If I set up a property-tax installment plan before July 1, can the county still hit me with the 15% collection penalty?

Plain-English summary

When Texas property taxes go unpaid, counties often hire a law firm to chase the money, and they cover that firm's fee by tacking an extra penalty (up to 15%) onto bills that are still delinquent on July 1. Separately, the Tax Code lets a struggling taxpayer set up an installment plan to pay off delinquent taxes over time. Cameron County wanted to know what happens when both things are in play: if a taxpayer signs an installment agreement before July 1, does the 15% collection penalty still hit?

The Attorney General said no. The key was what the installment-plan statute does and does not say. It expressly says interest keeps running on the unpaid balance while the plan is in effect. It says nothing about penalties continuing to pile up. The Comptroller had long read that silence to mean that signing an installment agreement stops new penalties, and the Attorney General agreed. A separate section of the code handles when penalties accrue, and the section that sets the delinquency date does not itself impose any penalty.

So the county's reading lost. The 15% collection penalty under section 33.07 attaches to taxes that are still delinquent on July 1, but if the taxpayer locked in an installment agreement before that date, the taxes were already covered by the agreement and the penalty never attached. The opinion lined up with the Comptroller's consistent administrative practice.

Currency note

This opinion was issued in 1993. 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. The property-tax delinquency, penalty, and installment-agreement provisions in Tax Code chapters 31 and 33 have been amended since 1993; confirm the current statute before relying on anything described here.

Background and statutory framework

Section 6.30(c) of the Tax Code lets a taxing unit's governing body contract with a competent attorney to enforce the collection of delinquent taxes. Section 33.07 then lets the unit provide that taxes which remain delinquent on July 1 of the year they become delinquent incur an additional penalty to defray collection costs, if the unit has contracted with an attorney under section 6.30; the penalty may not exceed 15% of the taxes, penalty, and interest due. Cameron County had contracted with a law firm and adopted a 15% penalty, which served as the firm's compensation.

Section 33.02 authorizes a collector for a taxing unit that collects its own taxes to enter a written installment agreement (for up to 36 months) for payment of delinquent taxes, penalties, and interest. Subsection (b) provides that interest accrues on the unpaid balance during the agreement, by reference to section 33.01(c). The Comptroller of Public Accounts had consistently interpreted section 33.02 to let a delinquent taxpayer stop the imposition of penalties by entering an installment agreement, reasoning that the Code specifies "interest" when it means interest and "penalties" when it means penalties, and that a taxpayer would have little incentive to agree to pay if penalties kept accruing.

The Attorney General concurred with the Comptroller and rejected the county's contrary argument. The county had pointed to section 31.02(a), which sets the date taxes become delinquent and lists certain exceptions (taxes paid under sections 31.02(b), 31.03, and 31.04) but does not except taxes subject to an installment agreement. The AG found that argument unpersuasive because section 31.02(a) only establishes the delinquency date and does not impose penalties, while the imposition of penalties is addressed specifically in sections 33.01, 33.02, and 33.07. Because section 33.02 expressly provides for interest, but not additional penalties, to accrue on the unpaid balance, the AG concluded the section 33.07 penalty does not apply to taxes subject to a section 33.02 installment agreement entered before July 1.

Citations

• Tax Code § 6.30 (taxing unit may contract with an attorney to collect delinquent taxes)
• Tax Code § 33.07 (additional penalty, not to exceed 15%, on taxes delinquent on July 1, to defray collection costs)
• Tax Code § 33.02 (written installment agreement for delinquent taxes, up to 36 months); § 33.02(b) (interest accrues on the unpaid balance during the agreement)
• Tax Code § 33.01, § 33.01(a) (accrual of penalties and interest on delinquent taxes)
• Tax Code § 31.02(a) (date taxes become delinquent; listed exceptions do not include installment agreements)

Common questions

Does a property-tax installment plan signed before July 1 avoid the 15% collection penalty?
Under this opinion, yes. The Attorney General concluded that the section 33.07 collection penalty does not apply to delinquent taxes subject to a section 33.02 installment agreement entered before July 1 of the year the taxes became delinquent.

Why doesn't the penalty apply?
Because section 33.02 expressly lets interest, but not additional penalties, accrue on the unpaid balance once an installment agreement is in place. The Comptroller had long read the statute that way, and the Attorney General agreed.

Does interest still accrue under an installment agreement?
Yes. Section 33.02(b) provides that interest accrues on the unpaid balance during the agreement. The opinion's conclusion was about penalties, not interest.

What was the county's argument, and why did it lose?
The county argued that section 31.02(a), which sets the delinquency date, lists exceptions but does not except installment-agreement taxes. The Attorney General found that section 31.02(a) only fixes the delinquency date and does not impose penalties; the penalty rules are in sections 33.01, 33.02, and 33.07, which control.

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/dan-morales/dm-0235
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1993/dm0235.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

Office of the Attorney General
State of Texas

DAN MORALES
ATTORNEY GENERAL

July 12, 1993

Honorable Luis V. Saenz
Cameron County District Attorney
Cameron County Courthouse
914 East Harrison Street
Brownsville, Texas 78520

Opinion No. DM-235

Re: Whether a delinquent tax penalty adopted by the Cameron County Commissioners Court under section 33.07 of the Tax Code applies to delinquent taxes subject to installment agreements entered into under section 33.02 of the Tax Code prior to July 1 of the year in which the taxes became delinquent (RQ-528)

Dear Mr. Saenz:

On behalf of the Tax Assessor-Collector of Cameron County (the "tax assessor-collector"), you ask whether a delinquent tax penalty adopted by the Cameron County Commissioners Court under section 33.07 of the Tax Code applies to delinquent taxes subject to installment agreements entered into under section 33.02 of the Tax Code prior to July 1 of the year in which the taxes became delinquent. Subsection (c) of section 6.30 of the Tax Code authorizes the governing body of a taxing unit to contract with any competent attorney to represent the unit to enforce the collection of delinquent taxes. Section 33.07 authorizes a taxing unit to provide that

taxes that remain delinquent on July 1 of the year in which they become delinquent incur an additional penalty to defray costs of collection, if the unit . . . has contracted with an attorney pursuant to Section 6.30 of this code. The amount of the penalty may not exceed 15 percent of the amount of taxes, penalty and interest due.

You inform us that the Cameron County Commissioners Court has entered into an agreement with a law firm to collect delinquent taxes in accordance with section 6.30, and has passed a resolution providing for a 15 percent penalty on taxes that remain delinquent on July 1 of the year in which they become delinquent pursuant to section 33.07. You state that "[t]he compensation under the contract with the law firm is the 15% penalty allowed by Section 33.07 and required by the Commissioners Court." You ask whether this 15 percent penalty may be assessed against a taxpayer who has entered into an installment agreement with the taxing unit under section 33.02 prior to July 1 of the year in which the taxes became delinquent.

Section 33.02, which authorizes the collector for a taxing unit to enter an agreement with a person for the payment of delinquent taxes, penalties, and interest in installments, provides in pertinent part:

(a) The collector for a taxing unit that collects its own taxes may enter an agreement with a person delinquent in the payment of the tax, penalties, and interest in installments. The agreement must be in writing and may not extend for a period of more than 36 months.

(b) Interest accrues as provided by Subsection (c) of Section 33.01 of this code on the unpaid balance during the period of the agreement.

(c) A property owner's execution of an installment agreement under this section is an irrevocable admission of liability for all tax, penalties, and interest that are subject to the agreement.

(d) Property may not be seized and sold and a suit may not be filed to collect a delinquent tax subject to an installment agreement unless the property owner:

(1) fails to make a payment as required by the agreement;

(2) fails to pay other property taxes collected by the unit when due as required by the collector; or

(3) breaches any other condition of the agreement.

. . .

Tax Code § 33.02(a) - (d) (footnote added).

The comptroller interprets section 33.02 to allow a delinquent taxpayer who enters into an installment agreement to avoid the imposition of further penalties. A letter to the tax assessor-collector from the office of the comptroller states in pertinent part:

Subsection (b) [of section 33.02] provides that interest accrues on the unpaid balance-the subsection does not provide for penalties to accrue on that balance. . . . We have consistently interpreted Section 33.02(b) to allow a taxpayer to stop the imposition of penalties on delinquent taxes by entering into an installment agreement. Throughout the Tax Code, the Legislature specifies "interest" when it means interest and "penalties" when it means penalties. Further, we think the clear intent of Section 33.02 was to allow a taxpayer to formally agree to pay delinquent taxes and avoid the imposition of further penalties or a suit to collect taxes-a taxpayer would have little or no incentive to enter into an installment agreement if penalties continued to accrue or he could still be sued for collection. Under our interpretation, a taxpayer could not be liable for the 15 percent additional penalty if he entered into the installment agreement before July 1. Section 33.02 does not permit penalties to accrue after the agreement is made and Section 33.07 does not permit the 15 percent additional penalty to attach until July 1. This has been our consistent administrative construction of the law.

Letter to Antonio Yzaguirre, Jr., Tax Assessor-Collector, Cameron County, from Ray Bonilla, General Counsel, Comptroller of Public Accounts, dated April 16, 1993 (emphasis in the original).

You disagree with the comptroller's conclusion. You contend that the phrase "taxes that remain delinquent on July 1 of the year in which they become delinquent incur an additional penalty" in section 33.07 refers to delinquent taxes subject to an installment agreement. You base your contention on the fact that section 31.02(a), the provision which establishes the date upon which taxes become delinquent, sets forth certain exceptions, namely taxes paid under sections 31.02(b), 31.03 and 31.04, but does not except taxes subject to an installment agreement under section 33.02. We concur with the comptroller's interpretation of section 33.02, and find your contention unpersuasive.

First, we agree with the comptroller that it is dispositive that section 33.02 expressly provides that interest will continue to accrue on the unpaid balance but does not similarly provide that penalties will continue to accrue. Again, subsection (b) of section 33.02 states that "[i]nterest accrues as provided by Subsection (c) of Section 33.01 of this code on the unpaid balance during the period of the agreement." (Emphasis added.) Subsection (b) does not provide that penalties will continue to be imposed. Significantly, section 33.01 provides for both the accrual of interest and the imposition of penalties. Subsection (a) of section 33.01, for example, provides:

A delinquent tax incurs a penalty of six percent of the amount of the tax for the first calendar month it is delinquent plus one percent for each additional month or portion of a month the tax remains unpaid prior to July 1 of the year in which it becomes delinquent. However, a tax delinquent on July 1 incurs a total penalty of twelve percent of the amount of the delinquent tax without regard to the number of months the tax has been delinquent.

In addition, we believe it is insignificant that section 31.02(a) does not except installment agreements. Section 31.02(a) establishes the date upon which taxes become delinquent. It does not impose penalties, nor do the provisions it excepts. The imposition of penalties is specifically addressed in sections 33.01, 33.02, and 33.07. We agree with the comptroller's conclusion that these provisions do not authorize a taxing unit to impose a penalty adopted pursuant to section 33.07 on a taxpayer who has entered into an installment agreement under section 33.02 prior to July 1 of the year in which the taxes became delinquent.

SUMMARY

A delinquent tax penalty adopted under section 33.07 of the Tax Code does not apply to delinquent taxes subject to installment agreements entered into under section 33.02 of the Tax Code prior to July 1 of the year in which the taxes became delinquent.

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 [name illegible in source scan]
Assistant Attorney General