| "Collecting more taxes than is necessary
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| | Texas BPP taxes.
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| is legalized robbery." These words of
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| | Preparing A Summary For Your Hearing
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| wisdom, spoken by the 13th president of
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| | The appraisal district would prefer to
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| the United States, Calvin Coolidge, still
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| | see a fixed asset listing, which includes
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| ring true in today's society for
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| | the original cost and date of acquisition
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| homeowners and business owners. Robbery
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| | for every asset purchased. However, a
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| may seem like a harsh word, but what
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| | fixed asset listing is not required. This
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| would you say if someone tried to sell
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| | is good news for small businesses that do
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| you one-year-old motel sheets for 90% of
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| | not maintain a fixed asset listing.
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| the original cost? Based on the appraisal
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| | Unequal appraisal
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| district's depreciation schedule, this is
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| | Assessed values for BPP accounts often
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| a fair deal.
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| | range from ten-times to fifty-times on a
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| Most people would not consider this a
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| | per square foot basis for companies in
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| fair deal and either reject the offer or
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| | the same industry. For example, real
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| request a lower price. This should be the
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| | estate brokerage offices, which have
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| same thought process when the appraisal
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| | 10,000 square feet of office space, may
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| district overassesses your business
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| | have assessments ranging from
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| personal property (BPP). Texas law
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| | $10,000-$500,000. It seems unlikely that
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| requires business owners to report BPP,
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| | the computers and furniture in one
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| personal property used for the production
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| | brokerage office are 50 times as valuable
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| of income, to the appraisal district for
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| | as those in a competitor's firm on a per
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| assessment and taxation. Although there
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| | square foot basis.
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| are no criminal penalties for not
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| | Appraisal districts tend to accept the
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| complying with the law, there is a
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| | assessed value rendered by property
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| penalty of 10% of the taxes. For example,
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| | owners. Many large companies render using
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| if you have a BPP account assessed for
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| | fixed asset listings. Appraisal districts
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| $100,000, your annual BPP taxes are
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| | use the cost basis information and the
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| $3,000, based on a 3% tax rate. The 10%
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| | Comptroller's schedule to calculate the
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| penalty for this BPP account would be
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| | "market value" for property. The
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| $300 ($3,000 times 10% equals $300).
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| | valuations for these rendered accounts
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| The huge range of assessed value for
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| | tend to grossly distort the actual value
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| business personal property (BPP) makes
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| | of these properties. Property owners who
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| obtaining substantial property tax
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| | do not render have values on the lower
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| reductions highly probable. It is not
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| | end of the range of value. While it seems
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| unusual for the range of assessed value
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| | intuitive that appraisal districts would
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| for BPP accounts for similar properties
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| | penalize owners who do not render by
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| to vary by 5,000%! For example, furniture
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| | sharply increasing their assessed values,
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| and computers for companies within the
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| | the practice is the opposite. Appraisal
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| same office building sometimes vary from
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| | districts tend to reward property owners
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| $1 to $50 per square foot. Market value
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| | who do not render by leaving their
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| and unequal appraisal are two options for
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| | assessed values at modest levels. This
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| appealing BPP assessments. Given the
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| | creates a disincentive to render. It also
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| inequity in BPP assessments and the
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| | unequally taxes property owners who
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| subjectivity of valuing BPP, property
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| | render with a fixed asset listing. These
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| owners have a high probability of success
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| | factors have caused a high degree of
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| when properly prepared for a BPP
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| | dispersion in BPP assessed values.
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| assessment appeal. Protest both market
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| | How To Appeal On Unequal Appraisal
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| value and unequal appraisal.
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| | Contrary to popular belief, it is
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| How to appeal?
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| | possible to appeal BPP utilizing unequal
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| To appeal your BPP, you can either use
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| | appraisal, a concept that is fairly new.
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| the Comptroller's form, or send a letter
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| | Most property tax consultants and large
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| to the appraisal review board (ARB) on or
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| | property owners have not considered or
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| before May 31st of each year. The protest
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| | utilized unequal appraisal regarding BPP.
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| letter to the ARB should identify the
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| | Appraisal districts are resistant to the
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| property and the reason for your protest
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| | concept of appealing BPP based on unequal
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| (section 41.44d of the Texas Property Tax
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| | appraisal. (It is inappropriate to tax
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| Code).
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| | property owners who render using a fixed
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| Tips:
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| | asset listing at the highest level, based
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| · Since the appraisal district's staff
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| | on utilizing the Comptroller schedule,
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| tends to become more motivated to resolve
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| | when allowing property owners who do not
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| appeals later in the season versus
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| | render very lean levels of assessment.)
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| earlier in the season, it is better to
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| | Preparing an appeal based on unequal
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| appeal or protest on May 31st or shortly
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| | appraisal for BPP is simple and
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| before the deadline date.
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| | straightforward. Start by obtaining
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| · Even if you do not receive a notice of
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| | information on the assessed value, and
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| assessed value for your BPP account, it
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| | amount of office space/manufacturing or
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| is still important to send a written
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| | warehouse space for property owners
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| notice of appeal or protest. The
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| | similar to the subject property owner.
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| appraisal district does not have to send
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| | This is typically done by using companies
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| a notice of your assessed value if the
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| | with the same Standard Industrial Code
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| value does not change by more than
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| | (SIC) as the subject property owner. You
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| $1,000. If the notice of assessed value
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| | can obtain this information by sending an
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| gets lost in the mail, and you do not
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| | open records request to the appraisal
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| send a protest notice, you lose your
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| | district. When appealing, research the
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| right to appeal for the current year.
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| | assessed value for your competitors.
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| When sending a notice of appeal to the
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| | Compile data regarding the assessed value
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| ARB, also send the appraisal district a
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| | and building area for the subject and
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| House Bill 201 request. House Bill 201
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| | comparable accounts into a summary:
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| refers to section 41.461 of the Texas
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| | When should you appeal?
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| Property Tax Code that allows property
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| | Appeal annually on market value and
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| owners to obtain a copy of any evidence
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| | unequal appraisal. To effectively appeal
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| the appraisal district plans to use at
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| | on these two options, research unequal
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| the ARB hearing 14 days before the
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| | appraisal based on assessment comparables
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| hearing. This request prohibits the
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| | on the appraisal district's web site and
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| appraisal district from using any
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| | evaluate the market value of your BPP.
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| information that was not provided to the
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| | After reviewing both the unequal
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| property owner 14 days before the ARB
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| | appraisal and market value options,
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| hearing.
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| | determine your primary focus for
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| Market Value, Book Value & Comptroller
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| | appealing your BPP account. If neither
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| Schedule
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| | market value nor unequal appraisal
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| Three popular options for describing
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| | provides a basis for appealing your
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| value for BPP are: market value, book
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| | property taxes, you can withdraw the
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| value, and the Comptroller's schedule.
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| | notice of protest or just skip the
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| Market value is defined in section
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| | hearing.
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| 1.04(7) of the Texas Property Tax Code
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| | Tips for your hearing (Informal & ARB)
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| that reads as follows:
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| | Informal hearing
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| "Market value" means the price at which a
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| | · First meet with the appraiser and
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| property would transfer for cash or its
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| | politely explain the basis for your
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| equivalent under prevailing market
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| | adjustment. Give the appraiser a copy of
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| conditions if:
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| | your evidence and explain it in a
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| (a) exposed for sale in the open market
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| | methodical way.
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| with a reasonable time for the seller to
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| | · The appraiser will review your
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| find a purchaser,
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| | information and the information he/she
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| (b) Both the seller and the purchaser
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| | has available, and will then likely make
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| know of all the uses and purposes to
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| | an offer to settle. Consider the
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| which the property is adapted and for
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| | appraiser's offer and explain why your
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| which it is capable of being used and of
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| | evidence is better than his/her evidence,
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| the enforceable restrictions on its use,
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| | and again request your value or a value
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| and
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| | between your value and his/her value.
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| (c) Both the seller and the purchaser
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| | · You will quickly learn the lowest
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| seek to maximize their gains and neither
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| | value the appraiser is willing to accept.
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| is in a position to take advantage of the
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| | At this point, you need to either agree
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| exigencies of the other.
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| | to that value or proceed to the Appraisal
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| Let's compare the differences in value
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| | Review Board (ARB) hearing.
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| resulting from using market value, book
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| | · If you settle the appeal at the
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| value and the Comptroller's schedule. The
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| | informal level, you will not be able to
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| BPP for a typical motel room includes
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| | pursue an ARB hearing or a judicial
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| items such as bedding, linens, window
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| | appeal. However, it does resolve the
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| air-conditioning unit, towels and a
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| | issue in a timely manner.
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| television. Based on market value, after
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| | ARB hearing
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| one year, these types of items could
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| | · Introduction of the two parties at the
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| probably only be sold for 10% to 30% of
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| | hearing
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| the original cost. Book value, based on
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| | · Explanation of the hearing process
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| federal depreciation schedules, indicates
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| | · Property description (address any
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| a value of 80% of the purchase price
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| | errors in the description of your
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| after one year. The Texas Comptroller's
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| | property after the appraiser's
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| schedule for BPP for motels has an
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| | description of your property)
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| eight-year life with 10% depreciation for
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| | · Property owner presentation
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| the first seven years. Hence, the
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| | · Questions from the ARB panel members
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| Comptroller schedule indicates one-year
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| | · Appraisal district presentation
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| old hotel furnishings are worth 90% of
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| | · Rebuttal and closing evidence from the
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| their original purchase price. This is
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| | property owner
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| clearly inconsistent with market value
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| | · ARB announces its decision
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| for these items.
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| | Summary Points
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| Inventory
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| | · Annual appeals will minimize your BPP
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| There are a number of controversial
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| | property taxes.
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| issues related to how inventory is
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| | · There are huge differences between the
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| assessed. These include shrinkage,
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| | market value estimated by the
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| damage, functional obsolescence and
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| | Comptroller's schedule and actual market
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| economic obsolescence. For example, what
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| | value.
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| is the market value of merchandise
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| | · Based on excessive assessments for BPP
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| returned during the week after Christmas
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| | for companies who render using a fixed
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| on January 1st (the effective date for
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| | asset listing, a low percentage of
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| valuation)? Since returned merchandise
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| | property owners who render and the low
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| has usually been opened, damaged, missing
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| | assessed values for property owners who
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| parts or may be an unpopular item, it is
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| | do not render, there are rich
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| worth less than cost in many cases.
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| | opportunities for appealing BPP by using
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| Market value is relevant in determining
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| | unequal appraisal.
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| the assessed value for inventory for
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