2021 Texas Legislative Update - Legislature Strengthens Property Taxpayer’s Rights

Brusniak Turner Fine LLP

2021 Texas Legislative Update – Legislature Strengthens Property Taxpayer’s Rights

The Regular Session of the 87th Texas Legislature made various changes to Texas property tax law benefitting taxpayers and tax professionals.

HB 1090 (Effective date September 1, 2021) – Appraisal Districts Have Less Time to Pick Up Real Property Not Assessed for Taxation

Currently, when taxable real property is erroneously omitted from an appraisal roll, a chief appraiser has five years to discover and correct the omission. When this occurs, back taxes, penalties, and interest are assessed against the taxpayer. The legislature has shortened the period for back assessment from five years to three years. The legislature did not change the back-assessment window for personal property which remains at two years.

SB 1449 (Effective date January 1, 2022) – Tax Exemption for Business Personal Property Broadened to Help Small Business

For many years, the legislature provided an exemption for business personal property having a value of $500 or less. Inflation has eroded the benefit of this exemption for small businesses and caused unnecessary compliance expenses for taxpayers. In recognition of this, the legislature increased the exemption from $500 to $2,500 for income-producing tangible personal property, thereby freeing many businesses from having to file renditions in the future.

HB 1197 (Effective date January 1, 2022) – Religious Organizations Can Now Warehouse Adjoining Property for Development for a Much Longer Period of Time

H.B. 1197 amends the Tax Code to extend from six years to ten years the maximum property tax exemption period for a tract of land that is owned by a religious organization for purposes of expanding or constructing a new place of regular religious worship provided that the land is contiguous to the tract of land on which the organization's place of regular religious worship is located.

SB 1421 (Effective date September 1, 2021) – Taxpayers Who Made Mistakes in Rendering Their Property Now Have Two Years to Correct Their Renditions and Obtain Refunds

Taxpayers are currently required to report their business personal property to appraisal districts by April 15 unless they obtain an extension to May 15. Since rendition statements are due during the busiest time of year, mistakes are common. Court decisions have been inconsistent as to whether taxpayers have a right under current law to correct mistakes they have made in rendering their property. Given the confusion and opportunity for error, the legislature thought it appropriate to allow a period for corrections of errors, similar to that which taxpayers have for their federal tax returns. However, they have done so under limited circumstances.

S.B. 1421 allows an appraisal review board to change an appraisal roll or related appraisal records for the current tax year and for the two preceding tax years to correct an inaccuracy in the appraised value of a property owner's tangible personal property that was the result of an error or omission in a rendition or property report.

The roll may not be changed for any tax year in which one of the following occurred:

  • the property owner failed to timely file the rendition statement or property report and was assessed a penalty;
  • the property was the subject of a taxpayer protest brought by the property owner, a hearing on the protest was conducted in which the owner offered evidence or argument, and the Appraisal Review Board (“ARB”) made a determination of the protest on the merits;
  • the property was the subject of a previous motion filed by the property owner to correct the roll and either:
    • the chief appraiser and the owner agreed to the correction;
    • the ARB determined the motion;
    • the ARB determined that the owner forfeited the right to a final determination of the motion for failing to comply with applicable prepayment requirements; or
    • the property's appraised value was established as a result of a written agreement between the property owner or the owner's agent and the appraisal district.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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