Interstate Allocation

Interstate Allocation, Texas Property Tax Code Sec. 21.03

In 1982 Section 21.03 of the Texas Property Tax Code was established to provide an appraisal method for property taxable in Texas but used regularly or irregularly out of state that fairly reflects its use in this state.  While the wording of the section is somewhat ambiguous the meaning to taxpayers is pretty simple.  If you own mobile personal property that is used out of state in the previous year a special valuation method is available to you which can result in substantial tax savings.

Interstate Allocation is not an exemption so filing for this status is not through an application but through a Rendition of Property Qualified for Allocation.  This special rendition must be filed with the Texas Appraisal District where the property is taxable between January 1st and April 15th of each tax year.  An automatic 30 day extension is available upon request with an addition 15 day extension possible for good cause.

Various types of property are eligible for this valuation but it is imperative that the owner be able to document/quantify use in this state and other states.  This documentation is often in the form of travel logs by mileage but any data that establishes measurable use in other states will do.  Tractor trucks, vessels, automotive fleets, salesman vehicles, commercial and business aircraft among others are types of assets possibly subject to this appraisal option.

Once you have submitted the rendition for your property subject to allocation the calculation are pretty simple (excepting commercial aircraft) and are generally total use in Texas divided by total use equals percent taxable in this state.

For example, a trucking company in Texas has a truck tractor which has a market value of $100,000 as of 01-01-2012.  Mileage logs for the truck indicate the truck traveled 50,000 miles in Texas and 200,000 miles in other states.  50,000/250,000 = 20% so the actual taxable value of the truck for the year is $20,000.  If the tax rate for the county where the company is located is 2.75% the resulting tax savings for the allocation method is $2,200.  Imagine the tax savings for a fleet of interstate trucks.

This same methodology with some differences in calculation requirements can be applied to aircraft, vessels, and even equipment.  If you are eligible for appraisal under this section you should be taking advantage of the significant tax savings.  Assessment Advisors agents have over 20 years experience dealing with allocated property so help is call away.