2023 Texas Statutes › Tax Code › Title 1 - Property Tax Code › Subtitle C - Taxable Property and Exemptions › Chapter 11 - Taxable Property and Exemptions › Subchapter B. Exemptions › Section 11.251. Tangible Personal Property Exempt

Sec. 11.251.  TANGIBLE PERSONAL PROPERTY EXEMPT.  (a)  In this section, "freeport goods" means property that under Article VIII, Section 1-j, of the Texas Constitution is not taxable.
(b)  A person is entitled to an exemption from taxation by a taxing unit of the appraised value of that portion of the person's inventory or property consisting of freeport goods as determined under this section for the taxing unit.
(c)  The exemption provided by Subsection (b) is subtracted from the market value of the inventory or property determined under Section 23.12 to determine the taxable value of the inventory or property for the taxing unit.
(d)  Except as provided by Subsections (f) and (g), the chief appraiser shall determine the appraised value of freeport goods under this subsection.  The chief appraiser shall determine the percentage of the market value of inventory or property owned by the property owner in the preceding calendar year that was contributed by freeport goods.  The chief appraiser shall apply that percentage to the market value of the property owner's inventory or property for the current year to determine the appraised value of freeport goods for the current year.
(e)  In determining the market value of freeport goods that in the preceding year were assembled, manufactured, repaired, maintained, processed, or fabricated in this state or used by the person who acquired or imported the property in the repair or maintenance of aircraft operated by a certificated air carrier, the chief appraiser shall exclude the cost of equipment, machinery, or materials that entered into and became component parts of the freeport goods but were not themselves freeport goods or that were not transported outside the state before the expiration of 175 days, or, if applicable, the greater number of days adopted by the taxing unit as authorized by Subsection (l), after they were brought into this state by the property owner or acquired by the property owner in this state. For component parts held in bulk, the chief appraiser may use the average length of time a component part was held in this state by the property owner during the preceding year in determining whether the component parts were transported out of this state before the expiration of 175 days or, if applicable, the greater number of days adopted by the taxing unit as authorized by Subsection (l).
(f)  If the property owner was not engaged in transporting freeport goods out of this state for the entire preceding year, the chief appraiser shall calculate the percentage of cost described in Subsection (d) for the portion of the year in which the property owner was engaged in transporting freeport goods out of this state.
(g)  If the property owner or the chief appraiser demonstrates that the method provided by Subsection (d) significantly understates or overstates the market value of the property qualified for an exemption under Subsection (b) in the current year, the chief appraiser shall determine the market value of the freeport goods to be exempt by determining, according to the property owner's records and any other available information, the market value of those freeport goods owned by the property owner on January 1 of the current year, excluding the cost of equipment, machinery, or materials that entered into and became component parts of the freeport goods but were not themselves freeport goods or that were not transported outside the state before the expiration of 175 days, or, if applicable, the greater number of days adopted by the taxing unit as authorized by Subsection (l), after they were brought into this state by the property owner or acquired by the property owner in this state.
(h)  The chief appraiser by written notice delivered to a property owner who claims an exemption under this section may require the property owner or a person designated in writing by the importer of record to provide copies of inventory or property records in order to determine the amount and value of freeport goods.  If the property owner or designated person fails to deliver the information requested in the notice before the 31st day after the date the notice is delivered to the property owner or before the date the appraisal review board approves the appraisal records under Section 41.12, whichever is later, the property owner forfeits the right to claim or receive the exemption for that year.  If the property owner or designated person delivers the information requested in the notice before the date the appraisal review board approves the appraisal records but not before the 31st day after the date the notice is delivered to the property owner and the exemption is allowed, the property owner is liable to each taxing unit for a penalty in an amount equal to 10 percent of the difference between the amount of tax imposed by the taxing unit on the inventory or property and the amount that would otherwise have been imposed.  The chief appraiser shall make an entry on the appraisal records for the inventory or property indicating the property owner's liability for the penalty and shall deliver a written notice of imposition of the penalty, explaining the reason for its imposition, to the property owner.  The assessor for a taxing unit that taxes the inventory or property shall add the amount of the penalty to the property owner's tax bill, and the tax collector for the unit shall collect the penalty at the time and in the manner the collector collects the tax.  The amount of the penalty constitutes a lien against the inventory or property against which the penalty is imposed, as if it were a tax, and accrues penalty and interest in the same manner as a delinquent tax.
(i)  The exemption provided by Subsection (b) does not apply to a taxing unit that takes action to tax the property under Article VIII, Section 1-j, Subsection (b), of the Texas Constitution.
(j)  Petroleum products as set forth in Article VIII, Section 1-j, of the Texas Constitution shall mean liquid and gaseous materials that are the immediate derivatives of the refining of oil or natural gas.
(k)  Property that meets the requirements of Article VIII, Sections 1-j(a)(1) and (2), of the Texas Constitution and that is transported outside of this state not later than 175 days, or, if applicable, the greater number of days adopted by the taxing unit as authorized by Subsection (l), after the date the person who owns it on January 1 acquired it or imported it into this state is freeport goods regardless of whether the person who owns it on January 1 is the person who transports it outside of this state.
(l)  The governing body of a taxing unit, in the manner provided by law for official action, may extend the date by which freeport goods that are aircraft parts must be transported outside the state to a date not later than the 730th day after the date the person acquired or imported the property in this state.  An extension adopted by official action under this subsection applies only to the exemption from ad valorem taxation by the taxing unit adopting the extension and applies to:
(1)  the tax year:
(A)  in which the extension is adopted if officially adopted before June 1 of a tax year; or
(B)  immediately following the tax year in which the extension is adopted if officially adopted on or after June 1 of a tax year; and
(2)  each tax year following the year of adoption of the extension.
Added by Acts 1989, 71st Leg., ch. 534, Sec. 1.  Amended by Acts 1991, 72nd Leg., ch. 504, Sec. 1, eff. June 13, 1991;  Acts 1993, 73rd Leg., ch. 779, Sec. 1, eff. Jan. 1, 1994;  Acts 2001, 77th Leg., ch. 125, Sec. 1, eff. Sept. 1, 2001.
Amended by:
Acts 2013, 83rd Leg., R.S., Ch. 1402 (H.B. 3121), Sec. 1, eff. January 1, 2014.