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Integrity • Tenacity • Clarity
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[Speaker 1] (00:00:00)
Hey, today we’re going to talk about Texas exemption.
And so what are the most common missed opportunities when you take on new client and do their compliance work?
[Speaker 2] (00:00:12)
That’s a really good question because, you know, Texas exemptions are worth a lot of savings.
You definitely don’t want to miss out on them.
So what we find is when we take on a new client and they had previously been doing their own property tax work and compliance in-house is that they miss out on exemptions such as the Freeport exemption and the biomedical exemption.
And then the other big win is the pollution control exemption.
[Speaker 1] (00:00:40)
So how do people miss out on the Freeport exemption?
[Speaker 2] (00:00:44)
Well, often people think that their inventory doesn’t qualify.
There are qualifications and you do have to apply every year.
But sometimes people think they don’t qualify and so they don’t apply for it.
The best way to not get an exemption is to not apply for it.
But we have found so many times that they were actually eligible.
And without knowing all the intricacies of property tax code, they were missing out on a very important exemption.
One of the reasons is they think that maybe that their inventory doesn’t turn more than two times a year.
It has to turn in 175 days or less.
And we can help them with that by maybe identifying some inventory that doesn’t turn at all.
And we render that separately at its full value.
And then we render the inventory that is turning and does qualify as part of the Freeport exemption.
And they turn out they were eligible all along.
Another reason that they think they don’t qualify is that they ship all of their inventory to somewhere local within Texas.
Not realizing that their client may be turning around and shipping that out of the state.
And therefore, it’s still leaving the state in 175 days or less.
And they could piggyback off of their client’s existing Freeport.
So I would suggest that if you have inventory that is shipped out of Texas and you want to know if you’re qualified or not,
you’ll give ITC Tax a call and we will walk through those scenarios with you.
[Speaker 1] (00:02:26)
And so what is the alternative inventory valuation date of September 1?
[Speaker 2] (00:02:32)
You have the choice to render your inventory cost as of September 1 or as of January 1.
And it’s automatically January 1 unless you request a September 1 inventory valuation.
And so it’s important for people that are seasonal.
Maybe you’re gearing up for Christmas and you have more inventory in September.
You wouldn’t want to do that.
But if you have less inventory in September and more in January,
you would want to choose that option because your inventory balance would be lower in September.
And therefore, your property taxes would also be lower on that inventory.
[Speaker 1] (00:03:12)
Thank you.
So is there any other exemption that we should pay attention to?
Yes.
[Speaker 2] (00:03:24)
There’s the pollution control exemption.
And it really applies to a lot of people.
And they’re not aware of it.
But because you often have to get a permit to operate,
there’s all kinds of rules that you have to follow that are regulatory.
Emissions rules and such.
Water treatment rules.
Any equipment that you have to put in in order to meet those regulations
can qualify for pollution control exemption.
A use of determination from TCEQ makes the value of that equipment exempt from property taxes.
For as long as you own it, you only have to do the application the first year
and you don’t have to apply again after that.
The other exemption that was recently passed,
so a lot of people haven’t heard of it, was the biomedical exemption.
And that’s for biomedical companies.
And it exempts your machinery and equipment for making the biomedical equipment or inventory.
It exempts your finished goods.
So this is another Texas exemption that if you think you qualify for,
you should give us a call and make sure you get any exemption that’s coming to you.
[Speaker 1] (00:04:39)
Thank you, Dawn.
Also, go back to the Freeport.
I heard that there’s a new change on the Freeport exemption deadline.
Is it true?
[Speaker 2] (00:04:49)
It is.
So it used to be all exemption applications have to be in by April 30th.
And your rendition needs to be filed by April 15th.
You can extend your rendition by 30 days.
So if you filed an extension for your rendition and it got it extended to May 15th,
in the past, your Freeport exemption was still due April 30th.
But now the legislature has changed the rules.
So if you get an extension on your rendition to May 15th, it automatically also extends your Freeport application to May 15th.
Making it so people don’t have to file two mailings instead of one.
[Speaker 1] (00:05:37)
Okay.
So is there any application fee applied to any of the exemption that we just talked about?
No, Trudy.
[Speaker 2] (00:05:45)
There’s no application fee for filing an application for any exemption to the appraisal district.
The only fee associated with an application for an exemption is the fee you have to pay the TCEQ in order for them to determine whether or not your assets are solely used for pollution control.
[Speaker 1] (00:06:05)
And I heard that for that pollution control application fee, they have a separate tier that apply, like the fee structure or something like that.
[Speaker 2] (00:06:16)
There are different tier levels for pollution control property.
The first level is a tier one, and that application fee is $150.
And that is for assets that the TCEQ has already identified as being 100% pollution control.
They’re very common items.
For instance, a paint booth, water trucks, dust collectors.
All of those are on the tier one list, and that fee is $150.
And then you can go up to second tier, which is more complicated equipment that would take further review.
And then there’s also the tier three, which is if you are making some money off of that same equipment, it’s producing a byproduct.
So it’s not 100% pollution control.
The TCEQ can still grant you some level of exemption based on the relationship with the money it’s bringing in and the part of it that is solely for pollution control.
They will come up with a percent exemption.
[Speaker 1] (00:07:20)
So what is the biggest deadline coming up that you think everyone needs to pay attention to?
[Speaker 2] (00:07:26)
It’s a great question.
So Texas renditions are due April 15th.
So the first thing you need to do is either have that prepared, get it mailed, or you can ask for an extension.
They’re automatically granted, but they have to be mailed into the appraisal district prior to April 15th.
And then the second deadline is exemption applications are due April 30th.
So that’s all of them unless you have extended your rendition deadline to May 15th.
And the free port exemption is also extended to May 15th.
What I really want to be clear about is the Postal Service has changed their methods and their procedures.
And they used to scan your letter when you dropped it off.
And so you would get a postmark of that day.
And everybody’s relied on that to pay their income taxes and file their property taxes.
Now they have changed their processes to they don’t scan it until it gets to the sorting center, which could be one or two days later.
So you either need to send it very, very early, your rendition.
If it’s a property tax statement, pay it online.
But if you are going to file your renditions by paper through the mail, we advise you to walk it inside and get them to scan it right there and to send it certified so that you can track it and prove that you mailed it timely.
[Speaker 1] (00:09:00)
Yes, I agree.
And I think also it’s so important to remind the client when to send our data so that the agent will have some time to look at the data and make sure that we mailed it out on time.
Right?
What do you think?
That is correct.
[Speaker 2] (00:09:23)
Yes.
So please send in your data to your agent as soon as possible so they can analyze it, get your compliance done.
And we send everything certified mail so that we can always track exactly when it was mailed and that we were compliant and timely.
[Speaker 1] (00:09:42)
All right.
Thanks, Dawn.
It was very good information that I learned a lot today from you.
And is there anything else that you want to tell me, everyone, about?
[Speaker 2] (00:09:55)
Yes.
Please reach out to itctax.com with any questions.
We’re happy to answer your questions.
We don’t want you to miss out on any exemptions.
It’s not critical that you know everything today.
Just know what’s available and know where to find us.
itctax.com.
Yes.
[Speaker 1] (00:10:14)
Thank you, Dawn.
[Unknown] (00:10:16)
Thank you.