Property Tax Payment Refunds

A taxpayer does not have to apply for an automatic refund. The collector must automatically grant the refund and pay it, often along with interest. Automatic refunds include appraisal roll corrections, tax roll corrections, approved late homestead exemptions, voter-approval election reductions, court-ordered appraisal roll changes and duplicate payments.

Appraisal Roll Corrections (Tax Code Section 25.25)
Tax Code Section 25.25 and Chapters 41, 41A and 42 allow changes to the appraisal roll for the following reasons:

• court judgments reducing taxable value;
• determinations through binding arbitration;
• multiple appraisals;
• one-fourth over-appraisal error for residence homesteads;
• one-third over-appraisal error for non-residence homesteads;
• an erroneous denial or cancellation of a residence homestead exemption if the applicant or recipient is disabled, 65 or older or is a surviving spouse of a person who qualified for the 65 or older residence homestead exemption;
• an erroneous denial or cancellation of a 100 percent disabled veteran exemption under Tax Code Section 11.131 or a disabled veteran exemption under Tax Code Section 11.22;
• a clerical error; or
• another inaccuracy as prescribed by board rule that does not increase a person’s tax liability.

The chief appraiser certifies each change made to the assessor for each taxing unit affected within five days of making the change and the assessor enters the same changes to the tax roll. If the correction in the tax roll decreases the tax liability of a property owner after the owner has paid the tax, the taxing unit must refund the overpaid taxes within 60 days of correcting the tax roll.

Late Granted Exemptions (Tax Code Sections 11.431, 11.438 and 11.439)
The Tax Code allows a chief appraiser to approve the following late exemption applications, which may result in a refund:

• residence homesteads (Tax Code Section 11.431);
• veteran’s organization exemption (Tax Code Section 11.438); and
• disabled veteran’s exemption (Tax Code Section 11.439).

After approving a late exemption application, the chief appraiser notifies the collector for each taxing unit with jurisdiction to tax the property. Within 60 days, the collector must automatically refund the difference to the person who was the owner of the property on the date the tax was paid.

Tax Roll Corrections (Tax Code Section 26.15)
A taxing unit’s assessor must enter tax roll changes resulting from:

• a chief appraiser’s changes to the appraisal roll; or
• a governing body’s order to correct a mathematical error.

If a correction decreases the property owner’s tax liability after the owner has paid the tax, the taxing unit must automatically refund the resulting overpayment within 60 days of correcting the tax roll.

Reduction of Tax Rate Following Tax Rate Election
If a tax rate election under Tax Code Section 26.07, 26.075 or 26.08 reduces an adopted tax rate to the voter-approval tax rate, the assessor recalculates the tax and mails corrected bills. If a property owner has already paid taxes calculated using the higher tax rate, the taxing unit must automatically refund the overpayment if it is $1 or more.

A taxpayer must request a refund within 90 days if the overpayment is less than $1.

Duplicate Payments (Tax Code Section 31.111)
If a collector discovers that a taxpayer mistakenly paid a tax because another person paid the identical tax amount on the same property, the collector must automatically refund the duplicate payment as soon as practicable.

Conditional Payments (Tax Code Section 31.071)
A property owner whose property is subject to a pending protest, appeal or challenge may submit a conditional payment of taxes before the delinquency date. Once the property is no longer subject to a protest, appeal or challenge, the collector must apply the amount paid to the tax imposed and refund the remainder, if any.

Overpayment in Escrow Account (Tax Code Section 31.072)
A collector may enter a contract with a property owner to deposit money into an escrow account to pay property taxes. When the tax bill is prepared, the collector applies the money in the account to pay the taxes imposed and refunds any amount in the account in excess of the taxes paid.

Payments Made to Multiple Like Taxing Units (Tax Code Section 31.112)
If taxing units of the same type that legally cannot include the same geographic territory have imposed property taxes on the same property due to overlapping or erroneously applied geographic boundaries, the property owner may file suit in the supreme court to:

• establish the correct geographic boundary between the taxing units; and
• determine the amount of property taxes owed and the taxing unit or units owed.

If a refund is not automatic, the taxpayer must file an application for the refund with the collector within three years of the date the payment was made. A taxing unit’s governing body may extend this deadline for up to two years if the taxpayer can show good cause for the extension. Auditor and governing body approval may be required.

Overpayments or Erroneous Payments (Tax Code Section 31.11)
If a taxpayer applies for a refund, the collector must determine whether the payment was erroneous or excessive. If the collector determines the payment was erroneous or excessive and the auditor agrees, the collector refunds the payment from available current tax collections or from funds appropriated for making refunds.

Governing Body Approval (Tax Code Section 31.11(a)(1) and (a)(2))
Certain refunds require approval from the taxing unit’s governing body. If a collector collects taxes for a single taxing unit, refunds exceeding $500 must receive approval from the taxing unit’s governing body. If a collector collects taxes for more than one taxing unit, refunds exceeding $2,500 must receive approval from the taxing unit’s governing body.

In counties with a population of two million or more, refunds exceeding $5,000 must receive approval from the taxing unit’s governing body.

Applying Refund to Delinquent Taxes (Tax Code Section 31.11(b))
In certain cases, a refund may be applied to delinquent taxes. If a taxpayer is the sole owner of a property on which delinquent taxes are due and another property on which a refund is due, the refund amount may be applied as a payment to the delinquent account.

A taxpayer must apply for a refund within three years of making the payment. The governing body may grant a one-time extension of the deadline for two years for good cause.

The taxpayer must apply by filing the collector-provided application form or Comptroller Form 50-181, Application for Tax Refund Overpayments or Erroneous Payments (PDF), or by filing a written request with the collector that includes information that will allow the collector to determine whether the taxpayer is entitled to a refund.

Collectors must provide refund application forms without charge upon request and must send a refund application form when notifying a taxpayer of overpayment on an account by $5 or more.

The application must be signed by the taxpayer and include an affirmation that the application is true and correct. If governing body approval is required, the collector will indicate the decision and date on the application form.

The Tax Code provides for the taxing unit to pay interest on refunds in several cases. Requirements differ depending on whether the refund results from a court-ordered appraisal roll change or from another change.

Non-Litigation Refunds (Tax Code Section 31.12)
If a taxing unit pays a tax refund provided by Tax Code sections 11.431(b), 26.07(g), 26.075(k), 26.15(f), 31.11, 31.111 or 31.112 on or before the 60th day after the date the liability for the refund arises, no interest is due on the amount refunded. Interest may be required if not paid within 60 days after liability for the refund arises. Liability for a refund arises on the date the:

• chief appraiser notifies the collector of the grant of a late homestead exemption;
• result of a tax rate election is certified;
• chief appraiser certifies a correction to the appraisal roll;
• governing body orders a correction to the tax roll;
• taxing unit’s auditor determines the payment was erroneous or excessive; or
• collector determines the payment was a duplicate.

Interest is calculated at one percent per month or part of a month from the date the taxing unit became liable for the refund.

Litigation Refunds (Tax Code Section 42.43)
Tax Code Section 42.43 provides for a refund resulting from the final determination of an appeal that decreases a tax liability after the taxpayer has already paid the taxes. If a taxpayer has paid taxes and a district court determination reduces the taxpayer’s liability, the taxing unit must refund any excess taxes and pay interest on the refund amount. The collector calculates the interest from the delinquency date until the date the refund is paid at a rate not to exceed 9.5 percent per year. If the refund with interest is not made before the 60th day after the chief appraiser certifies the correction to the appraisal roll, the interest rate increases to an annual rate of 12 percent.

The taxing unit must send the refund to the property owner unless the final judgment designates to whom and where a refund is to be sent. A property owner may designate to whom and where a refund be sent by filing Comptroller Form 50-765, Designation of Tax Refund (PDF), with the taxing unit within 21 days of the final determination.