EXLP Leasing, LLC, et al v. Webb Cnty. Appraisal Dist., No. 04-14-00343-CV, 2015 Tex. App. LEXIS 5594 (Tex. App.—San Antonio June 3, 2015, pet. denied)
EXLP Leasing LLC and EES Leasing LLC (collectively, “EXLP”) lease compressors to oil and gas operators for use in the extraction of oil and natural gas. The compressor packages at issue in this case were rented by EXLP from EXLP’s business facility in Victoria County to companies that utilized the compressors Webb County on January 1, 2012. In 2011, the legislature amended sections of the Property Tax Code dealing with the valuation of heavy equipment inventory. Whereas previously only dealers who held heavy equipment inventory for sale, or for lease with a purchase option, were entitled to calculation of the market value of their property based on sales for the previous year divided by twelve, after the amendments dealers who held heavy equipment inventory for lease without a purchase option were also entitled to calculation of the market value of their property based on lease payments for the previous year divided by twelve. Based on the amendments to the Tax Code, EXLP calculated the market value of the compressors based on the prior year’s lease payments and rendered them in Victoria County, the location of its business facility. EXLP did not render the property in Webb County. The appraisal district in Webb County declared the compressors operating there as of January 1 to be taxable business personal property. After an unsuccessful administrative protest, EXLP filed suit in district court. The United Independent School District (“United ISD”) intervened in the suit and filed a motion to dismiss on the basis that EXLP did not comply with the tax payment requirements of Texas Property Tax Code § 42.08(b). The trial court granted the motion to dismiss, and EXLP appealed.
Section 42.08(b) requires that a property owner suing in district court pay the lesser of the amount of taxes not in dispute, the amount due, or the amount of taxes imposed in the preceding year. Here, EXLP challenged the ability of Webb County to tax the compressors at all, so the amount of taxes not in dispute was zero and was the lowest of the three benchmarks. The appellees contended that Section 42.08(b) requires that a property owner pay some amount more than zero in order to maintain their lawsuit. The court of appeals agreed with EXLP, holding that where the amount of taxes not in dispute is zero, the taxpayer is not required to pay anything to maintain its lawsuit. While EXLP failed to make a statement in writing to the court of the amount it intended to pay, the court of appeals held that under an amendment to Section 42.08(b-1) that failure did not constitute a jurisdictional error. Accordingly, the court of appeals reversed the trial court’s decision and remanded for further proceedings.