

Opinion issued May 10, 2012
 

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-11-00131-CV
———————————
City of Bellaire, Harris County, Houston Independent School
District, Port of Houston Authority of Harris County, Harris County Flood
Control District, Harris County Hospital District, Harris County Department of
education, and Houston Community College System, Appellants
V.
Efrem D.
Sewell d/b/a The Law Offices of Efrem D. Sewell, P.C., Appellee

 

 
On Appeal from the 164th District Court
Harris County, Texas

Trial Court Case No. 2009-33504
 

 
O P I N I O N
          Appellants,
Harris County, the Harris County Department of Education, the Port of Houston
Authority of Harris County, the Harris County Flood Control District, the Harris
County Hospital District, the Houston Independent School District, and the
Houston Community College System (collectively, “the taxing authorities”), sued
Efrem Sewell, d/b/a
The Law Offices of Efrem D. Sewell, P.C. (“Sewell”),
to recover delinquent ad valorem taxes on Sewell’s business personal
property.  The City of Bellaire (“the
City”) intervened, also seeking delinquent ad valorem taxes.  The trial court awarded the delinquent base
tax amounts to the taxing authorities and the City, but it did not award the
penalties and interest that had accrued on the delinquent taxes.  In one issue, the taxing authorities and the
City contend that the trial court erred by failing to award them the penalties
and interest to which they were statutorily entitled under the Texas Tax Code.
          We
reverse and remand.
Background
          The
taxing authorities brought suit against Sewell for delinquent ad valorem taxes
on his business personal property for the tax years 2002–2008 and sought
$22,991.62 in delinquent taxes, penalties for failure to file statutorily
required rendition statements, and statutory penalties and interest.  It is undisputed that Sewell did not render
his business personal property for any of the tax years at issue.  The taxing authorities additionally sought recovery of “all
delinquent taxes, penalties and interest, including taxes, penalties and
interest becoming delinquent during the pendency of this suit,” such as the
taxes and the associated penalties and interest for the 2009 tax year, which became
delinquent during the pendency of the suit. 
The taxing authorities joined the City as a party because it “may have a
claim and lien for delinquent taxes against all or part of the same
property.”  The City subsequently
intervened and sought recovery of $4,542.71 in delinquent taxes, penalties, and
interest for the 2002–2008 tax years and “all additional taxes which become
delinquent on such property prior to judgment, as well as any additional
penalties and interest which accrue prior to or after judgment.”
          At a bench trial on November 29, 2010,
the taxing authorities and the City introduced certified copies of Sewell’s
delinquent tax statements for tax years 2002–2009, issued by the Harris County
Tax Assessor-Collector, which reflected the base tax owed and the statutory
penalties, interest, and rendition penalties assessed.  Sewell argued that collection of the
delinquent taxes, penalties, and interest for the 2002–2004 tax years was
barred by limitations, and the trial court agreed and rendered judgment to this
effect.[1]  The final judgment included a table setting
out the delinquent base tax, the penalties and interest accrued, and the total
amounts owed to Harris County,[2]
the Houston Independent School District, the Houston Community College System,
and the City.  These amounts corresponded
to the entries for the base taxes, penalties, and interest for each taxing unit
for the tax years 2005–2009 as shown in the certified tax statements.  In the judgment, the trial court crossed out
the columns for “Penalty & Interest” and “Total,” and instead handwrote a
total of $12,834.59 underneath the “Delinquent Base Tax” column.  The trial court also awarded post-judgment
interest and costs to the taxing authorities and the City and placed a tax lien
against Sewell’s property.
          The taxing authorities requested that
the trial court file findings of fact and conclusions of law, and they later
requested past-due findings and conclusions. 
The trial court never responded.
          Both the taxing authorities and the
City moved for a new trial.  They argued
that the certified tax statements established a prima facie case of the amount
of delinquent taxes, penalties, and interest that Sewell owed to each taxing
unit.  They noted that Sewell had
complained at trial that the “[appraised] value [of his business personal
property] was too high,” but they argued that no section of the Tax Code allows
the trial court to waive the statutory penalties and interest on this basis and
that the only waivers authorized by the Tax Code were not applicable to this
case.  They argued that the trial court
should have granted relief “in the full amount requested,” and they requested
that the court modify its judgment to include the amount of assessed penalties
and accrued interest as shown on the certified tax statements.  These motions were overruled by operation of
law.
Penalties and Interest on Delinquent Ad Valorem Taxes
          In
their sole issue, the taxing authorities and the City contend that the trial
court erred in awarding them only delinquent taxes because they are also statutorily
entitled to the penalties and interest that have accrued on the delinquent
taxes.
          The
Tax Code provides that generally, with exceptions not applicable here, ad
valorem taxes are delinquent “if not paid before February 1 of the year
following the year in which [the taxes are] imposed.”  Tex. Tax Code Ann. § 31.02(a) (Vernon
2008).  Tax Code
section 33.01 provides that a delinquent tax incurs a penalty of six percent of
the amount of the tax for the first calendar month the tax is delinquent, plus
one percent for each additional month the tax remains unpaid prior to July 1 of
the year in which it becomes delinquent. 
Id.
§ 33.01(a) (Vernon 2008). 
If, however, the tax remains unpaid on July 1, the tax incurs a total
penalty of twelve percent of the amount of the tax, regardless of how many
months the tax has been delinquent.  Id. 
Delinquent taxes continue to incur this penalty as long as the taxes
remain unpaid, regardless of whether a judgment for the delinquent taxes has
been rendered.  Id.  A delinquent tax also
accrues interest at the rate of one percent for each month the tax remains
unpaid, regardless of whether a judgment has been rendered.  Id. § 33.01(c).
The taxing unit may also provide
that taxes that remain unpaid on July 1 “incur an additional penalty to defray
costs of collection” if the unit contracts with an attorney for collection
purposes pursuant to Tax Code section 6.30. 
Id. § 33.07(a) (Vernon
2008); see also id. § 6.30(c) (Vernon
2008) (“The governing body of a taxing unit may contract with any competent
attorney to represent the unit to enforce the collection of delinquent
taxes.  The attorney’s compensation is
set in the contract, but the total amount of compensation provided may not exceed
20 percent of the amount of delinquent tax, penalty, and interest
collected.”).  The amount of the penalty
may not exceed the amount of compensation specified in the contract with the
collections attorney.  See id. § 33.07(a).
Additionally, taxpayers are
required to “render for taxation all tangible personal property used for the
production of income that the person owns . . . on
January 1.”  Id. § 22.01(a) (Vernon Supp. 2011) (listing requirements for
rendition statement).  If a taxpayer
fails to timely file a rendition statement, “the chief appraiser shall impose a
penalty . . . in an amount equal
to 10 percent of the total amount of taxes imposed on the property for that
year by taxing units participating in the appraisal district.”  Id. § 22.28(a) (Vernon Supp. 2011); Sturgis Air One, L.L.C. v. Harris Cnty. Appraisal Dist., 351 S.W.3d 381, 386 (Tex. App.—Houston [14th Dist.]
2011, no pet.) (“An untimely rendition results in the ten
percent penalty mandated by Section 22.28.”); Indus. Commc’ns, Inc. v. Ward Cnty. Appraisal Dist., 296 S.W.3d 707, 720 (Tex.
App.—El Paso 2009, pet. denied) (“The Tax Code imposes substantial penalties on
a person who fails to render property for taxation.”).
Tax Code section 33.011 contains provisions in which waiver
of the assessed penalties by the governing body of the taxing unit is mandatory
and waiver of the accrued interest is discretionary, as well as provisions in
which waiver of both the penalties and the interest is discretionary.  See Tex. Tax. Code Ann. § 33.011 (Vernon
2008).  For these
waivers to apply, both of these provisions require, among other things, the
taxpayer to pay the delinquent tax not later than the 21st day after the date
the taxpayer knows or should have known of the delinquency.  See id.
§ 33.011(a)(1), (3).  It is undisputed that Sewell has never paid
any portion of the taxes assessed, and thus the waiver provisions of section
33.011 are inapplicable.
          Tax
Code section 33.41 authorizes a taxing unit, “[a]t any time after its tax on
property becomes delinquent,” to file suit to enforce the taxpayer’s personal
liability for the tax.  Id. § 33.41(a) (Vernon
2008).  In this suit, the taxing
unit must “join other taxing units that have claims for delinquent taxes
against all or part of the same property.” 
Id.
§ 33.44(a) (Vernon 2008). 
Section 33.47(a) provides:
In a suit to collect a
delinquent tax, the taxing unit’s current tax roll and delinquent tax roll or
certified copies of the entries showing the property and the amount of the tax
and penalties imposed and interest accrued constitute prima facie evidence that
each person charged with a duty relating to the imposition of the tax has
complied with all requirements of law and that the amount of tax alleged to be
delinquent against the property and the amount of penalties and interest due on
that tax as listed are the correct amounts.
 
Id.
§ 33.47(a) (Vernon 2008). 
Once a taxing authority in a delinquency suit introduces the tax records
described in section 33.47(a) into evidence, it establishes a prima facie case
“as to every material fact necessary to establish its cause of action.”  Nat’l
Med. Fin. Servs., Inc. v. Irving Indep.
Sch. Dist., 150 S.W.3d 901, 906 (Tex. App.—Dallas 2004, no pet.); see also Maximum Med. Improvement, Inc. v. Cnty. of Dallas, 272 S.W.3d
832, 835 (Tex. App.—Dallas 2008, no pet.) (stating
same); Reinmiller v. Cnty. of Dallas, 212 S.W.3d 835, 836–37 (Tex. App.—Eastland
2006, pet. denied) (stating same); Aldine
Indep. Sch. Dist. v. Ogg, 122 S.W.3d 257, 264
(Tex. App.—Houston [1st Dist.] 2003, no pet.) (stating same).  A
rebuttable presumption then arises that the taxes in question are due,
delinquent, and unpaid.  Nat’l Med. Fin. Servs.,
150 S.W.3d at 906. 
After the taxing authority makes its prima facie case by introducing the
required records, the burden of proof then shifts to the taxpayer to show, by
introducing competent evidence, that he has paid the full amount of taxes,
penalties, and interest or that there is some other defense that applies to his
case.  Id.; see also Estates of
Elkins v. Cnty. of Dallas,
146 S.W.3d 826, 829 (Tex. App.—Dallas 2004, no pet.) (“Unless the taxpayer
establishes independent reasons why the taxing authority should not recover,
the taxing authority is entitled to judgment.”).
          Taxing
units are statutorily entitled to penalties and interest on delinquent taxes
pursuant to Tax Code chapter 33.  See Tex.
Tax Code Ann. § 33.01(a) (“[A] tax delinquent on July 1 incurs a
total penalty of twelve percent of the amount of the delinquent
tax . . . .”), (c) (“A delinquent tax accrues interest at a
rate of one percent for each month . . . the tax remains
unpaid.”); see also Atl. Shippers of
Tex., Inc. v. Jefferson Cnty., No.
09-10-00511-CV, 2012 WL 746299, at *5 (Tex. App.—Beaumont Mar. 8, 2012, no pet.
h.) (“The Tax Code further provides that a delinquent tax incurs statutory
penalties and accrues interest.”); Galveston
Indep. Sch. Dist. v. Heartland Fed.
Sav.
& Loan Ass’n, 159 B.R. 198, 205 (S.D. Tex.
1993) (applying section 33.01(c) and holding, “[T]he Taxing Authorities are
entitled to statutory interest for every month or portion of a month after
August 26, 1991, in which the 1990 taxes remained unpaid”).  Tax Code section 33.52(b), which addresses
the form of the judgment in a delinquent tax suit, provides that “[i]n lieu of stating as a liquidated amount the aggregate
total of taxes, penalties, and interest due, a judgment may: (1) set out the
tax due each taxing unit for each year; and (2) provide that penalties and
interest accrue on the unpaid taxes as provided by Subchapter A [of chapter
33].”  Tex.
Tax Code Ann. § 33.52(b)
(Vernon Supp. 2011). 
In either circumstance, the judgment must award applicable penalties and
interest in addition to the delinquent tax. 
Unless one of the waiver provisions of section 33.011 applies, which is
not the case here, the trial court has no discretion to omit an award of
penalties and interest from the judgment if the taxing units have established
their prima facie entitlement to relief and the taxpayer provides no contrary
evidence or legal arguments for why the penalties and interest should not be
awarded.  See Atl. Shippers, 2012 WL 746299, at *5 (“[W]e conclude
the summary judgment evidence establishes, as a matter of law, that Atlantic
failed to pay its taxes by the statutory
deadlines. . . .  We hold the trial
court correctly concluded that Atlantic, as a matter of law, owed penalties and
interest on tax years 2005, 2006, and 2007.”); see also Carrollton-Farmers Branch Indep. Sch. Dist. v. JPD, Inc., 168 S.W.3d 184, 188 (Tex. App.—Dallas 2005, no
pet.) (“Once the appraised value is finally
determined, the tax rolls are corrected and the current tax roll is used to
calculate penalties and interest recoverable in a delinquency lawsuit under
chapter 33.”); Richardson Indep. Sch. Dist. v. GE Capital Corp., 58
S.W.3d 290, 294–95 (Tex. App.—Dallas 2001, no pet.) (“By
changing the amount of tax owed, the corrected tax bill changes the amount of
tax on which delinquency penalties are assessed; however, it does not purport
to eliminate the property owner’s liability for penalties from the failure to
pay the original tax bill.”).
          Here,
the taxing authorities and the City complied with section 33.47(a) by introducing
into evidence certified copies of the delinquent tax statements for tax years
2002–2009.  These statements demonstrated
the delinquent tax owed, the applicable penalties, including rendition
penalties, and the accrued interest assessed for each taxing unit and each tax
year.  The taxing authorities and the
City thus established a prima facie case “as to every material fact necessary
to establish [their] cause of action.”  Nat’l Med. Fin. Servs.,
Inc., 150 S.W.3d at 906.  The burden then shifted to Sewell to
introduce competent evidence showing either that he paid the full amount of
taxes, penalties, and interest, or that some other defense applied to his case.  Id.  Aside from asserting limitations with regard
to the 2002–2004 tax years, which the taxing authorities and the City conceded,
and arguing that his property was overvalued, which is not a proper defense in
a suit to recover delinquent taxes,[3] Sewell asserted no other
defenses, and he presented no evidence that he had paid the full amount of
taxes, penalties, and interest.
          We
conclude that the taxing authorities and the City were statutorily entitled to
penalties and interest accrued on Sewell’s delinquent taxes for tax years
2005–2009.  We hold that the trial court
erred in failing to award the applicable penalties and interest to the taxing
authorities and the City in its final judgment.[4]
          We
sustain the taxing authorities’ and the City’s sole issue.
Conclusion
          We
reverse the judgment of the trial court insofar as it failed to award
applicable penalties and interest to the taxing authorities and the City and
remand the case to the trial court for calculation of the amount of penalties
and interest to which the taxing authorities and the City are statutorily
entitled.
 
 
                                                                   Evelyn
V. Keyes
                                                                   Justice

 
Panel
consists of Justices Keyes, Bland, and Sharp.




[1]           See
Tex. Tax Code Ann. § 33.05(a)(1) (Vernon 2008) (“Personal property may not be seized and
a suit may not be filed to collect a tax on personal property that has been
delinquent more than four years.”).  The
trial court ruled that “Plaintiff(s) HISD, HCCS, and HARRIS COUNTY take nothing
against the Defendant(s) as to tax years 2002 through 2004” on the basis of
limitations.  The taxing authorities do
not challenge this ruling on appeal.  The
trial court did not, however, so limit the City’s recovery.  Instead, the final judgment awarded $3,018.50
to the City.  This amount corresponds to
the total amount of base taxes payable to the City for tax years 2002–2009 as
reflected on the certified copy of the tax assessor-collector’s records.  On appeal, however, the City argues that it
“does not request recovery of [the 2002–2004] tax years,” and it instead
requests rendition of judgment in the amount of $3,858.05:  $2,196.19 for “2005–2009 base tax and rendition penalty” and $1,661.86 for
statutory penalties and interest. 
(Emphasis added.)
 


[2]           The trial court referred to Harris
County, the Harris County Department of Education, the Port of Houston
Authority of Harris County, the Harris County Flood Control District, and the
Harris County Hospital District collectively as “Harris County.”


[3]           Complaints that the appraisal district
overvalued the taxpayer’s property are properly raised in proceedings pursuant
to Tax Code chapters 41 and 42, involving a protest of the appraised value
before the appraisal review board and judicial review of the appraisal review
board’s administrative determination in the district court.  See
Tex. Tax Code Ann. §§ 41.01–.71, 42.01–.43 (Vernon 2008 &
Supp. 2011).  Except
for exceptions not applicable here, the administrative procedures for
adjudicating valuation protests are “exclusive, and a property owner may not
raise any of those grounds in defense to a suit to enforce collection of
delinquent taxes.”  Id. § 42.09(a)(1) (Vernon 2008); see also Nev. Gold & Silver, Inc. v.
Andrews Indep. Sch. Dist., 225 S.W.3d 68, 76 (Tex. App.—El Paso 2005, no pet.)
(“[F]ailure to exhaust the administrative remedies
precludes judicial review of the appraisal and also deprives the property owner
of the right to raise such protest as a defense against a suit to enforce
collection of delinquent taxes.”); Reed
v. Prince, 194 S.W.3d 101, 107 (Tex. App.—Texarkana 2006, pet. denied) (“A
taxpayer must meet specific and mandatory provisions of the Tax Code in order
to challenge the amount of taxes assessed against a property.”) (citing Tex. Tax Code Ann. §§ 41.01–.71 (Vernon
2008 & Supp. 2011)). 
Thus, because Sewell could not properly assert overvaluation as a
defense to payment of the delinquent taxes, penalties, and interest, the trial
court could not refuse to award penalties and interest to the taxing
authorities and the City on this basis.
 


[4]           The City requests that we reverse and
render judgment that it is entitled to $3,858.05, the total amount of
delinquent taxes, rendition penalties, and section 33.01 penalties and interest
for the 2005–2009 tax years as stated in the certified tax statements.  We note that section 33.01 provides that
penalties and interest continue to accrue “as long as the tax remains unpaid,
regardless of whether a judgment for the delinquent tax has been
rendered.”  Tex. Tax Code Ann. § 33.01(a), (c) (Vernon 2008).  We therefore remand this case to the trial
court to determine the amount of penalties and interest to which the taxing
authorities and the City are entitled under the Tax Code.


