Untitled Texas Attorney General Opinion

December 21, 1962 Honorable Jesse James Opinion No. WW-1507 State Treasurer Capitol Station Re: Payment of pro rata Austin, Texas interest on refunded money paid under pro- teat under submitted Dear Mr. James: facts. We quote the following excerpt from your letter requesting our opinion on the above captioned matter: "We respectfully request your opinion regarding the payment of pro rata interest to companies refunded monies paid to the state under protest and refunded under conditions as listed below: "1. When companies pay under protest for taxes to the State, shall the State Treasurer pay pro rata interest along with the refund payment when refunds are made without suit being filed such as under conditions set out In Attorney General's Opinion w-1169? "2. When companies file suit for refund of monies paid under protest, and after suit la filed, other protest payments are made on a continuing basis for the same reason and judgment is awarded these companies on original suits and no amended petitions are filed, shall the State Treasurer pay pro rata interest on refund of pro- tested payments not included in the original suit? "3. Where suits are dismissed and refunds are made to companies because laws are declared unconstitutional, shall the State Treasurer make payment of pro rata Interest on these refunds?" Honorable Jesse James, Page 2 (Opinion No. WW-1507) Opinion No. w-1169 held that refunds In the full amount of the taxes in controversy were authorized under the provisions of Article 4388, Vernon's Civil Statutes, in the following aitua- tiona: (1) where suits were properly filed under the provisions of the protest statute and were later dismissed by the taxpayer and (2) where suits were properly filed under the protest ats- tute and the judgments did not include all of the taxes paid under protest. Article 4388 reads as follows: "The State Treasurer shall receive daily from the head of each Department, each of whom is specifically charged with the duty of making same daily, a detailed list of all persons remitting money the status of which Is undetermined or which is awaiting the time when it can finally be taken into the Treasury, together with the actual remittances which the Treasurer shall cash and place in his vaults or in legally authorieed depository banks, if the necea- aity arises. The report from the General Land Office shall include all money for interest, principal and leases of school, university, asylum and other lands. A deposit receipt shall be issued by the Comptroller for the daily total of such remittances from each apartment; and the cashier of the Treaaurer'a Eepart- ment shall keep a eaah book, to be called 'suspense cash book,' in which to enter these deposit receipts, and any others issued for cash received for which no deposit warrants can be issued, or when their issuance 18 delayed. As soon as the status of money so placed with the Treasurer on a depoaft recel.ptis deter- mined, it shall be transferred from the suspense account by plactng the portion of l.tbelonging to the State in the Trea- sury by the Issuance of a deposit warrant, and the part found not to belong to .the State shall be refunded. When deposit warrants are issued, they shall be entered in this cash 'book,aa we.llas any refunds, and the balance shall represent the aggre- gate of the items at%11 in suspense. Refunds shall be made in a msnner simQlar to that in present use, except ,thatseparate series of Honorable Jesse James, Page 3 (Opinion No. WW-1507) warrants shall be used for making such refunds, to be called 'refund warrants,' and such war- rants shall be written and signed by the Comp- troller and countersigned by the Treasurer and charged against the suspense funds to which they apply. Such warrants shall then be returned to the Comptroller and delivered by him to the veraon entitled to receive them. Acts 2nd C.S.1909, p. 438; Acts 1930, blat Leg. 5th C.S. p. 230, ch. 73 8 3; Acts 1931, 42nd Leg. p. 396, ch. 242 $j1." Your first two questions are answered In the negative. Refunds in such cases are made pursuant to the provisions of Article 4388 which we have set out in full. You will note that this article makes no provision at all for the payment of pro rata interest. Section (5) of Article 1.05, Ch. 1, Title 122A, 20A Tax-Gen, V.C.S., contains the following provision: !, In the event, however, that suit is bro;ght by such taxpayer within the time and within the manner provided in this Arti- cle, and it be finally determined that such money so paid by such taxpayer, or any part thereof, was unlawfully demanded by such public official and that the same belongs to such taxpayer, then and in that event it shall be the duty of the State Treasurer to refund such amount, together with the pro rata interest earned thereon, to such tax- payer,,bythe issuance of a refund warrant, . . . Since under the facts outlined in your questions 1 and 2 the protest statute has not been complied with, the provision for the payment of pro rata interest cannot be invoked by the tax- payer. Pro rata interest may be paid only in those instances in which the statutory procedure outlined in Article 1.05 has been followed. We think that a different result must be reached under the facts stated in your third question and advise you that in such instances the Treasurer should make payment of pro rata interest on refunds of this type. True, such suits are not con- cluded by a final judgment in the taxpayer's favor as is usually the case in those instances in which refunds are paid pursuant to the provisions of the protest statute. However, there was Honorable Jesse James, Page 4 (Opinion No. WW-1507) in existence at the time of such dlamiasal a final judgment declaring the particular law involved to be unconstitutional. Article 1.05 does not provide that a final judgment in the taxpayer's favor be entered, but only states if "it be finally determined that such money so paid by such taxpayer . . was unlawfully demanded . . ." the Treasurer shall refund aulh money together with the pro rata interest earned thereon to such taxpayer. The test case "finally determined" that such money was unlawfully demanded. SUMMARY No pro rata interest may be paid on refunded money in those instances in which refunds are made pursuant to Article 4388, Vernon's Civil Statutes, even though said monies were originally paid under the pro- teat statute, Article 1.05, 20A Tax-Gen, V.C.S., except in instances In which sub- sequent to the protested payment and prior to judgment in the suit for the tax refund, the law imposing the tax is declared uncon- stitutional. Very truly yours, WILL WILSON Attorney General of Texas MMP:pw APPROVED: OPINION COMMITTFE W. V. Geppert, Chairman Robert Rowland Howard Maya Marvin Sentell Frank Booth REVIEWED FOR THE ATTORNEY GENERAL By: Leonard Paaamore