R-325

PRICE DANIEL ATTORNEYGENERA‘

May 1, 1947
Hon. George H. Sheppard Comptroller of PublicAccounts Austin, Texas Opin,SonNo. V-176

Re: The accrual of interest and penalties on real estate taxes on property vested under the Allen Dear Sir: Property Act.

You have requested the opinion of thisDepartment on the following situation:

"Underthe provisions of Public Law 671, 79th Congress,approvedAugust 8, 1946, theAlien Property Custodiannow is empowered to pay real estate taxes and specialassessments affecting vested propertieswhether the taxes accrued prior
or subsequentto the date of vesting. Provided, however, that under this statute such paymentsmay only be made where there are sufficient funds held in the account of the former owner to cover same.
"Thisdepartmentisinformed that it is the desire of the Custodian to pay all taxeswhich are due and payable,where the Custodian has on hands proceeds from the property or other funds of the
same owner in amount sufficientto pay taxes appropriate under the law. It is the contention of the Custodian that no interestand/or penalties accrue after vesting date of the property.
"Thisdepartment has been requested to instruct Tax Collectors,where property has vested under the Alien Property Law, to revise their rolls
or statements for delinquent taxes on such property to conformwith the proposals outlined by the Alien Property Custodian.
"Thisdepartmentwill, therefore, thank you to advise us whether or not we have the authority to authorize such Tax Collectors to accept the money as tenderedby the Alien Property Custodian In pagment of taxes and clear the rolls of such interest and penalties as may be shown to be due."Eon. GeorgeH. Sheppard - page 2, v-176

The pertinentparts of Public Law 671, 79th Congress, approvedAugust 6, 1946, relating to the payment of taxes by theAlien Property Custodianupon property or Interest therein which has been transferred to or vested in him, are as follows:

"Sec. 36. (a) The vesting in or transfer to the Alien Property' Custodian of any property or interest (otherthan any property or interestac‘ quired by the United States prior toDecember 18, 19&l), or the receipt by him of any earnings, increment, or proceeds therof shall not render inapplicable any Federal, State Territorial, or -9 local tax for any periodprior or subseauent to the date of such vesting or transfer,nor render applicable the exemptionsprovided in title II of the Social Security Act with respect to service performed in the employ of the United States Government or of any instrumentalityof the United States. (Emphasisadded)
"'(b) The Alien Property Custodian shall,notwithstanding the filing of any claim or the institution of any suitunder thisAct, pay any tax Incident to any such property or interest, or the earnings, Increment, or proceeds thereof, at the earliest time appearing to him to be not contrary to the interest of the United States. The former
owner shall not be liable for any such tax accruing while suchproperty, interest, earnings, increment,
or proceeds are held by the Alien Property Custodian, unless they are returned pursuant to thisAct without aayment of such tax by the Allen Property Custodian. Every such tax shall be paid by theAlien Property Custodian to the same extent,as nearly as may be deemed practicable,as though the property or interesthad not been vested in or transferred to the Alien Property Custodian, and shallbe paid only out of the property or interest, or earnings, Increment, or proceeds thereof, to which they are incidentor out of other property or interestsacquired from the
same former owner, or earnings, increment,or proceeds thereof. Nontax liabilitymay be enforced from any property or interestor the earnings, increment, or proceeds thereofwhile heldby the Alien Property Custodian exceptwith'his consent. Where any property or interest is transferred,otherwise than pursuant to section 9 (a)or 32 hereof, theAlien Property Custodianmay transfer the property or interest free and clear of any tax, except to the extent of any lien for a tax existingandHon. George H. Sheppare - Page 3, v-176

perfected at the date of vesting, and the proceeds of such transfer shall, for tax purposes, replace the property or interest in the hands of theAlien Property Custodian.

"(d) The word ‘tax’as used in this section shall include,without limitationby reason of this enumeration,any property income, excessprofits,war-proflts, excise, Estate and employment &x, importduty, and specialassessment; and also any interest,penaltg, additional amount, or addition thereto not arising from any act, omission neglec,t,

fallure, or delay on the oart of the&stodLan."(Emphasis added)

In view of the emphasizedverbiage of subsection (d), supra, it is clear that the Alien Property Custodianneed not
w any interest or penalty arising from any act, omission, neglect, failure or neglect on his part, But such conduct on the part of theAlien Property Custodiandoes not prevent the statutoryaccrual of the interestand/or penalty upon the basic tax in view of the emphasizedportion of subsection (a),which provides that the vesting of the title to the property in the Alien Property Custodian shall not render Inapplicableany State tax for any period prior or subsequent to the date of vesting or transfer.

The contention of the Alien Property Custodian stated in your request iswithout merit, subsection (d)referred to above, subject to the exception in and the Comptrollerdoes not have the authority to authorize the Tax Collector to accept the taxes and clear the rolls without the payment of the accrued penalties and interest.

SUMMARY

The Comptroller of PublicAccounts is not authorized to direet Tax Collectorsto receive payment of taxes from the Alien Property Custodian under the provisions of Public Law 671, 79th Congress, and clear the rolls without payment of accrued interestand penalties thereon.Hon. George H. Sheppard - Page 4,v-176

Yours very truly

ATTORNEY GENERAL OF TEXAS

CKR/lh/wc By s/C.K. Rkhards Assistant

APPROVED:~MAY 1, 1947 s/PriceDaniel ATTORNEYGENERAL OF TEXAS