Can a county's delinquent-tax-collection attorney donate money or equipment back to the county?

Plain-English summary

The Bastrop County Criminal District Attorney asked whether an attorney who contracts with a county to collect delinquent taxes may donate personnel, equipment, or money back to the county to help with that collection. The Attorney General concluded that such a donation is not allowed if it amounts to refunding part of the attorney's compensation, and that whether any particular gift is such a refund is a fact question the opinion could not decide.

The analysis started with how these attorneys get paid. A county may contract with a private attorney to collect delinquent taxes under Tax Code section 6.30, with compensation capped at twenty percent of the delinquent tax, penalty, and interest collected. To fund that, section 33.07 lets the county add an extra penalty to the delinquent taxes, and the penalty may not exceed the compensation specified in the attorney's contract. A 2001 amendment tightened that link, expressly tying the penalty to the attorney's contract compensation. A prior opinion, JM-857, had already held that the entire section 33.07 penalty must go to compensate the contract attorney, and that the county could not keep part of it to cover its own collection costs.

The county attorney suggested that Local Government Code section 81.032, which lets a commissioners court accept gifts and donations for county purposes, might allow the county to take such a payment. The opinion noted the payment was framed as a "gift" but could just as easily be a rebate of the attorney's compensation. It then explained that section 81.032 must be read in harmony with other statutes and does not authorize accepting a donation for a purpose inconsistent with the law. Because the section 33.07 penalty exists only to compensate the attorney, an attorney paid from that penalty may not donate any of that compensation back to the county, whether to enhance tax collection or for any other county purpose.

The opinion also addressed a brief arguing that firms had relied on language in JM-857 about contract terms on "costs of collection." It read that sentence in the context of the whole opinion, which limits the penalty to attorney compensation and not the county's collection costs, and pointed to other Tax Code provisions (sections 33.48 and 33.49) that allocate specific court costs and cannot be reallocated by contract. In conclusion, the opinion said it could not determine whether any particular donation was really an allocation of the section 33.07 penalty to the county, because that is a question of fact, but warned that a contract providing for such a "donation" would raise the issue that it impermissibly diverts part of the penalty to the county.

Currency note

This opinion was issued in 2001. Subsequent statutory amendments, court decisions, or later Attorney General opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Tax Code provisions on delinquent-tax collection (sections 6.30, 33.07, 33.48, and 33.49) and the Local Government Code gift provision have been amended since 2001, so the specific percentages and citations described here may no longer be current.

What the opinion meant for those who asked

The Bastrop County Criminal District Attorney (what the opinion held): The opinion concluded that an attorney compensated through the section 33.07 penalty may not donate any of that compensation back to the county, and that whether a specific donation is such a refund is a fact question outside the opinion process. A tax-collection contract building in such a donation would raise the issue that it improperly allocates part of the penalty to the county.

Counties and their commissioners courts (what the opinion held for them): The opinion treated the section 33.07 penalty as dedicated entirely to compensating the contract attorney, not to covering the county's collection costs. The general gift-acceptance authority in Local Government Code section 81.032 does not let a county accept a donation that is really a rebate of that compensation.

Private delinquent-tax-collection firms (what the opinion held for them): The opinion concluded that a firm paid from the section 33.07 penalty cannot donate part of that compensation back to the taxing unit. It read JM-857's "costs of collection" language narrowly, consistent with the rule that the penalty goes to the attorney and that certain costs are allocated by statute and cannot be shifted by contract.

Common questions

Can a county's tax-collection lawyer give money or equipment back to the county?
The opinion concluded not if the gift refunds part of the lawyer's compensation. The section 33.07 penalty that funds the attorney is dedicated to paying the attorney, so donating that compensation back to the county is not allowed.

Doesn't the law let counties accept gifts?
Local Government Code section 81.032 lets a commissioners court accept gifts for county purposes, but the opinion explained it must be read in harmony with other laws and cannot authorize a donation for a purpose inconsistent with the law. A rebate of the section 33.07 penalty is such an inconsistent purpose.

Is every donation from the tax attorney automatically illegal?
Not necessarily. The opinion said whether a particular donation is really a refund of the attorney's compensation is a fact question it could not resolve. But a contract that provides for such a donation would raise the issue that it improperly allocates part of the penalty to the county.

What is the section 33.07 penalty for?
The opinion explained the penalty is solely to compensate the contract attorney who collects the delinquent taxes, not to pay the county's own costs of collection. A 2001 amendment made that link explicit by tying the penalty to the compensation specified in the attorney's contract.

Background and statutory framework

A county may contract with a private attorney to collect delinquent taxes under Tax Code section 6.30(c), with total compensation not exceeding twenty percent of the delinquent tax, penalty, and interest collected. Tex. Tax Code Ann. § 6.30(c) (Vernon 1992); id. § 1.04(12) (Vernon Supp. 2001) (defining "taxing unit" to include a county). Section 33.07 authorizes the taxing unit to add a penalty to defray collection costs where it has contracted with an attorney under section 6.30, and the penalty may not exceed the compensation specified in the attorney's contract. Id. § 33.07(a) (Vernon Supp. 2001), as amended by Act of May 17, 2001, 77th Leg., R.S., ch. 1430, § 14, 2001 Tex. Sess. Law Serv. 4819, 4823. If that penalty is imposed, the taxing unit may not also recover attorney's fees in the suit. Id. § 33.07(c). A taxing unit may collect attorney compensation under section 33.07 or the separate attorney's-fee provision of section 33.48, but not both. City of Houston v. First City, 827 S.W.2d 462, 474 (Tex. App.-Houston [1st Dist.] 1992, writ denied).

A prior opinion, JM-857 (1988), held that the full section 33.07 penalty must be used to compensate the contract attorney, and that the county could not keep part of it to pay its own collection costs. The 2001 amendment tying the penalty to the attorney's contract compensation confirmed that conclusion. The county attorney pointed to Local Government Code section 81.032, which allows a commissioners court to accept a gift, grant, donation, bequest, or devise for county purposes. Tex. Loc. Gov't Code Ann. § 81.032 (Vernon Supp. 2001). The opinion noted that absent such express authority, counties generally could not accept gifts of money or personal property for county purposes, citing prior letter opinions and contrasting statutes that do authorize certain donations. See Tex. Loc. Gov't Code Ann. § 270.001 (Vernon 1999); Tex. Transp. Code Ann. § 252.214 (Vernon 1999); Bell County v. Alexander, 22 Tex. 351 (1858).

The opinion explained that section 81.032 must be construed in harmony with other statutes and does not authorize accepting a donation for a purpose inconsistent with the constitution or laws. Acker v. Tex. Water Comm'n, 790 S.W.2d 299, 301 (Tex. 1990); Standard v. Sadler, 383 S.W.2d 391, 395 (Tex. 1964). Because the section 33.07 penalty is dedicated to compensating the attorney, an attorney paid from it may not donate that compensation back to the county for any purpose. The opinion also pointed to the Tax Code's allocation of specific court costs and expenses, which may not be reallocated by contract. Tex. Tax Code Ann. § 33.48 (Vernon Supp. 2001); id. § 33.49(a), (b). Finally, it concluded that whether a particular donation is in effect an allocation of the section 33.07 penalty to the county is a fact question that cannot be resolved in an attorney general opinion.

Citations

Statutory provisions:

• Tex. Tax Code Ann. § 6.30(c) (Vernon 1992)
• Tex. Tax Code Ann. § 1.04(12) (Vernon Supp. 2001)
• Tex. Tax Code Ann. § 33.07(a), (c) (Vernon Supp. 2001)
• Tex. Tax Code Ann. § 33.48 (Vernon Supp. 2001)
• Tex. Tax Code Ann. § 33.49(a), (b) (Vernon Supp. 2001)
• Act of May 17, 2001, 77th Leg., R.S., ch. 1430, § 14, 2001 Tex. Sess. Law Serv. 4819, 4823
• Tex. Loc. Gov't Code Ann. § 81.032 (Vernon Supp. 2001)
• Tex. Loc. Gov't Code Ann. § 270.001 (Vernon 1999)
• Tex. Transp. Code Ann. § 252.214 (Vernon 1999)

Cases:

• City of Houston v. First City, 827 S.W.2d 462 (Tex. App.-Houston [1st Dist.] 1992, writ denied)
• Acker v. Tex. Water Comm'n, 790 S.W.2d 299 (Tex. 1990)
• Standard v. Sadler, 383 S.W.2d 391 (Tex. 1964)
• Bell County v. Alexander, 22 Tex. 351 (1858)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0443
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2001/jc0443.pdf

Original opinion text

Best-effort transcription from the official scanned PDF. Minor character-level errors from the source OCR have been corrected; the linked PDF is authoritative.

OFFICE OF THE ATTORNEY GENERAL - STATE OF TEXAS

JOHN CORNYN

December 20, 2001

The Honorable Charles D. Penick
Bastrop County Criminal District Attorney
804 Pecan Street
Bastrop, Texas 78602

Opinion No. JC-0443

Re: Whether a county that contracts with an attorney for the collection of delinquent taxes may accept a gift from that attorney (RQ-0410-JC)

Dear Mr. Penick:

You ask 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.[1] When a county contracts with an attorney to collect delinquent taxes pursuant to section 6.30 of the Tax Code, section 33.07 authorizes the county to impose an additional penalty on the delinquent taxes to provide compensation for the contract attorney. An attorney who is compensated under section 33.07 of the Tax Code may not make a donation to the county if the donation in effect refunds part of the compensation to the county. Whether a particular donation is a refund of the attorney's compensation under section 33.07 is a fact question that cannot be resolved in an attorney general opinion.

A county may contract with a private attorney to represent it in collecting delinquent taxes. See Tex. Tax Code Ann. § 6.30(c) (Vernon 1992) (authority for "taxing unit" to contract for collection of delinquent taxes); see also id. § 1.04(12) (Vernon Supp. 2001) ("taxing unit" defined to include "county"). The attorney's compensation is set in the contract, but the total amount of compensation provided may not exceed twenty percent of the amount of delinquent tax, penalty, and interest collected. Id. § 6.30(c) (Vernon 1992). Section 33.07 of the Tax Code authorizes the taxing unit to provide that the delinquent taxes incur an additional penalty "to defray costs of collection, if the unit . . . has contracted with an attorney pursuant to Section 6.30" of the code. Id. § 33.07(a) (Vernon Supp. 2001). "The amount of the penalty may not exceed the amount of the compensation specified in the contract with the attorney to be paid in connection with the collection of the delinquent taxes." Id., as amended by Act of May 17, 2001, 77th Leg., R.S., ch. 1430, § 14, 2001 Tex. Sess. Law Serv. 4819, 4823 (added language in italics). If a penalty is imposed pursuant to section 33.07, "a taxing unit may not recover attorney's fees in a suit to collect delinquent taxes subject to the penalty." Id. § 33.07(c). Section 33.48 of the Tax Code provides for recovery of "attorney's fees in the amount of 15 percent of the total amount of taxes, penalties, and interest due the unit," see id. § 33.48(a)(5), but a taxing unit may collect attorney's compensation under only one of the two provisions. See City of Houston v. First City, 827 S.W.2d 462, 474 (Tex. App.-Houston [1st Dist.] 1992, writ denied).

Until it was amended by the Seventy-seventh Legislature, Tax Code section 33.07 provided that the additional penalty "may not exceed 15 percent of the amount of taxes, penalty, and interest due." See Tex. Tax Code Ann. § 33.07 (Vernon Supp. 2001). A prior opinion of this office determined that 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. See Tex. Att'y Gen. Op. No. JM-857 (1988) at 7. 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. See id. at 2-3, 7. Section 33.07 of the Tax Code now expressly ties the penalty to the attorney's compensation, stating that the "amount of the penalty may not exceed the amount of the compensation specified in the contract with the attorney." See Act of May 17, 2001, 77th Leg., R.S., ch. 1430, § 14, 2001 Tex. Sess. Law Serv. 4819, 4823 (added language in italics). This language confirms the conclusion of Attorney General Opinion JM-857 that the entire penalty was to be paid as compensation to the contract attorney.

You suggest, however, that an attorney who is compensated pursuant to section 33.07 of the Tax Code may give the county money to use for collecting delinquent taxes and that section 81.032 of the Local Government Code authorizes the county to accept the gift. This payment is characterized as a "gift" or "donation" in the request letter, but it could also be characterized as a rebate from the attorney's compensation. See XIII Oxford English Dictionary 297 (2d ed. 1989) ("rebate" defined as "[a] deduction from a sum of money to be paid, a discount").

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." Tex. Loc. Gov't Code Ann. § 81.032 (Vernon Supp. 2001). Absent such express legislative authority, counties could not accept gifts of money or other personal property to use for county purposes. See Tex. Att'y Gen. LO's 97-032 (county may not accept gifts of videotapes, books, or cash on behalf of alternative dispute center); 88-106 (county may not collect funds and disburse them to local law enforcement agencies to combat drug abuse in county). But see Tex. Loc. Gov't Code Ann. § 270.001 (Vernon 1999); Tex. Transp. Code Ann. § 252.214 (Vernon 1999); Bell County v. Alexander, 22 Tex. 351 (1858) (authority of county to accept donation of land). The question to be addressed is whether the enactment of Local Government Code section 81.032 changes the analysis of Tax Code section 33.07 stated in Attorney General Opinion JM-857.

Section 81.032 of the Local Government Code must be construed in harmony with other statutes. See generally Acker v. Tex. Water Comm'n, 790 S.W.2d 299, 301 (Tex. 1990); Standard v. Sadler, 383 S.W.2d 391, 395 (Tex. 1964). Section 81.032 does not authorize the commissioners court to accept a donation for purposes inconsistent with the constitution or laws. See Tex. Att'y Gen. Op. No. JC-0073 (1999) at 2-3 (commissioners court authorized by statute to accept donation of land for road-building subject to reasonable conditions, but court may not accept a condition that is contrary to the constitution or statutes); see also 10 Eugene McQuillin, The Law of Municipal Corporations: Corporate Property, Gifts and bequests § 28.16, at 47 (3d ed. 1999) (illegal condition attached to gift to municipality may vitiate the gift). An attorney who contracts with a county to collect delinquent taxes for compensation derived from the section 33.07 penalty may not donate any of the section 33.07 compensation to the county, whether the donation is to enhance the collection of delinquent taxes or for another county purpose. The purpose of the penalty authorized by section 33.07 of the Tax Code is to compensate the attorney and not to pay other county expenses.

A brief submitted in connection with this request states that a number of 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,'"[2] in reliance on language in Attorney General Opinion JM-857. This opinion, after pointing out that nothing required the taxing unit to impose the full fifteen percent penalty, stated that "[i]n drafting the contract, the taxing unit has the opportunity to include specific terms on the 'costs of collection' which the attorney will absorb." Tex. Att'y Gen. Op. No. JM-857 (1988) at 7.

The sentence from Attorney General Opinion JM-857 must be read in the context of the entire opinion, which emphasizes that the penalty imposed under section 33.07 may not be spent to defray the taxing unit's costs of collection. Id. This places a significant limit on the power of the county to contract regarding costs of collection. Moreover, the Tax Code expressly allocates certain costs, and these may not be reallocated by contract. Section 33.48 authorizes the taxing unit to recover usual court costs, including service of process, filing notice of lis pendens against property, foreclosure sale, and other reasonable expenses incurred by the taxing unit to determine the name, identity, and location of parties and to secure legal descriptions of the property, as well as reasonable court-approved attorney ad litem fees. See Tex. Tax Code Ann. § 33.48 (Vernon Supp. 2001), as amended by Act of May 17, 2001, 77th Leg., R.S., ch. 1430, § 23, 2001 Tex. Sess. Law Serv. 4819, 4826; see also Tex. Tax Code Ann. § 33.07(c) (Vernon 2001) (if penalty is imposed pursuant to section 33.07, taxing unit may not recover attorney fees in suit to collect delinquent taxes subject to penalty). Subsection 33.49(a) of the Tax Code provides that a taxing unit is not "liable in a suit to collect taxes for court costs, including any fees for service of process, an attorney ad litem, arbitration, or mediation, and may not be required to post security for costs," except that a "taxing unit shall pay the cost of publishing citations, notices of sale, or other notices from the unit's general fund." Tex. Tax Code Ann. § 33.49(a), as amended by Act of May 17, 2001, 77th Leg., R.S., ch. 1430, § 24, 2001 Tex. Sess. Law Serv. 4819, 4826; id. § 33.49(b). Accordingly, the quoted language from Attorney General Opinion JM-857 is limited by the holding of that opinion and by Tax Code provisions.

In conclusion, we point out that we cannot determine whether a particular donation to the county constitutes an allocation of the section 33.07 penalty to the county. This determination raises questions of fact, which cannot be resolved in an attorney general opinion. See, e.g., Tex. Att'y Gen. Op. Nos. JC-0328 (2000) at 6; JC-0152 (1999) at 12; JC-0020 at 2; DM-98 (1992) at 3; H-56 (1973) at 3; M-187 (1968) at 3; O-2911 (1940) at 2. 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 section 33.07 penalty to the county.

[1] Letter from Charles D. Penick, Bastrop County Criminal District Attorney, to Opinions Division (July 31, 2001) (on file with Opinion Committee) [hereinafter Request Letter].

[2] Brief from R. Bruce Medley, Perdue, Brandon, Fielder, Collins & Mott, L.L.P., to Opinion Committee, Office of the Attorney General of Texas (Sept. 10, 2001) (on file with Opinion Committee) [hereinafter Brief].

                                   SUMMARY

            When a county contracts with an attorney to collect delinquent taxes pursuant to section 6.30 of the Tax Code, section 33.07 authorizes the county to impose an additional penalty on the delinquent taxes to provide compensation for the contract attorney. The additional penalty authorized by section 33.07 of the Tax Code is solely for the purpose of providing compensation to the contract attorney, and the attorney may not make a donation to the county that in effect refunds part of his or her compensation to the county. Whether a particular donation is a refund of the attorney's compensation under section 33.07 is a fact question.

                                          JOHN CORNYN
                                          Attorney General of Texas

HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN D. GUSKY
Chair, Opinion Committee

Susan L. Garrison
Assistant Attorney General, Opinion Committee