Legislation passed during last June’s special session modified the law relating to property taxes on certain types of “goods-in-transit.”  A property tax exemption, commonly referred to as the “Super Freeport” exemption, allows a local option exemption for goods traveling elsewhere in Texas and can be claimed when the goods are at certain warehouses not owned by the owner of the goods. 

Senate Bill 1 requires cities to take official action (adopt an ordinance or resolution) between October 1, 2011, and December 31, 2011, to provide for the taxation of goods-in-transit in 2012.  The city must conduct a public hearing prior to doing so.  These new requirements apply regardless of any action taken by a city in the past to tax Super Freeport goods.  In other words, any city that wishes to collect property taxes on Super Freeport goods in 2012 must now conduct a public hearing and adopt a new ordinance or resolution in the specific timeframe.  The failure to take official action within the timeframe will mean that the goods-in-transit will be exempt from taxation in 2012. 

In addition, some cities expressed concern that the previous statutory language would impermissibly allow some retailers to claim the exemption by “spinning off’ ownership of goods-in-transit.  Senate Bill 1 also clarified that the Super Freeport property tax exemption is not available for goods stored at a warehouse that is in any way owned or controlled by the owner of the goods. 

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Texas Municipal League.

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