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Attorney General Issues Opinions On
VIT Escrow Accounts, Other Areas
Texas and Gavel graph Attorney General John Cornyn issued two opinions about the interest earned on motor vehicle inventory tax escrow accounts. He also issued two opinions dealing with taxation of certain property.

Escrow accounts

In Opinion No. JC-0149, issued December 8, 1999, General Cornyn ruled that interest earned on motor vehicle inventory escrow accounts may not be used for expenses not related to administering the prepayment process. He stated that the county tax assessor-collector, who administers the prepayment process, determines whether and to what extent a particular purchase is a legitimate cost to administering the program.

The opinion found that the county auditor's authority is to audit the interest monies, including the review of expenditures from the fund with interest monies, and to report the audit to the commissioners court.

Cornyn also found that purchases by the county tax assessor-collector with the interest monies are not subject to the competitive bidding under the County Purchasing Act.

Property Tax Code Section 23.122(c) requires a tax assessor-collector to retain interest earned on the motor vehicle escrow accounts to defray the cost of the prepayment procedures. The question asked by McLennan County Auditor Steven Moore was if the interest earned may be used to purchase equipment used for both the prepayment program and for general administration of the county tax office.

In Opinion No. JC-0135, issued October 28, 1999, Attorney General Cornyn found the tax assessor-collector may use the escrow accounts' interest to supplement salaries of full-time employees administering the prepayment program. He said that the assessor-collector determines if the salary supplements are a legitimate cost of the program.

In responding to questions from Johnson County Attorney Bill Moore, the opinion stated that the county auditor must audit the motor vehicle inventory tax fund and the interest earned on the fund. It noted that any equipment purchased with the interest money is under the sole control of the tax assessor-collector's office.

Travel trailers
On December 8, 1999, Opinion No. JC-0150 held that travel trailers that have been affixed to rented land are personal property, but are not exempt as personal property not used to produce income. Cornyn found that imposing property taxes on these travel trailers that have paid sales taxes and motor vehicle registration does not constitute double taxation.

trailer graph Representative Jim Solis, chair of the House Committee on Economic Development, asked about a situation common in the Rio Grande Valley. Winter residents and others in the local communities live in travel trailers on which they paid sales tax and motor vehicle registration. The travel trailers frequently are grounded and equipped with rails, porches, and carports, and typically located on rental spaces in trailer parks. Local appraisal districts have determined that the trailers have been affixed to land as real property, according to Property Tax Code Section 1.04(3)(A)'s definition of real property. Representative Solis asked whether such travel trailers are real or personal property and whether imposing property taxes on the travel trailers results in double taxation.

The opinion keyed in on the phrase in the definition of real property "improvement," found in Section 1.04(3)(A), that a transportable structure designed and occupied for residential or business purposes, whether or not it is affixed to land, "if the owner of the structure owns the land on which it is located." The opinion stated that determining if a particular piece of personal property has become an improvement depends on the intent of the owner "as evidenced by the mode and sufficiency of annexation." The opinion found the appraisal district must first determine if the attachment is permanent, subject to the property owner's right to protest to the appraisal review board.

The opinion held that the long-term placement of travel trailers on lots of land owned by another person results in separate taxable interests, but not two separate interests in real property. It said that a trailer attached to a leased lot, while an improvement to real property, generally will remain the property of the person leasing the lot from the trailer park. The opinion concluded that such a trailer is taxable to the lessee of the lot, but as personal property rather than real property.

The opinion also looked at Property Tax Code Section 11.14, which entitles a person to an exemption from all tangible personal property not held or used for the production of income. Section 11.14 excludes "other than manufactured homes" from the exemption. The opinion reviewed Article VIII, Section 1, of the Texas Constitution, that permits the legislature to exempt from property taxes "all ... tangible personal property, except structures which are personal property and are used or occupied as residential dwellings" and except property held or used for producing income. The opinion concluded that the trailers are personal property but constitute "manufactured housing" and are not exempted by Section 11.14.

Finally, the opinion looked at the issue of double taxation. Referring to Black's Law Dictionary, the opinion found double taxation does not include imposing different taxes concurrently on the same property. The opinion concluded that no question of impermissible double taxation arises in the situation with the travel trailers.

Nonprofit organization
Opinion No. JC-0134, issued October 28, 1999, found that a county may not waive taxes, penalties, and interest on real property owned by an individual that houses a nonprofit organization.

Cameron County District Attorney Yolanda de Leon asked whether Cameron County may waive delinquent taxes, penalties, and interest on this account, as provided in Property Tax Code Section 33.011.

The opinion reviewed Section 33.011 that requires the delinquency be attributable to an act or omission of the taxing unit or its agents in order to waive penalties and interest. In this case, the taxpayer had been given regular notice, knew about the tax owed, and had not paid them within 21 days of knowing about the tax, as required by Section 33.011. The opinion concluded that Section 33.011 was not available in this case.

The opinion also found that the property did not qualify for exemption under Property Tax Code Section 11.18 because the property was not owned by the charitable organization.