Office of House Bill AnalysisH.B. 438
By: Gallego
Ways & Means


Under current law, certain tangible personal property is exempt from ad
valorem taxation if the property is detained in this state for assembling,
storing, manufacturing, processing, or fabricating purposes by the person
who acquired or imported the property.  However, property that would
otherwise be exempt, such as warehouse inventory, is subject to taxation by
the state which may place the Texas warehousing industry at a competitive
disadvantage to similar industries in neighboring states or across the
border.  House Bill 438 exempts tangible personal property that consists of
goods-in-transit from ad valorem taxation. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


House Bill 438 amends the Tax Code to provide a tax exemption for the
appraised value of the portion of a person's property that consists of
goods-in-transit.  The bill sets forth the method that the chief appraiser
is required to use in determining the appraised value of goods-in-transit
and the percentage of the market value of inventory or other property owned
by the property owner that was contributed by goods-in-transit. The bill
also provides exceptions in determining the appraised value or market value
if the property owner was not engaged in transporting goods-in-transit
intrastate for the entire preceding year or if the property owner or the
chief appraiser demonstrates that the calculation method significantly
understates or overstates the market value of the qualified exempted

H.B. 438 sets forth the methods by which the chief appraiser determines the
market value of goods-intransit that in the preceding year were used for
specified operations by the person who acquired or used the property in
maintaining or repairing a certified aircraft.  The bill provides that the
same tax exemptions apply to persons who operate warehouses used primarily
for storing cotton for intrastate as well as interstate transportation. 

The bill provides the chief appraiser the authority to require a property
owner, who claims an exemption for goods-in transit by a delivered written
notice to the property owner, to provide copies of property records to
determine if the goods-in-transit exemption satisfy the applicable


January 1, 2003 if the constitutional amendment to exempt from ad valorem
taxation tangible personal property held at certain locations only
temporarily for assembling, manufacturing, processing, or other commercial
purposes takes effect.