Attorney General Opinions
Five Opinions Address Property Tax Issues
Texas Attorney General Greg Abbott issued five opinions since January on property tax issues. His opinions addressed amending a tax abatement agreement, taxing private roads for public use, executing tax warrants and seizures, applying a new law on temporary absence from a homestead for exemptions and holding two public offices.
Tax abatement agreement
In his January 13 Opinion No. GA-0134, Abbott ruled that a retroactive amendment of a tax abatement agreement that extinguishes an existing tax liability violates Article III, Section 55 of the Texas Constitution. He held that Tax Code Section 312.208, permitting amendment of tax abatement agreements, does not modify the rule established by Tax Code Section 11.42(a) that a “person who does not qualify for an exemption on January 1 of any year may not receive the exemption that year.”
Fort Bend County Attorney Ben W. “Bud” Childers sought the opinion on behalf of the county tax assessor-collector.
In 2000, Fort Bend County entered into a tax abatement agreement with RTRON, Ltd. Some of the conditions of the agreement were that the certified appraised value of the improvements and tangible personal property, excluding inventory, shall be not less than $7.25 million and that tangible personal property shall have a total certified appraised value of not less than $2 million, of which at least $600,000 shall be new and not have been subject to taxation prior to the date of the agreement.
On December 17, 2002, RTRON requested that the agreement be amended to decrease the appraised values to $5.75 million and $1.4 million, respectively, and that the amendments be retroactive to January 1, 2002, so as to apply to the 2002 taxes. Before any such amendment of the agreement was made, the taxes for tax year 2002 became due. The taxes were assessed at full value because RTRON Ltd. did not have the required appraised value for abatement for tax year 2002.
On March 25, 2003, the commissioners court approved the amendments that RTRON had requested, including the request that the amendment be retroactive to January 2002. RTRON sought a tax refund for the 2002 tax year because, under the amended terms of the tax abatement agreement, it did not owe them.
The opinion reviewed Tax Code Chapter 312 that permits a commissioners court to enter into tax abatement agreements with owners of real property located in a reinvestment zone if it “has established guidelines and criteria governing tax abatement agreements by the taxing unit and a resolution stating that [the county] elects to become eligible to participate in tax abatement.” Section 312.208(a) provides that a tax abatement agreement may be modified or terminated by the parties at any time before its expiration to “include other provisions that could have been included in the original agreement or to delete provisions that were not necessary to the original agreement.”
The opinion also reviewed Tax Code Chapter 11.28 that provides the owner of real property subject to a Chapter 312 tax abatement agreement is entitled to a tax exemption as provided by the agreement. It stated that Section 11.42(a) generally provides that eligibility for and amount of an exemption authorized by this chapter for any tax year are determined by a claimant’s qualifications on January 1. A person who does not qualify for an exemption on January 1 of any year may not receive the exemption that year.
Abbott found that Section 11.42’s language clearly does not contemplate a post facto alteration of tax exemption qualifications. Further, he stated that Section 312.208(a) does not indicate that the power to amend the terms of a tax abatement agreement includes the power to modify the Section 11.42 statutory rule.
Finally, Abbott wrote: “Significantly, the constitutional provision that chapter 312 implements does not modify article III, section 55, and chapter 312 may not be construed to authorize the county to violate that constitutional prohibition.”
“Accordingly, the amendment approved on March 25, 2003, after 2002 taxes became due, would in effect retroactively expunge a liability. The fact that the debt in question was paid after it became due does not alter the terms of this analysis. Once the debt had become due and owing, it could not be cancelled, ... “ the opinion stated.
Private roads for public use
In Opinion No. GA-0139 issued January 28, Abbott held that property that has been dedicated to the public for use as streets but that has not been accepted by the county is not county-owned for tax-exemption purposes. The opinion stated that the county must, consequently, levy property taxes on the property.
Senator Kenneth Armbrister, Natural Resources Committee Chair, asked about the status of certain property dedicated for use as public roadways in a subdivision plat in a county with fewer than 50,000 people where the commissioners court approved the plat for filing but did not accept the roads for county maintenance.
The opinion stated that only a commissioners court, acting as a body, has authority to accept a street for county maintenance. A commissioners court in a county with a population of 50,000 or less may acquire an interest in a road under Section 253.011 or 281.002, Transportation Code.
The opinion also found that a county has no authority to order the removal of an obstruction of a road that has not been accepted into the county road system. But, as a consequence of a real property conveyance that expressly refers to a plat showing abutting roads or streets, the purchaser acquires a private interest in the roads shown on the plat. A property owner holding such a deed has a right to enforce his or her private easement.
Tax warrants and seizures
On January 28, Opinion No. GA-0140 addressed the execution of tax warrants and property seizure and sale under Tax Code Chapter 33. In this opinion, Abbott ruled the following six key points:
“A peace officer, as defined by article 2.12 of the Code of Criminal Procedure, may execute a tax warrant for the seizure of personal property under section 33.23 of the Tax Code, while a sheriff or constable is the only type of peace officer that may execute a tax warrant for seizure of real property under section 33.93 of the same code. Likewise, any peace officer may seize personal property that is the subject of a tax warrant, while a sheriff or constable may seize real property. Seizure requires possession or control of the property. A peace officer who seizes personal property is authorized, but not required, by statute to relinquish possession to the tax assessor-collector. On the other hand, section 33.93 requires the sheriff or constable to turn the possession of seized real property over to the assessor-collector.”
“Section 33.23 does not specify who is to prepare the inventory or personal property seized in accordance with a tax warrant. Consistent with case law and with practical considerations, the officer who executes the warrant must prepare the inventory.”
“In accordance with section 33.25 of the Tax Code, in a county the size of Harris County, the sale of seized personal property must be held (1) by either the peace officer or the tax assessor-collector, whomever the court has specified in the tax warrant; or (2) under an agreement authorized by the commissioners court, by an auctioneer or Internet service provider. If the seller is an auctioneer or an Internet service provider, it should pay the proceeds either to the peace officer, who must pay them to the assessor-collector, or directly to the assessor-collector, in accordance with the agreement. An officer who receives proceeds from a third party or who receives proceeds as a result of having personally conducted the sale must pay them over to the assessor-collector. The assessor-collector must distribute the proceeds as section 33.25(f) directs.”
“Seized real property must be sold by ‘the officer charged with selling’ it, unless directed otherwise by the taxing unit that requested the warrant. The officer who conducted the sale must distribute the proceeds.”
“Seized personal property may be sold at any time, unless the warrant or agreement with an auctioneer specifies otherwise.”
“None of the Tax Code provisions examined in this opinion unconstitutionally delegates authority to a tax collector-assessor.”
Harris County Attorney Mike Stafford requested the opinion on a series of questions dealing with Tax Code Chapter 33, including tax warrants, seizure of property, sale of seized property and constitutionality of statutes delegating authority.
Chapter 33, Subchapter B, addresses seizing personal property, including tangible personal property, cash on hand and various financial instruments. A taxing unit may seize a person's personal property for paying a delinquent tax, penalty and interest that the person owes on the property. Personal property also may be seized before the tax becomes delinquent in certain limited circumstances. When a tax is delinquent, or in those circumstances before a tax is delinquent, a tax collector may apply to a court for a tax warrant authorizing that the property be seized. The court may issue the warrant upon submission of a sufficient affidavit.
Subchapter E of the chapter provides for seizure of real property. Section 33.911, which relates specifically to counties, authorizes a county, after notifying the owner, to seize a person's real property for paying a delinquent tax, penalty and interest the person owes on the property in certain circumstances. After property becomes subject to seizure, the county's assessor-collector may apply for a tax warrant to a district court, which must issue the warrant if the assessor-collector submits a sufficient affidavit.
Tax warrant. First, the opinion dealt with questions about who is authorized to execute a tax warrant. The opinion concluded that any peace officer, as defined in Article 2.12, Code of Criminal Procedure, who is in the county and has jurisdiction to do so may execute a warrant for the seizure of personal property under Section 33.23. The opinion also held that the sheriff or a constable may execute a warrant for the seizure of real property under Section 33.93.
Seizure of personal and real property. On questions about who seizes the property, the opinion said that a warrant directs that property be seized; thus, execution of the warrant requires seizure of the specified property. For this reason, the opinion’s conclusion mirrored the previous issue: any peace officer, as defined by Article 2.12, Code of Criminal Procedure, who is in the county and has jurisdiction to do so may seize personal property specified in a warrant issued under Section 33.23, while the sheriff or a constable may seize real property specified in a warrant issued under Section 33.93.
On the question of whether seizure of personal or real property requires actual possession, the opinion concluded that seizure requires the officer executing the warrant to possess, or to exercise control of, the property.
In addressing who maintains possession of the seized personal property, the opinion found that a peace officer is not statutorily required to turn possession over to the assessor-collector. It held that, under Section 33.23(c), either the peace officer or the assessor-collector may "take possession of" the seized personal property "pending its sale." A tax warrant may order a peace officer to turn personal property over to the assessor-collector, however.
On the other hand, the opinion found that a peace officer must turn the possession of seized real property over to the assessor-collector. It said that Section 33.93(c) is “unambiguous” on this point.
On the question of who prepares the inventory of seized personal property, the opinion held that the inventory must be prepared by either the peace officer or the tax assessor-collector. It found that case law suggests that, in general, the officer who executes the warrant inventories the seized property. This practice would serve to protect the officer should some item later be discovered missing, and it therefore serves a practical purpose. Thus, it concluded that the officer who executes the warrant must prepare the inventory.
Sale of seized property. The opinion addressed questions on who is authorized to hold the sale of property seized under a tax warrant and to receive and deliver the proceeds.
The opinion found that, for a county that exceeds 3 million population, Section 33.25 appears to permit a county to authorize a peace officer or the tax assessor-collector to contract with an auctioneer, which contract may provide for "on-line bidding and sale" through an Internet service provider. If the seller is an auctioneer, it should pay the proceeds either to the peace officer, who must pay them to the assessor-collector, or directly to the assessor-collector, in accordance with the contract. An officer who receives proceeds from a third party or who receives proceeds as a result of having personally conducted the sale must pay them over to the assessor-collector. The assessor-collector must distribute the proceeds as Section 33.25(f) directs.
Further, the opinion concluded that the officer whom the warrant charges with doing so must sell the real property. And, in accordance with Section 34.02, the officer who is charged with conducting the sale must distribute the proceeds.
On the question about the periods of time during which a sale of seized personal property may be conducted, the opinion found that none of the statutes or rules regulate the hours during which the sale of personal property must occur. It said, “... we believe the sale may be conducted at any hour, unless the warrant specifies otherwise.”
Constitutionality of statutes delegating authority. The last area dealt with whether the Tax Code provisions "that authorize a tax assessor-collector to seize property [are] a delegation of authority beyond that contemplated in the Texas Constitution."
The opinion found that none of the Tax Code provisions examined unconstitutionally delegate authority to a tax collector-assessor. It said that Article VIII, Section 14 of the Texas Constitution explicitly gives the legislature the task of defining an assessor-collector's authority. It held that the legislature decides what duties an assessor-collector, a sheriff and a constable are required or authorized to perform in the tax collection process.
Temporary absence from homestead
Abbott ruled in Opinion No. GA-0148 issued February 12 that the amendments adopted during the 78th Texas Legislature, Regular Session, for temporary absence from a homestead to still receive property tax exemptions did not apply to the exemptions for the 2003 tax year.
Abbott reviewed House Bill (H.B.) 1223 and the term “temporary” for purposes of residential homestead occupancy and exemption qualification. H.B. 1223 limits the temporary absence from the homestead to two years to maintain property tax exemptions, unless the absence is a result of military service or residency in a facility providing services related to health, infirmity or aging.
Representative Fred Hill, Local Government Ways and Means Committee Chair, had asked if the term “temporary” applied to granting exemptions for the tax year beginning on January 1, 2004, or may it be applied to homestead exemptions existing on January 1, 2003.
The opinion held that the retrospective application of a statute to a previous year requires that such statutes expressly provide that they shall be retrospective. “Nothing in H.B. 1223 makes it retrospectively applicable to the 2003 tax year,” the opinion stated.
Holding two offices
Abbott’s Opinion No. GA-0169 issued March 23 held that a city council member is not prohibited from simultaneously serving as a board member of a tax increment reinvestment zone and on the city council that created the zone.
Senator Troy Fraser, Business and Commerce Committee Chair, requested an opinion concerning whether there was a conflict with the common-law doctrine of incompatibility to serve in both positions at the same time.
The opinion looked at the three areas of the common-law doctrine of incompatibility: self-appointment, self-employment and conflicting loyalties. Abbott found that a city council member does not violate these three components by serving in both positions.