Art Lies, Volume 11, June-September 1996 Page: 5
50 p. : ill. ; 28 cm.View a full description of this periodical.
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News from TALA
f you own a gallery or show your work in one, don't
be surprised if a local government official starts to
show a keen interest in your work. At least once
every three years, the Harris County Appraisal District
(or whichever Appraisal District is home to your busi-
ness) must determine the value of all taxable property
for each taxing unit in the district, including the city,
the county and the school district. 'Taxable property'
includes paintings, jewelry, business equipment and
other tangible items used in the art business.
The appraisal process begins in January of each year.
An appraiser for the district can, during normal busi-
ness hours, enter your gallery or other business to
determine what property you owned on January 1st
and what its value is. But that's not all. Under Section
22.04 of the Texas Property Tax Code, the appraiser
can also ask for a list of names and addresses of all
persons who had work physically located on the prop-
erty on January 1st. Many gallery owners are under-
standably reluctant to expose their artists to Appraisal
District scrutiny. On the other hand, if you refuse to
provide the information, the appraiser will assume that
all of the work belongs to you and tax it accordingly.
If this seems like a Hobson's choice, remember that
January 1st is the operative date. If you return the
artists' work to them before Christmas, close down the
gallery, and open up with a new exhibit after the holi-
days, then you avoid the dilemma. Of course, perma-
nent exhibits, business equipment and other items
permanently located on the property are still subject
to the tax.
By May 15th or shortly thereafter, the chief appraiser
sends you notice of the appraised value of your prop-
erty. Artwork held for sale is valued as inventory: its
market value is the price for which it would sell as a
unit to a purchaser who would continue the business.
The rate of tax is not actually set until August or Sep-
tember, but is usually 3% of the appraised market
value. The tax is due by January 31st of the following
year. Failure to pay the tax can result in penalties and
interest, seizure of property, and/or a suit by the
Appraisal District to collect delinquent taxes.
The notice of appraised value that you receive in May
is not the final word on the topic. Most art businessowners are of the opinion that the Appraisal District
places too high a value on their property. If you share
this opinion and want to voice it to a higher authority,
you must file a written protest by May 31st or within 30
days of delivery of the notice (whichever is later). The
final step in the protest process is a formal hearing in
front of the Appraisal Review Board (the 'ARB'), which
is an independent body charged with resolving dis-
putes between property owners and the Appraisal
District. However, you will probably resolve the issue
with the Appraisal District on an informal basis before
ever reaching the formal hearing stage.
While gallery owners might disagree with the valua-
tion of all of their personal property, the most slippery
dispute is over the market value of the artwork. Take a
painting that took little money to create and is priced
at $1000. The appraiser will be inclined to base his
valuation on the asking price. However, unless the
painting's price is based on previous sales of the
artist's work, the $1000 amount might reflect the
artist's aspirations much more than the true market
value of the work. Even if there is an established mar-
ket for the artist's work, the final sale price could fall
far short of the asking price. In other words, the
Appraisal District might need a reality check when it
comes to the market value of your artwork.
The word from the front is that the Appraisal district
will give up some ground to a taxpayer, particularly
when dealt with in a cooperative, friendly and uncon-
frontational way. However, don't go into a protest
unarmed. Take financial statements and balance
sheets. Take sales records and evidence of the
dichotomy between asking price and sales prices.
Take your common sense. If at all possible, take your
accountant. As the Texas Comptrolleris office tells us,
'(t)he right to protest...is the most important right you
have as a taxpayer.' It can't hurt to exercise it.June - September 1990
Art Lies 11
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Calledare, Donald. Art Lies, Volume 11, June-September 1996, periodical, June 1996; Houston, Texas. (https://texashistory.unt.edu/ark:/67531/metapth228042/m1/5/: accessed May 4, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; .