HB3424 - Relating to the ad valorem taxation of certain dealer's heavy equipment inventory.

      H.B. No. 3424         AN ACT   relating to the ad valorem taxation of certain dealer's heavy   equipment inventory.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 23.1242, Tax Code, is amended by   amending Subsections (b), (e), (f), (g), and (k) and adding   Subsections (b-1) and (f-1) to read as follows:          (b)  Except for an item of heavy equipment sold to a dealer,   an item of heavy equipment included in a fleet transaction, an item   of heavy equipment that is the subject of a subsequent sale, or an   item of heavy equipment that is subject to a lease or rental, an   owner or a person who has agreed by contract to pay the owner's   current year property taxes levied against the owner's heavy   equipment inventory shall assign a unit property tax to each item of   heavy equipment sold from a dealer's heavy equipment inventory.  In   the case of a lease or rental, the owner shall assign a unit   property tax to each item of heavy equipment leased or rented.  The   unit property tax of each item of heavy equipment is determined by   multiplying the sales price of the item or the monthly lease or   rental payment received for the item, as applicable, by the unit   property tax factor.  If the transaction is a lease or rental, the   owner shall collect the unit property tax from the lessee or renter   at the time the lessee or renter submits payment for the lease or   rental.  The owner of the equipment shall state the amount of the   unit property tax assigned as a separate line item on an invoice.   On or before the 20th day of the month following each calendar   quarter [ month ] the owner shall, together with the statement filed   by the owner as required by this section, deposit with the collector   an amount equal to the total of unit property tax assigned to all   items of heavy equipment sold, leased, or rented from the dealer's   heavy equipment inventory in the preceding calendar quarter [ month ]   to which a unit property tax was assigned.  The money shall be   deposited by the collector to the credit of the owner's escrow   account for prepayment of property taxes as provided by this   section.  An escrow account required by this section is used to pay   property taxes levied against the dealer's heavy equipment   inventory, and the owner shall fund the escrow account as provided   by this subsection.           (b-1)     Not later than December 15 of each year, the collector   shall provide written notice to each owner for whom the collector   maintains an escrow account under Subsection (c) of the unit   property tax factor for the following tax year for each location in   which the owner's heavy equipment inventory is located.          (e)  The comptroller by rule shall adopt a dealer's heavy   equipment inventory tax statement form.  Each calendar quarter   [ month ], a dealer shall complete the form regardless of whether an   item of heavy equipment is sold, leased, or rented.  A dealer may   use no other form for that purpose.  The statement may include the   information the comptroller considers appropriate but shall   include at least the following:                (1)  a description of each item of heavy equipment   sold, leased, or rented including any unique identification or   serial number affixed to the item by the manufacturer;                (2)  the aggregate amount received by the dealer   attributable to the sales price of or lease or rental payments   [ payment ] received for the items [ item ] of heavy equipment   described by Subdivision (1) [ , as applicable ]; and                (3)  the total amount of unit property tax assigned by   the dealer to the items [ of the item ] of heavy equipment described   by Subdivision (1) [ , if any; and                [ (4)     the reason no unit property tax is assigned if no   unit property tax is assigned ].          (f)  On or before the 20th day of the month following each   calendar quarter [ month ], a dealer shall file with the collector   the statement completed by the dealer covering the sale, lease, or   rental of each item of heavy equipment sold, leased, or rented by   the dealer in the preceding calendar quarter [ month ]. On or before   the 20th day of the [ a ] month following a calendar quarter [ month ]   in which a dealer does not sell, lease, or rent an item of heavy   equipment, the dealer must file the statement with the collector   and indicate that no sales, leases, or rentals were made in the   preceding calendar quarter [ prior month ].             (f-1)   A dealer shall [ file a copy of the statement with the   chief appraiser and ] retain complete and accurate records   documenting [ documentation relating to ] the disposition of each   item of heavy equipment sold , leased, or rented by the dealer for at   least four years from the date of disposition of the item [ and the   lease or rental of each item of heavy equipment ].  A chief appraiser   or collector may examine records [ documents ] held by a dealer as   required [ provided ] by this subsection in the same manner, and   subject to the same conditions, as provided by Section 23.1241(g).          (g)  Except as provided by this subsection, Subsection (f)   applies to any dealer, regardless of whether a dealer owes heavy   equipment inventory tax for the current year.  A dealer who owes no   heavy equipment inventory tax for the current year because the   dealer was not in business on January 1:                (1)  shall file the statement required by this section   showing the information required by this section for each calendar   quarter [ month ] that the dealer is in business; and                (2)  may not assign a unit property tax to an item of   heavy equipment sold by the dealer or remit money with the statement   except in compliance with the terms of a contract as provided by   Subsection (k).          (k)  A person who acquires the business or assets of an owner   may, by contract, agree to pay the current year heavy equipment   inventory taxes owed by the owner.   The person who acquires the   business or assets of the owner may use the same unit property tax   factor that the owner who owes the current year tax would use when   paying the current year tax. The owner who owes the current year   tax and the person who acquires the business or assets of the owner   shall jointly notify the chief appraiser and the collector of the   terms of the agreement and of the fact that the other person has   agreed to pay the current year heavy equipment inventory taxes owed   by the dealer.  The chief appraiser and the collector shall adjust   their records accordingly.  Notwithstanding Section 23.1241, a   person who agrees to pay current year heavy equipment inventory   taxes as provided by this subsection is not required to file a   declaration until the year following the acquisition.  This   subsection does not relieve the selling owner of the tax liability.          SECTION 2.  This Act applies only to ad valorem taxes imposed   for an ad valorem tax year that begins on or after the effective   date of this Act.          SECTION 3.  This Act takes effect January 1, 2026.       ______________________________ ______________________________      President of the Senate Speaker of the House                   I certify that H.B. No. 3424 was passed by the House on May   15, 2025, by the following vote:  Yeas 141, Nays 1, 2 present, not   voting.     ______________________________   Chief Clerk of the House                 I certify that H.B. No. 3424 was passed by the Senate on May   23, 2025, by the following vote:  Yeas 31, Nays 0.     ______________________________   Secretary of the Senate       APPROVED:  _____________________                      Date                           _____________________                    Governor