December 21, 

### 1962

Honorable Jesse James Opinion No. WW-1507 StateTreasurer Capitol Station Re: Payment of pro rata Austin, Texas interest on refunded moneypaid under proteat under submitted Dear Mr. James: facts.

We quote the following excerpt from your letter requesting our opinion on the above captionedmatter:

"We respectfullyrequest your opinion regarding the payment of pro rata interest to companiesrefunded moniespaid to the stateunder protest and refunded under conditionsas listedbelow:

"1. When companiespay under protest for taxes to the State, shall the State Treasurerpay pro rata interestalong with the refund payment when refunds
are made without suitbeing filed such
as under conditions set out In Attorney General'sOpinion

### w-1169?

"2. When companies file suit for refund of monies paid under protest, and after suit la filed, otherprotest payments are made on a continuingbasis for the same reason and judgment is awarded these companies on original suits and no amendedpetitions are filed, shall the State Treasurerpay pro rata interest on refund of protested payments not included in the original suit?

"3

. Where suits are dismissed and refunds are made to companiesbecause laws are declaredunconstitutional, shall the StateTreasurer make payment of pro rata Interest on these refunds?"Honorable Jesse James, Page 2 (OpinionNo. 

### WW-1507)

Opinion No. 

### w-1169 held that refunds In the full amount of the taxes in controversywere authorizedunder the provisions of Article 

### 4388,Vernon's Civil Statutes, in the following aituationa: (1)where suitswere properly filed under the provisions of the protest statuteand were later dismissed by the taxpayer and (2)where suitswere properly filed under the protest atstute and the judgments did not include all of the taxes paid under protest.

Article 

### 4388reads as follows:

"The State Treasurer shall receive daily from the head of each Department,each of whom is specificallychargedwith the duty of making same daily, a detailed list of all persons remitting money the status of which Is undetermined or which is awaiting the time when it can finallybe taken into the Treasury, togetherwith the actual remittanceswhich the Treasurer shall cash and place in his vaults or in legally authorieed depository banks, if the neceaaityarises. The report from the General Land Office shall includeall money for interest,principal and leases of school, university, asylum and other lands. A deposit receipt shallbe issuedby the Comptroller for the daily total of such remittances from each apartment; and the cashier of the Treaaurer'a Eepartment shall keep a eaah book, to be called 'suspensecash book,' in which to enter these deposit receipts, and any others issued for cash received for which no depositwarrants can be issued, or when their issuance 18 delayed. As soon as the status of money so placed with the Treasurer on a depoaft recel.pt is determined, it shall be transferred from the suspenseaccount by plactng the portion of l.t belonging to the State in the Treasuryby the Issuance of a depositwarrant, and the part found not to belong to .the State shallbe refunded. When deposit warrants are issued, they shallbe entered in this cash 'book, aa we.llas any refunds, and the balance shall represent the aggregate of the items at%11 in suspense. Refunds shallbe made in a msnner simQlar to that in present use, except ,thatseparate series ofHonorable Jesse James, Page 

### 3 (OpinionNo. 

### WW-1507)

warrants shallbe used for making such refunds, to be called 'refundwarrants,' and suchwarrants shallbe written and signedby the Comptroller and countersignedby the Treasurer and chargedagainst the suspense funds to which they apply. Suchwarrants shall then be returned to the Comptrollerand delivered by him to the veraon entitled to receive them. Acts 2nd C.S.1909,p. 

### 438;Acts 1930, blat Leg. 5th C.S.p. 230, ch. 73 8 3; Acts 1931, 42nd Leg.p. 396, ch. 242 $j1."

Your first two questions are answered In the negative. Refunds in such cases are made pursuant to the provisions of Article 

### 4388which we have set out in full. You will note that this article makes no provision at all for the payment of pro rata interest.

Section 

### (5)of Article 1.05, Ch. 1, Title 122A, 20A Tax-Gen,V.C.S., contains the followingprovision:

!, In the event, however, that suit is bro;ght by such taxpayer within the time and within the mannerprovided in this Article, and it be finally determined that such money sopaid by such taxpayer, or any part thereof,was unlawfully demanded by such public official and that the samebelongs to such taxpayer, then and in that event it shallbe the duty of the State Treasurer to refund such amount, togetherwith the pro rata interest earned thereon, to such taxpayer,,by

the issuance of a refundwarrant,

. . . Sinceunder the facts outlined in your questions 1 and 2 the protest statutehas not been compliedwith, the provision for the payment of pro rata interest cannotbe invokedby the taxpayer. Pro rata interestmay be paid only in those instances in which the statutoryprocedure outlined in Article 1.05 has been followed.

We think that a different result must be reached under the facts stated in your third questionand advise you that in such instances the Treasurer shouldmake payment of pro rata interest on refunds of this type. True, such suitsare not concluded by a final judgment in the taxpayer's favor as is usually the case in those instances in which refunds are paid pursuant to the provisions of the protest statute. However, there wasHonorable Jesse James, Page 4 (OpinionNo. 

### WW-1507)

in existence at the time of such dlamiasal a final judgment declaring the particular law involved to be unconstitutional. Article 1.05 does not provide that a final judgment in the taxpayer's favor be entered, but only states if "itbe finally determined that suchmoney sopaid by such taxpayer

. . was unlawfully demanded

. . ."the Treasurer shall refund aulh money togetherwith the pro rata interest earned thereon to such taxpayer. The test case "finallydetermined" that such money was unlawfully demanded.

SUMMARY

No pro rata interestmay be paid on refunded money in those instances in which refunds are made pursuant to Article 

### 4388, Vernon's Civil Statutes,even though said monies were originallypaid under the proteat statute,Article 1.05, 20A Tax-Gen, V.C.S., except in instances In which subsequent to the protested payment and prior to judgment in the suit for the tax refund, the law imposing the tax is declaredunconstitutional.

Very truly yours,

WILL WILSON Attorney General of Texas

MMP:pw

APPROVED:

OPINION COMMITTFE W. V. Geppert, Chairman Robert Rowland Howard Maya Marvin Sentell Frank Booth

REVIEWED FOR THE ATTORNEY GENERAL By: Leonard Paaamore