Legislative Update - Taxpayers Can Now Force Appraisal Districts and Appraisal Review Boards to Follow Texas Property Tax Law

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Background. The government should not strip taxpayers of their rights, and the Texas Tax Code provides many rights to protesting taxpayers.

During protest hearings:

  • Taxpayers are entitled to hearings in order to present their cases to appraisal review boards (“ARB”).
  • Taxpayers are entitled to choose whether to present their evidence and argument first or to require an appraisal district to present its evidence first, then rebut.
  • Taxpayers are entitled to present evidence, cross-examine witnesses, and offer argument in response to the government’s position.
  • Taxpayers may request the appraisal district’s evidence prior to a hearing, and evidence not produced within 14 days prior to the hearing should be excluded.

Yet, often taxpayers are railroaded by ARBs and blindsided by appraisal districts at these hearings. Sometimes, taxpayers appear for their hearings and are forced to present their arguments first, stripping them of their strategic opportunity to hear the appraisal district’s evidence. (Taxpayers should consider doing this when they suspect an appraisal district does not have sufficient evidence to back up its value). In some instances after a hearing begins, taxpayers are ambushed with new evidence. Worst yet, some taxpayers are denied the ability to rebut testimony or argument offered by an appraisal district or even present their case at a hearing because, “That’s not how we do it in this county.” Some ARBs have promulgated their own stringent rules limiting taxpayers’ rights prior to and during a hearing.

Previously, there was no legal mechanism to compel appraisal districts and ARBs to follow the uniform provisions of the Texas Tax Code. H.B. 988 addresses this issue by providing taxpayers the option to seek binding arbitration to compel these entities to comply with state law.

Changes. H.B. 988 amends the Tax Code to require an ARB to adopt procedures for hearings to review appraisal records and to hear taxpayer protests. The bill prohibits ARBs from deviating from the model rules promulgated by the Texas Comptroller of Public Accounts (“Comptroller”). The bill provides as follows:

Taxpayers Can Force Appraisal Review Boards and Chief Appraisers into Binding Arbitration for Violating Statutory and Procedural Requirements

H.B. 988 allows a taxpayer to take a chief appraiser or an ARB to binding arbitration. Property owners who file a property tax protest notice must file a request for limited binding arbitration under the bill's provisions to compel the ARB or chief appraiser to rescind procedural rules adopted by the ARB that are not in compliance with the Comptroller’s model hearing procedures or to compel compliance with an applicable requirement of the Property Tax Code.

Taxpayers may request binding arbitration in the following circumstances:

  1. (1) rescind procedural rules adopted by the ARB that are not in compliance with the model hearing procedures prepared by the Comptroller;

  2. (2) schedule a hearing on a protest;

  3. (3) deliver information to a property owner in the manner required by the Tax Code;

  4. (4) allow property owners to offer evidence, examine or cross-examine witnesses or other parties, and present arguments;

  5. (5) set a hearing for a time and date certain and postpone a hearing that does not begin within two hours of its scheduled time;

  6. (6) schedule hearings on protests concerning multiple properties identified in the same notice of protest on the same day at the request of a property owner or a property owner's designated agent; and

  7. (7) refrain from using or offering as evidence information requested by a property owner under Section 41.461 that was not delivered to the property owner at least 14 days before the hearing.

How to Compel Arbitration

To compel arbitration, a taxpayer must first deliver written notice to the chairman of the ARB, the chief appraiser, and the taxpayer liaison officer. The notice must specify the procedural requirement the chief appraiser or ARB violated, and the notice must be sent within five business days of the violation. There is a 10-day window to allow the chief appraiser or ARB an opportunity to comply before arbitration can be filed.

If the ARB or chief appraiser fails to comply within the 10-day window, the taxpayer must file a written request for arbitration with the Comptroller. The taxpayer may not file the request: (1) earlier than the 11th day, or (2) later than the 30th day after the date the taxpayer delivers notice of its intent to request binding arbitration to the chairman of the ARB, the chief appraiser, and the taxpayer liaison officer. Thus, the taxpayer has a narrow window to request binding arbitration.

To secure arbitration, the taxpayer must tender the notices above and remit a deposit between $450-$500 depending on the value of the property at issue. If successful at arbitration, the arbitrator can order the ARB to rescind its order determining protest, require a new hearing in accordance with the arbitrator’s ruling, and order the appraisal district to refund the arbitration fee, less $50 which is retained by the Comptroller for administrative purposes. Importantly, an ARB’s failure to comply with any of the procedural rules above will not pause or delay the original hearing.

Model Rules

  1. Before adopting written procedures, an ARB must hold a public hearing to consider its proposed rules;

  2. An ARB must do the following not later than May 15 of each year:

    1. hold the hearing;

    2. make any amendments to the proposed hearing procedures the ARB determines are

      necessary; and

    3. by resolution adopt the hearing procedures;

  3. An ARB must comply with model hearing procedures when adopting the hearing procedures;

  4. An ARB must incorporate the model hearing procedures prepared by the Comptroller when adopting its hearing procedures but an ARB may adopt procedures that supplement the model procedures without contradicting or circumventing them; and

  5. An ARB chairman has exclusive authority over the administration of the adopted hearing procedures.

Every County Must Have a Taxpayer Liaison Officer to Help Resolve Disputes

H.B. 988 revises the requirement that only certain counties appoint a taxpayer liaison officer to extend that requirement to all counties, regardless of population, and to provide that an officer is responsible for receiving and compiling a list containing not only comments and suggestions but also complaints filed concerning a matter related to the fairness and efficiency of the district's ARB.

Taxpayers Can Complain to a Taxpayer Liaison Officer if an Appraisal Review Board Violates Procedural Requirements for Protest Hearings

H.B. 988 also authorizes a person who owns property in an appraisal district or the district's chief appraiser to file a complaint with the district's taxpayer liaison officer alleging that the district's ARB has adopted or is implementing hearing procedures that are not in compliance with the model procedures or is not complying with applicable procedural requirements. The taxpayer liaison officer is required to report complaints to the board of directors for the appraisal district.

Conclusion. Soon, property tax protest hearings will have uniform standards across Texas. While this is no guarantee ARBs or chief appraisers will adhere to the procedural requirements, this legislation grants taxpayers the right to compel ARBs and chief appraisers to follow Texas law and all procedural rules.

The effective date of these changes is September 1, 2021. However, the binding arbitration provisions are already in effect.

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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