Property Tax Abatement

Disclaimer:

This information should not be construed as, and is not a substitute for, legal advice.

Taxpayers and taxing units are urged to consult the Attorney General’s Economic Development Handbook and their own legal counsel for any questions or interpretations of economic development laws.

Tax Programs/Incentives

2006 Biennial Reports

December 2006


Introduction

On September 1, 1997, the Comptroller assumed responsibility for the state's Central Registry of Reinvestment Zones and Ad Valorem Tax Abatement Agreements. House Bill 1526—enacted by the 75th Legislature in 1997—moved the registry to the Comptroller’s office from the Texas Department of Economic Development (formerly, Texas Department of Commerce).

Each taxing unit that designates a reinvestment zone or executes a tax abatement agreement must notify the Comptroller’s office each year, before July 1 of the year following the year in which the zone is designated or the agreement is executed.

The taxing unit notification must contain three primary elements. First, for a reinvestment zone, the taxing unit must provide a general description of the zone, including its size, the types of property located in it, its duration, and the guidelines and criteria established for the reinvestment zone under Tax Code Section 312.002. The taxing unit also must send any subsequent amendments and modifications of the guidelines or criteria to the Comptroller’s office.

Second, the taxing unit must provide a copy of each tax abatement agreement to which it is a party. Third, the unit must send any other information required by the Comptroller’s office to fulfill its statutory responsibilities.

On June 11, 2001, the Comptroller was charged with the responsibility of establishing the state's Central Registry of Tax Increment Reinvestment Zones. House Bill 612—enacted by the 77th Legislature in 2001—was the enabling legislation that moved the registry to the Comptroller’s office.

Each taxing unit that designates a reinvestment zone or approves a project plan or reinvestment zone financing plan under Chapter 311 of the Tax Code must deliver a copy of the plans to the Comptroller. Delivery must be made before April 1 of the year following the year in which the zone is designated or the plan is approved.

The taxing unit notification must contain three primary elements. First, for a reinvestment zone, the taxing unit must provide a general description of the zone, including its size, the types of property located in it, and its duration. The taxing unit also must provide any subsequent amendments and modifications of the project plan or reinvestment zone financing plan.

Second, the taxing unit must provide a copy of each project plan or reinvestment zone financing plan approved. Third, the unit must provide any other information required by the Comptroller’s office to fulfill its statutory responsibilities.

House Bill 612 also amended Section 311.016 of the Tax Code to require each municipality to send a copy of its Annual Report by Municipality to the Comptroller by the 90th day following the end of the fiscal year of the municipality.

Also, House Bill 612 added Section 311.0163, Tax Code and amended 312.005, requiring the Comptroller to submit a report to the Legislature and to the governor on the Reinvestment Zone for Tax Abatement Registry, Tax Abatement Agreement Registry and Tax Increment Financing Zone Registry.

In 1995, Senate Bill 345 enacted legislation to provide a state Tax Refund for Economic Development. Some Texas property owners are eligible to receive refunds on their net state sales and use taxes and franchise taxes for paying local school taxes, where tax incentives are not offered by a school district. The total for all refunds collectively may not exceed $10 million, the amount made available by the Texas Legislature. Under Senate Bill 345, the Comptroller reported to the legislature annually the refund results

Senate Bill 1652 (79th Legislature Regular Session) amended Section 111.304 of the Tax Code to require the Comptroller to report to the Legislature on the Tax Refund for Economic Development by December 31st of each even-numbered year of the biennium.

In an effort to streamline and provide all the information economically and efficiently, the Comptroller’s office has combined the previous reports in to one.