ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
November 5,2012
The Honorable Anna Laura Cavazos Ramirez Opinion No. GA-0973
Webb County Attorney
Post Office Box 420268 Re: Whether a taxing authority may impose, and
Laredo, Texas 78042-0268 a county is obligated to pay, penalties and interest
on ad valorem taxes imposed on real property
purchased by a county for the year of sale that
have remained unpaid (RQ-I063-GA)
Dear Ms. Ramirez:
You ask whether a taxing authority may impose, and a county is obligated to pay, penalties
and interest on ad valorem taxes imposed on real property purchased by a county for the year of sale
that have remained unpaid. J You inform us that several years ago, Webb County (the "County")
purchased real property in three separate transactions. Request Letter at 2. In two instances, the
prorated amount of the seller's taxes for the year of sale were calculated and deducted from the sale
price. !d. In each case, ad valorem taxes on the properties for the year of sale were not paid and
have remained outstanding. Id. You state that all three properties were acquired for and are used
for a public purpose. !d. You further inform us that Webb County does not dispute owing the "base
tax" for each property for the period during the year of sale prior to the date it acquired the property,
but does dispute paying penalty and interest imposed after that date. Id. Specifically, you ask the
following questions:
1. Can penalties and interest be imposed as fees which accrued on
a delinquent ad valorem tax balance, on a tax-exempt governmental
entity?
2. Is Webb County, the purchaser of real property, in the same
position as any other taxpayer or does its tax-exempt status relieve it
of any obligation to pay penalties and interest owed as ad valorem
delinquent taxes on the property it purchased?
ILetter from Office of the Webb Cnty. Att'y, Honorable Anna Laura Cavazos Ramirez, to Honorable Greg
Abbott, Tex. Att'y Gen. at 1 (May 23,2012), http://www.texasattorneygeneral.gov/opin ("Request Letter").
The Honorable Anna Laura Cavazos Ramirez - Page 2 (GA-0973)
3. Is a "tax-exempt" status automatically triggered on the day of
closing, when Webb County acquired the property, thereby relieving
Webb County from paying penalties and interest that accrued after it
purchased the property?
4. If one tax-exempt governmental entity can charge another
tax-exempt governmental entity penalties and interest based on
delinquent ad valorem taxes, what constitutional or statutory authority
allows them to do this?
Id. at 1-2.
The duty to pay ad valorem taxes constitutes both a personal obligation of the owner and a
lien on the property. TEX. TAX CODE ANN. § 32.01(a) (West 2008); id. § 32.07(a). The person who
owns property on January 1 ofthe year for which a tax is imposed incurs a personal obligation to pay
the tax. Id. § 32.07(a). Once the personal obligation attaches, it is not relieved by a subsequent sale
or other transfer of the property. Id. 2 Further, a seller's failure to pay ad valorem taxes on real
property does not render the purchaser personally liable for the unpaid property taxes. City of San
Antonio v. Toepperwein, 133 S.W. 416, 417 (Tex. 1911). The Tax Code does provide a procedure
for a party to become personally liable for ad valorem taxes owed by another, stating that a "person
who receives or collects an ad valorem tax or any money represented to be a tax from another person
holds the amount so collected in trust for the benefit of the taxing unit and is liable to the taxing unit
for the full amount collected plus any accrued penalties and interest on the amount collected." TEX.
TAX CODE ANN. § 32.07(d) (West 2008). While you describe two of the transactions as providing
Webb County with a credit for prorated taxes, you do not provide sufficient information to determine
whether section 32.07(d) applies here. See Request Letter at 2.
In addition to a property owner's personal obligation to satisfy outstanding ad valorem tax
debts, the property itself can become subject to a statutory tax lien. "On January 1 of each year, a
tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately
imposed for the year on the property . . . . " TEX. TAX CODE ANN. § 32.01(a) (West 2008).
Moreover, a delinquent tax generally incurs statutory penalty and interest "as long as the tax remains
unpaid." Id. § 33.01(a), (c).
Notwithstanding the statutory tax lien authorized by the Tax Code, the Texas Constitution
grants an exemption from taxation and forced sale for property that a political subdivision such as
a county owns and holds exclusively for public purposes. TEX. CONST. art. XI, § 9. Additionally,
the Legislature has granted a tax exemption for property owned by a county and used for public
2The Tax Code provides a procedure for a person who transfers property to a political subdivision of the state
to be relieved of the obligation for ad valorem taxes due in the year of the transfer by the payment of prorated taxes.
TEX. TAX CODE ANN. § 26.11 (West 2008). Based on the information provided in your request letter, it appears the
sellers of the real property in question did not avail themselves of this procedure. See Request Letter at 2.
The Honorable Anna Laura Cavazos Ramirez - Page 3 (GA-0973)
purposes. TEX. TAX CODE ANN. § 11.11(a) (West Supp. 2012) (providing that, with exceptions not
pertinent here, "property owned by this state or a political subdivision of this state is exempt from
taxation ifthe property is used for public purposes"); see also TEX. CONST. art. vrn, § 2 (authorizing
the Legislature to exempt public property used for public purposes from taxation); see also TEX.
PROP. CODE ANN. § 43.002 (West 2000) (providing that "the real property of a political subdivision
of the state [is] exempt from attachment, execution, and forced sale"). With respect to taxes owed
when a governmental entity acquires real property from a private party, courts have concluded that
one political subdivision "cannot legally levy, assess or collect taxes from another of [the state's]
subdivisions on property belonging to such subdivision when such property is being used by it for
public purposes ... even though the lien had attached prior to the acquisition of said property and
while the same was privately owned." City of Marlin v. State, 205 S.W.2d 809,810 (Tex. Civ.
App.-Waco 1947, no writ); see also State v. City of San Antonio, 209 S.W.2d 756,757-58 (Tex.
1948) (reversing judgment against a city and school district for state and county taxes, penalties, and
interest accrued on property acquired and used for publjc purposes, and holding that the property
"was not subject to seizure and sale to satisfy a judgment for taxes levied by the state and county
during the time it was ... privately owned").
Consequently, to answer your first two questions, when a political subdivision acquires
property from a private party, and the property qualifies for a constitutional or statutory tax
exemption, the exemption generally precludes charging the political subdivision penalties and
interest for any outstanding ad valorem taxes. See Lubbock Indep. Sch. Dist. v. Owens, 217 S.W.2d
186, 189 (Tex. Civ. App.-Amarillo 1948, writ ref' d) (determining that preexisting city and school
district tax lien was suspended by the acquisition of the property by the state but could be enforced
once the property was conveyed to a private party); Tex. Att'y Gen. Op. No. 1M-1085 (1989) at 17
(determining that penalties and interest on delinquent ad valorem taxes owed on property continued
to accrue after title reverted to Veterans' Land Board but that tax lien would be unenforceable while
title is with the state).
Your third question asks whether property purchased by a tax-exempt entity acquires tax-
exempt status as of the date of closing. Generally, property will be tax exempt when it meets the
criteria for a constitutional or statutory exemption. See Travis Cent. Appraisal Dist. v. Signature
Flight Support Corp., 140 S.W.3d 833,843 (Tex. App.-Austin 2004, no pet.) (determining that
property with public use became tax exempt on the date that the city became the owner pursuant to
the terms of the parties' contract); A. & M. Consolo Indep. Sch. Dist. V. City of Bryan, 184 S.W.2d
914,915-16 (Tex. 1945) (setting forth test for determining public purpose). See also TEX. TAX
CODE ANN. § 11.11 (West Supp. 2012); id. § 11.42(b). While property acquired by a political
subdivision may become tax exempt on the date of closing, whether a particular piece of property
is tax exempt on a specific date will depend on the details of the transaction and the use of the
property for public purposes. You have not provided us with sufficient information to determine
whether any particular piece of property was tax exempt on a specific date. Finally, because the tax
exemptions discussed above generally do not permit a taxing authority to impose penalties and
interest on a tax-exempt political subdivision for delinquent ad valorem taxes, we need not answer
your final question.
The Honorable Anna Laura Cavazos Ramirez - Page 4 (GA-0973)
SUMMARY
When a political subdivision acquires property from a private
party and the property qualifies for a constitutional or statutory tax
exemption, the exemption generally precludes charging the political
subdivision penalties and interest for any outstanding ad valorem
taxes.
Whether a particular piece of property acquired by a political
subdivision is tax exempt on a specific date will depend on particular
facts regarding the property.
Very truly yours,
DANIEL T. HODGE
First Assistant Attorney General
JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel
JASON BOATRIGHT
Chairman, Opinion Committee
William A. Hill
Assistant Attorney General, Opinion Committee