December 21, 1962 

Honorable Jesse James Opinion No. WW-1507 

State Treasurer 

Capitol Station Re: Payment of pro rata 

Austin, Texas interest on refunded 

money paid under proteat under submitted 

Dear Mr. James: facts. 

We quote the following excerpt from your letter 

requesting our opinion on the above captioned matter: 

"We respectfully request your opinion 

regarding the payment of pro rata interest 

to companies refunded monies paid to the 

state under protest and refunded under 

conditions as listed below: 

"1. When companies pay under protest 

for taxes to the State, shall the State 

Treasurer pay pro rata interest along 

with the refund payment when refunds 

are made without suit being filed such 

as under conditions set out In Attorney 

General's Opinion w-1169? 

"2. When companies file suit for 

refund of monies paid under protest, 

and after suit la filed, other protest 

payments are made on a continuing basis 

for the same reason and judgment is 

awarded these companies on original 

suits and no amended petitions are 

filed, shall the State Treasurer pay 

pro rata interest on refund of protested payments not included in the 

original suit? 

"3 . Where suits are dismissed and 

refunds are made to companies because 

laws are declared unconstitutional, 

shall the State Treasurer make payment 

of pro rata Interest on these refunds?" 
Honorable Jesse James, Page 2 (Opinion No. WW-1507) 

Opinion No. w-1169 held that refunds In the full amount 

of the taxes in controversy were authorized under the provisions 

of Article 4388, Vernon's Civil Statutes, in the following aituationa: (1) where suits were properly filed under the provisions 

of the protest statute and were later dismissed by the taxpayer 

and (2) where suits were properly filed under the protest atstute and the judgments did not include all of the taxes paid 

under protest. 

Article 4388 reads as follows: 

"The State Treasurer shall receive daily 

from the head of each Department, each of 

whom is specifically charged with 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 finally be taken into 

the Treasury, together with the actual 

remittances which the Treasurer shall cash 

and place in his vaults or in legally 

authorieed depository banks, if the neceaaity arises. The report from the General 

Land Office shall include all money for 

interest, principal and leases of school, 

university, asylum and other lands. A 

deposit receipt shall be issued by 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 

'suspense cash book,' in which to enter 

these deposit receipts, and any others 

issued for cash received for which no 

deposit warrants 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 

suspense account by plactng the portion 

of l.t belonging to the State in the Treasury by the Issuance of a deposit warrant, 

and the part found not to belong to .the 

State shall be refunded. When deposit 

warrants are issued, they shall be entered 

in this cash 'book, aa we.ll as any refunds, 

and the balance shall represent the aggregate of the items at%11 in suspense. Refunds 

shall be made in a msnner simQlar to that in 

present use, except ,that separate series of 
Honorable Jesse James, Page 3 (Opinion No. WW-1507) 

warrants shall be used for making such refunds, 

to be called 'refund warrants,' and such warrants shall be written and signed by the Comptroller and countersigned by the Treasurer and 

charged against the suspense funds to which 

they apply. Such warrants shall then be 

returned to the Comptroller and 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 

$j 1." 

Your first two questions are answered In the negative. 

Refunds in such cases are made pursuant to the provisions of 

Article 4388 which 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 following provision: 

!, In the event, however, that suit 

is bro;ght by such taxpayer within the time 

and within the manner provided in this Article, and it be finally determined that such 

money so paid by such taxpayer, or any part 

thereof, was unlawfully demanded by such 

public official and that the same belongs 

to such taxpayer, then and in that event it 

shall be the duty of the State Treasurer to 

refund such amount, together with the pro 

rata interest earned thereon, to such taxpayer,,by the issuance of a refund warrant, 

. . . 

Since under the facts outlined in your questions 1 and 2 

the protest statute has not been complied with, the provision for 

the payment of pro rata interest cannot be invoked by the taxpayer. Pro rata interest may be paid only in those instances in 

which the statutory procedure outlined in Article 1.05 has been 

followed. 

We think that a different result must be reached under 

the facts stated in your third question and advise you that in 

such instances the Treasurer should make payment of pro rata 

interest on refunds of this type. True, such suits are 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 was 
Honorable Jesse James, Page 4 (Opinion No. 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 "it be finally 

determined that such money so paid by such taxpayer . . was 

unlawfully demanded . . ." the Treasurer shall refund aulh 

money together with the pro rata interest earned thereon to 

such taxpayer. The test case "finally determined" that such 

money was unlawfully demanded. 

SUMMARY 

No pro rata interest may 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 originally paid 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 declared unconstitutional. 

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