BRUSNIAK’S 2005 TEXAS PROPERTY TAX DIGEST
(c) John Brusniak, Jr. 2005
United States Bankruptcy Courts
INTANGIBLE PERSONAL PROPERTY IS NOT SUBJECT TO A TAX LIEN.
In re: Southwest Broadband Holdings I, 326 B.R. 112 (N.D. Tex. 2005). [OPINION]
Taxpayer filed for bankruptcy protection leaving no assets other than accounts receivable. Secured creditor filed an adversary proceeding against the taxing units contending that their delinquent tax liens did not extend to the accounts receivable and that the secured creditor was entitled to them. The taxing units countered that such assets were personal property and that under the Tax Code provisions pertaining to seizures, taxing units are specifically authorized to seize accounts receivable. The court disagreed, ruling that accounts receivable are intangible and are not taxable under the Tax Code, and as a result the tax lien does not extend to them. The court ruled that such receivables could have been reached in a tax warrant proceeding in state district court, but not otherwise.
Texas Supreme Court
AN ILLEGAL STATE PROPERTY TAX IS CREATED WHEN A SCHOOL DISTRICT IS DEPRIVED OF MEANINGFUL DISCRETION IN SETTING ITS PROPERTY TAX RATE.
Neeley v. West Orange-Cove Consolidated Independent School District, 176 S.W.3d 746 (Tex. 2005). [OPINION]
School districts sued the state contending that the state “Robin Hood” formula forced them to tax at or near the statutory cap of $1.50 per $100 of value, thereby depriving them of meaningful discretion in setting their local tax rates. The evidence demonstrated that school districts cumulatively, on a statewide basis, were currently spending over 97% of all property tax revenue which would be available assuming that everyone was taxing at the maximum tax rate, while only 20% of the students in the state were exceeding minimum accreditation standards. Additionally, the evidence demonstrated that the state was recapturing over $1 billion from the “Robin Hood” districts. The Supreme Court ruled that this combination of events was sufficient to demonstrate that the state so controlled the tax rate process as to unconstitutionally deprive the districts of meaningful discretion in setting their tax rates.
UNDERGROUND STRUCTURES MAY BE TAXED SEPARATELY FROM THE LAND.
Matagorda County Appraisal District v. Coastal Liquids Partners, L.P., 165 S.W.3d 329(Tex. 2005). [OPINION]
Underground salt dome caverns for storing liquid hydrocarbons were constructed and leased to taxpayer for an annual rental of $500,000. Taxpayer contended that the caverns were not separately assessable and could only be taxed as a part of the surface estate. The court disagreed, finding that some aspects of land, such as oil and gas leases, have always been separately assessed and that had this improvement been constructed on the land’s surface, rather than underground, its taxability would have been obvious. The court declined to specify a definitive test as to which aspects of land could be taxed, but stated that the individual characteristics of the property should be considered in making a determination as to whether the property should be separately assessed.
Texas Courts of Appeals
TAXING UNIT IS NOT BOUND BY A JUDGMENT DECLARING TAX LIABILITY TO WHICH IT WAS NOT A PARTY; MERELY FILING A LETTER WITH AN APPRAISAL REVIEW BOARD COMPLAINING OF ERRONEOUS PRIOR YEAR TAXATION DOES NOT CONSTITUTE EXHAUSTION OF ADMINISTRATIVE REMEDIES.
Nevada Gold & Silver, Inc. v. Andrews Independent School District, No. 08-04-00229-CV (Tex. App.–El Paso, August 25, 2005, no pet.). (to be published). [OPINION]
Two parties disputed title to a property. A lawsuit was filed and a default judgment was entered ordering the defendants to deliver title to the plaintiffs free and clear of all ad valorem taxes. The party failed to pay the taxes, but filed a letter with the appraisal review board seeking a retroactive revaluation of the property for four years. Nothing else was done. Taxing unit sued to foreclose title. In defense, the party contended that the delinquent tax trial could not go forward because the title had not been cleared as required by the prior suit. It also sought value corrections from the district court. The court rejected the parties’ request, ruling that the taxing unit was not bound by the judgment in the prior suit since it was not a party to that case. It further ruled that judicial relief as to the valuations was not available because the parties’s action failed to exhaust administrative remedies. Exhaustion of remedies is a condition precedent to the filing of a challenge in district court.
MOVABLE PROPERTY HAS A TAX SITUS IN A TAXING UNIT IF IT IS LOCATED THERE FOR MORE THAN A LIMITED PERIOD OF TIME; THAT PERIOD IS DETERMINED BY THE PROPERTY’S USE IN THE PRIOR CALENDAR YEAR; EVENTS OCCURRING SUBSEQUENT TO JANUARY 1 OF THE TAX YEAR ARE IRRELEVANT IN DETERMINING SITUS.
Patterson-UTI Drilling Company, LP v. Webb County Appraisal District, 182 S.W.3d 14 (Tex. App. –San Antonio 2005, no pet.). [OPINION]
Drilling company moved drilling rigs from county to county and job to job. The rigs would not be moved to a new location until a new job was procured for them Two rigs spent a total of 159 and 175 days in a county, and were idle for 40 days and 68 days respectively as of January 1 of a tax year after completing their contractual assignments while awaiting a new job. The rigs subsequently were used on new jobs within the same county and stayed for the ensuing calendar year in the county. The taxpayer rendered the rigs in its home county for taxation. The appraisal district of the county where they were physically located picked them up for taxation, and the taxpayer appealed. The court held that movable property does not acquire a tax situs unless it is located in a taxing unit for more than a limited period. Whether an item has been located somewhere for more than a temporary period is determined by its use in the prior tax year, and events occurring after January 1 of the tax year are irrelevant. The court held that these rigs did not have a tax situs in the county of use and because of their mobile nature were taxable at the taxpayer’s principal place of business.
APPRAISAL REVIEW BOARDS ARE NOT AUTHORIZED TO HEAR TAXPAYER COMPLAINTS AGAINST TAX OFFICES; TAXPAYER IS NOT BARRED BY FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES AS TO MATTERS WHICH COULD NOT BE PROTESTED TO AN APPRAISAL REVIEW BOARD.
Dallas Central Appraisal District v. 1420 Viceroy Limited Partnership, 180 S.W.3d 267 (Tex. App.–Dallas, 2005, no pet.). [OPINION]
Taxpayer sought a waiver of penalties, interest and collection fees due to lack of proper notice. When the request was denied, taxpayer filed a notice of protest with the appraisal review board. The review board denied the protest, and the taxpayer filed suit in district court. The appraisal district responded with a plea to the jurisdiction. The trial court denied the plea, and the appraisal district filed an interlocutory appeal to the court of appeals. The court of appeals ruled that the express language of Section 41.41 of the Texas Tax Code limited the appraisal review board to hearing complaints brought as to conduct of appraisal districts, appraisal review boards and chief appraisers and not as to the conduct of tax offices. It rejected, however, the jurisdictional contention of the appraisal district that the taxpayer’s lawsuit was barred by the exclusivity provisions of Section 42.09 of the Texas Tax Code because the action complained of was not capable of being protested to the appraisal review board and hence was not subject to the limitations of that provision. As a result, the matter was cognizable under the general jurisdiction of the district court.
APPRAISAL DISTRICT MAY NOT APPRAISE PROPERTY LOCATED OUTSIDE ITS BOUNDARIES.
Devon Energy Production, L.P. v. Hockley County Appraisal District, 178 S.W.3d 879 (Tex. App. – Amarillo 2005, pet. denied). [OPINION]
Taxpayer owned a working interest in a lease. The lease was located 84% in Hockley County and 16% in Terry County; however, the subsurface mineral formation was divided equally between the counties. Terry County utilized the mineral formation to appraise the value of the interest while Hockley County utilized the lease percentages. Taxpayer sued Hockley County contending that a double assessment had occurred. The court agreed, finding that Hockley County was taxing property located in Terry County by ignoring the actual location of the minerals and that an appraisal district was not allowed to appraise property located outside its boundaries.
DECLARATORY JUDGMENT SUIT PERTAINING TO DELINQUENT TAXES MAY BE APPROPRIATE; ATTORNEY’S FEES ARE RECOVERABLE AGAINST TAXING ENTITIES IN DECLARATORY JUDGMENT ACTIONS.
Fort Bend County v. Martin-Simon, 177 S.W.3d 479 (Tex. App.–Houston [1st Dist.] 2005, no pet.). [OPINION]
Taxing units sued a deceased taxpayer and his unknown heirs for delinquent taxes for tax years 1977, 1978 and 1984 through 1991. On the same date, the taxing units sued one of the heirs for taxes due on her 25% share of the estate for tax years 1990 through 1997. (The taxpayer had previously deeded the property to his four children in equal shares in 1991.) The heir paid the taxes due in her suit. Three years later, the heir appeared in the original suit, filing an answer to the suit alleging that the taxes on her portion of the property had been paid in their entirety, seeking a declaratory judgment to that effect and attorney’s fees. In response, the taxing units dismissed their case. After a post-judgment default trial on the counterclaim, the trial court entered judgment declaring that the taxes due on the heir’s 25% interest were paid in full and awarding attorney’s fees. The taxing units appealed, claiming that a declaratory judgment was inappropriate because the judgment merely clarified that the taxes had been paid in the prior suit and because the award of attorney’s fees was impermissible due to governmental immunity. The court disagreed, finding that the declaration sought and obtained by the heir was appropriate because it was broader than the tax years encompassed in the prior suit, covering more tax years and identifying her interest in the property. It upheld the award of attorney’s fees because such an award is appropriate when a taxpayer seeks a declaration as to the taxpayer’s rights against the government under a tax statute.
TAXPAYER MAY CHALLENGE OWNERSHIP OF PROPERTY IN A DELINQUENT TAX TRIAL WITHOUT HAVING EXHAUSTED ADMINISTRATIVE REMEDIES; THE BURDEN OF PROOF AS TO OWNERSHIP DOES NOT SHIFT TO TAXING UNITS UNTIL A TAXPAYER INTRODUCES SUFFICIENT EVIDENCE TO REBUT THE PRIMA FACIEPRESUMPTION CREATED BY THE INTRODUCTION OF A TAX STATEMENT INTO EVIDENCE; TAXPAYER MAY NOT SEEK TO OBTAIN APPRAISAL DISTRICT DOCUMENTS THROUGH DISCOVERY ADDRESSED TO A TAXING UNIT.
John B. Barnett, Jr. MD Surgical, P.A. v. County of Dallas, 175 S.W.3d 919 (Tex. App.–Dallas 2005, no pet.). [OPINION]
Taxing unit sued taxpayer to collect delinquent taxes. Taxpayer defended on the grounds of nonownership, claiming that he had relocated his medical practice and left much of his equipment behind at the prior location for the new tenant. He argued that he could not have been the owner of as much property as had been assessed for taxation. The court recognized the taxpayer’s ability to challenge ownership of property in a delinquent tax trial without an exhaustion of administrative remedies; however, it held that the nature of the evidence presented by the taxpayer was as to the valuation of the property and not its ownership. Such evidence is not permitted at a delinquent tax trial. As a result, the taxpayer failed to shift the prima faciepresumption of accuracy of the assessment which was raised by the government’s introduction of the delinquent tax statement into evidence. The court further ruled that the taxpayer did not have the ability to compel the discovery of appraisal district documents by discovery directed to the taxing units. It was the obligation of the taxpayer to obtained these documents through either the public information process or through third party discovery.
PARTY MAY LEGALLY PURCHASE THE PROPERTY INTERESTS OF A TAXPAYER WHOSE PROPERTY IS ABOUT TO BE FORECLOSED AND BYPASS THE EXCESS PROCEEDS ASSIGNMENT PROVISIONS OF THE TAX CODE.
Woodside Assurance, Inc. v. N.K. Resources, Inc., 175 S.W.3d 421 (Tex. App.–Houston [1stDist.] 2005, no pet.). [OPINION]
Taxpayer, whose property was to be foreclosed pursuant to a delinquent tax judgment, sold his interest in the property to a third party. At the foreclosure sale, a company owned by the third party bid an excessive amount for the property to insure that it would obtain title to the property. Thereafter, the third party petitioned the court for release of the excess proceeds. A lienholder, whose interest had been foreclosed in the sale sought the release of the excess proceeds to it, arguing that the third party had illegally manipulated the foreclosure sale and had violated the provisions of the Tax Code pertaining to the assignment of excess proceeds. The court disagreed, ruling that no statutory provision exists prohibiting a person from purchasing a taxpayer’s interest prior to a tax foreclosure sale and thereafter bidding on the property at the foreclosure sale. It further held that the excess proceeds provisions of the Tax Code only pertain to transfers which occur after a foreclosure sale, not before.
TAXING UNIT MUST REFUND TAXES, PENALTIES AND INTEREST WHICH IT COLLECTS IF A PROPERTY TAX VALUE IS LOWERED AS A RESULT OF AN APPEAL OF AN APPRAISAL REVIEW BOARD ORDER; ATTORNEY’S FEES MAY NOT BE RECOVERED IF SUIT IS FILED PRIOR TO 180 DAYS AFTER THE RIGHT TO REFUND ARISES.
Carrollton-Farmers Branch independent School District v. JPD, Inc., 168 S.W.3d 184 (Tex. App.–Dallas 2005, no pet.). [OPINION]
Taxpayer appealed an appraisal review board order setting an appraised value at $2,992,780 to district court. While the case was pending, the taxing units filed a delinquent tax suit attempting to collect the taxes due under the appraisal review board order. They subsequently issued tax warrants, pursuant to which the taxpayer paid large sums of money to the taxing units. Thereafter, the district court in the appeal of the appraisal review board determination, lowered the value of the property to $186,300. The taxing units refunded to the taxpayer the base tax, but refused to refund the penalties and interest which they had collected, contending that the Tax Code specifically only referenced refunds of taxes and not of penalties and interest. Approximately ninety days after the appraisal district corrected its records, the taxpayer filed a counterclaim in the delinquent tax suit seeking the refund of the additional monies and seeking an award of attorney’s fees from the taxing units. The court disagreed with the taxing units’ construction of the statute, and ruled that penalties and interest cannot be determined until a base tax is determined in an appeal of an appraisal review board order. Therefore, no lawful penalties or interest had been collected by the taxing units. It ruled, however, that the taxpayer could not recover attorney’s fees because the refund statute provides that attorney’s fees are only recoverable if a suit for refund is filed 180 days after the date on which the claim for refund arises.
THE OWNER OF A LOW AND MODERATE INCOME HOUSING APARTMENT COMPLEX MUST BE A COMMUNITY HOUSING DEVELOPMENT ORGANIZATION FOR THE PROPERTY TO QUALIFY FOR EXEMPTION IF THE PROPERTY WAS CONSTRUCTED PRIOR TO DECEMBER 31, 2001,
American Housing Foundation v. Brazos County Appraisal District, 166 S.W.3d 855 (Tex. App.–Waco 2005, pet. denied). [OPINION]
A for-profit limited partnership, with a nonprofit Community Housing Development Organization general partner, applied in tax year 2002 and 2003 for exemption from taxation for a low and moderate income apartment complex which it owned. The appraisal district denied the exemption, and the court upheld the denial. The court ruled that properties constructed prior to December 31, 2001 by for-profit limited partnerships could not qualify for the exemption by having a qualified general partner. The statutory provisions pertaining to such properties required the owner of the property itself to be a Community Housing Development Organization. The for-profit entity owning the property was not such an organization.
EVEN IF AN APPRAISAL DISTRICT MISLEADS A TAXPAYER AS TO THE NATURE OF AVAILABLE TAX CODE REMEDIES, SUCH ACTION WILL NOT CONFER JURISDICTION ON A DISTRICT COURT TO REVIEW A DISPUTE; FAILURE TO EXHAUST ADMINISTRATIVE REMEDIES BARS REVIEW OF A CLAIM BY A DISTRICT COURT.
Interstate Apartment Enterprises, L.C. v. Wichita Appraisal District, 164 S.W.3d 448 (Tex. App.–Fort Worth 2005, no pet.). [OPINION]
When the mortgage company informed a taxpayer that its property tax escrow was substantially short, the taxpayer called the appraisal district and complained that it had not received a notice of appraised value and asked what it could do to fix its excessive valuation. The appraisal district employee informed the taxpayer that its only remedy was to file a motion under Section 25.25(d) of the Tax Code to correct the valuation. The employee did not inform the taxpayer of its rights under Section 41.411 of the tax code. That section applies when an appraisal district fails to deliver a notice of appraised value. The taxpayer filed its motion to correct value under section 25.25(d) only to discover, after the appraisal review board ruled against it, that its property was not so excessively appraised as to qualify for relief under that statute, and by then it was too late to file a motion under Section 41.411. The taxpayer appealed the decision of the appraisal review board to the district court and contended that it should be allowed to pursue its remedies under Section 41.411 before the district court due to the incomplete and inaccurate information provided to it by the appraisal district. The court disagreed, ruling that a trial court cannot acquire jurisdiction by estoppel and that even if the appraisal district had intentionally mislead the taxpayer, such conduct could not confer jurisdiction upon the trial court. Accordingly, the court ruled that it could not review the claim under Section 41.411 because of the taxpayer’s failure to exhaust its remedies before the appraisal review board.
A PERSON PURCHASING PROPERTY SUBJECT TO A TAX LIEN LOAN DOES NOT HAVE STANDING TO RAISE AN ISSUE AS TO USURY; A LENDER ON A TAX LIEN LOAN MAY RECOVER 10% OF THE LOANED AMOUNT IN ATTORNEY’S FEES IF THE TAXES WERE DELINQUENT AT THE TIME OF LIEN TRANSFER AND 15% IF THE TAXES WERE NOT DELINQUENT; INTEREST DUE ON A TAX LIEN LOAN DOES NOT TOLL WHEN MONIES ARE PAID INTO THE REGISTRY OF THE COURT.
Weisfeld v. Texas Land Finance Company II, 162 S.W.3d 379 (Tex. App.–Dallas 2005, no pet.). [OPINION]
Taxpayer obtained a tax lien loan on its property. Thereafter, a third party acquired title to the property subject to the tax lien loan. The lender sued the taxpayer and the third party to foreclose the tax lien. The third party tendered the amount which it believed was due and owing on the loan into the registry of the court while contending that the loan was usurious, that the lender could not recover attorney’s fees and that the interest on the loan stopped accruing when the money was tendered into the registry of the court. The court disagreed, finding that claims of usury are personal to the person obtaining the loan and may not be asserted by subsequent parties in interest pursuant to the terms of the Finance Code, notwithstanding the provision in Section 32.065(e) of the Tax Code which only provides that the penalties for usury shall be calculated under the terms of the Finance Code. The court further held that a party foreclosing a tax lien loan judicially is entitled to recover up to 10% of the lien amount in controversy if the taxes were delinquent at the time of the making of the loan and 15% of the loaned amount if the taxes were not delinquent at the time of the loan. Finally, the court held that a tender of the monies allegedly due into the registry of the court did not toll the running of interest on the loan since such a tender is not deemed to be made unconditionally..
TAXPAYER MAY NOT BYPASS PROPERTY TAX ADMINISTRATIVE AND JUDICIAL PROCEDURES CONTAINED IN THE TAX CODE WITHOUT PROVING COMMON LAW EXCEPTIONS TO EXHAUSTION RULE EXIST; TAXPAYER MUST APPEAL TAX DUE DATE DISPUTE TO THE APPRAISAL REVIEW BOARD; SECTION 41.411 CODIFIED COMMON LAW DUE PROCESS RIGHTS; PURE QUESTIONS OF LAW MUST BE BROUGHT TO APPRAISAL REVIEW BOARD FOR DETERMINATION PRIOR TO SUIT IN COURT.
MAG-T, L.P. v. Travis Central Appraisal District, 161 S.W.3d 617(Tex. App.–Austin 2005, pet. denied). [OPINION]
Taxpayer filed a late rendition personal property rendition for tax year 2003 with the appraisal district under the special amnesty statute passed by the legislature. The appraisal district issued a revised notice of appraised value, after a prior value had been certified, reflecting a higher total valuation for the property. The taxing unit issued a revised tax bill reflecting a higher total due and demanded payment of the revised bill by January 31, 2004. Taxpayer did not file a notice of protest with the appraisal review board, but instead sought injunctive relief from the district court. The appraisal district filed a plea to the jurisdiction in response to the court contending that the suit should be dismissed for failure to exhaust administrative remedies. Taxpayer contended that it could bypass the administrative remedies based on common law exceptions to the exhaustion rule. The court disagreed, finding that the appraisal district was within its statutory rights to include previously omitted property in the revised notice and that the added valuation constituted omitted property. The court rebuffed taxpayer’s argument that the taxing unit had impermissibly shortened the tax delinquency period by finding that the taxpayer should have appealed that decision as well to the appraisal review board. It further held that the taxpayer’s due process rights to notice were not violated because the taxpayer had failed to utilize the provisions of Section 41.411 to raise the issue of lack of notice and that Section 41.411 was intended to displace the taxpayer’s common law rights. Finally, the court ruled that even if the dispute involved a “pure issue of law” the taxpayer was required to exhaust administrative remedies first because the legislature had given the taxing authorities “exclusive jurisdiction to interpret and act” as to these issues.
A “CAPPED” RESIDENTIAL HOMESTEAD VALUE IS NOT NECESSARILY THE EQUIVALENT OF THE HOMESTEAD’S MARKET VALUE.
Dallas Central Appraisal District v. Cunningham, 161 S.W.3d 293 (Tex. App.–Dallas 2005, no pet.). [OPINION]
Taxpayer sued the appraisal district for tax year 2002 over the value of his residential homestead. An agreed judgment was entered setting the market value of the property at $200,000. The following year, 2003, the appraisal district sent the taxpayer a notice of appraised value setting the market value of his homestead at $374,330 and the appraised value at $225,000. On summary judgment, the taxpayer contended that he had performed $5,000 worth of improvements to his property, but that their market value was $0 and that the court should reduce the “market value” of his homestead to $220,000. The trial court granted summary judgment, and the appraisal district appealed. The court of appeals reversed, finding that the “market value” and “appraised value” of homestead property are not synonymous terms. The court held that the “market value” of a homestead is calculated under the general provisions of Chapter 23 of the Tax Code, while the “capped” or “appraised value” is calculated under the specific provisions of Section 23.23 of the Tax Code.
A PURCHASER OF BUSINESS PERSONAL PROPERTY IS REQUIRED TO WITHHOLD AN AMOUNT SUFFICIENT TO PAY THE ENTIRE TAX AT THE TIME OF THE PURCHASE; IF THE PURCHASER FAILS TO DO SO, THE PURCHASER IS LIABLE UP TO THE EXTENT OF THE PURCHASER PRICE FOR THE TAX; A TAXPAYER WHO RECEIVES ACTUAL NOTICE OF AN INCREASED TAX VALUATION MAY NOT COMPLAIN THAT THE NOTICE WAS MISADDRESSED; IF A TAXPAYER FAILS TO TIMELY FILE A PROTEST UNDER SECTION 41.411 OF THE TAX CODE AND TIMELY TENDER THE TAXES DUE, THE TAXPAYER FORFEITS ITS STATUTORY REMEDIES.
Dan’s Big & Tall Shop, Inc. v. County of Dallas, 160 S.W.3d 307 (Tex, App.–Dallas 2005, pet. denied). [OPINION]
Taxpayer purchased the assets of an ongoing business along with the right to continue doing business under the former owner’s trade name. The purchaser properly filed an assumed name certificate showing its own correct name and address, but stating that it would continue doing business under the former trade name and at the former trade address. The taxpayer did not withhold the property taxes for the year of acquisition at the time of the sale, and apparently did not render the property for taxation in the following year. The appraisal district mailed the notice of appraised value in the name of the former owner to the former owner’s address. Tax bills were sent in the same manner. The purchaser contended that it was only obligated to pay itsproratashare of the property taxes for the year of acquisition citing the provision in Section 31.081 of the Tax Code which provides that “a purchaser who fails to withhold the amount required...is liable...to the extent of the value of the purchaser price.” The court held that the statute requires the purchaser to withhold the entire amount of property taxes due from the purchase price, and that the purchaser is liable for the entire amount unless that amount exceeds the total value of the property purchased. The court held that the delivery of the notice of appraised value and the tax bills to the business location and in the former owner’s name were sufficient to give the new owner actual notice of the tax assessment and that the new owner should have taken other steps had it wished to receive notices in a different name and at a different location. Finally, the court held that the taxpayer could not avail itself of the remedies in Section 41.411 for the failure of the appraisal district to deliver the notice of appraised value to it because it had not timely filed its notice of protest with the appraisal review board and because it had not timely paid the taxes on the property, both of which constitute conditions precedent to the filing of such a motion.
TO BE ADMISSIBLE INTO EVIDENCE AT DELINQUENT TAX TRIAL, TAX RECORDS MUST BEAR A SEAL.
Al-Nayem International Trading , Inc. v. Irving Independent School District, 159 S.W.3d 762 (Tex. App.–Dallas 2005, no pet.). [OPINION]
Taxing unit sued taxpayer to collect delinquent property taxes. At trial, the taxing units offered certified copies of the delinquent tax statements and an affidavit from the assessor. Taxpayer objected on the grounds that the records did not contain a seal. On appeal, the appellate court ruled that the evidence was inadmissible because public records are not self-authenticating unless they bear the seal of the public entity and a signature purporting to be an attestation, or contain the signature of an officer or employee of the public entity and bear the seal of an officer of the public entity verifying the signature and official capacity of the signor.
ATTORNEYS COLLECTING DELINQUENT TAXES ARE NOT IMMUNE FROM SUIT UNLESS THE TAXING UNIT HAS THE RIGHT TO CONTROL THE DETAILS OF THE ATTORNEY’S WORK IN SUCH A FASHION THAT WOULD MAKE THE ATTORNEY AN EMPLOYEE OF THE TAXING UNIT.
Zuniga v. Navarro & Associates, P.C., 158 S.W.3d 663 (Tex. App.–Corpus Christi 2005, pet. denied). [OPINION]
Citizen wanted to buy property at tax foreclosure sale and called the attorney representing the taxing unit asking whether the property could be safely purchased. The attorney told him that she had run a title search and that there were no outstanding liens on the property. The citizen bought the property at the foreclosure sale for $90,000. The court paid the excess proceeds to the former owner. Thereafter, the citizen discovered that there was an outstanding, unforeclosed mortgage lien on the property in the amount of $120,000. The former owner went bankrupt and could not redeposit the excess proceeds into the registry of the court. The citizen sued the attorney in tort seeking recovery of the monies which he had paid for the property. The attorney defended on the grounds of sovereign immunity and official immunity. The appellate court ruled that neither defense was available because sovereign immunity can only be raised by the government itself and for official immunity to apply the government must control the details of the attorney’s work to such an extent as to make that attorney an employee of the government.
TAXPAYER DOES NOT HAVE STANDING TO RAISE THE FAILURE OF A TAXING UNIT TO JOIN LIENHOLDER; FORECLOSURE PURCHASER DOES NOT NEED TO INTRODUCE TAX JUDGMENT AND ORDER OF SALE TO ESTABLISH STATUTE OF LIMITATIONS DEFENSE.
Jordan v. Bustamante, 158 S.W.3d 29 (Tex. App.–Houston [14th Dist.] 2005, pet. denied.).[OPINION]
Taxing unit sued taxpayer for delinquent taxes on two different tracts. Two years after entry of judgment, taxpayer sued the third party tax foreclosure purchaser and the taxing units seeking to set aside the foreclosure sale. Taxpayer alleged that the foreclosure was defective because the taxing units failed to join two lienholders to the suit. In response, the third party purchaser raised the one-year statute of limitations period contained in Section 33.54(a)(1) of the Texas Tax Code as a defense to the suit. Taxpayer claimed that the third party had not proven the statute of limitations defense at trial because the tax judgment and order of sale were not introduced into evidence. The court held that the taxpayer did not have standing to raise the failure to join the lienholders to the lawsuit because the taxpayer was not injured by the failure to join. The court further held that the plain language of the statute did not require such evidence to be introduced and upheld the limitations defense.
PURCHASER AT TAX SALE MUST INTRODUCE INTO EVIDENCE TAX JUDGMENT AND ORDER OF SALE TO PROVE STATUTE OF LIMITATIONS DEFENSE.
Sani v. Powell, 153 S.W.3d 736 (Tex. App.–Dallas 2005, pet. denied). [OPINION]
Taxing unit obtained a foreclosure judgment against taxpayer for delinquent taxes. The day before the foreclosure sale, taxpayer filed for bankruptcy protection and an automatic stay issued. The constable was not advised of the automatic stay and sold the property to a third party purchaser. Taxpayer remained in possession of the property and three years later sued to set aside the foreclosure sale. Third party purchaser raised the one-year statute of limitations period contained in Section 33.54(a)(1) of the Texas Tax Code as a defense to the suit. Taxpayer claimed that the third party had not proven the statute of limitations defense at trial because the tax judgment and order of sale were not introduced into evidence. The court agreed with the taxpayer, held that such evidence was required by reading Section 33.54(a)(1) in conjunction with Section 34.01 of the Tax Code and set aside the sale.
Texas Attorney General Opinions
AN APPRAISAL DISTRICT MAY NOT EMPLOY THE SPOUSE OF THE TAX ASSESSOR; IF THE ASSESSOR MARRIES AFTER EMPLOYMENT, THE EMPLOYEE’S RELATIONSHIP MUST END AT THE FIRST LEGAL OPPORTUNITY; THE TAX ASSESSOR MAY NOT RESIGN FROM THE APPRAISAL DISTRICT BOARD TO WAIVE THE CONFLICT.
Op. Tex. Att’y Gen. No. GA-0375 (2005). [OPINION]
Under the anti-nepotism provisions of Section 6.05(f) of the Texas Tax Code, if the county tax assessor marries an employee of the appraisal district, the employee’s employment must end at the end of the contractual term, or if the employment is “at will” immediately. The tax assessor is a statutory member of the appraisal district’s board of directors and thus cannot resign from the board or assign a person to serve in the assessor’s place to avoid the application of the anti-nepotism provisions.
A SCHOOL DISTRICT MAY OFFER AN EARLY PAYMENT DISCOUNT REGARDLESS OF WHETHER THE TAXING ENTITY COLLECTING TAXES FOR THE SCHOOL DISTRICT OFFERS THE DISCOUNT.
Op. Tex. Att’y Gen. No. GA-0373 (2005). [OPINION]
A school district may offer an early payment discount to taxpayers regardless of whether the taxing entity collecting taxes on behalf of the school district offers the discount on its own taxes.
A TAXING ENTITY MAY OFFER A HOMESTEAD TAX FREEZE TO ITS ELDERLY AND DISABLED TAXPAYERS REGARDLESS OF WHETHER IT OFFERS A TAX HOMESTEAD EXEMPTION.
Op. Tex. Att’y Gen. No. GA-0363 (2005). [OPINION]
A taxing unit may offer a homestead tax freeze to its elderly and disabled taxpayers regardless of whether it has adopted a homestead tax exemption.
STATEMENTS ISSUED BY THE TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS ON MANUFACTURED HOMES MAY BE REVOKED IF THEY ARE BASED UPON FRAUDULENT REPRESENTATIONS THAT PROPERTY TAXES HAVE BEEN PAID.
Op. Tex. Att'y Gen. GA-0343 (2005). [OPINION]
Tax liens must be listed on a statement of ownership issued by the Texas Department of Housing and Community Affairs for a manufactured home. The Department may refuse to issue or it may suspend or revoke a statement which was issued based upon false or fraudulent information as to whether a tax lien existed on the property. The Department may similarly refuse to issue or it may suspend or revoke a statement on a manufactured home which was relocated without truthful information being provided regarding the property taxes due on the home.
THE PROVISIONS MANDATING THAT PROPERTY VALUED BY MULTIPLE APPRAISAL DISTRICTS BE PLACED AT THE LOWEST DETERMINED VALUE ARE NOT UNCONSTITUTIONAL PER SE; CERTAIN PARTICULAR VALUATIONS UNDER THIS STATUTE MAY BE UNCONSTITUTIONAL.
Op. Tex. Att'y Gen. GA-0317 (2005). [OPINION]
Section 6.025(d) of the Tax Code, which requires the chief appraisers appraising property in overlapping jurisdictions to place the property on at the lowest, ultimately determined appraised value, is not unconstitutional per se. It is possible that specific valuations may violate the constitutional requirement of taxation at market value, but these will need to be reviewed on a case-by-case basis.
APPRAISAL REVIEW BOARDS MAY NOT SCHEDULE HEARINGS PRIOR TO THE FILING OF NOTICES OF PROTEST.
Op. Tex. Att'y Gen. GA-0311 (2005). [OPINION]
Appraisal review boards may not pre-schedule hearings for taxpayers or agents. The filing of a notice of protest is a condition precedent to the scheduling of an appraisal review board hearing.
CITY MAY USE TAX INCREMENT FUNDS TO PAY A PRIVATE DEVELOPER FOR CERTAIN COSTS.
Op. Tex. Att'y Gen. GA-0305 (2005). [OPINION]
A city may use a tax increment fund to pay a private developer for environmental remediation, renovation or facade preservation costs if the costs constitute project costs. A tax increment fund is a municipal fund and competitive bidding requirements may apply to expenditures from the fund. If a municipal expenditure is subject to competitive bidding, the city is prohibited from reimbursing expenditures not made pursuant to a competitively bid contract.
A CITY MAY GRANT A TAX ABATEMENT FOR NEWLY ADDED BUSINESS PERSONAL PROPERTY AT A SITE THAT WAS PREVIOUSLY SUBJECT TO A TEN YEAR ABATEMENT AGREEMENT.
Op. Tex. Att'y Gen. GA-0304 (2005). [OPINION]
A city may grant a tax abatement for newly added business personal property at a site that was previously subject to a ten year abatement agreement. The new abatement agreement must comply with the current abatement statutes.