Open topic with navigation

In cases where a taxpayer has petitioned for a lower appraisal value on his/her property, but has paid the full levy amount while awaiting a decision on the petition, a refund with interest will be due on the amount refunded, including levy, delinquent penalty and interest, and attorney fees, if the lower appraisal value is approved.  The refund is calculated from the delinquency date for the taxes until the date the refund is made.  This rule is outlined in the Texas Tax Code, section 42.43.

The calculation for the litigated interest amount is: (no. of days of interest * refund amount * litigated interest rate) / 365.

Litigated refunds are not given on rendition penalties. Starting with the 2016 tax year, the litigated interest rate is 9.5%. See the client preference LITIGATED_RF_FLAT_OR_VARIABLE for information on the rate for 2015 and prior.

Any levy still due will be charged penalty and interest beginning the first of the month at least 21 days in the future (effective September 1, 2019). If unpaid on this date, the original due date is used from that point forward.

The report generated with this process lists, for each account number, the tax year, units, deposit number of the adjustment refund, the amount of levy being refunded, the amount of normal calculated interest and attorney fees, the check date, due date, interest rate, number of days of interest, and the total refund amount.

Consider these client preferences:

LITIGATED_REFUND_INTEREST_PAY:  For litigated refund interest accounts, you can choose whether to give the refund and interest to the owner or payer by setting the client preference  to OWNER or PAYER. Litigated refunds go to the payer (or owner) from the year and payment the refund was created.

LITIGATED_RF_FLAT_OR_VARIABLE: (batch menu no. 318 only, for tax year 2015 and prior) If the Lit. Ref. Rate field on the Property Value Detail screen is blank, then this preference is considered. Set it to FLAT to always use 8% interest rate for accounts with litigated refunds processed within 60 days or VARIABLE to use the prime interest rate from the Prime Interest Rate screen (+ 2%, not to exceed 8%) for the month of the Check Date on the Property Value Detail screen If the Filed Date is on or after 9/1/2011 (if the Filed Date is before 9/1/2011, 8% is always used). If there is no Filed Date, the prime interest rate is always used when the preference is set to VARIABLE. Note that this preference is superceded by the value of the Lit. Ref. Rate field; if that field is marked VARIABLE and the preference is FLAT, then the prime interest rate (+2%) will be used, and vice versa.

INT4208_SOURCE: Enter an account to use for storing litigated interest funds as part of the 42.08 refund interest transfer process.

INT4208_TAXUNIT: Enter 8005, which is the tax unit used to store the litigated interest funds as part of the 42.08 refund interest transfer process. This unit should be assigned to the INT4208_SOURCE account. Funds for this unit may be provided by a delinquent attorney firm.

4208_REFUND_OH : Set to Y to place litigated interest refunds on hold. The USE_FLAGGED_REFUND_LOGIC preference must also be set to Y.

APPLY_LIT_RF_CURR_YEAR_ONLY: Set to Y(the default) to pull litigated interest money from the current year of the INT4208_SOURCE account and apply it to the litigated account. Set to N to pull the interest funds from the year of the corresponding adjustment refund.

CHECK_FOR_PAYMENT_TO_ADD_4208: Set to Y to NOT add 4208 dates or a Penalty Control on the Receivable screen if a payment has been made; Set to N to add this data even if no payment has been made.

User Entitlements

The following user entitlements must be set for each user who needs access to the Batch Menu and Batch Request screens. They are part of the Run Batch Processes task.  See Tasks, Entitlements, and Jobs for more information. The user entitlement for each batch menu no. mentioned below must be set to Y for each authorized user. Batch menu nos. default to N when they are added.

BATCH_MENU - access to the Batch Menu to generate the reports.

BATCH_REQUEST - access to the Batch Request screen to see the reports.

Note: If you need to change the recipient of these refunds, please do this in the Change Refund Recipient screen before running the process explained below.  

1. From the Main Menu, click the Account Master () button or select Update, then Account Master, or click the Go To drop-down list and select Account Master.  The Account Master Summary screen will appear.
2. If the account has carried over from a previous screen, all pending refund information will appear automatically.  

If the Account Number field is blank, enter the account number, then press F8 (Execute Query) to see pending refund information.

If you need to enter a different account number, press F7 (Enter Query), key in the account number, then press F8 (Execute Query) to see pending refund information.

Note: If you don't know your account number, see Locating an Account.

1. Click Prior Year(s).  
2. Using the drop-down list, select the year to view.  The list contains only those years that have been archived. If you want to see another year, key in that year in the year field.
3. Click OK. The Account Master Summary screen will display.

WARNING: If you want to view data for a paid account in a prior year and your tax office has had its paid account data loaded into ACT's archive tables, the property values and jurisdictions for the rebuilt year will be inserted. Please check them for accuracy. Enter any exemptions into either the Account Master Summary or Special Exemptions tabs.  Remember to return to the Account Master Summary screen and press F10 (Save).

For unpaid prior year accounts and paid accounts that haven't been put into the archive tables, zeroes will show in the value fields for the year you rebuild if the client preference POPULATE_EQUAL_VALUES is set to N.  If the preference is set to Y, the property values will be populated with data from the Receivable and Property Value screens.   If no values exist for that year in those screens, $0.00 values will be inserted. Please check the values for accuracy.  Remember to enter any exemptions, then press F10 (Save).  

A receivable is not created unless it existed in the archive tables or in the regular production tables before doing this Prior Year rebuild.

3. Click the Account Detail tab; the Account Detail screen appears.
4. In the Last Certified Date field, enter the date the appraisal district notified the tax office that refund interest is due.  
5. Click the Prop Value tab; the Property Value Detail screen appears.
6. In the Source field, enter 4208.
7. (batch menu no. 318 only, tax years 2015 and prior) In the Lit. Ref. Rate drop-down list, select FLAT if you want the program to calculate an 8% interest rate or VARIABLE if you want to use the prime interest rate for the month of the 42.08 Check Date (see below). This rate is stored in the Prime Interest Rate screen.
8. Leave the Filed Date field blank unless the appraisal district provides the filing date for litigated refunds.
9. In the 42.08 Check Date field, enter the date that the refund interest check will be processed. This is not needed if processing litigated refunds in the refund wizard.

The ACT system compares this date to the Last Certified Date to determine whether interest is charged at 8%, variable (for refunds processed within 60 days; see the preference LITIGATED_RF_FLAT_OR_VARIABLE) or 12% (for refunds processed after 60 days).  It also determines the number of days for interest to be paid by comparing this date to the delinquency date for this account and year.

Note: Interest will not be calculated if the due date for an account is after this Check Date.  This creates a negative number of days eligible for interest. Accounts with this situation will be listed on the log report.

10. In the value fields, enter the corrected amounts for homesite, agricultural and/or non-qualifying.
11. Click the Summary tab.
12. Click Save and Calculate Levy.  This recalculates the levy portion of the refund due.
13. From the Main Menu, click on Products, then Batch Products.  The ACT Batch Menu will appear.  
14. Click on the Calculate Litigated Refund Interest line, batch menu no. 318 (for processing either 8% or variable - prime rate - interest rates).

15. Press Enter. The parameter screen for this report appears.
16. Enter a Deposit No. for the deposit to be created during this process.

Note:  The Deposit Number must start with 'RI'.

17. Enter the Deposit Date and Receipt Date for the deposit (YYYYMMDD format).
18. In the Report Option field, leave the default of D.
19. In the Process Option field, enter E for edit or P for process.
20. Leave the Req. Seq. No. from Trigger Table field blank to return all litigated refunds or enter a request sequence number for a group of accounts in the trigger table.
21. Click Submit Job to start the report process.  
22. Click OK on the "OK to Submit Job" pop-up screen.  
23. To preview and print your report, see Previewing and Printing Reports.  You can print the report after both Edit and Process options.  The process option also updates the ACT system by removing the interest amount from the collections for each jurisdiction and placing it in a refund jurisdiction (the report will show the refund and interest in the individual jurisdictions, however).  Set the client preference INT4208_TAXUNIT to this 8xxx tax unit.  Also, set INT4208_SOURCE to the account to be used to hold the refund amounts.

Note: If the litigated refund interest is to be calculated using the prime interest rate (+2%), but the rate for the month of the refund's Check Date in the Property Value Detail screen is missing, the process will not run and an error message will be provided.

24. Once refund interest is processed, the Source field is updated automatically to RIPD (refund interest paid), the interest is added to the refund amount and can be seen in the Account Status and  Payment History Unit Transactions screens.  The Deposit Status screen shows the interest being taken out of the refund interest 'bucket' and moved to the payer of the account.

Litigated interest amounts are NOT placed on hold unless the client preference 4208_REFUND_OH is set to Y.. The interest amounts are shown in the Refund column in Account Status.

Note: A deposit named RIyyyymmmmCR is created in the background; it contains payment information only if remittance data is missing for an account.

25. A Refund Report (TN536) can be run, entering L in the Refund Type field.  This will show only the litigated interest refunds. The TN536 can be run in both edit and update (final pay) modes.

Refunds on hold associated with litigated interest accounts will be processed through TaxLedge and posted back, even if the TN536 was run for refunds not on hold. They are not changed to in transit (IT) status, but the interest portion is placed in IT status.