Opinion ID: 6109716
Heading Depth: 4
Heading Rank: 2

Heading: 42b Property Tax Code Overview

Text: We turn then to the broader scheme of the Property Tax Code to ensure that this interpretation is consistent with the structure of the Code and to address due process concerns. Sebastian argues that allowing an appraisal district to shift tax liability by making corrections under section 25.25(b) violates due process because section 25.25(b) does not require a hearing. While the statute does not contemplate a hearing for corrections under section 25.25(b) as it does for corrections under section 25.25(c) and (d), we note at the outset that the Property Tax Code's protest scheme may allow for a hearing to challenge such a correction. See TEX. TAX CODE § 41.41(a)(9) (providing that a taxpayer has a right to protest to the ARB an action of the chief appraiser ... that applies to and adversely affects the property owner). In this case, WCAD's chief appraiser's letter notifying Sebastian of the correction under section 25.25(b) advised Sebastian that it had thirty days to protest the action to the WCARB. Sebastian filed a protest and was afforded a hearing before the WCARB. Therefore, we reject the suggestion that Sebastian was denied due process in this case. See Sondock v. Harris Cty. Appraisal Dist. , 231 S.W.3d 65 , 70 (Tex. App.-Houston [14th Dist.] 2007, no pet.) ([D]ue process simply affords a right to be heard before final assessment; it does not detail the review mechanism.) (quoting ABT Galveston Ltd. v. Galveston Cent. Appraisal Dist. , 137 S.W.3d 146 , 155 (Tex. App.-Houston [1st Dist.] 2004, no pet.) ). The court of appeals noted that when a taxpayer's individual liability may be increased, the taxpayer has detailed due process rights to notice, a protest, and a hearing. 492 S.W.3d at 834 . We agree that when a taxpayer's liability is in fact increased, the taxpayer's due process rights are implicated. McKesson Corp. v. Div. of Alcoholic Beverages & Tobacco, Dep't of Bus. Regulation of Fla. , 496 U.S. 18 , 36, 110 S.Ct. 2238 , 110 L.Ed.2d 17 (1990) (Because exaction of a tax constitutes a deprivation of property, the State must provide procedural safeguards against unlawful exactions in order to satisfy the commands of the Due Process Clause.). Therefore, we consider section 25.25's role within the Property Tax Code to determine how a correction as to a determination of ownership affects tax liability. In analyzing the Property Tax Code as a whole, we begin by observing that property taxes, by definition, are tied to land or personal property, unlike other types of taxes, which may be tied to a person or entity. Compare TEX. CONST. art. VIII, § 1 (b) (All real property and tangible personal property in this State ... shall be taxed in proportion to its value.) with id. art. VIII, § 24(b) (limiting the Legislature's authority to impose a tax on the net incomes of natural persons). Property tax liability, therefore, derives from ownership of property. See TEX. TAX CODE § 32.07. A person who owns property is generally liable for property taxes assessed on that property, and a person who does not own property generally has no property tax liability. See  Green Tree Servicing, LLC v. Travis Cty. , No. 03-10-00709-CV, 2011 WL 3890408 at  (Tex. App.-Austin 2011, no pet.) (mem. op.) (holding that a party presenting prima facie proof that it did not own the [property] at issue ... set up a meritorious defense to its liability for the taxes assessed). Thus, as explained below, we discern an important principle evident in the Property Tax Code that informs our analysis-a property owner's tax liability exists by virtue of ownership, independent of the appraisal roll or tax bill. A property tax, or ad valorem tax, is a tax on property at a certain rate based on the property's value. Tex. Mun. League Intergovernmental Risk Pool v. Tex. Workers' Comp. Comm'n , 74 S.W.3d 377 , 387 (Tex. 2002). The Texas Constitution provides that [a]ll real property and tangible personal property in this State is subject to such a tax unless exempt as required or permitted by [the] Constitution. TEX. CONST. art. VIII, § 1 (b). The Property Tax Code is thus founded on the notion that [a]ll real and tangible personal property that this state has jurisdiction to tax is taxable unless exempt by law. TEX. TAX CODE § 11.01(a). This Court has long recognized that property taxes are tied to the property rather than to an individual. See, e.g. , State v. Wynne , 134 Tex. 455 , 133 S.W.2d 951 , 956 (1939) (comparing property taxes and excise taxes, stating: If the tax is directly on property itself, the tax is a property tax.). In fact, the Property Tax Code provides that on January 1, the day that property ownership gives rise to property tax liability, a tax lien in favor of each applicable taxing unit automatically attaches to all taxable property to secure the payment of all taxes, penalties, and interest ultimately imposed for the year on the property. TEX. TAX CODE § 32.01(a) ; see § 32.07(a) ([P]roperty taxes are the personal obligation of the person who owns or acquires the property on January 1 of the year for which the tax is imposed.). If property taxes are not paid by the owner or by another person authorized by the owner, the taxing unit may secure payment by legal action, including foreclosure on the lien, seizure and sale of personal property to satisfy the bill, or a suit to enforce personal liability for taxes. Id. §§ 33.21, .25, .41, .53; see also § 32.06 (allowing a property owner to authorize another to pay property taxes on its real property); Cent. Appraisal Dist. of Taylor Cty. v. Dixie-Rose Jewels, Inc. , 894 S.W.2d 841 , 842 (Tex. App.-Eastland 1995, no pet.) (discussing the priority of a tax lien on personal property over other encumbrances). Moreover, the Property Tax Code is clear that the person who owns the property on January 1 is responsible for the tax liability attached to the property. [P]roperty taxes are the personal obligation of the person who owns or acquires the property on January 1 of the year for which the tax is imposed. TEX. TAX CODE § 32.07(a). This is true regardless of whether that person's name is listed on the appraisal roll or tax bill. See id. § 31.01(a), (g); cf. Atlantic. Shippers of Tex., Inc. v. Jefferson Cty. , 363 S.W.3d 276 , 285 (Tex. App.-Beaumont 2012, no pet.) (holding that the appraisal district's failure to correct the appraisal roll under section 25.25(c) had no effect on the delinquency date of the tax). Taxing units mail the tax bill to the person in whose name the property is listed on the tax roll, but failure to send or receive the tax bill ... does not affect the validity of the tax, penalty, or interest, the due date, the existence of a tax lien, or any procedure instituted to collect a tax. TEX. TAX CODE § 31.01(a), (g). Similarly, failure to receive notice of appraised value as required by the Property Tax Code does not affect the  property owner's obligation to pay the tax based on that appraised value. Id. § 25.19(d). And [a] mistake in the name or address of an owner does not affect the validity of the appraisal records, of any appraisal or tax roll based on them, or of the tax imposed. Id. § 25.02(b). Taxes are due upon receipt of the tax bill, but delinquency is not dependent on such receipt. Rather, taxes are delinquent if not paid before February 1 of the year following the year in which imposed. Id. § 31.02(a). Delinquent taxes incur penalties and accrue interest regardless of the reason for delinquency. Id. § 33.01. But see id. § 33.011(a)(1) (providing that a taxing unit shall waive penalties and interest if the taxing unit or appraisal district caused or resulted in the taxpayer's failure to pay the tax before delinquency and the tax is paid within twenty-one days of the date the taxpayer knows or should know of the delinquency). Thus, a property owner should make sure that the appraisal district records accurately reflect the owner's name, address, and property. In the case of tangible personal property, when a property owner files its rendition, the owner ensures that the appraisal district has its name, address, and opinion of the property's value on file. See id. § 22.01(a) (requiring a rendition of all tangible personal property used for the production of income that the person owns, which must include the name and address of the property owner). When a property owner does not ensure that the appraisal district records correctly lists its name, address, and property, inaccuracies on the appraisal roll and tax roll may result. Such inaccuracies do not relieve the property owner of its tax liability; rather, under the Property Tax Code, the property owner is liable for the taxes on property it owns, even if it does not receive a tax bill or if the tax bill goes to another who is incorrectly listed as the owner. In other words, ownership gives rise to tax liability, and the appraisal roll and tax roll merely reflect such ownership-they do not establish ownership or create tax liability. 8 Turning our attention back to section 25.25 and the Property Tax Code's provisions allowing corrections of appraisal rolls to reflect ownership, of course we do not read the restrictive language in section 25.25(b) as having no meaning. See TIC Energy & Chem., Inc. v. Martin , 498 S.W.3d 68 , 74 (Tex. 2016) ([W]e consider the statute as a whole, giving effect to each provision so that none is rendered meaningless or mere surplusage.). However, we disagree with Sebastian's contention that does not increase the amount of tax liability means does not increase the amount of anyone's tax bill. Under the Property Tax Code, the actual property owner bears personal responsibility for paying taxes on property it owns, and tax liability exists even if an error in the appraisal roll or tax roll results in the property owner not receiving a tax bill. Consistent with our analysis of the Property Tax Code, we read the restriction against increasing the amount of tax liability as  referring to an increase in the appraised value of that property that would increase the corresponding tax liability attached to the property. 9 A correction under section 25.25 as to the appraisal roll's reflection of property ownership will certainly affect the taxing units' expectation of who will pay the tax bill, but it does not increase, or even affect, the tax liability for that property. See TEX. TAX CODE §§ 25.02, 31.01, 31.02, 32.07. And, in fact, the Taxing Authorities are not permitted under section 25.25 to increase the value at which property had been appraised after the appraisal roll has been certified. MAG-T, L.P. , 161 S.W.3d at 627 . Property taxes are tied to property, and property-tax liability arises out of actual property ownership, not the appraisal roll and tax roll reflection of ownership, which may be inaccurate when a property owner has not ensured that the appraisal district records accurately list its name and address. Simply put, tax liability exists independently of the appraisal roll or tax bill. In this case, WCAD ultimately determined that Sebastian, not DeBruce, was the owner of the personal property at issue based on the NGFA rules incorporated into the sales contracts. Both the WCARB and the district court agreed. The chief appraiser's correction under section 25.25(b) did not change the value of the grain; it merely attributed ownership of that same-valued grain back to Sebastian. That correction, of course, resulted in the taxing units' expectation that Sebastian, and not DeBruce, would pay the taxes due on the grain. And it likely meant that DeBruce was entitled to a refund of the property taxes it paid under protest, pending resolution of its challenge to the section 25.25(c) ownership change. See TEX. TAX CODE § 31.071 (providing for conditional payment before delinquency date for property taxes under protest or challenge, and for refund of taxes not owed at the conclusion of protest). But under the Property Tax Code, WCAD's correction had no effect on tax liability-if Sebastian was indeed the owner on January 1, Sebastian was liable for property taxes regardless of whose name appeared on the appraisal roll or the tax bill. Therefore, we hold that WCAD acted within its authority to correct the ownership of grain under section 25.25(b). 10 We reverse the court of appeals' holding on this issue. This, of course, implicates the issue of who actually owned the property on January 1, 2009 and is liable for the property taxes on the grain. Sebastian argues that DeBruce owned the grain and is therefore liable for the taxes. 11 Its primary  argument on this issue is that DeBruce paid storage fees on the grain and would not have done so if it did not own the grain. DeBruce, who is not a party to this proceeding, indicated to WCAD that the NGFA rules, incorporated into the sales contracts, dictate that title did not pass until shipment, meaning that Sebastian had title on January 1, the date for determining tax liability. The district court based its factual finding that Sebastian owned the grain on those rules. Sebastian counters that title is not the same as ownership, and even if DeBruce did not hold legal title to the grain, it held equitable title. Generally, equitable title has been considered sufficient to establish ownership for property tax purposes. See AHF-Arbors at Huntsville I, LLC v. Walker Cty. Appraisal Dist. , 410 S.W.3d 831 , 837, 839 (Tex. 2012) (defining equitable title as the present right to compel legal title and holding that it is sufficient to establish ownership for the purpose of exemptions under the Property Tax Code); Travis Cent. Appraisal Dist. v. Signature Flight Support Corp. , 140 S.W.3d 833 , 840 (Tex. App.-Austin 2004, no pet.) (listing Texas appellate court cases that suggest that a person holding equitable title to property may be the owner for taxation purposes). The court of appeals did not reach the issue of ownership, which raises both factual and legal questions, 12 because its holding on the construction of section 25.25(b) was dispositive. Therefore, we remand the case to that court for further consideration of this issue.