HBA-KDB H.B. 490 77(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 490 By: Heflin Ways & Means 8/7/2001 Enrolled BACKGROUND AND PURPOSE The Tax Code governs interactions between taxpayers, appraisal review boards, and assessors and collectors of taxes for the fair and efficient administration of property taxes. Contained within the Tax Code are procedures and directives to both taxpayers and taxing units to ensure each entity's rights and responsibilities within this system. However, some inefficiencies in the Tax Code could have hindered the implementation of a more transparent system of property taxation and collection. House Bill 490 modifies the Tax Code to clarify existing provisions. 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. ANALYSIS House Bill 490 amends the Tax Code to provide that an individual is ineligible to serve on an appraisal district board of directors and is disqualified from employment as chief appraiser if the individual owns property on which delinquent taxes have been owed to a taxing unit for more than 60 days after the date the individual knew or should have known of the delinquency unless the delinquent taxes and any penalties and interest are being paid under an installment payment agreement or a suit to collect the delinquent taxes is deferred or abated (Secs. 6.035 and 6.412). The bill provides that a contract that authorizes a county to have its taxes assessed and collected by another taxing unit may exclude from the taxes the other unit or the district is required to assess and collect under certain tax provisions (Sec. 6.24). The bill provides that rendition statements, real and personal property reports, attachments to those statements and reports, and other information the owner of property provides to the appraisal office in connection with the appraisal of the property that is made confidential may be disclosed to a taxing unit or its legal representative that is engaged in the collection of delinquent taxes on the property that is the subject of the information (Sec. 22.27). The bill authorizes the chief appraiser to change the appraisal roll at any time to correct a determination of ownership and multiple appraisals of a property. After a chief appraiser certifies such a change, the liability of a taxing unit for a refund of taxes, and any penalty or interest on those taxes, is limited to taxes paid for the tax year in which the appraisal roll is changed and the four tax years preceding that year. The failure or refusal of a chief appraiser to change an appraisal roll is not an action that the appraisal review board is authorized to determine, an action that may be the subject of a suit to compel, an action that a property owner is entitled to protest, an action that may be appealed (Sec. 25.25). If a taxpayer submits a payment of taxes that exceeds by $5 or more the amount of taxes owed for a tax year to a taxing unit, the bill requires the collector for the taxing unit, without charge, to mail to the taxpayer or the taxpayer's representative a written notice of the amount of the overpayment accompanied by a refund application form (Sec. 31.11). The bill requires the collector of a taxing unit (collector) who determines that a person erred in making a payment of taxes because the identical taxes were paid by another person to refund the amount of the taxes to the person who erred in making the payment. The bill requires such a refund to be made as soon as practicable after the collector discovers the erroneous payment, and to be accompanied by a description of the property subject to the taxes sufficient to identify the property. If the property is assigned an account number, the bill requires the collector to include that number. The bill requires the collector, each month, to inform the auditor of each appropriate taxing unit of refunds of taxes during the preceding month (Sec. 31.111). The bill modifies provisions relating to a notice of delinquency (Sec. 33.04). The bill provides that penalties and interest that accrued or that were incurred or imposed relating to the collection of taxes on certain homesteads prior to the filing of an affidavit for deferral or prior to the date on which a judgment or order of abatement is signed are preserved. The bill authorizes an additional penalty for collection costs for taxes due before June 1 to be imposed and collected only if the taxes for which collection is deferred or abated remain delinquent on or after the 91st day after the date the deferral or abatement period expires (Secs. 33.06 and 33.065). The bill prohibits the amount of the penalty for collection costs for taxes due before June 1 from exceeding the amount of the compensation specified in the contract with the attorney to be paid in connection with the collection of the delinquent taxes, rather than 15 percent of taxes, penalties, and interest due (Sec. 33.07). The bill adds the election to repeal a tax increase and the correction of a tax roll that increases the tax liability of property owners to the list of circumstances that incur additional penalties to defray the cost of collecting delinquent taxes. The bill prohibits such a penalty from exceeding the amount of the compensation specified in the contract with the attorney to be paid in connection with the collection of the delinquent taxes, rather than 15 percent of taxes, penalties, and interest due (Sec. 33.08). The bill sets forth provisions relating to the transfer of delinquent county education district taxes in certain counties (Sec. 33.09). The bill requires a peace officer, in addition to a collector, to take possession of a property pending its sale after a tax warrant is issued. Pending the sale of the property, the bill authorizes a collector and a peace officer to secure the property at the location where it is seized or to remove the property to another location. The bill provides that a person having possession of personal property of the person against whom a tax warrant is issued and who surrenders the property on demand has no liability to any person as a result of making the surrender. The bill requires the collector, at the time of the surrender, to furnish a sworn receipt to the other person describing the property surrendered (Sec. 33.23 ). After a seizure of personal property, the bill requires the collector to provide in writing the name and the address of each other person the collector identifies as having an interest in the property to the peace officer charged with executing the warrant. The bill requires a peace officer, rather than the collector, to deliver as soon as possible a written notice stating the time and place of the sale and briefly describing the property seized to the person having an interest in the property whose name and address the collector provided to the peace officer. The bill requires the collector to apply the seized property toward the payment of taxes, penalties, and interest included in the application for warrant and all costs of seizure (Sec. 33.25). In a suit to collect a delinquent tax, the bill requires a court to grant a taxing unit injunctive relief on a showing that the personal property on which the taxing unit seeks to foreclose a tax lien is about to be removed from the county in which the tax was imposed or transferred to another person and the other person is not a buyer in the ordinary course of business. Such injunctive relief must prohibit alienation or dissipation of the property, order that proceeds from the sale of the property in an amount equal to the taxes claimed to be due be paid into the court registry, or order any other relief to ensure the payment of the taxes owed. The bill provides that a taxing unit is not required to file a bond as a condition to the granting of injunctive relief. In a petition for the injunctive relief, the taxing unit is authorized to also seek to secure the payment of taxes for a current tax year that are not delinquent and is required to estimate the amount due if those taxes are not yet assessed. The bill provides that the tax lien attaches to any amounts paid into the court's registry with the same priority as for the property on which taxes are owed (Sec. 33.41). The bill provides that a taxing unit is entitled to recover reasonable attorney ad litem fees approved by the court and incurred in those suits in which the court orders the appointment of an attorney to represent the interests of a defendant served with process by means of citation by publication or posting (Sec. 33.48). The bill adds fees for an attorney ad litem to the list of fees that a taxing unit is not liable to collect taxes for court costs (Sec. 33.49). H.B. 490 authorizes any taxing unit that was a party to a judgment to file a petition to vacate the judgment for foreclosure of a tax lien if the property described in the judgment was subject to multiple appraisals for the tax years included in the judgment. The bill prohibits the taxing unit from filing a petition if a tax sale of property has occurred unless the property was bid off to a taxing unit, and has not been resold, or the tax sale or resale purchaser, or the purchaser's heirs, successors or assigns, consents to the petition. The bill requires the court, if the court grants the petition, to enter an order providing that, any tax sale based under that judgment and, if applicable, any resale are vacated; the tax deed and, if applicable, any resale deed are canceled; the delinquent tax suit is revived; and except in cases where the judgment is vacated due to the property described in the judgment being subject to duplicate appraisals, the taxes, penalties, interest, attorney's fees and costs, together with the liens securing same are reinstated (Sec. 33.56). The bill provides that the costs of the sale include deed recording fees anticipated by the sale of the property. The bill authorizes the collector of any tax unit to assist the officer in making a calculation by providing the officer with a certified tax statement showing the amount of the taxes included in the judgment that remain due that taxing unit, including all penalties, interest, and attorney's fees provided by the judgment as of the date of the proposed sale. The bill provides that a certified tax statement need not be sworn and is sufficient so long as it is signed by the tax collector or the collector's deputy. The bill authorizes the officer making the sale, with the consent of the collector who applied for a tax warrant, to offer property seized by a municipality or a county to a charitable organization that improves property for low-income housing or a religious organization for less than the lesser of the amounts if a bid sufficient to pay the lesser of the market value of property is not received. If the property is offered to such a person, the bill requires the officer making the sale to reopen bidding at the amount of that person's bid and bid off the property to the highest bidder. The bill provides that the acceptance of a bid by the officer is conclusive and binding on the question of its sufficiency. The bill provides that an action to set aside the sale on the grounds that the bid is insufficient may not be sustained in court, except that a taxing unit that participates in distribution of proceeds of the sale is authorized to file an action before the first anniversary of the date of the sale to set aside the sale on the grounds of fraud or collusion between the officer making the sale and the purchaser. The bill prohibits property seized by a municipality or a county from being sold for an amount that is lesser than the lesser of the market value of the property as specified in the warrant or the total amount of taxes, penalties, interest, costs, and other claims for which the warrant was issued except if the sale is made to a charitable organization. The bill requires an officer to bid the property off to a taxing unit that requested the order of the sale if a sufficient bid is not received by the officer making the sale. The bill authorizes the commissioners court to designate the area at the county courthouse where sales are to take place (Sec. 34.01). The bill provides that at a hearing regarding excess proceeds, the proceeds be paid according to the priorities of each party that established claim to the proceeds and include the tax sale purchaser if the tax sale has been adjudged void and the purchaser has prevailed in an action against the taxing units. The bill adds that any taxes, penalties, or interest that were omitted from the judgment by accident or mistake are proceeds that are to be paid to a taxing unit. The bill prohibits a person from taking an assignment of an owner's claim to excess proceeds unless the assignment is taken on or after the 36th day after the date the excess proceeds are deposited in the registry of the court, the assignment is in writing and signed by the assignor, and the assignment document contains a sworn statement by the assignor. The bill provides that an assignee who obtains excess proceeds without complying with the prescribed requirements is liable to the assignor for the amount of excess proceeds obtained plus attorney's fees and expenses. An assignee who files a petition setting forth a claim to excess proceeds must attach a copy of the assignment document and produce the original of the assignment document in court at the hearing on the petition. If the original assignment document is lost, the assignee must obtain the presence of the assignor to testify at the hearing. The bill prohibits a fee charged to obtain excess proceeds for an owner from being greater than 25 percent of the amount obtained or $1,000, whichever is less (Sec. 34.04). The bill adds a municipality's affordable housing policy to the already existing urban redevelopment plans (Sec. 34.051). The bill authorizes a purchaser at a void tax sale or tax resale, in lieu of pursuing the subrogation rights, to elect to file an action against the taxing units to which proceeds of the sale were distributed to recover an amount from each taxing unit equal to the distribution of taxes, penalties, interest, and attorney's fees it received. The bill authorizes the purchaser to include a claim for and entitles to recover any excess proceeds of the sale that remain on deposit in the registry of the court or, alternatively, have judgment against any party to whom the excess proceeds have been distributed. The bill provides that this only applies to an original purchaser at a tax sale or resale and who has not subsequently sold the property to another person. The bill prohibits a suit against taxing units unless the action is instituted before the first anniversary of the date of sale or resale (Sec. 34.07). The bill authorizes the owner of a residence homestead or land designated for agricultural use who has a right of redemption to redeem the property on or before the second anniversary of the date on which the deed of the taxing unit is filed for record by paying the taxing unit the lesser of the amount of taxes, penalties, interest, and costs for which the warrant was issued or the market value of the property as specified in the warrant, plus the amount of the fee for filing the taxing unit's deed and the amount spent by the taxing unit as costs on the property if the property was seized and bid off to the taxing unit (Sec. 34.21). H.B. 490 amends the Local Government Code to set forth provisions relating to the sale of real property to certain nonprofit or religious organizations (Sec. 253.010). EFFECTIVE DATE September 1, 2001.