Businesses Required to Render Taxable Personal Property

The Texas Property Tax Code now requires that property owners render all tangible personal property used for the production of income in Texas. The rendition must identify, describe and provide the location of all taxable property as of January 1.

The rendition must be filed using a form approved by the State Comptroller and must be filed by April 15, unless an extension is allowed. Penalties have been created to enforce the rendition requirement, with a penalty applied if the rendition is not filed, filed late, or false.

The following is a brief summary of some of the key points relating to the new rendition requirement.

Mandatory Forms

The rendition law provides the State Comptroller the ability to mandate the use of specific forms for the rendition of property. While in previous years, the Comptroller has issued model forms that a taxpayer could choose to use or not use (as long as they provided sufficient information for rendition), the Comptroller has now decided to mandate the use of the Comptroller's forms or another form specifically approved by the Comptroller.

Several appraisal districts have issued their own rendition forms, in some cases mailing these forms to taxpayers with instruction to complete and return as part of their rendition. However, in some cases, these forms have not been approved by the Comptroller. While an appraisal district might decide to accept a rendition filed on its own unapproved form, any such rendition would be in technical violation of the rendition requirement and the Comptroller's mandate.

Furthermore, a rendition filed in one appraisal district using another appraisal district's unapproved form runs the risk of being rejected as not in compliance with the statute. Thus, a taxpayer might timely provide all necessary information and still find itself penalized for the erroneous filing.

To avoid any confusion as to whether a form does or does not comply with the rendition statute, GPD recommends that all taxpayers utilize the Comptroller's form or a form for which the taxpayer has obtained specific approval from the Comptroller's office.

Penalties

The new rendition law imposes two categories of penalties.

If a rendition is filed late or not filed at all, then the taxpayer is to be assessed a penalty of 10 percent of the taxes assessed on its property. Also, if a rendition is filed that does not include the required information or if the taxpayer fails to provide additional information to support an opinion of value included in a rendition, then the taxpayer could suffer the 10 percent penalty.

A penalty of 50 percent of the taxes assessed is imposed either if the taxpayer files a false rendition with the intent to commit fraud or evade taxes or if the taxpayer destroys or alters records in connection with rendition proceedings. A claim for the 50 percent penalty must be brought by the county or district attorney and determined by a court before the chief appraiser may impose the penalty.

A chief appraiser has the ability to waive a penalty if it is determined that the property owner exercised reasonable diligence or has substantially complied with the rendition requirements. Such a waiver must be requested in writing by the taxpayer within 30 days of notification of the penalty. The failure of the chief appraiser to waive the penalty may be protested to the appraisal review board.

Deadline

The taxpayer must file its personal property rendition by April 15, unless an extension of time to file is requested in writing on or before that date. Upon the filing of a request for extension, the chief appraiser is required to extend the filing date to May 15.

A taxpayer might obtain a second extension upon the showing of good cause to the chief appraiser. If the chief appraiser determines that good cause exists for further delay, then he may extend the filing deadline another 15 days.

The appraisal district cannot send a notice of value for business personal property until the deadline for the filing of a rendition occurs. Thus, in cases where an extension or two extensions have been granted, the taxpayer might not receive its value notice until late May or even June.

Requirement of Rendition

The rendition statute provides that the following information must be provided by the taxpayer in rendering its business personal property:

1. the property owners name and address;
2. a general property description by type or category;
3. if inventory, a description and general estimate of quantity;
4. the propertys physical location or taxable situs; and
5. the owners good faith estimate of the propertys market value or, at the owners option, the historical cost when new and the year of the propertys acquisition.

Any additional information requested on an approved rendition form (or any additional information requested by an appraisal district's unapproved form) is optional; and the taxpayer can choose to provide the information or not.

Small businesses having taxable personal property with an aggregate value of less than $20,000 need only render the owners name and address, a general property description by type or category, and the propertys physical location or taxable situs. A special section for such renditions is included in the Comptroller's form.

Who Must Render?

Every property owner who owns tangible personal property used for the production of income in Texas must render their property. There are no exceptions for small business (though the information included on the rendition might differ if all the property has a value of less than $20,000) or a particular type of business.

While some property, such as special inventory (motor vehicles, heavy equipment, etc. held for retail sale) might be subject to a different form of rendition, the new rendition law appears to establish one fact. If it is taxable business personal property, it must be rendered.

For more information on the new rendition law, see The New Rendition Law: What It Really Means.

If you have any questions about the contents of this article, please contact Dan Donovan, David Kaplan, or Ron Gray or contact the GPD Property Tax Section at propertytax@gpd.com.