476 S.W.3d 752
Tex. App.2015Background
- Valerus Compression Services and Valerus Compression Services Management leased 43 compressors (5 in Reeves County, 38 in Loving County) as of January 1, 2012.
- Legislation amended Texas heavy equipment inventory taxation (Sections 23.1241 and 23.1242) effective January 1, 2012, changing market-value calculations to include lease/rental payments.
- Valerus sought to treat the compressors as heavy equipment dealer inventory and value them at a 12-month trailing lease-payment basis; taxes were remitted to Harris County, not Reeves/Loving.
- Appraisal Districts treated the compressors as taxable business personal property in Reeves and Loving Counties and challenged the valuation method as unconstitutional as applied.
- The trial court granted partial summary judgments: Valerus on applicability of the heavy-equipment statutes; Appraisal Districts on facial unconstitutionality; and it ruled situs in Reeves and Loving.
- On appeal, the Eighth District reversed in part, holding the statutes are not unconstitutional as applied and upheld the situs in Reeves and Loving.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Constitutionality as applied | Valerus contends 23.1241/23.1242 are constitutional as applied. | Appraisal Districts argue the statutes are unconstitutional as applied. | Not unconstitutional as applied; Valerus succeeds on this issue. |
| Taxable situs | Valerus urges Harris County situs via Form 50-265 and Section 23.1241(f). | Situs rests in Reeves and Loving Counties under Section 21.02(a). | Situs in Reeves and Loving Counties; Harris County not proper. |
Key Cases Cited
- Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931 (Tex. 1996) (taxation market value requires reasonable construction)
- Nootsie, Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659 (Tex. 1996) (market value classifications permissible if not arbitrary)
- FM Properties Operating Co. v. Williamson County Appraisal Dist., 947 S.W.2d 724 (Tex. 1997) (inventory valuation may use income-based method)
- City of Austin v. Cannizzo, 267 S.W.2d 808 (Tex. 1954) (definition of market value and tax proportionality groundwork)
- Davis v. City of Austin, 632 S.W.2d 331 (Tex. 1982) (presumption of tax situs in jurisdiction; burden on taxpayer to rebut)
- Gotham Ins. Co. v. Warren E&P, Inc., 455 S.W.3d 558 (Tex. 2014) (standing and relief requirements in cross-appeals)