A bi-monthly insider guide to the confusing world of property taxation from BRUSNIAK TURNER. Providing insight and saving lawyers research time and their clients money since 1981

THE DELUGE OF PROPERTY TAX MAIL: WHAT TO IGNORE, EMBRACE, OR CONTEMPLATE?

© John Brusniak 2024

Heads up, Lawyers! This Tidbits primer is for you and your clients! As winter fades and spring unfolds, a variety of property tax related envelopes come winging your way. They appear annually like returning migratory birds; but delivered by your postal service carrier. It's tempting to toss them aside or pretend they don't exist, but that might not be the best move. Among the barrage of letters, some could be solicitations, while others could contain serious, time-sensitive matters with potentially nasty consequences. The real puzzle is figuring out which is which. Ready for some guidance?"

WHAT YOU CAN AND SHOULD IGNORE

Texas is a non-disclosure state. This means sale prices in real estate transactions are not public knowledge nor recorded in the public record. That leaves appraisal districts hungry for sales data. As a result, appraisal districts and the state comptroller hunt for data by mailing out sales data request forms. If you or your client gets one of these requests, I recommend you toss them in the trash. Nothing in Texas law requires anyone to respond to these inquiries—and only bad things can happen if you respond. For example, having your property raised to your sales price while your comparable neighbors' values remain unchanged. This practice has a name. It's called “sales chasing.” It's illegal and yet it occurs. All provided information will be used to assess your property. It is better to let an appraisal district go through its normal processes without giving them “free data.” If a recently purchased property is overvalued, you can provide the appraisal district with a closing statement during the protest season and obtain a value correction. The upside to not disclosing your purchase price is that an appraisal district might guess too low.

THE ESSENTIALS

1. REQUESTS FOR APPLICATION OR REAPPLICATION

First and foremost, never ignore requests for additional information or re-application from an appraisal district for exemption or special valuation properties, such as farms and ranches. (Yes, this applies to lawyers who have farms and ranches as vacation homes.) We unfortunately field many calls about this, most of which involve wailing and tears. The deadlines are strict and limited opportunities for late remedies exist. 

2. NOTICES PERTAINING TO PROPERTY IN INTERSTATE COMMERCE

Applications for allocation of property moving in the stream of interstate commerce, such as airplanes, trucks, trains, oil, gas, ships, drilling rigs are important. Their owners are entitled to pro-rated taxes based upon their use in Texas. As many people (clients and lawyers alike) enjoy owning airplanes, failure to timely file an allocation request will result in payment of taxes on the full value of their property—rather than the fractional share on which they should pay.

3. NOTICES OF APPRAISED VALUE 

Do not ignore Notices of Appraised Value and the filing deadline information contained within them. These notices inform you of the value upon which your taxes will be calculated. Failing to thoroughly review the information on the notices can cost you a lot of money. Pay attention not only to what is included in the notices, but also to what might be missing. If a property had an exemption or a special valuation in the prior tax year, but the Notice of Appraised Value does not reflect it, a protest must be filed unless the removal was appropriate. (NOTE: Not every instance of removal is done intentionally; but even accidental omissions result in the loss of tax benefits.). Notices of Appraised Value typically arrive in April, but some arrive later. As discussed in a prior newsletter, late remedies may be available, but they typically come with strings attached.

4. HEARING NOTICES AND HEARING DETERMINATIONS

Be on the lookout for notices scheduling appraisal review board hearings, and notices of orders determining protests. Short windows of opportunity for seeking relief for missed hearings and appealing decisions exist, and they are absolute. These notices most often arrive during summer vacation season. If you or your client is going to be out of town after filing a protest, get someone to watch their mail like a hawk. (I have heard countless sad tales from taxpayers who unwittingly waived their rights while on vacation.

THE ONES TO THINK ABOUT

RENDITION FORMS

Surprise! In addition to real property, Texas also taxes business personal property. That means the property in your law office, as well as every bit of tangible business personal property your client owns, is subject to taxation. However, it would be unfathomable for appraisal districts to be aware of every item of taxable personal property located in Texas. (Appraisal districts know where real property is because it tends to be obvious and almost never moves.) To assist appraisal districts with this Herculean task, the tax code mandates business personal property owners file written renditions, or reports, of what they own. If you or your client have multiple law offices or business locations, separate renditions are required for each location. Failure to timely file a rendition results in a 10% penalty being added to the tax bill. However, no other penalty exists for noncompliance. Appraisal districts on rare occasions have filed suits seeking mandatory injunctions to compel taxpayer renditions. For some taxpayers, a 10% penalty is preferable to submitting their data to the appraisal district. Prior to filing a rendition, taxpayers should review their prior year's tax valuation and analyze the value of their property under property tax standards (which sometimes vary from accounting standards); or, alternatively, elect to report an owner's opinion of value. In the absence of data regarding business personal property, appraisal districts tend to bump up the value of business personal property annually seeking to find a taxpayer's pain threshold that will get the taxpayer to submit a rendition. Noncompliance with the rendition requirements is the norm across the state.

REPORTS OF PROPERTY NOT OWNED BY YOU BUT IN YOUR POSSESSION ON JANUARY 1 

Rendition forms are not intuitive. Requests for information regarding property that was in the possession of a taxpayer on January 1, but not owned by them, are usually buried towards the end of rendition forms. For most taxpayers, this means leased property, such as: photocopiers, computers, cars, or other high-tech equipment. Taxpayers who are in the leasing or storage business (like office building and mini-storage owners) are required to report the names and addresses of parties renting space in their facilities. Penalties, akin to rendition penalties, exist for failing to report such property. Appraisal districts have the option of seeking mandatory injunctions to compel production of the data. Sometimes appraisal districts deal with recalcitrant parties by engaging in a fictional presumption that the property belongs to the owner of the real property where it is located and assigning the tax to them. That tends to bring about prompt compliance. 

SOLICITATION LETTERS

You have probably encountered solicitations from property tax consultants seeking to represent you regarding your home or business. Just like with any other profession, there are good ones and some that are not so good. I recommend that you perform careful due diligence and not rely on information contained in mailed solicitations. 

IMPORTANT TIME FRAMES AND WHAT TO WATCH FOR

These dates are typical but notices can show up at any time of the year.

 JANUARY THROUGH FEBRUARY : Rendition forms Interstate allocation forms Requests for reapplications

APRIL THROUGH MAY: Notices of Appraised Value Requests for reports of property not owned Determinations for exemptions and special valuations Deadline for filing Notices of Protest To challenge values To challenge denials of exemptions and special valuations 

MAY THROUGH JULY: Notices of hearings Appraisal review board hearings 

MAY THROUGH OCTOBER: Notices of Appraisal Review Board Determinations 

OCTOBER THROUGH DECEMBER: Property tax bills

COMING UP NEXT "To render or not to render. That is the question. ” A deeper dive into strategies for minimizing business personal property taxes through renditions