Foreign Trade Zone Appeal

The Texas Property Tax code is clear on that a property is located in a Foreign Trade Zone (FTZ) is exempt from property taxation.  We had an appeal in late 2011 in which the taxpayer was able to obtain a FTZ status in late 2010 through application process with a federal agency.  They filed a rendition for the property and noted that the property had obtained a FTZ status.  Unfortunately they filed their rendition late.   A 2011 notice of value was issued and the taxpayer did not file a timely appeal.  After the 2011 tax roll was certified the taxpayer discovered that they had not been granted FTZ exemption.  The taxpayer contacted the appraisal district and over the course of months convinced the staff that they were entitled to FTZ exemption.  The appraisal district (district) decided that since they had already certified the 2011 tax roll to the taxing entities they could not move forward with the exemption.  We appealed to the appraisal review board (ARB) claiming that we were never notified of a rejection of the FTZ exemption which the district had earlier acknowledged in writing that the property did qualify for FTZ exemption.  The ARB ruled in favor of district and the taxpayer filed suit in district court.  A settlement was reach in litigation and the taxpayer agreed to pay a 10% penalty on the original proposed value plus a token amount on returned and damaged inventory which had been returned to the property owner prior to 1/1/12.

There is a clear and important lesson to be learned from the case:

  • File renditions timely.
  • After receiving a notice of value take action and do not assume anything.
  • If a taxpayer obtains or is attempting to gain an exemption notify the district in writhing.
  • Document all communications with a district.