DAN MORALES

ATTORNEY GENERAL 

## Bffice of tfp !Zlttornep &nerat &ate ofQkxae September 28, 1993 Susan A. Spataro, CPA, CMA Travis County Auditor P.O. Box 1748 Austin, Texas 78767 Opinion No. DM-258
Be.: Whether unclaimed overpayments on property taxes escheat to the state or do they belong to Travis County after three years @Q-W Dear Ms. Spataro: Travis County collects property taxes for itself as well as several other taxing units pursuant to the Tax Code section 31.01. In the event of overpayment or erroneous payment of taxes, unclaimed funds are deposited in a separate escrow account. You express concern that over a significant period of time, the amount of funds in the account has accumulated. Refunds consisting of overpayments or erroneous payments are addressed by section 31.11 ofthe code which provides as follows:

(a) If a taxpayer applies to the tax collector of a taxing unit for a retbnd of an overpayment or erroneous payment of taxes and the auditor for the unit determines that the payment was erroneous or excessive, the tax collector shall retimd the amount of the excessive or erroneous payment from available current tax collections or gem krds appropriated by the unit for making refunds. However, if the amount of the relimd exceeds $500, the collector may not make the refund unless the governing body of the taxing unit also determines that the payment was erroneous or excessive and approves the refimd.

. . (c) An alpplicationfor a refund must be made within three years afrr thedare ofthepayment or the taxpayer waives theright to therefind. Acts 1993,73d Leg., ch. 198, 3 1(emphasis added). Your inquiry is concerned with the disposition of the fimds once the three year time period for reclamation has lapsed. You speciticslly ask whether the unclaimed overpayments belong to Travis County and if so, whether they maybe legally transferred into the county’s general fund. Our research indicates that the Tax Code does not address the disposition of the 8mds following the reclamation period, nor do any prior judicial or attorney general

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opinions. However, chapters 71 through 75 of the Property Code, also known as the Texas Unclaimed Property Law, address the escheat ofpersonal property held by a person other than a banking organization or life insurance company. Chapter 71 addresses escheat in the context of an individual that dies intestate and without heirs. In such an instance the real and personal property previously held would escheat to and vest in the state. Prop. Code $71.001. Chapters 72 and 74 address abandoned unclaimed property and the procedures necessary for escheat to the state. Chapter 72 specifically applies to personal property held by a person other than a banking organization or life insurance company;’ and provides in pertinent part

personal property is presumed abandoned if, for longer than three years: (1) the existence and location of the owner of the property is unknown to the holder ofthe property;2 and (2) according to the knowledge and records ofthe holder of the property, a claim to the property has not been asserted or an act of ownership ofthe property has not been exercised. Id. 572.101(a) (footnote added). While the state does possess a property interest in abandoned funds, that interest is only as great as the interest held by the original owner of the funds. State v. TexasElec. Service Co., 488 S.W.2d 878, 881 (Tex. Civ. App.--Fort Worth 1972, no writ). As section 72.101 provides, the original owner waives all rights to the property once the three year time period has lapsed. Once the owner’s rights to the property cease to exist, the state is left without an interest to claim. Central Power & Light Co. v. St&e, 410 S.W.2d 18, 26 (Tex. Civ. App.--Corpus Christi 1966, writ refd n.r.e.). Similarly, the original owner of an overpayment ofproperty taxes waives his right to claim an interest in the funds once the three year reclamation period has lapsed. Hence, the state also loses any right to assert a claim to the funds at the end of the three year period. In the absence of an interest which may be asserted by the original owner of the fiurds or the state, such Iknds maybe retained by the county. For a substantial amount of time, counties levying such a tax have exercised their discretion in retaining unclaimed overpayments. Cur research indicates that such exercise

‘Chapter 73 addresses the escheat of inactive accmn& held by banking organizations. Id. 85 73.001 - 73.503. zForpupmes ofchapter72,aholderisdefinedss apersonwhois inpossessionofpropertythat belongstoanother, atrusteeorisindebtedtoanotheronanobligation. Id. 8 72.001(e). Weconcludethat Travis county meets the requirements of a holder prior to the expiration ofthe three year reclamation period.

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of discretion has been unchallenged. Thus, it is our understanding that it has been standard practice for counties to retain unclaimed overpayments collected at a local level. In the absence of authority to the contrary, we conclude that local counties may exercise their discretion in retaining possession of unclaimed overpayments on property taxes; finthermore, such finds may be transferred into the counties’ general timd accounts pursuant to article VIII, section 9 ofthe Texas Constitution.3
SUMMARY
In the absence of authority to the contrary, unclaimed overpayments on property taxes belong to the county once the three year period ofreclamation has lapsed under section 31.11 ofthe Tax Code. The timds may be transferred into the county’s general fund account pursuant to article VIII, section 9 ofthe Texas Constitution.

DAN MORALES Attorney General ofTexas 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 Toya C. Cook Assistant Attorney General

3ArticIe VU, section9oftheTexasConstitutionstatesthat “[a]nycountymayputalltaxmoney collected bythecountyintoonegeneralfund withoutregardto the purpose or sourceofeachtax.” We notethat this provisiononlypertainsto collectionsof county tax, not cokctions for other political SUhdiViSiO"S.

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