Can a taxpayer lose a Chapter 41 protest and then later bring a Section 25.25(c) motion to correct raising essentially the same complaint? The recent Supreme Court of Texas’s ruling in J-W Power Company v. Sterling County Appraisal District confirms that the answer is yes.

J-W Power Company v. Sterling County Appraisal District, No. 22-0974, No. 22-0975, 2024 WL 2869325 (Tex. June 7, 2024)

In this case, J-W Power Company protested the taxable situs of its natural-gas compressors under Chapter 41 of the Texas Property Tax Code. After their protest was denied—and without appealing to the district court—they subsequently filed motions to correct the appraisal roll under Section 25.25(c)(2), (3). Their Section 25.25(c) argument? Essentially the same as their Chapter 41 protest: the property is dealer’s heavy equipment inventory and must be taxed in the county where JWP maintains its inventory, not at the location where the equipment might otherwise be physically located, i.e., no taxable situs. The motions were denied, and JWP appealed to district court and ultimately to the Supreme Court of Texas.

The question presented to SCOTEX was whether JWP’s Section 25.25(c) motions to correct were precluded by the doctrine of res judicata (a/ka/ claim preclusion) due to their earlier Chapter 41 protest.

The appraisal districts contended that JWP was attempting to relitigate issues already denied. But JWP argued that Subsection (l) of 25.25 permits a motion to be filed regardless of any prior protest and prevents the application of re judicata. The appraisal districts disagreed with JWP and argued that Subsection (l) has no application because JWP’s prior Chapter 41 protest did not relate to the appraised value of the property, which Subsection (l) requires. And here, since JWP’s prior Chapter 41 protest was a challenge to taxable situs, not appraised value, Subsection (l) does not apply and JWP’s motions are precluded by res judicata. SCOTEX rejected the appraisal districts arguments and agreed with JWP.

SCOTEX honed in on the language of Subsection (l) of 25.25: “A motion may be filed . . . regardless of whether . . . the owner of the property protested under Chapter 41 an action relating to the value of the property that is the subject of the motion.” Tex. Tax Code § 25.25(l) (emphasis added). This wording was critical. 

SCOTEX read Subsection (l) of 25.25 as a guarantee to a property owner’s ability to file a Section 25.25(c) motion regardless of any prior Chapter 41 protest, no matter the nature. It hinged this guarantee on Subsection (l)’s language of regardless of whether, which means “without taking into account.” It reasoned that because it cannot take into account a prior Chapter 41 protest when considering a Section 25.25(c) motion to correct, the appraisal district’s argument cannot be right. It would require SCOTEX to take into account whether or not JWP’s prior Chapter 41 protest related to the value of the property, which Subsection (l) of 25.25 prohibits. Accordingly, SCOTEX rejected the appraisal districts arguments and agreed with JWP and reversed the lower courts judgments and remanded the case down for further consideration.

The takeaway of this ruling is that a taxpayer can lose a Chapter 41 protest and still bring a Section 25.25(c) motion to correct on essentially the same issues. This important clarification empowers taxpayers and emphasizes the need to navigate the complexities of property tax litigation.

Tex. Tax Code § 25.25(l):
(l) A motion may be filed under Subsection (c) regardless of whether, for a tax year to which the motion relates, the owner of the property protested under Chapter 41 an action relating to the value of the property that is the subject of the motion.

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To review the Opinion from J-W Power Company v. Sterling County Appraisal District, click the following link (or copy and paste): https://www.txcourts.gov/media/1458710/220974_220975.pdf.

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Key Sections of Texas Property Tax Code: 
§ 25.25(l), Correction of Appraisal Roll 

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