Ad valorem tax is a tax levied on property in proportion to its value, as determined by assessment or appraisal. The most common ad valorem tax is that imposed by counties and cities on real estate.

Ad valorem tax lawsuits result when the property owner fails to pay his property taxes to the city, county, and/or school district. The city, county, and/or school district will file a lawsuit against the property owner to recover those delinquent taxes. If TWC has filed a tax lien in the county in which the property taxes are owed, the Commission will be brought into the lawsuit as a lien holder and will be served with citation. An answer to the lawsuit must be filed within three weeks of service.

The Civil Actions Unit receives ad valorem tax lawsuits in one of the following ways:

• Service of the citation is made upon the Comptroller of Public Accounts and they forward the citation and petition to TWC.
  
  
• Service of the citation is made upon the Attorney General of Texas and they forward the citation and petition to TWC, or they prepare an answer to the lawsuit and forward a copy of the answer to TWC.
  
  
• Service of the citation is made upon an individual employed with TWC (such as the Executive Director, Commissioner, or Director of Tax or Legal Department).

When the Civil Action Unit receives the lawsuit or receives information from Legal Services regarding the lawsuit, a review of the Tax system to determine information indicating a name, a TWC account number, or state tax lien recording information is performed.

• An alpha search via the Tax system is performed on the defendant named in the lawsuit even if a TWC account number is provided. When all accounts for the defendant are located in the Tax system, the TWC account numbers should be written in pencil on the upper right corner of the document.
  
  
• If the defendant cannot be located in the Tax System, a search via the Claimant History screen should be conducted. If the defendant is located there, a pencil notation should be made on the lawsuit stating that it is a Benefit Payment Control case.
  
  
• If a TWC tax lien is listed by volume and page but an account for the defendant cannot be found in the Tax system, contact the county clerk's office where the tax lien was recorded and obtain the following information: which TWC department filed the tax lien; if it is a Tax Department tax lien, what is the TWC account number; and the styling of the employer's name on the tax lien. Some counties may not give this information over the telephone. If this is the case, a pencil notation should be made on the lawsuit stating that information.
  
  
• If the defendant cannot be located in the Tax system or in the Claimant History and there is no information in the lawsuit as to a TWC account number or tax lien recording information, a note stating "NOT TWC" should be placed on the lawsuit.

Each account should be reviewed for indebtedness, and the amount owed should be written beside the account number.

• Always check the lien, judgment and abstract recording screen to insure that a tax lien was filed against the defendant in the county in which the lawsuit was filed. If no tax lien was filed there, an investigation must be performed, including contacting the plaintiff's attorney to learn why TWC is involved in the lawsuit.
  
  
• If a TWC account number for the defendant cannot be located in the Tax system but a TWC account number is known, check the archive books and, if found, reinstate the account via request for reinstatement of an archived account screen if a balance exists on the account.
  
  
• If the defendant's account indicates a bankruptcy was filed, we must determine who the bankrupt entity is and if the bankruptcy case is still open. Obtain a printout of all bankruptcy information from the Special Actions Unit and place it with the lawsuit. If the defendant is not the bankrupt entity or his bankruptcy has been closed or dismissed, proceed as usual.
  
  
• If the defendant located on an alpha search is an officer of a corporation that owes money to TWC, determine if there is an officer liability judgment or final assessment against the defendant. If so, compute the current officer liability debt on the account and annotate it in pencil on the lawsuit. If no judgment or final assessment was taken against the defendant and the tax lien was styled only in the corporation's name, annotate that information in pencil on the lawsuit.
  
  
• Request deletion of any inappropriate or outdated comments on the account. Also review the account to determine if any further collection action such as tax liens or bank freezes/levies are warranted.

Our Legal Services Department handles all responses and/or referrals to the Attorney General for these lawsuits. Once we have obtained the above information regarding the TWC account, forward the lawsuit to Legal Services. If the amount owed meets the current monetary criteria, a sworn statement of employer account, Form C-25, should be requested (print only C-25 - no court record screen should be created) and copies of the tax liens and abstracts should be made and forwarded to Legal Services along with the lawsuit.

When a Notice of Excess Proceeds is received, a Form C-25 should be requested (print only C-25 - no court record screen should be created) and copies of the tax liens and abstracts should be made and forwarded to Legal Services along with the notice and a cover memo.

If indebtedness exists on the account, comments should be placed on the delinquency comments screen listing the plaintiff, the defendant, the cause number of the suit, the court of record and its county of jurisdiction, and the type of lawsuit.

When the Attorney General's office files an answer to the lawsuit on behalf of TWC, they forward a copy of the answer to TWC, Legal Services. If we receive this answer from the Attorney General's office, forward it to Legal Services.

Answers to lawsuits and amended petitions are sometimes received. These should be forwarded to Legal Services.

Should a judgment be received from the court or the plaintiff's attorney involving an Ad Valorem lawsuit, forward it to Legal Services and they will take the appropriate action.