If a county tax collector loses my check, am I still on the hook for the property taxes?

Plain-English summary

Lafayette County's former collector/treasurer was convicted of theft tied to her official duties. In the process, some taxpayers' checks were never deposited and could not be located. The taxpayers held receipts. Initially the county told them they were "absolved from any immediate liability." Later, after investigation, the county went back to collect the unpaid taxes, eventually recovering about half. State Senator Jimmy Hickey, Jr. asked the AG two questions: did the taxpayers still owe the tax, and if so, were the amounts properly delinquent and listable on the delinquent-taxpayer list.

AG Leslie Rutledge said yes to both, but with an important caveat: the county had to treat these specific taxpayers fairly because they had done nothing wrong. The Arkansas constitution and statutes say county taxes are payable only in lawful currency or qualifying scrip. A check is only conditional payment; it does not discharge the tax until the bank actually pays it. That rule is well-settled enough that even a receipt-in-full or the collector treating the check as paid does not change the result.

On the delinquent-list question, the statutes are absolute: "All taxes unpaid after October 15 are delinquent." There are no exceptions for innocent taxpayers caught in someone else's malfeasance. So the amounts had to appear on the appropriate delinquency list.

But the Arkansas Property Taxpayer Bill of Rights requires "fair treatment" throughout the property tax system. The AG offered three concrete points of fairness: it would likely be unfair to charge these taxpayers the statutory 10% delinquency penalty, it would likely be unfair to leave them exposed if their replacement check and original both later cleared, and it would likely be unfair to put names on a published delinquency list before exhausting reasonable collection efforts. The county was not estopped from collecting, but equity strongly counseled restraint.

Currency note

This opinion was issued in 2016. Subsequent statutory amendments, court decisions, or later AG 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.

Common questions

Does giving a check to the collector pay my taxes?
Not yet. Under Arkansas law in effect at the time of this opinion, a check is conditional payment. The tax is not paid until the check actually clears. Even if the collector hands over a receipt, the tax remains a charge if the check is never presented or is dishonored. The AG quoted a corporate-law encyclopedia restating this as the general rule.

Can the county put me on the delinquent list if it was the collector who lost my check?
At the time, yes. Ark. Code Ann. § 26-36-201(a)(2) said "All taxes unpaid after October 15 are delinquent," with no exceptions. The county had a statutory duty to prepare delinquent-property lists. The AG said the lists must include these amounts, but also said the county should exercise restraint about when to actually publish names.

Should I have to pay the 10% delinquency penalty in this situation?
The AG said it would likely be unfair to charge taxpayers who did everything right under a 10% penalty triggered by misconduct that was not theirs. The Property Taxpayer Bill of Rights and the equity principles the AG referenced argued against assessing the penalty in these specific facts.

What about the original check turning up later and getting cashed alongside my replacement check?
The AG said it would likely be unfair for the county not to protect the taxpayer from overdraft fees and double-payment risk in that scenario. That implicitly puts a duty on the county to safeguard the taxpayer who issued a replacement.

Was the county legally required to send these taxpayers a break?
No. Government generally is not estopped from collecting a tax that is otherwise owed. Estoppel requires an "affirmative misrepresentation" the taxpayer relied on. The AG flagged the county's earlier statement absolving taxpayers from "immediate liability" without finding it amounted to actionable estoppel. The duty the AG identified came from the Taxpayer Bill of Rights and from general principles of fair treatment, not from contract or estoppel doctrine.

Background and statutory framework

The Arkansas Constitution, Article 16 Section 10, requires that county taxes be payable only in lawful U.S. currency (or, irrelevant here, county-issued orders and warrants). Ark. Code Ann. § 26-35-502 (Repl. 2012) reads the same way. The companion state-tax statute, Ark. Code Ann. § 26-18-503(b), is more explicit: "No remittance, other than cash, is a final discharge of liability due... until it has been paid in cash."

There were no Arkansas appellate cases interpreting the county-tax provisions in this context, so the AG drew on out-of-jurisdiction authority. 85 C.J.S. Taxation § 1033 (2016) summarized the general rule that taxes remain a charge until the check is paid, even with a receipt or negligent handling by the receiving officer. The American Law Reports annotation on this question (44 A.L.R. 1234, supplemented at 124 A.L.R. 1155) reached the same conclusion.

On delinquency: Ark. Code Ann. § 26-36-201(a)(2) declares all unpaid taxes delinquent after October 15. Ark. Code Ann. § 26-37-106(a)(1) requires a list of delinquent lands; § 26-36-203(a)(1)(A) requires a list of delinquent personal property taxes. The 10% penalty appears in §§ 26-35-501(c)(1), 26-36-201(b)(1), and 26-36-202(b).

The fairness counterweight: Ark. Code Ann. § 26-32-202(a)(4) (the Property Taxpayer Bill of Rights) declares taxpayers entitled to "fair... treatment throughout the property tax system." On equitable doctrine, the AG cited Arkansas Dep't of Human Services v. Estate of Lewis, 325 Ark. 20, 922 S.W.2d 712 (1996), for the rule that government is not estopped from collecting unless an agent made an "affirmative misrepresentation" the other party relied on, and pointed (by analogy) to Ark. Code Ann. § 26-18-705, which authorizes the Director of DFA to settle or compromise controversies over state taxes.

Citations

Statutes: Ark. Const. art. 16, § 10; Ark. Code Ann. §§ 26-35-502; 26-18-503(b); 26-36-201(a)(2), (b)(1); 26-37-106(a)(1); 26-36-203(a)(1)(A); 26-32-202(a)(4); 26-35-501(c)(1); 26-36-202(b); 26-18-705.

Cases: Arkansas Dep't of Human Services v. Estate of Lewis, 325 Ark. 20, 922 S.W.2d 712 (1996).

Secondary: 85 C.J.S. Taxation § 1033 (2016); Annotation, Payment of Tax by Check or Draft, 44 A.L.R. 1234; 124 A.L.R. 1155.

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

Opinion No. 2015-149
June 6, 2016
STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE

The Honorable Jimmy Hickey, Jr.
State Senator
1600 Arkansas Blvd., Suite 106
Texarkana, AR 71854

Dear Senator Hickey:

This is my opinion on your questions about the consequences of a county's loss of checks submitted to it in payment of property taxes.

You indicate in your request that taxpayers were given receipts but their checks were never presented to banks for payment and cannot now be located. The checks' loss presumably was due to the fault of the county's former collector/treasurer, who has been convicted of theft in connection with her official duties. After some taxpayers discovered their checks had not been presented for payment, "the county ensured the taxpayers who had receipts that they were absolved from any immediate liability as a result of the missing checks." After investigation, the county gave notice to the taxpayers and attempted to collect the unpaid taxes. The county has collected about half the unpaid total.

Your questions are:

1. Even though the taxpayer issued a check to pay their taxes, does the taxpayer remain liable for the tax debt?
2. If the answer to question 1 is "yes," should these tax liabilities be considered as delinquent and be listed on the delinquent taxpayer list?

RESPONSE

In my opinion, the answer to each of your questions is "yes," but the county must treat the taxpayers fairly and equitably in collecting the remaining unpaid taxes.

DISCUSSION

Question 1 - Even though the taxpayer issued a check to pay their taxes, does the taxpayer remain liable for the tax debt?

The Arkansas Constitution states that "[t]he taxes of counties... shall only be payable in lawful currency of the United States...." An Arkansas statute is substantially similar.

While no Arkansas cases discuss the meaning of these provisions, a similar statute applying to state taxes may supply more guidance: "All remittances required to be paid under any state tax law shall be made... by bank draft, check, cashier's check, money order, or money.... No remittance, other than cash, is a final discharge of liability due... until it has been paid in cash."

In my view, the applicable provisions mean that, while a county might accept a check in payment of taxes, the tax liability is not satisfied until the county actually receives cash in payment of the check. A legal encyclopedia expands on the rule:

The acceptance of a check on a bank for the amount of the drawer's taxes is at most only a conditional payment; that is, the taxes are not paid until the check is paid, and if it is never presented or is dishonored, the taxes remain a charge, even though a receipt in full for the taxes has been issued, the receiving officer treats the check as cash, or as payment, or is negligent in handling it.

In my opinion, then, a taxpayer whose check was lost by the county and never presented for payment remains liable for the tax.

Question 2 - If the answer to question 1 is "yes," should these tax liabilities be considered as delinquent and be listed on the delinquent taxpayer list?

The law states that "[a]ll taxes unpaid after October 15 are delinquent," and requires preparation of a "list of the delinquent lands" and a "list of delinquent personal property taxes...." No exceptions are stated. It is accordingly my opinion that tax liabilities not satisfied by October 15 are delinquent and must appear on the appropriate list of delinquencies.

However, it is of the utmost importance to remember that the taxpayers at issue did everything required of them by law to pay their taxes on time and were not at fault in connection with the checks' loss. The Arkansas Property Taxpayer Bill of Rights requires that taxpayers "receive fair... treatment throughout the property tax system." Fairness depends on the facts and circumstances prevailing in each case, which may differ among taxpayers, particularly with respect to actions taken or omitted after the checks' loss was discovered.

I cannot advise the county in general with respect to its actions to collect the unpaid taxes and delinquency penalties. But I will say that, absent facts not stated in your request, it would likely be unfair to attempt to collect the statutory delinquency penalty from these taxpayers. It would also likely be unfair for the county not to protect a taxpayer from overdraft fees and the like, in the event the taxpayer submits a replacement check which is paid, and the original check is found and accidentally or otherwise also presented for payment. And it would likely be unfair to place any name on a published delinquency list until the last day possible under the law and without repeated serious efforts to obtain payment from the taxpayer.

Finally, as a general matter, a government is not estopped from taking a course of action, like collecting a penalty otherwise due from a taxpayer, unless, among other things, an agent of the government has made an "affirmative misrepresentation" on which the other party relied. While I have no reason to believe any affirmative misrepresentation was made here, I am not necessarily in possession of all material facts and thus cannot conclusively say. Nor can I speculate productively about equitable remedies a court might apply in order to ensure that a taxpayer is treated fairly and equitably in these circumstances. I can merely reiterate that the county should treat each taxpayer fairly and equitably given the circumstances of his or her case.

Sincerely,
LESLIE RUTLEDGE
Attorney General