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

89(R) HB 3424 - Enrolled version - Bill Text

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