SECTION 9.4033. Allocation of Value

(a) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Commercial instrument or commercial equipment--Tangible personal property used for a business purpose, which includes, but is not limited to, commercial and business aircraft, rolling stock not owned or leased by a railroad, motor vehicle, shipping containers, vessels and watercraft (except for special purpose vessels and watercraft used as an instrumentality of commerce as defined in Tax Code, §21.031), mobile construction or drilling equipment, and mobile equipment of any other sort. The term does not include goods, wares, ores, or merchandise held for sale or resale, stored, warehoused, or in the process of assembly, manufacture, or refinement on January 1.

(2) Jurisdiction to tax--The legal power to levy a property tax on a property, regardless of whether the power to tax is exercised.

(3) Situs jurisdiction--A taxing unit, state, or nation that has jurisdiction to tax a property because of the property's location or use, or because of the owner's domicile or principal place of business.

(4) Used continually--Used several times on regular routes or for several tasks in close succession throughout the year.

(b) A property owner may apply for the allocation of total market value of a vessel, special-purpose vessel, or other watercraft.

(1) The allocation of taxable value of vessels and other watercraft used outside this state shall be determined according to the provisions of Tax Code, §21.021 and §21.031.

(2) To receive an allocation of value for vessels and other watercraft, a property owner must apply for the allocation on the comptroller-prescribed, model form Application for Interstate Allocation of Vessels or Other Watercraft or a form containing information which is in substantial compliance with the model form if approved by the comptroller. A person filing an allocation application form must include all information required by the form. The application must be filed with the chief appraiser for the district in which the property is taxable and must be filed prior to the approval of appraisal records by the appraisal board.

(3) If the chief appraiser determines that he needs information in addition to that furnished on the application, he may request additional information by written notice delivered to the property owner. A taxpayer shall furnish any additional information required within 15 days after the date the notice is mailed.

(c) The guidelines for determination of jurisdiction to tax are as follows.

(1) The chief appraiser shall determine whether property is within the taxing jurisdiction of another state or nation from the evidence supplied by the property owner. The burden of proof in establishing such jurisdiction is upon the property owner.

(2) The State of Texas has jurisdiction to tax property if:

(A) it is physically present within the State of Texas on January 1 for more than a temporary period;

(B) it has been used continually in Texas during the 12 months preceding January 1, regardless of its location on January 1; or

(C) its owner resides or does business in Texas and the property is outside Texas for a temporary period on January 1.

(3) Property is within the jurisdiction to tax of another state or nation if:

(A) it is physically present within that state or nation's boundaries on the state or nation's property tax lien date for more than a temporary period;

(B) it has been used continually in the state or nation during the 12 months preceding January 1, regardless of its location on January 1;

(C) its owner resides or does business in that state or nation and the property is outside that state or nation for temporary period on January 1; or

(D) the state or nation has in fact assessed a property tax against the property.

(4) Property is neither physically present nor used in a jurisdiction when it flies over the jurisdiction without landing.

(5) Property that leaves the boundaries of this state, and returns without being exposed to the taxing jurisdiction of another state or nation, remains within this state's taxing jurisdiction for the duration of the trip.

(6) Property is not within the jurisdiction to tax of this state or any other state of the United States if:

(A) it is an instrumentality of commerce;

(B) it is owned by a foreign domiciliary;

(C) it is taxed in the nation where its owner is domiciled;

(D) it is used exclusively in foreign commerce; and

(E) it is not present in this state for more than a temporary period on January 1.

(7) The chief appraiser may consider the following evidence in determining where a property has taxable situs:

(A) published schedules, if the property carries passengers and/or cargo on regular routes at regular times;

(B) records kept in the normal course of business, such as mileage, flight, or vessel logs, that indicate where the property has traveled, how long it was located at each destination, and the purpose of its location at each destination;

(C) reports filed with state or national agencies that indicate where the property has traveled, how long it was located at destination, and the purpose of its location at each destination; and

(D) actual tax bills or notices of appraisal or assessment from other jurisdictions.

(d) The chief appraiser shall allocate the market value of that property used in interstate or foreign commerce that qualifies for allocation under this subsection.

(1) Property qualifies for allocation if it:

(A) constitutes a commercial instrument or commercial equipment;

(B) is used for a business purpose;

(C) has taxable situs in a taxing unit within the appraisal district as provided by Tax Code, §21.02 or §21.021; and

(D) is used continually outside Texas in interstate or foreign commerce, whether regularly or irregularly.

(2) A commercial instrument or item of business equipment is present in the state for more than a temporary period if:

(A) its owner maintains one or more places of business in this state and the property is present in this state on January 1 or at any time during the 12 months preceding January 1; and

(B) the property has contact with this state of a character that would permit this state to tax it under applicable federal law.

(e) A property owner who is entitled to an allocation of property must file a rendition form that provides enough information necessary to prove the entitlement to allocation and permit the chief appraiser to apply an allocation formula appropriate to the subject property. An appraisal district shall use the comptroller-prescribed, model form Rendition of Property Qualified for Allocation of Value or a form containing information which is in substantial compliance with the model form if approved by the comptroller. Each form shall require the property owner to identify the property that is the subject of the rendition and provide information measuring the use of the property within Texas and within other states or nations. The form must permit the property owner to state an opinion of the total market value of the property and the amount of value that should be allocated to each taxing unit in which the property has situs.

(f) If the chief appraiser determines that the property was within the taxing jurisdiction of this state and within the taxing jurisdiction of another state or nation for the same calendar year, he shall allocate to each taxing unit in which the property has situs the portion of the property's market value that fairly reflects its use in this state. If an allocation formula specified in this subsection does not fairly reflect the use of the property in this state and other situs jurisdictions, the chief appraiser may use another formula that more adequately reflects use. Such alternate formulas may include revenue-ton miles, equipment load factors, or other measures of property use.

(1) For commercial aircraft property, as defined by Tax Code, §21.055, the chief appraiser shall use the following allocation formula: the fair market value of the aircraft multiplied by a fraction, the numerator of which is the product of 1.5 and the number of revenue departures by the aircraft from Texas during the preceding tax year and the denominator of which is the greater of:

(A) the number of hours in a year (8,760); or

(B) the numerator.

(2) For vessels, the chief appraiser will normally use an allocation formula based on port days. The ratio of the days the vessel spends in port in Texas to total days spent in port in all situs jurisdictions is the allocation ratio.

(3) For motor vehicles and rolling stock, not including vessels or aircraft, the chief appraiser will normally use an allocation formula based on mileage. The ratio of total miles traveled in Texas during the year to the total miles traveled in all situs jurisdictions during the year is the allocation ratio.

(4) For business aircraft property as defined by Tax Code, §21.055, the chief appraiser shall use the following allocation formula: the fair market value of the aircraft multiplied by a fraction, the numerator of which is the number departures by the aircraft from a location in Texas during the preceding tax year and the denominator of which is the number departures by the aircraft from all locations during the preceding tax year.

(5) For other equipment, the chief appraiser will normally use an allocation formula based on time. The ratio of time spent in Texas during the year to the total time spent in all situs jurisdictions during the year is the allocation ratio.

(g) If the appraisal office allocates the value of property in a given year:

(1) the chief appraiser shall note on the property's appraisal record for the year:

(A) that the allocation has been granted;

(B) the market value of the property;

(C) the allocation formula factor; and

(D) the appraised value of the property after allocation.

(2) the chief appraiser shall retain a record of the allocation for three years after it is granted, including:

(A) the rendition form requesting allocation;

(B) supporting documents filed by the property owner; and

(C) the formula chosen and calculations used in making the allocations.

(h) The comptroller's forms applicable to this section may be revised at the discretion of the comptroller. Current forms can be obtained from the Comptroller of Public Accounts' Property Tax Assistance Division.

Source Note: The provisions of this §9.4033 adopted to be effective December 13, 1996, 21 TexReg 11816; amended to be effective February 3, 1998, 23 TexReg 800; amended to be effective March 14, 2004, 29 TexReg 2371; amended to be effective October 10, 2010, 35 TexReg 9107