Property Tax Opinions Released in 2009Texas Supreme CourtOld Farms Owners Association v. Houston Independent School District Repealed notification law continues to apply to nonsuited delinquent tax lawsuit.Taxing units filed delinquent tax lawsuit against property owner in 1999, but nonsuited case in 2000. The case was refiled in 2002, and owner contended it was not liable for interest and penalties on taxes due to failure to send 5-year delinquency notice required by Tax Code. Taxing units argued that the notice provision did not apply because it was repealed in 2001 between nonsuit and refiling and current lawsuit was not filed under new statute<. Supreme Court held that repeal of 5-year notification law included savings clause that old statute continued to apply if delinquent tax lawsuit pending before effective date of change in law. Though the nonsuited delinquent tax lawsuit was not pending on the effective date of the statute, it was pending at some time before the effective date. Therefore, owner was required to pay taxes, but avoided liability for interest and penalties. Texas Courts of AppealDallas Central Appraisal District v. Friends of the MilitaryAttempt to obtain permission to build may constitute land use study.Charitable organization sought exemption of its land based on provision allowing exemption for incomplete improvements under physical preparation. Under physical preparation in Tax Code may include architectural, engineering, soil testing, land clearing, etc. as well as a land use study. There is no definition in the Code as to what constitutes a land use study. Appraisal district denied exemption, and charity sued. After trial, a jury found in favor of the charity and district appealed. On appeal, the district argued there was no evidence of any physical preparation as nothing had been done at the property except mowing. The charity's officer said that he contacted a company about constructing a building on the property in 2002, but discovered that zoning and related issues would prevent construction since the land was adjacent to a landmark cemetery. The officer spent the next several years seeking permission to build, which was finally granted in 2007. The court of appeals noted that, because there is no definition of what constitutes a "land use study," the efforts to obtain zoning and permission to build were sufficient evidence of a land use study to support the jury's verdict. Industrial Communications, Inc. v. Ward County Appraisal District Tax assessment void when owner not given notice of appraisal and deprived of right to protest.In 2000, Industrial purchased three radio towers located in Ward County. It attempted to register its ownership with the FCC, but the registration was unsuccessful due to computer error. Industrial notified its customers and vendors of a change in address from Pecos where the previous owner's office was located to Odessa where Industrial's office was located. It also notified the Postal Service to forward mail from Peco to Odessa. However, Industrial did not notify the Ward County Appraisal District of the change of address. Industrial began filing renditions in Ward County, but neglected to include the three towers. In 2004, after receiving a letter from the appraisal district concerning newly imposed penalties for failure to render, Industrial reviewed its records and determined that the towers were omitted. In 2004, Industrial filed its rendition with the towers and paid its taxes. In November 2004, Industrial received a 2003 delinquent tax notice for the towers. The notice was sent to the Odessa office, but prior notices and the 2003 tax bill were allegedly sent to the Pecos address which was obtained from the FCC due to the registration failure. The 2003 tax assessment was based on a value more than 14 times greater than the 2004 value. Industrial filed a protest based on failure to receive notice, but the appraisal review board denied the protest because the taxes were already delinquent. Industrial filed a declaratory judgment action, claiming the 2003 tax assessment was void due to lack of notice. The trial court ruled against Industrial based on the appraisal district's claim that Industrial failed to exhaust its administrative remedies. The court of appeals noted that, by the time Industrial learned of the tax assessment in late 2004, the taxes were already delinquent and thus the Tax Code provided no remedy allowing correction. The court therefore held that Industrial was denied due process before the assessment. The appraisal district claimed Industrial waived its due process rights on several bases, all of which were rejected by the court of appeals. The district claimed waiver by failing to render the towers in 2003; but the court held the only penalty for failure to render is the specified rendition penalty and not a forfeiture of due process rights. The district claimed waiver by failing to advise the district of the new address; but the court held that while notification to the district is advisable there is nothing in the Tax Code making it mandatory or providing for a forfeiture of due process rights. The district claimed waiver by failure to record the change of ownership with the FCC; but the court noticed that Industrial did not attempt to hide its ownership since it attempted to register its ownership and therefore there could be no intentional action resulting in waiver. After rejecting all of the district's waiver claims, the court of appeals held that Industrial was entitled to notice and failed to receive notice, and thus the 2003 tax assessment was void. Hays v. Butler Failure to adequately identify property makes tax judgment of foreclosure void.Deed holders each claimed ownership of tract of land. One set of holders (Butler) claimed ownership through a judgment quieting title in 1987 and subsequent transfers by the party gaining ownership through that judgment. The other set of holders (Hays) claimed ownership through a delinquent tax judgment against the party losing ownership in the quiet title lawsuit five years later, subsequent foreclosure by the school district, and subsequent conveyances from the school district. Hays claimed that Butler's suit seeking ownership declaration was too late because it was not filed within the limitations period to set aside a tax foreclosure. The court held that the tax judgment was void as to allowing foreclosure because the property description in the delinquent tax judgment did not identify the tract of land as being "Block 17." The failure to include the block number made the property description inspecific, and thus the school district never acquired title that it could convey down through the Hays deed claim. Therefore, Butler was determined to be the property owner of the property. Gard v. Bandera County Appraisal District Tax Code limits on attorney fees constitutional.Taxpayer sued appraisal District concerning appraised value of property. As a result of a value settlement, the value was reduced. Per Section 42.29 of the Tax Code, the value reduction limited the taxpayer's attorney fee award to $700. Taxpayer had incurred in excess of $13,000 in fees and claimed that the Section 42.29 fee limits were unconstitutional. On appeal, the taxpayer alleged that the fee limits were an unreasonable impediment to a property owner's right to protest appraised value. The court of appeals held the restrictions on attorney fee awards are a valid exercise of legislative authority and do not violate the Constitution. Averitt v. Caudle Oil and gas interest must be appraised at "market value" if value determined under Section 23.175 is higher than "market value."Averitt sued the Gaines County Appraisal District for tax years 2004, 2005 and 2006 protesting the appraised value of oil and gas interests he had inherited from his aunt. Averitt hired an independent appraiser who testified at trial that he conducted an appraisal in accordance with Chapter 23 of the Property Tax Code and that the value established by the Appraisal District was 130% higher than his appraisal. The Appraisal District offered testimony from Capitol, a third party appraisal company that established the appraised values. Capitol testified that it initially conducted an appraisal of the property under Section 23.175 of the Property Tax Code (special appraisal method for oil or gas interests) but the appraisal under that method caused the property to be "overassessed." Capitol also testified that it appraised the property using generally accepted appraisal standards. The jury ruled in favor of the Appraisal District and Averitt appealed. On appeal, Averitt argued that the trial court erred in instructing the jury because the charge should not use the term "market value" but rather should use the term "appraised value" using the special provision of Section 23.175. The appellate Court rejected this argument citing the Texas Constitution and Section 23.01 stating that all taxable property shall be appraised at its market value as of January 1 and that the jury was properly instructed on how to determine the market value. Averitt also argued that the evidence was conclusive that the appraisals conducted by Capitol did not comply with Section 23.175. The appellate Court cited the Texas Constitution which provides that no property shall be appraised at a value greater than its market value. Capitol testified that the appraisal conducted under Section 23.175 resulted in a value in excess of the market value but that the appraisal conducted under other generally accepted methods did not arrive a value in excess of market value. The appellate Court without further discussion determined that this evidence did not conclusively establish that the District failed to comply with Section 23.175. Burnet Central Appaisal District v. Millmeyer Attorneys fees limited by tax savings; individual property owner may testify as to the market value of property without qualifying as expert.The Appraisal District appraised the value of the Millmeyers lakefront home at $129,113 for tax year 2003. The Millmeyers filed an appeal. At trial, the Court lowered the value of the property to $119,219 resulting in a tax savings of $225.51 to the Millmeyers and awarded attorneys fees to the Millmeyers in an amount of $2,500. The Appraisal District filed an appeal alleging the award of attorneys fees was excessive. The Appellate Court agreed and held that Section 42.29(b) of the Property Tax Code provides that the amount of attorneys fees can be no greater than the total tax savings achieved. The Appraisal District also argued there was no evidence to support the value reduction. The Appellate Court disagreed. Sharon Millmeyer testified about the price paid for the property and the improvements made thereto. The Court stated that a property owner may give an opinion as to the value of her own property and does not have to be qualified as an expert witness to do so. The Appellate Court modified the attorney fee award to $225.51 and affirmed the trial court's ruling in all other respects. Midland Central Appraisal District v. BP America Production Co. Oil held in tank farm as part of interstate pipeline not taxable.As part of the interstate pipeline system of a common carrier, oil was stored in a tank farm in Midland County. The appraisal district sought to tax the oil because of the almost constant presence of some oil at the tank farm though oil moved through the pipelines and farm on a regular basis. Oil companies claimed that the oil was in interstate commerce and thus had no taxable situs in Midland County. The courts agreed with the oil companies, holding that once the oil entered the stream of interstate commerce it became non-taxable in Texas or Midland County until such time as it left the stream of interstate commerce. Because the oil merely flowed through Midland County from one destination to another while in the stream of commerce, it had no taxable situs in Midland County. American Housing Foundation v. Harris County Appraisal District CHoDO limited partnership exemption only applies to 2002 and later construction.Community Housing Development Organization claimed entitlement to tax exemption under Section 11.182 of Tax Code for apartment complex owned by a limited partnership because CHoDO owned 100 percent of general partner. Remaining 99 percent limited partnership interest was owned by another entity. Property was constructed before December 31, 2001. Appraisal district denied exemption because property was not owned by ChoDO itself and claimed limited partnership provisions of exemption statute did not apply due to age of property. On appeal from an adverse trial court determination, the CHoDO claimed that Section (e) of Section 11.182, dealing with limited partnership ownership, applied to properties constructed both before and after December 31, 2001. Court of appeals held that plain language of statute indicated that limited partnership exemption applied only to properties constructed in 2002 or later and other exemption provisions required ownership by CHoDO and not by limited partnership controlled by CHoDO. Appellate court noted that CHoDO made no claim of equitable ownership that might bring it within exemption provisions outside the limited partnership section requirements. Dallas Central Appraisal District v. Mission Aire IV Ground lessees retain ownership of improvements until expiration of lease.Tenant taxpayers held ground leases at municipally owned airport. As part of such ground leases, tenants were required to construct improvements on leased ground. Leases provided that landlord municipality would become the owner of the tenants' improvements upon termination or expiration of the leases. Appraisal District sought to tax improvements to tenants, but tenants claimed that lease provisions regarding ownership at end of lease and lease restrictions governing improvements made improvements effectively under ownership of city and thus nontaxable. Court held that specific lease provision stating landlord city would become owner at expiration of lease meant ownership of improvements was held by tenants until vested in city at end of lease. Improvements were thus held taxable to the tenants as owners. DiBello v. Charlie Thomas Ford, Ltd. Motor vehicle dealer may pass inventory tax to consumer if clearly disclosed in sales contract.In December 2002, DiBello purchased a new 2003 Ford Expedition in an installment sale and included within the purchase price was a "dealer's inventory tax" in the amount of $74.77. Almost four years after purchasing the Expedition, DiBello sued Charlie Thomas Ford claiming the dealer's inventory tax charge was fraudulent because no inventory tax obligation exists for consumers and Charlie Thomas Ford was not authorized to pass this charge onto its customers. Charlie Thomas Ford filed a Motion for Summary Judgment in the trial Court and the motion was granted. DiBello appealed. The Appellate Court stated that Section 23.121 of the Property Tax Code requires a dealer to pay a yearly tax on the value of the dealer's inventory, assessed on January 1 of the following year, equivalent to one-twelfth of the dealer's total annual sales volume in the prior year. Furthermore, Section 348.005(2) of the Texas Finance Code allows a Texas motor vehicle dealer to include "any taxes" as itemized charges in the amount financed in retail sales contracts. Finally, the Texas Consumer Credit Commissioner interpreted "any taxes" to include the unit property tax value as part of the purchase price as long as the amounts bears a clear and meaningful caption such as "Dealer's Inventory Tax". Charlie Thoms Ford clearly identified the tax in the contract and the trial court's decision was affirmed. Travis Central Appraisal District v. Texas Protax-Austin, Inc. Tax consultant has no independent cause of action.Tax consultant filed declaratory judgment lawsuit against appraisal district, review board, and district's attorney alleging improper ex parte communications affecting protest process. District claimed tax consultant had no standing to pursue any claim in case. Consultant claimed standing due to representation of specific property owners and representation generally of property owners in district. Court held consultant has no independent claim of standing apart from property owners alleging specific harm. Since no property owners were joined in lawsuit, case was dismissed. City of San Antonio ex rel. City Public Service Board v. Bastrop Central Appraisal District Denial of untimely filed special appraisal application does not violate due process.City utility owned land for which it was receiving public use tax exemption. In 2003, the appraisal district learned that portions of the land had been leased to a private company for mining purposes. The appraisal district then revoked the public use exemption retroactively back to 1999. The utility then filed applications to have the property appraised as agricultural property for the years 1999 through 2002. The appraisal district denied the applications as untimely. City utility protested the denials, but the review board never scheduled a hearing on the protest. City utility sued claiming a denial of due process. The court held that the denial of the applications and subsequent failure to schedule a hearing on the protest of the denial did not constitute a lack of due process because the applications under protest were clearly untimely and therefore the appraisal district had no duty to rule on them. Perhaps what is most interesting in the opinion is an alternative argument made by the city utility and rejected by the court. The utility said that its applications should be considered timely because it had no reason to file an application seeking agricultural appraisal when it was receiving the more beneficial public use exemption. The utility claimed that, until the public use exemption was retroactively withdrawn, it had no knowledge that it should be filing for agricultural valuation. The court held that a taxpayer receiving exemption or one form of special appraisal has the burden of also timely seeking any other form of exemption for special appraisal in case the received tax advantage is subsequently withdrawn. As an example, the court pointed out that Texas A&M University receives an exemption on certain property, but also receives agricultural appraisal on that same property. The court stated: "There is no due-process violation where property owners choose not to take advantage of the opportunities available to them." Based on this ruling, property owners receiving special appraisal or exemption would be wise to determine if some other form of appraisal or exemption might apply to their property in addition to the benefit they are currently receiving. Appraisal Review Board Of Dallas Central Appraisal District v. O'Connor & Associates Tax Code provides only remedy for contesting review board order.Dissatisfied with results and conduct of review board hearings on protests, tax consultant and property owners sought writ of mandamus to force review board to hold new hearings. Court of appeals ruled that, when review board issues order on protest, only avenue for contest is through de novo appeal under Chapter 42 of Tax Code. Our law firm represents individuals and businesses nationally |
