Property tax laws and the Property Tax Code apply to all jurisdictions in Texas (counties, cities, school districts, and special districts) which levy taxes. Utility districts fall under the category of special districts. All such jurisdictions are referred to as “taxing units”. The Texas Constitution contains six principles that are basic to the property tax system:
– Taxes must be equal and uniform. Appraisers must value similar properties in the same way, and taxing units must tax in a uniform manner. No single property or type of property should pay more than its fair share of taxes.
– Property must be taxed on the basis of its market value unless the property qualifies for any special-use appraisal.
– All property is taxable unless federal law or the state constitution provides an exemption for it.
– Appraisers may not appraise property above its market value.
– All property within a county must receive a single appraisal for property tax purposes.
– There must be a single Appraisal Review Board for each appraisal district.
– Civil statutes are the laws passed by the legislature that bind appraisal districts, taxing units and taxpayers in all
property tax matters.
– The Property Tax Code is the organized collection of state statutes passed by the legislature. The Code is the
primary source of law regarding operation of the Texas property tax system.
Property Tax Administration
Appraisal districts are established in each county and are responsible for appraising property for ad valorem tax purposes. Appraisal districts appraise property for all taxing units in the appraisal district. Each appraisal district is governed by a board of directors elected by participating taxing units. This board establishes an appraisal office. Appraisal districts are most frequently referred to as “CADs” or county appraisal districts. Chief appraisers are the chief administrators of the appraisal office and are appointed by the appraisal district board of directors.
The appraisal district is the only agency which may assign a value, grant or deny an exemption, and determine ownership. It is also the only agency which may correct errors relating to any of the information certified to the taxing units. All taxing units within an appraisal district receive certified data, which eventually result in tax rolls and tax statements for taxing units.
APPRAISAL REVIEW BOARDS
Each appraisal district board of directors appoints an appraisal review board or ARB. The ARB reviews appraisal records for completeness and correctness, makes corrections, and approves the records to create the district’s appraisal roll. It also hears protests from property owners and challenges from taxing units.
Counties, school districts, incorporated municipalities (cities), and special districts (municipal utility and junior college districts) may be taxing units. Taxing unit governing bodies (city councils, county commissioners courts, school boards and boards of directors) are responsible for approving each taxing unit’s budget, adopting tax rates, levying and collecting taxes, and spending those taxes to provide services and pay the unit’s debts.
ASSESSORS AND COLLECTORS
Counties have elected assessor-collectors who are responsible for assessing and collecting taxes for the county, and sometimes for other taxing units. Other taxing units may also appoint their own assessors and collectors. The assessment process involves determining taxable values for properties, calculating taxes, preparing tax rolls, and generating tax bills. Collections activities involve collecting and accounting for current and delinquent taxes.
BOARD OF TAX PROFESSIONAL EXAMINERS
The Board of Tax Professional Examiners (BTPE) is responsible for certifying Texas tax professionals: appraisers, assessors, and collectors.
Phases of the Tax Year
APPRAISAL PHASE (January 1 through May 15)
In most appraisal districts, property appraisal, record keeping, and maintenance of a set of property maps are year-round jobs. The chief appraiser values all taxable property in an appraisal district according to its value on January 1 of each year. Between January 1 and April 15 property owners submit property renditions. Taxpayers apply for applicable exemptions and special appraisals between January 1 and midnight April 30.
During the appraisal phase, the chief appraiser must notify taxpayers of any proposed changes to their property records and send a notice of appraised value. Taxpayers may protest the accuracy of their property appraisals and records. On May 15 or as soon afterward as possible, the chief appraiser presents the appraisal records to the Appraisal Review Board.
EQUALIZATION AND REVIEW PHASE (May 15 through July 20)
The ARB usually reviews the appraisal records and hears taxing unit challenges and taxpayer protests in June and July. In most cases, protests must be filed before June 1. Every taxpayer has the right to appear before the ARB to discuss such things as property ownership, situs, use, exemptions, and property value. The taxpayer must first file a protest with the ARB in order to have a hearing. The ARB will decide the matter in a public meeting and will order a “change” or a ‘no change”. Taxpayers may appeal ARB decisions in district court.
By July 20, the ARB finishes the review and approves the appraisal records, making them the appraisal roll. The chief appraiser certifies an appraisal roll to each taxing unit. Any additional, or supplemental records the chief appraiser prepares following certification must also receive ARB review. These supplemental records become part of the appraisal roll when the ARB approves them.
ASSESSMENT PHASE (July 25 through October 1)
The assessor receives the certified appraisal roll from the chief appraiser and presents it to the governing body. Information on the roll will help the taxing unit determine its budget and adopt a tax rate. The assessor or an employee of the taxing unit calculates the effective tax rate and rollback tax rate soon after the unit receives the roll, and the taxing unit publishes the rates along with other financial information.
Taxpayers have a right to see complete information about tax rates, tax levies, and debt obligations of taxing units. They also have a right to attend open meetings where governing bodies consider budgets and financial matters. The effective tax rate calculation, the notice of a hearing to increase taxes and the notice of the vote on a tax increase are normally published in a local newspaper. Taxpayers may attend these public hearings to express their views on proposed tax rates. Taxpayers should look for notices and announcements in the newspaper during the summer and fall.
Each year the governing body adopts a tax rate that will generate revenue sufficient to fund the budget. The assessor then calculates the tax due for each property by multiplying the taxable value times the adopted tax rate and further dividing by 100 (in Texas, property taxes are based on a tax rate which is expressed as “per hundred dollars of value”). Taxing units often have difficulty adopting a tax rate in early September. If the governing body must delay rate adoption, the delay pushes the assessment and collections activities to later dates. Assessors generally mail tax statements (tax bills) around October 1, though statements may be mailed earlier if everything is ready to go, but it could be later if circumstances delay the rate adoption process.
COLLECTIONS PHASE (October 1 – throughout the year)
A tax is due as soon as the taxpayer receives the bill, and any unpaid tax usually becomes delinquent on February 1 of the next year. If a taxing unit mails a bill after January 10, that tax will be delinquent on the first day of the next month that will provide a period of at least 21 days for payment. In other words, if the taxing unit mails bills on January 11, taxes become delinquent on March 1. Throughout the year the collections staff mails notices to delinquent taxpayers and takes legal action to secure payment of overdue taxes, penalties, and interest.