HBA-NMO H.B. 405 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 405
By: Palmer
Ways & Means
3/17/99
Introduced




BACKGROUND AND PURPOSE 

Current law requires a religious organization to pay tax on vacant land,
whether it derives a profit from the land or not.  If the religious
organization derives no profit from the land, this type of taxation may
place financial strain on the organization.  H.B. 405 entitles a religious
organization to an exemption from taxation of one or more parcels of vacant
land, not to exceed 40 aggregate acres, that does not produce revenue for
the organization or another person. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter B, Chapter 11, Tax Code, by adding Section
11.205, as follows: 

Sec.  11.205.  VACANT LAND OWNED BY RELIGIOUS ORGANIZATION.  (a) Provides
that "religious organization" has the meaning assigned by Section 11.20(c),
Tax Code, which qualifies a religious organization as one that is organized
and operated primarily for the purpose of engaging in religious worship or
promoting the spiritual development or wellbeing of individuals; does not
accrue distributable profits or realize private gain; uses its assets in
performing religious functions; and directs upon dissolution that its
assets be transferred to this state, the United States, or a charitable,
educational, or religious organization. 

(b) Entitles a religious organization (organization) to an exemption from
taxation of one or more parcels, not to exceed 40 aggregate acres, of
vacant land that is owned by the organization and does not produce revenue
for the organization or another person. 

(c) Requires the chief appraiser, for the purposes of Subsection (f), to
determine the market value of the land and to record it in the appraisal
records. 

(d) Requires the organization to notify the appraisal office in writing
before May 1 after the organization's entitlement to exemption ends.
Imposes a penalty on the land equal to 10 percent of the taxes that would
have been imposed on the land in each year it is erroneously exempted, if
the organization fails to notify the appraisal office. 

(e) Requires the chief appraiser to make an entry in the appraisal records
for the land on which the penalty is imposed, indicating liability for the
penalty, and to deliver a written notice of imposition of the penalty to
the organization.  Requires the notice to include an explanation of the
procedures for protesting the imposition of the penalty.  Requires the
assessor for each taxing unit to add the amount of the penalty to the
unit's tax bill for taxes on the land.  Requires the penalty to be
collected at the same time and in the same manner as the taxes on the land.
Provides that the amount of the penalty constitutes a lien on the land and
accrues penalty and interest in the same manner as a delinquent tax. 

 (f) Imposes an additional tax for each of the preceding five years for
which the land received an exemption, if the organization sells the land or
uses it to produce revenue. Provides that the additional tax is an amount
equal to the tax that would have been imposed had the land been taxed on
the basis of market value in each of those years, plus interest at an
annual rate of seven percent calculated from the dates the taxes would have
become due. 

(g) Provides that a tax lien attaches to the land on the date the
organization sells the land or first produces revenue to secure payment of
the additional tax and interest imposed and any penalties incurred.
Provides that the lien exists in favor of all taxing units for which the
additional tax is imposed. 

(h) Provides that the additional tax imposed by Subsection (f) does not
apply to the year for which the tax has already been imposed. 

(i) Provides that the additional tax, if only part of a parcel that has
received an exemption is sold by the organization or begins to produce
revenue, applies only to that part of the parcel and is an amount equal to
the taxes had that part been taxed on the basis of market value.   

(j) Provides that the chief appraiser make the determination that land has
been sold by the organization or has begun to produce revenue.  Requires
the chief appraiser to deliver a notice of the determination to the owner
of the land as soon as possible and to include in the notice the owner's
right to protest the determination.  Requires the assessor of each taxing
unit, if the owner does not file a timely protest or the protest is denied,
to prepare and deliver a bill for the additional taxes plus interest as
soon as practicable.  Provides that the taxes and interest are due and
become delinquent and incur penalties and interest as provided by law for
ad valorem taxes imposed by the taxing unit if not paid before the next
February 1 that is at least 20 days after the date the bill is delivered to
the owner of the land. 

(k) Provides that the sanctions provided by Subsection (f) do not apply if
the land is sold for right of way, condemned, or transferred to this state
or a political subdivision of this state to be used for a public purpose. 

SECTION 2.  Amends Section 11.43(c), Tax Code, to add the exemption
provided by Section 11.205, Tax Code, to a list of exemptions that once
allowed, need not be claimed in subsequent years. 

SECTION 3.  Effective date:  January 1, 2000, if the related constitutional
amendment is approved by the voters.  Otherwise, this Act has no effect. 

SECTION 4.  Emergency clause.