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Business personal property tax law changes include a new penalty
1-9-2004

The Texas Property Tax Code for many years required owners of business personal property to annually render (or summarize) to the central appraisal district the ownership and value of assets used in a business. Historically, however, over half of all owners of business personal property have not rendered.

Rendition was mandatory, but there was no penalty for not rendering. Many property owners felt it was not a material issue since the associated property taxes are modest. Others didn't render because it was not convenient, or it would dramatically increase their tax liability.

Chief appraisers at central appraisal districts and tax entities were concerned that a material amount of business personal property was not being taxed.

Impetus for change
There was concern that if business personal property owners are not being taxed equitably with real property owners, the burden of taxation would be shifted from owners of personal property to owners of real property.

In addition, fiscal shortfalls at many city, county and school entities, as well as at the state level, raised the government's need to ensure it was receiving all due revenue based on current tax laws.

In Robinson vs. Budget Rent-a-Car Systems, a 2001 appeals court decision, the court clarified that the chief appraiser may sue to force a business personal property owner to render business personal property. This was a largely unsatisfactory remedy, however, due to the financial costs and political stigma of chief appraisers suing large numbers of taxpayers.

The other possible solution was for chief appraisers to "guess high" on assessed values, effectively forcing business personal property owners to provide information. Fortunately, few chief appraisers chose this option.

The new law
During the summer of 2003, the Texas Legislature put some teeth into the rendition law by passing Texas Senate Bill 340.

Starting in 2004, a company that does not render will automatically pay a 10 percent penalty on its business personal property tax bill. This penalty, which can be appealed, will be collected by the chief appraiser.

There is also a 50 percent penalty for filing a fraudulent rendition. In addition, filing a fraudulent rendition is a criminal offense.

Owners of business personal property with an aggregate value of less than $20,000 can file a simplified rendition statement containing only the property owner's name and address, a general description of the property by type or category and the location of the property.

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