Attorney General RulingTax Attorney May Not Donate Section 33.07 Compensation
In Opinion No. JC-0443 issued December 20, the Texas Attorney General found that a contract attorney compensated under Tax Code Section 33.07 may not make a donation to the county if the donation in effect refunds part of the compensation to the county. He said whether a particular donation is a refund of the attorney’s Section 33.07 compensation is a fact question that cannot be resolved in an attorney general opinion.
When a county contracts with an attorney to collect delinquent taxes under Tax Code Section 6.30, Section 33.07 authorizes the county to impose an additional penalty on the delinquent taxes to provide compensation for the contract attorney. The attorney’s compensation is set in the contract, but the total amount of compensation provided may not exceed 20 percent of the amount of delinquent tax, penalty and interest collected. Section 33.07, as amended May 17, 2001, by House Bill 490, authorizes the taxing unit to provide that delinquent taxes incur an additional penalty, based on the amount the taxing unit has contracted with the attorney.
Bastrop County Criminal District Attorney Charles D. Penick asked whether an attorney that contracts with a county to collect delinquent taxes may donate personnel, equipment or dollars back to the county to enhance the county’s collection of delinquent taxes. He asked if Local Government Code Section 81.032 authorizes the county to accept the gift. The request stated that a number of law firms and taxing units “have negotiated contracts in which the firm either directly pays or reimburses a taxing unit for specific types of costs of collections.”
The opinion held that while this payment was characterized as a “gift” or “donation” in the request letter, it could also be characterized as a rebate from the attorney’s compensation.
The opinion cited prior Attorney General Opinion No. JM-857 (1988) that determined the full amount of the penalty collected under Section 33.07 must be used to compensate the attorney with whom the taxing unit had contracted. It concluded that the county had no authority to allocate only part of the Section 33.07 penalty to the attorney’s compensation and keep the rest to pay its own costs of collecting delinquent taxes.
The attorney general addressed whether the enactment of Local Government Code Section 81.032 changed the analysis of Tax Code Section 33.07 stated in Opinion JM-857. Section 81.032 provides that “[t]he commissioners court may accept a gift, grant, donation, bequest, or devise of money or other property on behalf of the county for the purpose of performing a function conferred by law on the county or a county officer.”
The ruling stated that Section 81.032 must be construed in harmony with other statutes and that Section 81.032 does not authorize the commissioners court to accept a donation for purposes inconsistent with the constitution or laws. He found the purpose of the Section 33.07 penalty was to compensate the attorney and not to pay other county expenses.
The ruling stated, “If, however, a county tax-collection contract provides for a ‘donation’ to the county by the attorney, we believe this provision would certainly raise the issue that the contract impermissibly allocates some of the article 33.07 penalty to the county.