It’s hard to know what to say about this interesting bit of news, so we’ll just let you read Harvey Kronberg’s analysis and draw your own conclusions. As always, boundless thanks to Harvey for his generosity in letting us run his pieces from time to time.
HB3 AUTHORIZES PROPERTY TAX BOUNTY HUNTERS?
Windfall for entrepreneurial tax collection firms, nightmare for businesses
On a party line vote, the "pro-business" Republicans on the House Ways and Means Committee yesterday voted out HB3 with a provision of unknown origin that, according to business groups, authorizes fishing expeditions in company books to challenge fixed asset valuations in property tax renditions.
When asked about the provisions during yesterday’s hearing, bill author John Smithee (R-Amarillo) said he did not know how the language got in the draft voted out by the committee.
According to the Texas Taxpayers and Research Association, "HB3 authorizes appraisal districts to contract with third-party contingency fee ‘asset verification agents’ to audit taxpayer books and records. The purported purpose of these audits is to ‘verify’ information contained in the rendition statement."
According to a fairly angry group of business associations, HB3 would authorize contingency fee driven agents to root around in a company’s books and IRS filings looking to start an argument over valuations. The "bounty hunter" would presumably collect 20% of any tax increases they could gin up based on increased appraisals.
In a flier they put out, TTARA notes that other states have "rejected bounty hunter audits as contrary to public policy. Texas should not allow ‘fishing expeditions’ by private contingency fee firms with no public interest other than manufacturing fees."
As one trade association type said, "What does market value have to do with depreciation schedules?"
And it’s true. Book value as reflected by purchase price, federal tax filings or depreciation schedules have little or nothing to do with market value.
There is something fundamentally unsavory about the Texas Legislature authorizing appraisal districts to hire contingency fee-based "bounty hunters" to randomly root around in business books looking for commissions.
Truth is, none of the members knew what was in the version of HB3 they voted out of Ways and Means yesterday. Hopefully, they have now had a chance to read the bill.