TITLE 34.PUBLIC FINANCE

Part 1. COMPTROLLER OF PUBLIC ACCOUNTS

Chapter 9. PROPERTY TAX ADMINISTRATION

Subchapter A. PRACTICE AND PROCEDURE

34 TAC §9.107

The Comptroller of Public Accounts proposes an amendment to §9.107, concerning appraised value limitation and tax credit for certain qualified property.

The section is being amended in response to 79th Legislature, 2005, House Bill 2201, effective September 1, 2005, amending Tax Code, §313.024(b). The new law adds clean coal projects and gasification projects for coal and biomass mixtures as uses of property that are eligible for appraised value limitations.

Subsection (b) is amended to add to the definitions of qualified property eligible for appraised value limitations, to correct standard industrial code references, for clarification, and to omit a reference to Government Code, §481.151 in subparagraph (D), as the provision has expired.

Subsection (c), concerning adopted by reference Form 50-296, is being revised to comply with changes in law and to include other matters necessary to make a determination of a property's qualification for a value limitation.

Subsection (o) is being amended to clarify the requirements for submitting and reviewing applications for tax credits and for administering the tax credit program under Tax Code, Chapter 313.

Subsection (p) is being amended to correct the state agency where the chief appraiser must send an annual report of properties that are subject to an appraised value limitation. Other subsections are amended for clarity.

John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. Heleman also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule would benefit the public by providing correct information to taxpayers regarding their tax responsibilities. The proposed amendment would have no significant fiscal impact on small businesses. There is no anticipated significant economic cost to the public.

Comments on the proposal may be submitted to Buddy Breivogel, Manager, Property Tax Division, P.O. Box 13528, Austin, Texas 78711-3528.

The amendment is proposed under and implements Tax Code, §§313.024(b), 313.104, and 313.105.

§9.107.Appraised Value Limitation and Tax Credit for Certain Qualified Property.

(a) Appraised value limitation applicant restriction. Corporations and limited liability companies that are subject to franchise tax under Tax Code, §171.001, may apply to the governing body of a school district for a limitation on the appraised value of qualified property in a reinvestment zone subject to the requirements and restrictions in this section. Sole proprietorships, partnerships, and limited liability partnerships are not eligible to apply. Corporations and limited liability companies that qualify for a limitation on the appraised value may also be eligible for a tax credit.

(b) Definitions. The following phrases, words, and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Impact fee--A charge or assessment that is imposed against a qualified property to generate revenue for funding or recoupment of the costs of capital improvements or facility expansions for water, wastewater, or storm water services or for roads that are necessitated by or attributable to property that receives a limitation on appraised value under this section.

(2) Manufacturing--An establishment that is primarily engaged in activities that are described in sector codes 31-33 of the 2002 North American Industry Classification System [ categories 2011-3999 of the 1987 Standard Industrial Classification Manual that the federal Office of Management and Budget publishes ].

(3) Primary employment--New jobs created by employers in a reinvestment zone as a direct result of incentives offered under Government Code, Chapter 2303 or Tax Code, Chapters 311, 312, or 313 [ Chapter 2303, Government Code or Chapter 311, 312, or 313, Property Tax Code ].

(4) Qualified investment--Investment that an owner proposes to build or install and that will qualify the owner for a limitation in the appraised value of qualified property. The term does not include land, but means:

(A) tangible personal property that is described as Section 1245 property by Internal Revenue Code of 1986, §1245(a), and that is first placed in service in Texas during the applicable qualifying time period that begins after December 31, 2001;

(B) tangible personal property that is first placed in service in Texas during the applicable qualifying time period that begins after December 31, 2001, and that is used in connection with the manufacturing, processing, or fabrication in a cleanroom environment of a semiconductor product. For purposes of this subparagraph, tangible personal property is neither required to be affixed to or incorporated into real property, nor required to be actually located in the cleanroom environment. Examples include integrated systems, fixtures, and piping; property that is necessary or adapted to reduce contamination or to control environmental conditions (e.g. airflow, temperature, humidity, or chemical purity) or to control manufacturing tolerances; and production equipment and machinery, moveable cleanroom partitions, and cleanroom lighting;

(C) a building or a permanent, non-removable component of a building that is built or constructed during the applicable qualifying time period that begins after December 31, 2001, and that houses tangible personal property described by subparagraph (A) or (B) of this paragraph; or

(D) any property that is described in subparagraphs (A)-(C) of this paragraph that is leased under a capitalized lease, but excludes any property that is leased under an operating lease.

(5) Qualifying job--A new permanent full-time job that:

(A) requires at least 1,600 hours of work per year;

(B) is not transferred from one area in this state to another area in this state;

(C) is not created to replace a previous employee;

(D) is covered by a group health benefit plan[ , as defined by Government Code, §481.151, ] for which the business pays or offers to pay at least 80% of the premiums or other charges that are assessed for employee-only coverage under the plan; and

(E) pays at least 110% of the county average weekly wage for manufacturing jobs as computed by the Texas Workforce Commission for the county where the job is located.

(6) Qualified property--Property that is used either as an integral part, or as a necessary auxiliary part, in manufacturing, research and development, a clean coal project, a gasification project for a coal and biomass mixture, or renewable energy electric generation and consists of:

(A) a new building or other new improvement that does not exist before the date on which the owner applies for an appraised value limitation;

(B) land that is not subject to a tax abatement agreement into which a school district has entered under Tax Code, Chapter 312; and is located in an area that is designated as a reinvestment zone under Tax Code, Chapter 311 or Chapter 312, or as an enterprise zone under Government Code, Chapter 2303, on which the owner:

(i) proposes to construct, erect, or affix a new building or new improvement that does not exist before the date on which the owner applies for an appraised value limitation; and,

(ii) in connection with that new building or new improvement, also proposes to make at least the minimum amount of qualified investment required by this section; and,

(iii) proposes to create at least 10 new jobs if the land is in a rural school district or at least 25 new jobs if the land is in a school district that is not a rural school district.

(C) tangible personal property that is either first placed in service in the new building or in or on the new improvement that did not exist before the date on which the owner applies for an appraised value limitation (unless the property is considered a semiconductor fabrication cleanroom or equipment under Tax Code, §151.318(q)) or first placed in service on the land on which that new building or new improvement is located, if the personal property is ancillary and necessary to the business that is conducted in that new building or in or on that new improvement. To qualify, tangible personal property may not be subject to a tax abatement agreement into which a school district has entered under Tax Code, Chapter 312.

(7) Qualifying time period--The first two tax years that begin on or after the date on which the approval of an application for a limitation on appraised value occurs.

(8) Renewable energy electric generation--An establishment that is primarily engaged in activities that are described in industry code [ category ] 221119 of the 2002 [ 1997 ] North American Industry Classification System.

(9) Research and development--An establishment that is primarily engaged in activities that are described in industry code 541710 of the 2002 North American Industry Classification System [ category 8731 of the 1987 Standard Industrial Classification Manual that the federal Office of Management and Budget publishes ].

(10) Clean coal project--The installation of one or more components of the coal-based integrated sequestration and hydrogen research project to be built in partnership with the United States Department of Energy, commonly referred to as the FutureGen project. The term incorporates the definition and requirements of Water Code, §5.001 and §5.558.

(11) Gasification project for a coal and biomass mixture--A project that uses a mixture of coal and other organic, non-fossil material as the primary feedstock to produce gaseous compounds that can be utilized as fuel or other commercial products.

(12) [ (10) ] Rural school district--A school district that has territory in a strategic investment area, as defined by Tax Code, §171.721, or in a county:

(A) that has a population of less than 50,000;

(B) that is not partially or wholly located in a metropolitan statistical area; and

(C) in which, from 1990 to 2000, according to the federal decennial census, the population remained the same; decreased; or increased, but at a rate of not more than 3.0% per annum.

(c) Forms.

(1) The comptroller adopts by reference the following [ amended ] model forms:

(A) Application For Appraised Value Limitation On Qualified Property (Form 50-296); and

(B) Application For Tax Credit On Qualified Property (Form 50-300).

(2) The comptroller will make available model forms that are adopted by reference in paragraph (1) of this subsection. Copies of the forms [ are available for inspection at the office of the Texas Register or ] may be obtained from the Comptroller of Public Accounts, P.O. Box 13528, Austin, Texas 78711-3528. The [ After adoption of this rule, copies of the ] forms may be viewed or downloaded from the comptroller's [ Window on State Government ] website, at http://www.window.state.tx.us/taxinfo/taxforms/02-forms.html. Copies may also be requested by calling our toll-free number, 1-800-252-9121. In Austin, call (512) 305-9999. From a Telecommunications Device for the Deaf (TDD), call 1-800-248-4099, toll free. In Austin, the local TDD number is (512) 463-4621.

(3) In special circumstances, a school district may obtain prior approval in writing from the comptroller to use an application form that requires additional information, or sets out the required information in different language or sequence than that which this section requires.

(4) All school districts and appraisal districts shall make available copies of the comptroller model forms that are adopted by reference in paragraph (1) of this subsection for taxpayers to use in their applications for an appraised value limitation and for tax credit under this section. Subject to the prior written approval requirement that is provided in paragraph (3) of this subsection, if a school district uses a form other than the one that the comptroller has adopted, then the alternate form must also be made available for taxpayers to use.

(d) Requirements and restrictions.

(1) A property owner must file with a school district an application for appraised value limitation before September 4 in the year that precedes the first year in which the owner proposes its qualifying time period to begin, unless the property owner proposes an extension of the 120-day period that is allowed in subsection (f)(1)(H) of this section, for the school district to decide on the application, in which instance the property owner must file as many days in advance of September 4 as the number of days in the proposed extension plus one day.

(2) The application for appraised value limitation must be:

(A) made on the comptroller's Application For Appraised Value Limitation On Qualified Property ( Form 50-296) or an alternate form authorized by subsection (c)(3) of this section;

(B) properly completed;

(C) accompanied by the applicable attachments that are specified on the form; and

(D) accompanied by the applicable application fee.

(3) The applicant must identify and quantify the qualified investment that the applicant proposes to build or install in the reinvestment zone during the qualifying time period, and the information must be sufficient to allow the school district to determine whether the applicant will meet the minimum qualified investment amount that is required for the relevant school district category.

(4) To be eligible for a limitation on appraised value under this section, at least 80% of all the new jobs that the property owner has created must be qualifying jobs as defined in subsection (b)(5) of this section.

(5) Property that a person other than the applicant owns and that is pooled or proposed to be pooled with property that the applicant owns may not be included in determination of the amount of the applicant's qualifying investment.

(e) School district categories and minimum qualified investment requirements.

(1) The minimum amount of qualified investment that this section requires is based on the category in which the school district is classified.

(A) School districts other than rural school districts are categorized according to the district's most recent total taxable value of property that is determined under Government Code, Chapter 403, Subchapter M (identified as "T2" on the comptroller's print out entitled "School District Summary Worksheet"), as follows:

Figure: 34 TAC §9.107(e)(1)(A) (No change.)

(B) Rural school districts are categorized according to the sum of the district's most recent market value of industrial real and personal property that is determined under Government Code, Chapter 403, Subchapter M (identified as "F2" and "L2" on the comptroller's print out entitled "School District Summary Worksheet"), less any applicable deductions that are allowed under Government Code, Chapter 403, Subchapter M, for industrial property, as follows:

Figure: 34 TAC §9.107(e)(1)(B) (No change.)

(2) The minimum qualified investment requirement for each category of school districts other than rural school districts is:

Figure: 34 TAC §9.107(e)(2) (No change.)

(3) The minimum qualified investment requirement for each category of rural school districts is:

Figure: 34 TAC §9.107(e)(3) (No change.)

(f) Application review process.

(1) A school district may choose not to consider the application and must notify the applicant of its decision, but if a school district does consider the application, then the following procedures must be followed:

(A) the school district shall immediately send a copy of the application to the comptroller;

(B) the school district shall also send a copy of the application to each appraisal district that appraises property that is described in the application;

(C) the school district, in its discretion, may allow the applicant to supplement the application after the filing date to provide information that is required by the application form that was unavailable prior to the filing date, but must forward any supplemental information that the district has received immediately to the comptroller and the appraisal district;

(D) the school district shall hire a qualified third party to perform an economic impact evaluation. See subsection (g) of this section, for further information on economic impact evaluation;

(E) the school district may obtain assistance from the comptroller, Texas Economic Development, the Council on Workforce and Economic Competitiveness, and the Texas Workforce Commission;

(F) the school district shall obtain a recommendation from the comptroller on whether the application should be approved. The comptroller's recommendation shall be made no later than the 61st day from the date on which the comptroller receives a copy of the application from the school district. The comptroller may consider the reported economic evaluation information in the application or any other available information that the comptroller considers relevant, and the comptroller may make a recommendation that is contingent on the receipt of appropriate supplemental information;

(G) the school district must make a written finding on each economic impact evaluation criterion that is listed in this section before the district approves or disapproves the application, and the district shall deliver a copy of those findings to the applicant; and

(H) the school district shall review the application, including the economic impact evaluation, and the comptroller's recommendation, and must approve or disapprove the application within 120 calendar days from the filing date of the application, unless the governing body and the applicant agree to an extension.

(2) The school district may approve the application only if it finds that the information in the application is true and correct, finds that the applicant is eligible for the limitation on the appraised value, and determines that granting the application is in the best interest of the school district and this state.

(3) If a school district grants the application, it must provide written notice to the applicant, the comptroller, and each appraisal district that appraises property that is described in the application. The school district and the property owner shall enter into a written agreement to incorporate the obligations of each party and provide for the appraised value limitation. See subsection (h) of this section for further information on the agreement.

(g) Economic impact evaluation. As provided by subsection (f) of this section, a school district must hire a qualified third party to perform an economic impact evaluation that will analyze the investment proposed in the application for an appraised value limitation and that will assist the school district to determine whether an appraised value limitation would be in the best interest of the school district and this state. The written report must include:

(1) the comptroller's recommendation on the application;

(2) the relationship between the applicant's industry and the types of qualifying jobs to be created by the applicant, to the long-term economic growth plans of this state as described in the strategic plan for economic development that the Texas Strategic Economic Development Planning Commission has submitted under Government Code, §481.033, as that section existed before February 1, 1999;

(3) the relative level of the applicant's investment per qualifying job to be created by the applicant;

(4) the wages, salaries, and benefits to be offered by the applicant to qualifying job-holders;

(5) the ability of the applicant to locate or relocate in another state or another region of this state;

(6) the impact that the added infrastructure will have on the region, including revenue gains that would be realized by the school district, and subsequent economic effects on the local and regional tax bases;

(7) the economic condition of the region of the state at the time when the person's application is being considered;

(8) the number of new facilities that were built or expanded in the region during the two years that preceded the date of the application and that were eligible to apply for a limitation on appraised value under this subsection; and

(9) the effect of the applicant's proposal, if approved, on the number or size of the school district's instructional facilities, as defined by Education Code, §46.001.

(h) Agreement. The written agreement between the school district and the property owner for the appraised value limitation:

(1) must describe with specificity the qualified investment that the person will make on or in connection with the person's qualified property that is subject to the limitation on appraised value under this section. Property that is not specifically described in the agreement is not subject to the appraised valued limitation unless the school district, by official action, provides that other property of the owner is subject to the appraised value limitation;

(2) must incorporate each relevant provision of this section and, to the extent necessary, include provisions for the protection of future school district revenues through the adjustment of the minimum valuations, the payment of revenue offsets, and other mechanisms to which the property owner and the school district agree;

(3) must require the property owner to maintain a viable presence in the school district for at least three years after the date on which the limitation on appraised value of the owner's property expires;

(4) must provide for the termination of the agreement, the recapture of ad valorem tax revenue that is lost as a result of the agreement if the owner of the property fails to comply with the terms of the agreement, and payment of a penalty or interest or both on that recaptured ad valorem tax revenue;

(5) may specify any conditions the occurrence of which will require the district and the property owner to renegotiate all or any part of the agreement; and

(6) must specify the ad valorem tax years that the agreement covers.

(i) Appraised value limitation.

(1) An appraised value limitation applies only to the maintenance and operations portion of a school district's ad valorem tax rate.

(2) A school district may limit the appraised value on qualified property for eight tax years, beginning with the tax year that follows the applicable qualifying time period.

(3) For each tax year in which the appraised value limitation is in effect, the appraised value of the qualified property that is described in the written agreement between the school district and property owner for school district maintenance and operations ad valorem tax may not exceed the lesser of:

(A) the market value of the property; or

(B) the amount to which the school district has agreed, but such amount must be at least the minimum amount of limitation that is set for the applicable school district category and that is enumerated in paragraph (4) of this subsection.

(4) Minimum amount of limitation.

(A) For school districts other than rural school districts:

Figure: 34 TAC §9.107(i)(4)(A) (No change.)

(B) For rural school districts:

Figure: 34 TAC §9.107(i)(4)(B) (No change.)

(j) Fees.

(1) Application fee. A school district may establish a reasonable nonrefundable application fee to be paid by a person who applies for a limitation on the appraised value of the person's property under this section. The amount of an application fee may not exceed the school district's estimated cost to process and act on an application, including the cost of the economic impact evaluation that this section requires.

(2) Impact fee. Notwithstanding any other law, including Local Government Code, Chapter 395, a municipality or county may impose and collect from the owner of a qualified property a reasonable impact fee to pay for the cost of providing improvements that are associated with or attributable to property that receives a limitation on appraised value under this section.

(k) Appraisal district responsibility. When appraising a person's qualified property that is subject to a limitation on appraised value under this section, the chief appraiser shall determine the market value of the property and include both the market value and the limited value in the appraisal records.

(l) Property not eligible for tax abatement. Property that is subject to a limitation on appraised value in a tax year under this section is not eligible for tax abatement by a school district under Tax Code, Chapter 312, in that tax year.

(m) Confidential business information. Information that describes the specific processes or business activities to be conducted or the specific tangible personal property to be located on real property that the application that an applicant submits to a school district covers is confidential unless the school district approves the application under this section. A school district may not disclose confidential information to the public.

(n) Tax rate limitation. A school district may not adopt a tax rate that exceeds the school district's rollback tax rate under Tax Code, §26.08, for each tax year during the qualifying time period. If the school district approves a subsequent application for an appraised value limitation while the restriction on the school district's tax rate is in effect, the restriction on the school district's tax rate extends until the expiration of the second anniversary of the subsequent application approval date.

(o) Tax credit.

(1) An owner is entitled to a credit for part of the ad valorem taxes that were paid to a school district for each tax year during the qualifying time period in an amount that is equal to the difference between the amount of tax that was actually paid on the qualified property and the amount of tax that would have been paid based on the appraised value limitation to which the school district agreed, provided that the owner follows the procedures that this subsection requires. The school district tax collector must apply any approved tax credit in the manner and time that is provided in paragraph (3) of this subsection.

(2) To be eligible for a tax credit, an owner must submit an application for tax credit before September 1 of the year that immediately follows the applicable qualifying time period to the school district to which the ad valorem taxes were paid. The application for tax credit must be:

(A) made on the Application for Tax Credit on Qualified Property (Form 50-300) or an alternative form that is authorized by subsection (c)(3) of this section;

(B) accompanied by tax receipts from the collector of taxes for the school district that show full payment of school district ad valorem taxes on the qualified property for the applicable qualifying time period;

(C) accompanied by a copy of the agreement between the applicant and the school district under Tax Code, §313.027 or §313.051; and

(D) accompanied by any other document or information that the [ comptroller or the ] school district considers necessary for a determination of the applicant's eligibility for the tax credit or the amount of the tax credit.

(3) A school district must determine the owner's eligibility for a tax credit before the 90th day after the date on which the application for a tax credit is received by the school district. If a school district determines that the owner is eligible for a tax credit and verifies the total tax credit that has been computed as provided by paragraph (1) of this subsection, then the school district shall direct its tax collector to determine and to report to the commissioner of education the amount of tax credits that will be applied [ apply the tax credit ] against any taxes that the school district imposes on the qualified property as follows:

(A) subject to the limitation that is imposed by subparagraph (B) of this paragraph, apply one-seventh of the total tax credit for seven tax years beginning with the tax year that follows the tax year in which the application for tax credit was approved, and for six tax years thereafter;

(B) the maximum amount of tax credit that may be applied in each tax year may not exceed 50% of the total amount of ad valorem school taxes that the school district imposes on the qualified property in that tax year;

(C) apply any tax credit that remains as a result of the application of the cap that is imposed by subparagraph (B) of this paragraph in the first tax year that begins on or after the date on which the owner's eligibility for the appraised value limitation expires under this section, but the maximum amount may not exceed the total amount of ad valorem school taxes that the school district has imposed on the qualified property in that tax year. Any remaining tax credit that is not used under this subparagraph expires.

(4) No tax credit will be allowed for either the tax year in which the owner relocates the business outside the school district or the tax years thereafter.

(5) The school district is authorized to investigate or review the amount of tax credits approved pursuant to paragraph (3) of this subsection, and to determine whether a person who received a tax credit was ineligible or received more credit than the person should have received. The school district shall consult with the comptroller concerning its determination. If the board of trustees of [ the comptroller and a school district determine that a person who received a tax credit was either not eligible for the credit or received more credit than the person was entitled, then ] the school district by official action makes a determination that a person who received a tax credit was ineligible or received more credit than the person should have received, it shall impose an additional tax on the qualified property that is equal to the amount of tax credit that was erroneously taken, plus interest at an annual rate of 7.0% calculated from the date on which the credit was issued. In addition:

(A) A tax lien attaches to the qualified property in favor of the school district to secure payment by the person of the additional tax and interest that are imposed and any penalties incurred ; and [ . ]

(B) a [ A ] person who is delinquent in the payment of an additional tax may not submit a subsequent application or receive a tax credit under this subsection in a subsequent year.

(p) Property list by chief appraiser. Before October 1 of each year, the chief appraiser shall compile and send to Office of the Governor, [ Texas ] Economic Development and Tourism a list of properties that have a market value that exceeds $100 million in the applicable tax year or that are subject to a limitation on appraised value under Tax Code, Chapter 313. The market value of each property on the list shall include the taxable real and personal property owned by a person at one site. The list shall include, at a minimum, the appraisal district name, the name of any other appraisal district that appraises the property, the appraisal district number that the comptroller has assigned, the name of each school district that taxes the property, each school district number that the education agency has assigned, each account number that the appraisal district has assigned, each taxpayer name, the market value of the taxable real and personal property that the taxpayer owns at that site, the taxable value of the taxable real and personal property that the taxpayer owns at that site, the tax year to which the listed information pertains, and the name and telephone number of a person at the appraisal district who is responsible for the information that is contained in the list.

(q) School district designation of reinvestment zone.

(1) The governing body of a school district may approve qualified land that is located in an area that is designated as a reinvestment zone under Tax Code, Chapter 311 or Chapter 312, or as an enterprise zone under Government Code, Chapter 2303, by the commissioners court of each county or the governing body of each municipality, provided that all the qualified land falls within this designated zone.

(2) The governing body of a school district, in the manner that is required for official action and for purposes of Tax Code, Chapter 313, Subchapter B or C, may designate an area that is entirely within the territory of the school district as a reinvestment zone under Tax Code, §312.0025, if the governing body finds that, as a result of the designation and the granting of a limitation on appraised value under Chapter 313, Subchapter B or C, for property that is located in the reinvestment zone, the designation is reasonably likely to:

(A) contribute to the expansion of primary employment in the reinvestment zone; or

(B) attract major investment in the reinvestment zone that would benefit property in the reinvestment zone and the school district, and contribute to the economic development of the region of this state in which the school district is located.

(3) The governing body of the school district may seek the recommendation of the commissioners court of each county and the governing body of each municipality that has territory in the school district before designating an area as a reinvestment zone under subsection (q)(2) of this section .

(r) Timeline. The following is an example of the timeline to be used for the appraised value limitation and tax credit under House Bill 1200, 77th Legislature, 2001. The timeline is intended as a visual aid to help the applicants' understanding of the overall appraised value limitation and tax credit process. Any conflict between this timeline and the specific language of this rule shall be resolved in favor of the specific language of the rule.

Figure: 34 TAC §9.107(r) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 10, 2006.

TRD-200602069

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: May 21, 2006

For further information, please call: (512) 475-0387


Subchapter I. VALIDATION PROCEDURES

34 TAC §9.4037

The Comptroller of Public Accounts proposes an amendment to §9.4037, concerning use of electronic communications for transmittal of property tax information, to conform to Tax Code, §25.19(b-1). The statute requires that the chief appraiser of each county appraisal district include in the notice of appraised value for real property, the difference, expressed as a percentage increase or decrease, in the appraised value of the property for the current year as compared to the fifth year before the current tax year.

The section is being amended in response to 79th Legislature, 2005, House Bill 1984, effective January 1, 2006. The law requires additional information to be included on notices of appraised value prepared by appraisal districts. Subsection (d)(1), the electronic XML document schema, is amended to include the percentage increase in value required to be included in the notices of appraised value.

John Heleman, Chief Revenue Estimator, has determined that for the first five-year period the rule will be in effect, there will be no significant revenue impact on the state or units of local government.

Mr. Heleman also has determined that for each year of the first five years the rule is in effect, the public benefit anticipated as a result of enforcing the rule would benefit the public by providing correct information to taxpayers regarding their tax responsibilities. The proposed amendment would have no significant fiscal impact on small businesses. There is no anticipated significant economic cost to the public.

Comments on the proposal may be submitted to Buddy Breivogel, Manager, Property Tax Division, P.O. Box 13528, Austin, Texas 78711-3528.

The amendment is proposed under and implements Tax Code, §25.19(b-1) and §1.085(e).

§9.4037.Use of Electronic Communications for Transmittal of Property Tax Information.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Account ID--the predominant identification number used on the hardcopy.

(2) CAD--County Appraisal District

(3) NOT--Notice

(4) PRP--Property

(5) OWN--Owner

(6) ENT--Entity

(7) minOccurs--Minimum occurrences

(8) maxOccurs--Maximum occurrences

(b) Transmittal of information. Information in notices of appraised value required by Tax Code, §1.085(g) to be delivered electronically must be transmitted according to the file layout provided by this section. The transmittal must be made by electronic mail, file transfer protocol (ftp) or any other method agreed upon by the property owner and the chief appraiser; however, if the size of the information file or other factors require the use of a 1/4 inch cartridge (1.2 Gb max), 1/2 inch cartridge 18 tract (3480), 8-mm cartridge (5 Gb max), 4-mm cartridge (5 Gb max), CD-ROM, DVD-ROM, or 2 1/2 inch disc, the property owner and the chief appraiser must agree to the use of one of these media, and delivery may be made by hand or by mail, according to the agreement of the property owner and the chief appraiser.

(c) Format and Content. The information included in statutorily required electronic transmissions between property owners and appraisal districts, taxing units, or other tax officials, must have the following specifications:

(1) Extensible Mark-up Language (XML)

(2) File layout. Items listed must be included in statutorily required electronic transmissions between property owners and appraisal districts, taxing units, or other tax officials. Optional items, or other items agreed upon by the property owner and the appraisal district may be included in the electronic notice.

Figure: 34 TAC §9.4037(c)(2) (No change.)

(d) Notice of Appraised Value--Tax Code §25.19.

(1) Electronic XML Document Schema

Figure: 34 TAC §9.4037(d)(1)

(2) Notice letter. The notice required by Tax Code, §25.19(h), may be transmitted electronically with the file layout provided by this section.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 10, 2006.

TRD-200602064

Martin Cherry

Chief Deputy General Counsel

Comptroller of Public Accounts

Earliest possible date of adoption: May 21, 2006

For further information, please call: (512) 475-0387


Part 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS

Chapter 73. BENEFITS

34 TAC §73.26

The Employees Retirement System of Texas (ERS) proposes a new rule to 34 TAC Chapter 73, §73.26, concerning Beneficiary Lineage for Guaranteed Periodic Payments. New rule §73.26 concerns the lineage of designated beneficiaries who are eligible to receive guaranteed periodic payments upon the death of a member or retiree. This new rule is needed to clarify how and to whom the remainder of any guaranteed periodic payments are to be made when a member or retiree dies.

New subsection (a) and (b) are added to provide that a member or retiree who selects a guaranteed periodic payment option under a retirement annuity or death benefit plan may select primary and alternate beneficiaries to receive any remaining payments upon the death of the member or retiree.

New subsection (c) is added to provide for the payment of any remaining guaranteed periodic payments to any living designated primary beneficiary(s) at the time of the death of the member or retiree.

New subsection (d) is added to provide for the payment of any remaining guaranteed periodic payments, where there are no living primary designated beneficiary(s), to any living designated alternate beneficiary(s) at the time of death of the member or retiree. Additionally, this new subsection provides that an alternate beneficiary(s) has no further entitlement in any remaining guaranteed periodic payments where there is a living primary designated beneficiary(s) at the time of death of the member or retiree.

New subsection (e) is added to provide for proportionate sharing when one of multiple primary beneficiaries dies before all remaining payments have been made.

New subsection (f) is added to clarify that when a designated primary or alternate beneficiary dies and there are no other living designated beneficiaries, any remaining payments shall be made to the estate of the deceased designated primary or alternate beneficiary. Additionally, ERS may pay the estate of a deceased beneficiary any remaining payments in a lump sum at the actuarial present value as provided by Texas Government Code §814.001.

New subsection (g) is added to this new rule to reference the applicability of other sections in the Texas Government Code: §814.006 - simultaneous death of members and beneficiaries, and §814.007 - a beneficiary causing the death of a member or annuitant.

Paula A. Jones, General Counsel, has determined that for the first five-year period the new rule is in effect, there will be no fiscal implication for state or local governments as a result of enforcing or administering this rule; and small businesses will not be affected. The new rule will affect an ERS member or retiree benefits succession at death. The circumstances are limited to those instances where a designated beneficiary dies and all remaining guaranteed periodic payments have not been made.

Ms. Jones also determined that for each year of the first five years the rule is in effect the public benefit anticipated as a result of enforcing this rule will be clarification of the rules as it applies to designated beneficiaries' eligibility to receive any remaining guaranteed periodic payments, and it is consistent with other forms of payments. There are no known anticipated economic costs to persons who are required to comply with this rule as proposed.

Comments on the proposed new rule may be submitted to Paula A. Jones, General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or e-mail Ms. Jones at paula.jones@ers.state.tx.us. The deadline for receiving comments is 10:00 a.m. on Monday, May 22, 2006.

The new rule is proposed under Texas Government Code §815.102, which authorizes the board of trustees to adopt rules for the administration of the funds of the retirement system. This new rule affects no other statutes beyond Title 8, Subtitle B of the Texas Government Code.

§73.26.Beneficiary Lineage for Guaranteed Periodic Payments.

(a) A member or retiree who selects an optional retirement annuity payable for a guaranteed period may, before or after retirement, designate one or more persons as primary beneficiaries to receive any remaining guaranteed periodic annuity payments if the member or retiree dies after retirement but before all guaranteed payments have been made. The member or retiree may also designate one or more alternate beneficiaries.

(b) A member who selects a death benefit plan for the payment of a death benefit plan annuity for a guaranteed period may designate one or more primary beneficiaries to receive the death benefit annuity upon the death of the member. The member may also designate one or more alternate beneficiaries.

(c) If any designated primary beneficiary is living at the time of the death of the retiree or of the member referred to in subsections (a) and (b) of this section, the primary beneficiary or beneficiaries will be entitled to receive the guaranteed periodic annuity payments or the death benefit plan annuity payments for the remainder of the guaranteed period.

(d) If no designated primary beneficiary is living at the time of the death of the retiree or of the member referred to in subsections (a) and (b) of this section, the designated alternate beneficiary or beneficiaries will be entitled to receive the guaranteed periodic annuity payments or the death benefit plan annuity payments, as applicable, in place of the designated primary beneficiaries. However, if a designated primary beneficiary is living at the time of the death of the retiree or member, then an alternate beneficiary shall have no further right, title, or interest in any annuity payments.

(e) If multiple primary beneficiaries are designated, upon the death of any one primary beneficiary, the remaining primary beneficiaries will share proportionately, based on the designated percentages, that portion of any remaining guaranteed annuity or death benefit plan annuity payments that was to have been paid to the beneficiary who died.

(f) If a designated primary beneficiary or alternate beneficiary becomes entitled to guaranteed annuity or death benefit plan payments as described in this section, but dies before all of the guaranteed periodic payments have been paid, and there are no other designated beneficiaries then living, any remaining guaranteed periodic payments shall be made to the estate of the beneficiary and not to the estate of the deceased retiree or member. At the sole election of the system, the system may pay the estate of a deceased beneficiary a lump sum amount that is the actuarial present value of the remaining guaranteed annuity payments.

(g) The simultaneous death provisions of Texas Government Code §814.006, and Texas Government Code §814.007, concerning a beneficiary who causes the death of a member or annuitant, apply to this section.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 7, 2006.

TRD-200602046

Paula A. Jones

General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: May 21, 2006

For further information, please call: (512) 867-7421