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Is a county subject to personal property ad valorem taxes passed on via contract

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October 18, 2017, 08:43
David Holmes
Is a county subject to personal property ad valorem taxes passed on via contract
Scenario:

1. Commissioner Precinct leases a piece of heavy equipment under an annual lease payment.
2. Lease agreement clearly passes to lessee any taxes incurred by lessor, including ad valorem taxes on personal property (since ownership in the property is not transferred).
3. Lessor invoices county-lessee for annual lease payment and adds on a substantial line item for ad valorem personal property taxes.

Question - Given that the contract is clear that these taxes are the responsibility of the lessee, is a political subdivision such as a county subject to these taxes under a lease agreement with a private business?

I am fairly certain that these taxes (or even an estimate of them) were not included in the proposal by the lessor to the Commissioner. The possibility of a fraudulent inducement claim is a discussion for another, perhaps follow up, topic.


David Holmes
County Attorney - Hill County
October 19, 2017, 11:12
David Holmes
Found the answer in 11.11 of the Tax Code.


David Holmes
County Attorney - Hill County