The Dallas Central Appraisal District (DCAD) is targeting trucking companies to assess Texas business personal property taxes, requiring fast action by a targeted company to timely respond and protect its defenses to the tax appraisal.  DCAD is specifically targeting companies that have a terminal or other physical location in its district, but that may not have filed a Rendition, which is due on or before April 15th each calendar year. DCAD assessed valuations have ranged from $2 million to $1 billion – with corresponding tax amounts of $54,837 to $27,418,400.

For a targeted company, the protest deadlines will largely be determined by the date of receipt (important date to note and record) of DCAD's Notice of Appraised Value (the Notice), which is the first communication likely to be sent to the company.  The Notice determines not only deadlines but also some defenses to the appraisal. In all likelihood, the Notice will be addressed to the company generally, meaning that the time to meet deadlines continues to run while the Notice is being routed to the proper person at the company.

As soon as the Notice is received, a company needs to take immediate action.  First, to dispute the appraisal, a company must file a Notice of Protest (a blank form of which is included with the Notice) within 30 days of receipt of the Notice.  The company must indicate a reason for the protest, and the reasons chosen can have a significant impact on the outcome of the protest.  Second, a company may drastically reduce its tax exposure by filing an Application for Interstate Allocation within 45 days of receiving the Notice. For trucks and trailers, the allocation may be made based on the percentage of miles driven (operated) in Texas. While these miles have historically been allocated using the ratio of Texas miles over total system miles (IFTA miles), DCAD and the applicable law now require the mileage allocation to be applied on a truck-by-truck and trailer-by-trailer basis.

CAVEAT – A trucking company that has a terminal or other facility in Dallas County, Texas or in another county in Texas, and that has not been paying Texas business personal property taxes on trucks and trailers (as opposed to furniture, office equipment, etc.) should place its employees who may receive mail on high alert for any mail from DCAD or from another appraisal district in Texas!

The strict deadlines and rules favor the taxing authorities. As a result, a trucking company with a terminal or other physical location in Texas should consider proactive action. Performing a Texas business personal property tax audit before the company is subjected to an appraisal district's assessment process may provide the company with the time necessary to consider the requirements of the very complex laws and regulations in order to minimize penalties and interest and determine how aggressively the company desires to be in interpreting what trucks and what trailers must be rendered and what value must be placed on such equipment when it is rendered. When an appraisal district sees that a company has rendered and is paying the tax the company is much less likely to be scrutinized by the appraisal district.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.