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Pratt & Whitney Canada, Inc. v. McLennan County Appraisal District
Citations: 927 S.W.2d 641; 1996 WL 120977Docket: 10-95-084-CV
Court: Court of Appeals of Texas; April 17, 1996; Texas; State Appellate Court
Pratt & Whitney Canada, Inc. appealed a dismissal by the McLennan County Appraisal District regarding the taxation of two aircraft engines, which they claimed were improperly placed on the 1994 personal property tax rolls. The dismissal occurred because Pratt & Whitney did not pay the contested taxes by the delinquency date, as required by Texas Tax Code section 42.08(b). The central issue was whether a property owner contesting jurisdiction over previously untaxed property must pay any taxes assessed to avoid dismissal. Pratt & Whitney argued that section 42.08 allowed them to choose whether to pay under subsection (1) or subsection (2). They contended that subsection (1) resulted in a tax amount of "zero" since their engines were not subject to the District's jurisdiction and were not taxed the previous year. The District asserted that Pratt & Whitney was obligated to pay some amount under subsection (2) if subsection (1) was inapplicable. The court disagreed with the District's interpretation, concluding that Pratt & Whitney was not required to pay taxes when contesting jurisdiction over an asset not taxed in the prior year. Consequently, the court reversed the dismissal and remanded the case for trial, determining that the entire taxable value was in dispute as Pratt & Whitney maintained that the engines were not subject to taxation by the District. Jurisdiction for the State to tax tangible personal property is established under section 11.01 of the tax code, which stipulates that property must be located in the state for more than a temporary period for the tax to apply. If the property is not in the state for that duration, the State lacks the jurisdiction to impose tax. Under section 42.08(b)(1), a property owner is not obligated to pay disputed taxes but must pay taxes on the non-disputed portion of the property’s value. The calculations for Pratt & Whitney under both prongs of subsection (1) yield zero, indicating no taxes are due. The District and the Board's claim that amounts due under subsection (1) are either inapplicable or incalculable is incorrect; the amount due is zero. The debate centers on whether Pratt & Whitney must pay under subsection (2) despite the zero calculation under subsection (1). The statute does not require payment under subsection (2) if the amount due under subsection (1) is zero. The District and Board’s argument that the property owner must pay something is based on case law addressing property valuation, not jurisdiction for tax imposition. The statute clearly allows for payment of either the greater of two amounts, but does not mandate payment under subsection (2) if the calculations under subsection (1) are zero. Consequently, Pratt & Whitney retains the right to appeal the tax assessment without making any payments. The court's dismissal of Pratt & Whitney's challenge to the tax was erroneous, leading to a reversal of the judgment and a remand for trial.