Untitled Texas Attorney General Opinion

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DAN MORALES
ATTORNEY
GENERAL September 28, 1993

Susan A. Spataro, CPA, CMA Opinion No. DM-258
Travis County Auditor
P.O. Box 1748 Be.: Whether unclaimed overpayments on
Austin, Texas 78767 property taxes escheat to the state or do
they belong to Travis County after three
years @Q-W

Dear Ms. Spataro:

Travis County collects property taxes for itself as well as several other taxing units
pursuant to the Tax Code section 3 1.01. In the event of overpayment or erroneous
payment of taxes, unclaimed funds are deposited in a separate escrow account. You
express concern that over a significant period of time, the amount of funds in the account
has accumulated. Refunds consisting of overpayments or erroneous payments are
addressed by section 3 1.11 of the code which provides as follows:
(a) If a taxpayer applies to the tax collector of a taxing unit for
a retbnd of an overpayment or erroneous payment of taxes and the
auditor for the unit determines that the payment was erroneous or
excessive, the tax collector shall retimd the amount of the excessive
or erroneous payment from available current tax collections or gem
krds appropriated by the unit for making refunds. However, if the
amount of the relimd exceeds $500, the collector may not make the
refund unless the governing body of the taxing unit also determines
that the payment was erroneous or excessive and approves the
refimd.
. .

(c) An alpplication for a refund must be made within three
years afrr the dare of the payment or the taxpayer waives the right
to the refind.

Acts 1993,73d Leg., ch. 198, 3 1 (emphasis added). Your inquiry is concerned with the
disposition of the fimds once the three year time period for reclamation has lapsed. You
speciticslly ask whether the unclaimed overpayments belong to Travis County and if so,
whether they may be legally transferred into the county’s general fund.

Our research indicates that the Tax Code does not address the disposition of the
8mds following the reclamation period, nor do any prior judicial or attorney general

p. 1342
Susan A. Spataro, CPA, ChIA - Page 2 (DM-258)

opinions. However, chapters 71 through 75 of the Property Code, also known as the
Texas Unclaimed Property Law, address the escheat of personal property held by a person
other than a banking organization or life insurance company. Chapter 71 addresses
escheat in the context of an individual that dies intestate and without heirs. In such an
instance the real and personal property previously held would escheat to and vest in the
state. Prop. Code $ 71.001.

Chapters 72 and 74 address abandoned unclaimed property and the procedures
necessary for escheat to the state. Chapter 72 specifically applies to personal property
held by a person other than a banking organization or life insurance company;’ and
provides in pertinent part
personal property is presumed abandoned if, for longer than
three years:

(1) the existence and location of the owner of the property is
unknown to the holder of the property;2 and
(2) according to the knowledge and records of the holder of the
property, a claim to the property has not been asserted or an act of
ownership of the property has not been exercised.

Id. 5 72.101(a) (footnote added). While the state does possess a property interest in
abandoned funds, that interest is only as great as the interest held by the original owner of
the funds. State v. Texas Elec. Service Co., 488 S.W.2d 878, 881 (Tex. Civ. App.--Fort
Worth 1972, no writ). As section 72.101 provides, the original owner waives all rights to
the property once the three year time period has lapsed. Once the owner’s rights to the
property cease to exist, the state is left without an interest to claim. Central Power &
Light Co. v. St&e, 410 S.W.2d 18, 26 (Tex. Civ. App.--Corpus Christi 1966, writ refd
n.r.e.). Similarly, the original owner of an overpayment of property taxes waives his right
to claim an interest in the funds once the three year reclamation period has lapsed. Hence,
the state also loses any right to assert a claim to the funds at the end of the three year
period. In the absence of an interest which may be asserted by the original owner of the
fiurds or the state, such Iknds may be retained by the county.

For a substantial amount of time, counties levying such a tax have exercised their
discretion in retaining unclaimed overpayments. Cur research indicates that such exercise

‘Chapter 73 addresses the escheat of inactive accmn& held by banking organizations. Id.
85 73.001 - 73.503.

zFor pupmes of chapter 72, a holder is defined ss a person who is in possession of property that
belongs to another, a trustee or is indebted to another on an obligation. Id. 8 72.001(e). We conclude that
Travis county meets the requirements of a holder prior to the expiration of the three year reclamation
period.

p. 1343
 Susan A. Spataro, CPA, CMA - Page 3 (DM-258)

of discretion has been unchallenged. Thus, it is our understanding that it has been
standard practice for counties to retain unclaimed overpayments collected at a local level.
In the absence of authority to the contrary, we conclude that local counties may exercise
their discretion in retaining possession of unclaimed overpayments on property taxes;
finthermore, such finds may be transferred into the counties’ general timd accounts
pursuant to article VIII, section 9 of the Texas Constitution.3

SUMMARY

In the absence of authority to the contrary, unclaimed
overpayments on property taxes belong to the county once the three
year period of reclamation has lapsed under section 3 1.11 of the Tax
Code. The timds may be transferred into the county’s general fund
account pursuant to article VIII, section 9 of the Texas Constitution.

DAN MORALES
Attorney General of Texas

WILL PRYOR
First Assistant Attorney General

MARY KELLER
Deputy Attorney General for Litigation

RENEA HICKS
State Solicitor

MADELEINE B. JOHNSON
Chair, Opinion Committee

Prepared by Toya C. Cook
Assistant Attorney General

3ArticIe VU, section 9 of the Texas Constitution states that “[a]ny county may put all tax money
collectedby the county into one general fund withoutregard to the purpose or source of each tax.” We
note that this provision only pertains to collections of county tax, not cokctions for other political
SUhdiViSiO"S.

p. 1344