Could a Texas appraisal district waive the 5% penalty and 10% interest on a taxing unit's late budget payment?

Texas AG Opinion JM-74: Appraisal District Late-Payment Penalties

Plain-English summary

JM-74 concluded that a Texas appraisal district could not waive or rescind the penalty and interest imposed when a participating taxing unit paid its share of the appraisal district budget late.

"[W]e conclude that the appraisal district is without authority to waive or rescind the penalty and interest to any taxing unit which tenders a delinquent payment."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

Section 6.06(e) called for quarterly payments unless the taxing unit and chief appraiser agreed to a different method. A late payment incurred a 5% penalty and interest at an annual rate of 10%.

"A payment is delinquent if not paid on the date it is due. A delinquent payment incurs a penalty of 5 percent of the amount of the payment and accrues interest at an annual rate of 10 percent."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

The obstacle was lack of statutory authority. The Tax Code contained no provision authorizing an appraisal district to forgive the mandatory charges.

"At no place in the code is the appraisal district given the authority to rescind or waive the penalty and interest imposed by section 6.06(e) of the Tax Code."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

"Therefore, absent specific statutory authority, we conclude that an appraisal district is without authority to rescind or waive the penalty imposed by section 6.06(e) of the Tax Code."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

Because no taxing unit could lawfully receive a waiver, JM-74 rejected the premise that another unit should receive a refund after one unit was allowed to pay without the charges. The opinion did not reach the separate collection-remedy question.

"We answer your first question in the negative, because we conclude that the appraisal district is without authority to waive or rescind the penalty and interest to any taxing unit which tenders a delinquent payment. Because we answer your first question in the negative, we deem it unnecessary to answer your second question."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

Currency note

This opinion was issued in 1983. 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.

Official subsequent treatment

The Texas Attorney General's current landing page identifies JM-74 as "Affirmed by LO-95-62."

"Affirmed by LO-95-62"
Source: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0074

LO-95-62 reaffirmed JM-74 after finding no statutory amendment, other legislation, court decision, or Attorney General opinion that changed its result.

"Therefore, in answer to your question about its continued validity, we reaffirm Attorney General Opinion JM-74."
Source: https://www2.texasattorneygeneral.gov/opinions/opinions/48morales/lo/%31%39%39%35/pdf/lo%31%39%39%35%30%36%32.pdf

The letter opinion also said a taxing unit and chief appraiser could agree to a different payment method at any time, but could not use that agreement to eliminate charges on payments already past due.

"We therefore conclude that an agreement between the governing body of a taxing unit and a chief appraiser providing for a different method of payment may be made at any time with one proviso."
Source: https://www2.texasattorneygeneral.gov/opinions/opinions/48morales/lo/%31%39%39%35/pdf/lo%31%39%39%35%30%36%32.pdf

"[A]n agreement may not have the effect of waiving or rescinding penalties and interest due on payments that are already past due and therefore delinquent."
Source: https://www2.texasattorneygeneral.gov/opinions/opinions/48morales/lo/%31%39%39%35/pdf/lo%31%39%39%35%30%36%32.pdf

Common questions

What charges applied to a delinquent appraisal-district payment?

The statute imposed a 5% penalty on the payment and 10% annual interest.

"A delinquent payment incurs a penalty of 5 percent of the amount of the payment and accrues interest at an annual rate of 10 percent."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

Could an appraisal district forgive the charges for one taxing unit?

No. JM-74 said the district had no statutory authority to waive or rescind either the penalty or interest.

"At no place in the code is the appraisal district given the authority to rescind or waive the penalty and interest imposed by section 6.06(e) of the Tax Code."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

If one unit paid without penalty, did another unit that already paid deserve a refund?

JM-74 answered no because the appraisal district lacked authority to excuse the first unit in the first place.

"If one taxing entity is allowed to pay without penalty and interest, should any other penalty and interest paid by another taxing entity be refunded?"
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

"We answer your first question in the negative, because we conclude that the appraisal district is without authority to waive or rescind the penalty and interest to any taxing unit which tenders a delinquent payment."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

Could the parties choose a different payment schedule?

Yes. Section 6.06(e) allowed the taxing unit's governing body and chief appraiser to agree on another payment method. LO-95-62 later said that agreement could be made at any time, but not used retroactively to erase already accrued charges.

"Unless the governing body of a unit and the chief appraiser agree to a different method of payment, each taxing unit shall pay its allocation in four equal payments."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

"An agreement between the governing body of a taxing unit and a chief appraiser providing for a different method of payment under section 6.06(e) of the Tax Code may be made at any time but may not have the effect of waiving or rescinding penalties and interest due on payments that are already past due and therefore delinquent."
Source: https://www2.texasattorneygeneral.gov/opinions/opinions/48morales/lo/%31%39%39%35/pdf/lo%31%39%39%35%30%36%32.pdf

Why did JM-74 construe the appraisal district's power narrowly?

It analogized appraisal districts to other governmental entities whose authority was limited to powers clearly granted by the constitution and statutes.

"Analogously, we hold that an appraisal district can exercise only those powers and duties which are clearly set forth in the constitution and statutes of this state."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

Background and statutory framework

Frio County Attorney James W. Smith, Jr. asked about taxing units' payments toward appraisal-district expenditures allocated under section 6.06(d).

"You ask us two questions regarding section 6.06(e) of the Tax Code. This section governs the method by which taxing units pay to the appraisal district their portions of the appraisal district's expenditures as allocated by section 6.06(d), Tax Code."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

The opinion recognized that the legislature could constitutionally remit accrued penalties by general statute, but found no remission provision applicable here.

"Moreover, remission by general statute of penalties which have accrued and are due political subdivisions is constitutional."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

"But, in this instance remission cannot be accomplished, because there is no statutory provision permitting it."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

Holding

"An appraisal district is without authority to rescind or waive the penalty and interest imposed by section 6.06(e) of the Tax Code upon taxing units which are delinquent in paying their allocation of the appraisal district's expenditures."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

Citations and references

Statutes discussed by JM-74:

• "section 6.06(e) of the Tax Code" Official PDF
• "section 6.06(d), Tax Code" Official PDF

Selected cases cited by JM-74:

• "Waters-Pierce Oil Company v. Texas, 212 U.S. 86, 107 (1909)" Official PDF
• "Jones v. Williams, 45 S.W.2d 130, 137 (Tex. 1931)" Official PDF
• "Tri-City Fresh Water Supply District No. 2 of Harris County v. Mann, 142 S.W.2d 945, 948 (Tex. 1940)" Official PDF
• "Miller v. El Paso County, 150 S.W.2d 1000 (Tex. 1941)" Official PDF

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0074
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1983/jm0074.pdf

Original opinion text

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

The Attorney General of Texas

JIM MATTOX
Attorney General

September 19, 1983

Honorable James W. Smith, Jr.
Frio County Attorney
P. O. Box V
Pearsall, Texas 78061

Opinion No. JM-74

Re: Whether penalties established by section 6.06(e) of the Tax Code for late payment of taxing entity assessments may be rescinded

Dear Mr. Smith:

You ask us two questions regarding section 6.06(e) of the Tax Code. This section governs the method by which taxing units pay to the appraisal district their portions of the appraisal district's expenditures as allocated by section 6.06(d), Tax Code. Section 6.06(e) of the Tax Code provides the following:

Unless the governing body of a unit and the chief appraiser agree to a different method of payment, each taxing unit shall pay its allocation in four equal payments to be made at the end of each calendar quarter, and the first payment shall be made before January 1 of the year in which the budget takes effect. A payment is delinquent if not paid on the date it is due. A delinquent payment incurs a penalty of 5 percent of the amount of the payment and accrues interest at an annual rate of 10 percent. If the budget is amended, any change in the amount of a unit's allocation is apportioned among the payments remaining. (Emphasis added).

Your first question is:

If one taxing entity is allowed to pay without penalty and interest, should any other penalty and interest paid by another taxing entity be refunded?

Your second question is:

If payments are accepted without payment of penalty and interest, what other recourse would the Frio County Appraisal District have for collecting due funds?

We answer your first question in the negative, because we conclude that the appraisal district is without authority to waive or rescind the penalty and interest to any taxing unit which tenders a delinquent payment. Because we answer your first question in the negative, we deem it unnecessary to answer your second question.

Under settled principles of law, the imposition of penalties falls within the police power of the legislature. Waters-Pierce Oil Company v. Texas, 212 U.S. 86, 107 (1909); First Texas Prudential Insurance Company v. Smallwood, 242 S.W. 498, 505 (Tex. Civ. App. - Beaumont 1922, no writ). Moreover, remission by general statute of penalties which have accrued and are due political subdivisions is constitutional. Jones v. Williams, 45 S.W.2d 130, 137 (Tex. 1931). But, in this instance remission cannot be accomplished, because there is no statutory provision permitting it. At no place in the code is the appraisal district given the authority to rescind or waive the penalty and interest imposed by section 6.06(e) of the Tax Code.

Generally, the powers of such governmental agencies as counties, townships, and school districts are more strictly construed than those of incorporated municipalities. Tri-City Fresh Water Supply District No. 2 of Harris County v. Mann, 142 S.W.2d 945, 948 (Tex. 1940). For example, a county has no powers or duties except those which are clearly set forth and defined by the constitution and the state statutes. Harrison County v. City of Marshall, 253 S.W.2d 67, 69 (Tex. Civ. App. - Fort Worth 1952, writ ref'd); Wichita County v. Vance, 217 S.W.2d 702, 703 (Tex. Civ. App. - Fort Worth 1949, writ ref'd n.r.e.). See also Miller v. El Paso County, 150 S.W.2d 1000 (Tex. 1941). Analogously, we hold that an appraisal district can exercise only those powers and duties which are clearly set forth in the constitution and statutes of this state. Therefore, absent specific statutory authority, we conclude that an appraisal district is without authority to rescind or waive the penalty imposed by section 6.06(e) of the Tax Code.

SUMMARY

An appraisal district is without authority to rescind or waive the penalty and interest imposed by section 6.06(e) of the Tax Code upon taxing units which are delinquent in paying their allocation of the appraisal district's expenditures.

Very truly yours,

JIM MATTOX
Attorney General of Texas

TOM GREEN
First Assistant Attorney General

DAVID R. RICHARDS
Executive Assistant Attorney General

Prepared by Jim Moellinger
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Chairman
Jon Bible
David Brooks
Colin Carl
Jim Moellinger
Nancy Sutton