HBA-DMH S.B. 248 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 248
By: Carona
Ways & Means
5/2/2001
Engrossed



BACKGROUND AND PURPOSE 

Under current law, a leased motor vehicle is subject to ad valorem property
taxes.   This taxation may have been intended solely for businesses leasing
fleets of vehicles.  However, many such leases are now used by individuals
who wish to pay a lower price for a new vehicle. The Texas Constitution was
amended last year to exempt leased motor vehicles from ad valorem property
taxes if the vehicles are not used by the lessee for the production of
income.  However, without enabling legislation, the constitutional
amendment has no effect.  Senate Bill 248 exempts leased motor vehicles
from ad valorem property taxes if such vehicles are not used primarily by
the lessee for the production of income. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the comptroller of public accounts in
SECTION 1 (Section 11.252, Tax Code) of this bill. 

ANALYSIS

Senate Bill 248 amends the Tax Code to entitle the owner of a motor vehicle
that is subject to a lease to an exemption from taxation of the vehicle if
the lessee does not hold the vehicle for the production of income and the
vehicle is used primarily for activities that do not involve the production
of income.  The bill requires the comptroller of public accounts
(comptroller) by rule to establish exemption application requirements and
appropriate procedures to determine whether a leased motor vehicle
qualifies for an exemption from taxation. The bill requires the comptroller
by rule to adopt a form to be completed by a lessee of a motor vehicle for
which the owner is authorized to apply for an exemption from taxation.  The
bill sets forth provisions regarding the requirements of the form and the
provision of the form to the lessee.  
The bill requires the owner of a leased motor vehicle to maintain a
completed form and to make the form available  for inspection and copying
by the chief appraiser of the applicable appraisal district at all
reasonable times. If the owner does not maintain such a form, the owner
must render the leased motor vehicle for taxation in the applicable
rendition statement or property report filed by the owner and is prohibited
from filing an application for an exemption from taxation for the leased
motor vehicle.     

The bill authorizes the governing body of a municipality by ordinance
adopted before January 1, 2002, to provide for the taxation of a leased
motor vehicle otherwise exempted from taxation.  If the governing body of a
municipality provides for the taxation of a leased motor vehicle, the
exemption provided does not apply to that municipality.  The leased motor
vehicle tax exemption provisions expire December 31, 2003, unless continued
in effect by the legislature. 

EFFECTIVE DATE

January 1, 2002, and applies only to ad valorem taxes imposed on a motor
vehicle that is subject to a lease entered into on or after January 2,
2001.