HBA-KDB C.S.H.B. 490 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 490 By: Heflin Ways & Means 4/2/2001 Committee Report (Substituted) 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, there may be some inefficiencies that could hinder the implementation of a more transparent system of property taxation and collection. C.S.H.B. 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 C.S.H.B. 490 amends the Tax Code to authorize the chief appraiser to change the appraisal roll at any time to correct a determination of ownership and multiple appraisals of a property. At any time, rather than at any time before the end of five years after January 1 of a tax year, the bill authorizes the appraisal review board, on motion of the chief appraiser or of a property owner, to direct by written order changes in the appraisal roll to correct multiple appraisals of a property in a tax year (Sec. 25.25). 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 during the deferral or abatement period. The bill authorizes the additional penalty to be 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 adds 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 (Sec. 33.08). C.S.H.B. 490 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 ). The bill requires the collector, after a seizure of personal property 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). 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. The bill provides that reasonable expenses that are incurred by the taxing unit in determining the name, identity, and location of necessary parties and in procuring necessary legal descriptions of the property on which delinquent tax is due are a charge against the property and secured by lien, regardless of whether a suit is pending, so long as taxes on that property were delinquent at the time the item of expense was incurred. The bill provides that in any action brought by a taxing unit for the sole purpose of enforcing its lien for the aforementioned expenses, it is an affirmative defense that the amount of those expenses is unreasonable (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). C.S.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 a 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 an additional amount not to exceed $40.00 incurred in any physical inspection of the property, and 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 deletes the provision that authorizes the taxing unit that established a tax lien to continue to enforce collection of any amount for which a former owner of the property is liable to the taxing unit, including any post-judgment taxes, penalties, and interest, in any other manner provided by law. The bill provides that all of a taxing unit's existing liens of any character that are not included and foreclosed in a tax foreclosure judgment or that attach to the foreclosed property after the signing of the judgment are extinguished and the taxes or other claims secured by those liens are canceled and forever barred if the taxing unit established its delinquent tax liens as a participant in the judgment and the property is bid off to a taxing unit. The bill authorizes the officer making the sale to bid off 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. 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 (Sec. 34.04). C.S.H.B. 490 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). The bill 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). The bill repeals provisions relating to notice of delinquency requirements (SECTION 22). EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 490 modifies the original bill to the Texas Legislative Council style and format. The substitute modifies the original bill by providing that at any time before the end of five years after January 1 of the tax year for which the change is sought, the appraisal review board, on motion of the chief appraiser or of a property owner, to direct by written order changes in the appraisal roll to correct clerical errors that a property's owner liability for a tax or the inclusion of property that does not exist in the form or at the location described in the appraisal roll (Sec. 25.25). The substitute transfers from the Tax Code to the Local Government Code provisions relating to the sale of real property to certain nonprofit or religious organizations.