Texas Comptroller of Public Accounts

Texas Comptroller of Public Accounts, Glenn Hegar

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Title 1. Property Tax Code
Subtitle F. Remedies
Chapter 41. Local Review

Subchapter A. Review of Appraisal Records by Appraisal Review Board

Sec. 41.03. Challenge by Taxing Unit.


An appraisal review board failed to give a taxpayer notice of a value increase resulting from a taxing unit challenge. Proper notice of an increased appraised value is a jurisdictional requirement that may be considered for the first time on appeal. The value increase was set aside due to the failure of notice to the taxpayer. However, the taxpayer's assertion that it should have been notified of the taxing unit challenge hearing was rejected. Lamar County Appraisal District v. Campbell Soup Co., 93 S.W.3d 642 (Tex. App.-Texarkana 2002, no pet.).

Appraisal review boards were not established to deal with questions of pure law. Thus, the Tax Code does not purport to place the resolution of questions of law regarding statutory declarations before the appraisal review board. A taxing unit may therefore take direct action in district court, rather than file a challenge to the appraisal review board in certain instances. Glasscock Underground Water Conservation District v. Pruitt, 915 S.W.2d 577 (Tex. App.-El Paso 1996).

Sec. 41.05. Hearing on Challenge.


A property owner is not entitled to be heard and receive notice of a challenge hearing before the appraisal review board which may indirectly affect the valuation of his or her property. Lamar County Appraisal Dist. v. Campbell Soup Co., 93 S.W.3d 642, (Tex. App. -- Texarkana 2003, no pet.).

Sec. 41.12. Approval of Appraisal Records by Board.


The taxpayer failed to exhaust its administrative remedies by not raising the issue of an application filing extension before the review board and evidence was not presented to establish entitlement to relief under Section 11.439 (now Section 11.4391) because no date of appraisal roll approval was offered. As a result, the Court did not address the retroactive application of the law. The application filed after the April 30 deadline in effect in 1999 barred the granting of the freeport exemption for that year. The taxpayer failed to file timely a freeport exemption application and did not request a filing extension for good cause as required in 1999. At trial, the taxpayer claimed that the appraisal district failed to treat the transmittal letter with the application as a request for extension. The taxpayer further contended that the amendment to the application requirements by Section 11.439 (effective in 2000 and renumbered in 2003 to Section 11.4391), permitting acceptance of late applications if filed before approval of appraisal records by the appraisal review board, should apply. Quorum International v. Tarrant Appraisal District, 114 S.W.3d 568 (Tex. App.-Fort Worth 2003, pet. denied).

Subchapter C. Taxpayer Protest

Sec. 41.41. Right of Protest.


The ad valorem tax did not violate the subsidiary's substantive due process rights because taxing property with no direct benefits to the property does not amount to a palpable and arbitrary abuse of power unless its initial inclusion in the district was itself a palpable and arbitrary abuse of power. The constitutional requirement of equality and uniformity is met when taxation is uniformly assessed on an ad valorem basis on all taxable property without regard to benefits received. Southwest Property Trust, Inc. v. Dallas County Flood Control District No. 1, No. 05-97-00399-CV (Tex. App. - Dallas [5th Dist.] 2002, rehearing overruled).

A leasehold's valuation was not the annual contract rental price on each leased lot, but instead had to be based on the leasehold's current market value which might be higher than the contract price given the demand for leasehold estates. All comparables of fee-simple interests should be eliminated from data used in establishing the fair market value of leaseholds, but the appraisals should not be limited to the amount of annual rent being paid on the leaseholds. Panola County Fresh Water Supply District Number One v. Panola County Appraisal District and Panola County Appraisal Review Board, 69 S.W.3d 278 (Tex. App. - Texarkana 2002, no pet.).

Section 25.25(d) does not provide for the appeal of the denial of an exemption. Bexar Appraisal District v. Wackenhut Corrections Corporation, 52 S.W.3d 795 (Tex. App. - San Antonio 2001, no pet.).

The statutory language in Tax Code Section 25.25(d) provides that the tax roll could not be changed if the property was subject of a prior protest brought under Tax Code Chapter 41 and resolved by an earlier negotiated resolution. Royal Production Company, Inc. v. San Jacinto County Central Appraisal District and San Jacinto County Appraisal Review Board, 42 S.W.3d 373 (Tex. App. - Beaumont 2001).

Taxpayer sought relief under Section 25.25 regarding the value of an airplane for 1991 through 1995. 1991 and 1992 were not properly before the court since protests were filed, but dismissed when taxpayer did not appear for the hearing. 1994 and 1995 were not properly before the court either since protests were filed and written settlements executed. No protest was pursued for 1993. However, since the parties stipulated to the form and location of the airplane as described in the appraisal, Section 25.25(c) provided no relief for 1993. Allocation of value cannot be corrected using Section 25.25(c). Aramco Associated Company v. Harris County Appraisal District and Harris County Appraisal Review Board, 33 S.W.3d 361 (Tex. App. - Texarkana 2000, pet. denied).

Sanctions against a taxing unit are inappropriate because the taxpayer may not raise excessive appraisal or nonownership in district court without first exhausting the administrative remedies in the Tax Code. Taxpayer did not protest the property's appraisal or ownership to the appraisal review board, and thus could not raise those issues in a delinquent tax lawsuit. Aldine Independent School District v. Baty, 999 S.W.2d 113 (Tex. App. -- Houston [14th District] 1999).

Arbitration is not a remedy available to a taxpayer that missed the Chapters 41 and 42 protest deadlines. If a Section 25.25 correction motion is filed, the district court must hear the appeal from the appraisal review board's decision. Harris County Appraisal District v. World Houston, Inc., 905 S.W. 2d 594 (Tex. App.-Houston [14th Dist.] 1995).

The subsequent purchaser of property is not barred from contesting the property's value under Section 25.25(d) when the previous owner had timely filed a protest of the property's value and then withdrew the protest because of the pending land sale. Jim Sowell Construction Company, Inc. v. Dallas Central Appraisal District, 900 S.W.2d 82 (Tex. App.-Dallas 1995, writ denied).

For the purposes of chapters of 41 and 42, "property owner" includes the owner of property on January 1 of the year for which taxes are imposed. Thus, HUD, which owned property on January 1 but sold it in August of the same year, was a property owner and had the right to appeal the appraisal review board decision to district court. HUD v. Nueces County Appraisal Dist., 875 S.W.2d 377 (Tex. App.-Corpus Christi 1994, no writ history).

A taxpayer seeking correction of a clerical error that affects tax liability must exhaust his administrative remedies by filing a correction motion with the appraisal review board before bringing suit in district court for a refund. Liland v. Dallas CAD, 731 S.W.2d 109 (Tex. App.-Dallas 1987, no writ).

Taxpayers who failed to comply with the Tax Code provisions for protesting property valuation were preempted from a right to judicial review because of the exclusiveness of the remedies provided by the Tax Code. Adams v. Kendall County Appraisal District, 724 S.W.2d 871 (Tex. App.-San Antonio 1986, no writ).

Injunctive relief by a taxpayer for protesting valuation of his property is no longer permissible; the legislature has provided a comprehensive plan for appeal of taxing authorities' decisions in the Tax Code and has required property owners to follow that plan. Brazoria County Appraisal District v. Notlef, Inc., 721 S.W.2d 391 (Tex. App.-Corpus Christi 1986, writ ref'd n.r.e.).

Property owned by a hospital authority with a portion leased to private doctors for their own commercial enterprise was not used exclusively for the use and benefit of the public and was not exempt as public property. A hospital authority must exhaust its procedural administrative remedies under the Tax Code before seeking judicial review. Grand Prairie Hospital Authority v. Tarrant Appraisal District, 707 S.W.2d 281 (Tex. App.-Fort Worth 1986, writ ref'd n.r.e.).

The failure of the tax assessor to deliver a notice of appraised value denied due process to the taxpayer and deprived the appraisal review board of jurisdiction to consider any increase in taxpayer's valuation above the amount rendered. Because the board did not acquire jurisdiction over the valuation, the taxpayer was not confined to remedies under the Property Tax Code and could challenge the assessments through a collateral attack. Garza v. Block Distributing Co., 696 S.W.2d 259 (Tex. App.-San Antonio 1985, writ ref'd n.r.e.).

Sec. 41.411. Protest of Failure to Give Notice.


Failure of prior property owners to assert lack of notice precludes subsequent owners from challenging the validity of past appraisals. Failure to deliver timely notices nullifies changes in appraisal rolls only with regard to the property owner at the time. Although the Tax Code authorizes notices of appeal by a "party other than a property owner," the parties contemplated are the chief appraiser and other governmental entities. The tax payment requirement of Section 42.08 was upheld as a requirement to maintain an appeal. Houston Land & Cattle Co. v. Harris County Appraisal District, 104 S.W.3d 622 (Tex. App.-Houston [1st Dist.] 2003, pet. denied).

Where property owner or his agent received notice of appraised value at property owner's listed address and appraisal district complied with required procedures, notice is presumed delivered when it is placed in the mail and the validity of the appraisal and the existence of a tax lien remain unaffected. Dallas County Appraisal District v. Lal, 701 S.W.2d 44 (Tex. App.-Dallas 1985, writ ref'd n.r.e.).

Sec. 41.412. Person Acquiring Property After January 1.


The subsequent purchaser of property is not barred from contesting the property's value under Section 25.25(d) when the previous owner had timely filed a protest of the property's value and then withdrew the protest because of the pending land sale. Jim Sowell Construction Company, Inc. v. Dallas Central Appraisal District, 900 S.W.2d 82 (Tex. App.-Dallas 1995, writ denied).

Bank foreclosed on property May 4, 1983. Required notices were sent in June of 1983 to the January 1 owner of the property. Bank did not get notice of appraised value until it received its tax statement in the fall of 1983. Court of appeals held that bank was denied due process because the Tax Code did not give him an opportunity to protest. Bank of America National Trust & Savings Association v. Dallas Central Appraisal District, 765 S.W.2d 451 (Tex. App.-Dallas 1988, writ denied). (Note: Sec. 41.412, adopted in 1987, addresses this issue.)

Sec. 41.43. Protest of Determination of Value or Inequality of Appraisal.


To determine an unequal appraisal protest in favor of the property owner provided by Tax Code Section 41.43, the appraisal review board's appraised value should be used since that is the only appraised value in existence when a protest is brought before district court. No conflict exists with Section 42.23 because the appraised value is simply the most current one on the tax rolls and admitted into evidence whether or not it was revised by the appraisal review board. Harris County Appraisal District and Harris County Appraisal Review Board v. Michael Duncan, 944 S.W.2d 706 (Tex. App.-Houston [14th District] 1997, writ denied).

Sec. 41.44. Notice of Protest.


The taxpayer must follow statutory procedures for allocation of value to apply. The owner waived constitutional entitlement to interstate allocation by failing to protest before the appraisal review board. The aircraft was located in the district on January 1 of each year in question, and the taxpayer did not challenge the description of the property on the appraisal rolls. The aircraft value therefore could not be allocated for prior years. A & S Air Service, Inc. v. Denton Central Appraisal District, 99 S.W.3d 340 (Tex. App.-Ft. Worth 2003, no pet.).

An appraisal review board exceeds its authority by having a written procedure that a taxpayer's fiduciary authorization must be filed prior to the filing of a protest or motion. Tarrant Appraisal Review Board v. Martinez Brothers Investments, Inc., 946 S.W.2d 914 (Tex. App.-Fort Worth 1997, no writ).

Sec. 41.45. Hearing on Protest.


Appraisal review board members perform quasi-judicial functions so that immunity did apply in barring claims against them in the performance of their duties. Three appraisal review board panel members were sued by a tax consultant claiming negligence in a value determination for not basing the value reduction on a preponderance of the evidence presented at the protest hearing. The members asserted the affirmative defense of judicial immunity. Sledd v. Garrett, 123 S.W.3d 592 (Tex. App.-Houston [14th Dist.] 2003, pet. denied).

An unadjudicated protest filed by a taxpayer does not bar a hearing pursuant to a motion for late correction under Section 25.25(d). Dismissal of a protest for failure to appear at a hearing is not an adjudication of the rights of the parties. The taxpayer was not entitled, however, to recover attorneys fees under Section 41.45 as a result of the denial of the hearing on the motion for late correction. Koger Equity, Inc. v. Bexar County Appraisal Review Board, 123 S.W.3d 502 (Tex. App.-San Antonio, 2003, no pet. h.).

Tax Code Section 25.25(c), subject to a five-year limitation, gives the appraisal review board the authority to change the appraisal roll on motion of the chief appraiser or a property owner. Section 25.25(b) does not contemplate the filing or presentation of any protest, or authorize the appraisal review board to review the chief appraiser's decision. Western Athletic Clubs, Inc. v. Harris County Appraisal District and Harris County Appraisal Review Board, 56 S.W.3d 269 (Tex. App. - Amarillo 2001, no pet.).

Sec. 41.47. Determination of Protest.


The 45-day limitation period for appeal of an appraisal review board decision only begins to run when proper notice is delivered to the appropriate party. Section 1.07(b) requires the tax official or agency to address the notice to the property owner, the person designated under Section 1.111(f) to receive the notice for the property owner (if that section applies) or, if appropriate, the property owner's agent at his address according to the most recent record in the possession of the official or agency. If a property owner files a written request for notices to be sent to a particular address, the official or agency shall send the notice to the address stated in the request. The erroneous delivery of a notice and order does not serve to trigger the 45-day period for appeal. A specific statutory scheme sets forth the manner in which property tax representatives may be designated and the effect that designation has on a taxing authority's obligation to deliver notice. The Texas Administrative Code provides that when an agent is an employee of a subsidiary of the owner, the owner is not required to provide documents supporting that agent's authority. The agent designation form itself states only that the person naming a tax agent should attach documentation - a suggestion that is not mandatory. Harris County Appraisal District and Harris County Appraisal Review Board v. Drever Partners, Inc., 938 S.W.2d 196 (Tex. App.-Houston [14th District] 1997).

Where taxpayer was dissatisfied with his property appraisal his exclusive remedies under the Property Tax Code are that of administrative and judicial review within available grounds of protest. When a taxpayer's protest to tax has been determined by the review board, he may then file suit for judicial review of the board's decision, but the board's decision is not a prerequisite to a suit by a taxing unit for delinquent taxes. The statute allows the appraisal board additional time to act by allowing a determination of all protests not only before appraisal records are approved, but "or as soon thereafter as practicable." Valero Transmission Company v. Hays Consolidated Independent School District, 704 S.W.2d 857 (Tex. App.-Austin 1985, writ ref'd n.r.e.).

Subchapter D. Administrative Provisions

Sec. 41.66. Hearing Procedures.


Appearance at appraisal review board hearing in person or by affidavit is mandatory condition precedent to filing suit. Webb County Appraisal District v. New Laredo Hotel, Inc., 792 S.W.2d 952 (Tex. 1990).

An appraisal review board exceeds its authority by having a written procedure that a taxpayer's fiduciary authorization must be filed prior to the filing of a protest or motion. Tarrant Appraisal Review Board v. Martinez Brothers Investments, Inc., 946 S.W.2d 914 (Tex. App.-Fort Worth 1997, no writ).

Where taxpayer did not check box on appointment of agent form authorizing the sending of notices to the agent, the appraisal review board was required to deliver any notices to the property owner. Mailing a notice without authorization did not trigger the 15- and 45-day appeal time periods. First Union Real Estate Investments v. Taylor CAD, 758 S.W.2d 380 (Tex. App.-Eastland 1988, writ denied).

Sec. 41.69. Conflict of Interest.


The AG compared the provisions of Sec. 41.69, Tax Code, with Sec. 171.004(a), Local Govt. Code. He set forth several differences. Section 41.69 applies to an ARB member regardless of the quantity of interest the person holds; while, Sec. 171.004(a) requires a "substantial interest." With an "interest," but without a "substantial interest," an official under Sec. 171.004(a) may participate in a protest determination. Section 41.69 prohibits an ARB member's participation in the protest determination. Even if the member has a substantial interest, under Sec. 171.004(a), a member may still be able to participate after disclosing the nature and extent of the interest. Section 41.69 prohibits participation of the member. The AG concluded that any conflict between the two sections involving ARB members would be resolved in favor of Sec. 41.69 because it specifically applies to such members. Id.

If a member of the ARB performs property tax consulting services in a taxpayer protest before the board, the member, as a matter of law, has a direct personal or pecuniary interest in the matter's outcome. Thus, Sec. 41.69 prevents the member's participation in the protest determination. Id.

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