Texas Pollution Control Exemptions Provide Property Tax Relief To Barge Owners
By John Woolard
Boats and barges operating in Texas waters are subject to property taxation in accordance with the Texas property tax code.
The basis for determining assessed value is:
Fair market value of the vessel
Less
Eligible exemptions
=
Taxable value
X
Texas allocation percentage
(Texas miles/total miles)
=
Assessed value
X
Tax rate
=
Annual tax liability
The two primary strategies for barge companies to reduce their annual property tax liability are: (1) appeal the market value, and (2) claim all available exemptions.
The Texas Commission on Environmental Quaility (TCEQ) “Prop 2” Tax Relief for Pollution Control Property program provides an opportunity to significantly reduce property taxes on double-hull tank barges built after Janaury 1, 1994.
By claiming exemptions on the incremental cost of the double hull, vapor control, and spill-prevention equipment, the annual property tax bill on an eligible tank barge can be reduced by 42 percent.
However, the multi-step qualifying process requires barge owners to “navigate the murky waters” of both the TCEQ and the local county appraisal district.
The initial exemption applications (for double hull, vapor control and spill prevention), including all supporting documentation, must be filed with the TCEQ by January 31.
Once approved, the TCEQ issues a “positive use determination” certificate, which must be attached to the exemption application filed with the local appraisal district by April 30. (Note: the required annual rendition listing of vessels and application for allocation are due by April 1.)
If the local appraisal district denies or fails to properly apply the exemption, a protest must be filed within 30 days after the issuance of the notice of value to avoid the risk of losing the benefit.
Although the exemption application process is time-consuming and deadline-specific, the property tax savings benefits make it worthwhile. For example, a barge owner with ten 10,000-barrel tank barges worth $1 million each will save approximately $105,000 annually (before allocation).
Even in states that do not provide pollution control exemptions, the tax assessor is often open-minded to allowing a “functional obsolescence” adjustment on the double-hull component that provides a property tax savings benefit consistent with Texas.
About the author: John Woolard is president of Industrial Property Tax Solutions (IPTS). He has more than 40 years experience managing and reducing property taxes and specializes in the inland marine transportation industry, including barge companies, shipyards, and liquid marine storage terminals.
