June 7, 1988 

Honorable Bob Bullock Opinion No. JM-916 

Comptroller of Public Accounts 

L.B.J. State Office Building Re: Authority of the 

Austin, Texas 

comp78774 troller to contract with paid 

informants for information 

about revenue or property the 

state may be legally entitled 

to recover (RQ-1302) 

Dear Mr. Bullock: 

You have requested an opinion on questions 

under article 4344g, V.T.C.S., 

arising 

House Bill No. 

which was adopted in 1987 by 

921 of the 70th Legislature. Acts 1987, 70th 

Leg., ch. 874, at 2971. Article 4344g, V.T.C.S., authorizes 

you to contract with any person to receive information about 

claims for the recovery of revenue or property which the 

state may be entitled to pursue, except for property subject 

to escheat by the state. V.T.C.S. art. 4344g, 51(a). See 

Prop. Code ch. 71-75. This enactment creates a financial 

incentive to persons who may be able to aid the state in 

recovering dormant accounts. Bill Analysis to H.B. No. 921, 

70th Leg. (1987), on file in the Legislative Reference 

Library. 

You first ask whether this statute violates article 

III, section 51, of 

in part: 

the Texas Constitution, which provides 

Sec. 51. The Legislature shall have no 

power to make any grant or authorize the 

making of any grant of public moneys to 

any individual, association of individuals, municipal or other corporations 

whatsoever. . . . 

? This provision prohibits giving away public funds: it does 

not deny the legislature the use of state funds for state 

purposes. State v. Citv of Dallas, 

Civ. App. - Austin 1958), 

319 S.W.2d 767 (Tex. 

aff'd 331 S.W.Zd 737 (Tex. 1960). 

To comply with the requirements of article III, section 51, 

any contract between a private individual and the state must 

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Honorable Bob Bullock - Page 2 (JM-916) 

I 

? 

serve a public purpose, adequate consideration must go to 

the state, and there must be contractual provisions designed 

to insure that the public purpose is carried out. See. 

e.cr., Dodson v. Marshall, 118 S.W.2d 621 (Tex. Civ. App. - 

Waco 1938, writ dism'd); Attorney General Opinion Nos. 

H-1309, H-1260 (1978): H-912 (1976). 

Article 4344g, V.T.C.S., provides as follows: 

(a) The comptroller of public accounts 

may contract with any person for the receipt 

of information about any possible claim that 

the state may be entitled to pursue for the 

recovery of revenue or other property, except 

that this Act shall in no way relate to or 

affect property which is recoverable by the 

state pursuant to Chapters 71-75, Property 

Code. 

(b) In any contract under Subsection (a) 

of this section, the total consideration to 

be paid by the state: 

(1) shall be contingent on a recovery by 

the state; 

(2) may not exceed five percent of the 

amount of the revenue or the value of the 

other property that the state recovers as a 

result of the pursuit of the claim about 

which the contracting person provided information; and 

(3) may be limited by agreement to not 

exceed a specified, absolute dollar amount. 

(c) Consideration may not be paid by the 

state pursuant to a contract executed under 

Subsection (a) of this section if at the time 

the contract is executed or within three 

months after the date of execution, and by 

means other than disclosure under the contract, a state employee has knowledge of the 

claim disclosed under the contract or has 

knowledge of a cause of action different 

from that disclosed under the contract but 

entitling the state to recover the same 

revenue or other property. An affidavit by a 

state employee claiming that knowledge under 

? 

I 

p. 4583 
Honorable Bob Bullock - Page 3 (JM-916) 

those circumstances is prima facie evidence 

of the knowledge and circumstances. 

It is a public purpose of the state to locate and recover 

revenue and other property to which it is entitled. See. 

e.s., Tex. Const. art. III, 

estimate anticipated revenue 

§49a (comptroller's duty to 

for state from all sources); 

Gov't Code 5403.011(2) (comptroller's duty to adopt 

tions for collection of 

regulastate revenues), 5403.055 (warrant 

may not be issued to person indebted to the state): 5403.091 

(transfer to general revenue fund of balance in dormant 

fund): Property Code ch. 71-75 (provisions for escheat of 

funds to state). 

Article 4344g, V.T.C.S., authorizes the comptroller to 

contract with a person to purchase information about claims 

to revenue or other property which the state may have. 

Properly authorized officers of the state may enter into 

a contract for services to be performed for the state. 

Fazekas v. Universitv of Houston, 565 S.W.2d 299 (Tex. Civ. 

APP. - Houston [lst Dist.] 1978, writ ref'd n.r.e.), cert. 

dismissed, 440 U.S. 952 (1979). This statute makes payment 

of consideration contingent upon a recovery by the state and 

limits it to 5% of the amount of revenue or value of 

property that the state recovers. Thus, the state will 

receive adequate consideration for any payment made. 

Moreover, the state may not pay consideration pursuant 

to an article 4344g contract where a state employee has 

knowledge of the claim disclosed under the contract or other 

knowledge entitling the state to recover. See V.T.C.S. art. 

4344g(c). This provision prevents the state from compensating a private individual for information which duplicates information in the possession of the state at the time 

the contract is signed or within three months thereafter. 

Section 4344g(c), V.T.C.S., also effectively prevents 

a state employee from entering into a contract with the 

comptroller under subsection (a) of that statute. If a 

state employee knows of a claim for revenue or property 

which the state is entitled to pursue, the state may not pay 

consideration under contract for information about that 

claim. Some state employees have an express duty to 

investigate and pursue claims on behalf of the state. 

e.q., General Appropriations Act, 

See. 

Acts 1987, 70th Leg., 2d 

C.S., ch. 78, art. I, rider 16, at 303 (collection of 

delinquent judgments by attorney general); Educ. Code 552.39 

(collection of money due on student loans). Subsection (c) 

of article 4344g, V.T.C.S., thus insures that the state will 

not pay extra compensation to a state employee for 

p. 4584 
Honorable Bob Bullock - Page 4 (JM-916) 

, 

information he has received on behalf of the state in his 

capacity as a state employee. & Tex. Const. art. III, 544 

(legislature may not grant extra compensation to public 

servant after public service shall have been performed); 

V.T.C.S. art. 6252-9b, 58 (standards of conduct for state 

officers and employees); Penal Code 539.03(a) (misuse of 

official information). 

We finally note that article 4344g, V.T.C.S., does not 

establish a traditional reward program, under which the 

government offers a reward to the general public, payable 

upon performing a and an individual 

accepts the 

specific service, 

offer by -performing. See. e.q., Broadnax v. 

Ledbetter, 99 S.W. 1111 (Tex. 1907) (sheriff offered reward 

for recapture of an escaped prisoner). Under such reward 

programs, the contract is formed only when an individual 

accepts the state's offer by performing the requested 

service, and the courts have struggled with questions of 

contract formation as well as the validity of rewards under 

article III, section 51. See Blain v. Pacific Exvress Co., 

6 S.W. 679 (Tex. 1887) (individual who captured one of two 

criminals not entitled to half of reward offered for capture 

of both criminals); Weaver v. Scurry Countv 28 S.W. 836 

(Tex. Civ. App. 

of bounties 

1894, no writ) (statute authokizing payment 

for destruction of wild animals analyzed 

for compliance with article III, section 51, of the Texas 

Constitution). Since article 4344g, V.T.C.S., contemplates 

that you will receive information pursuant to a contract, we 

need not address the questions raised by a reward program. 

You next ask whether there is an appropriation from 

which to pay for information received under an article 4344g 

contract. Article VIII, section 6, of the Texas Constitution provides in part: 

No money shall be drawn from the Treasury but 

in pursuance of specific appropriations made 

by law. . . . 

No particular form of words is required to make a 

appropriation;" it is 

"specific 

sufficient if the 

authorizes an 

legislature 

expenditure and specifies the purpose for 

which an appropriation is made. National Biscuit Co. v. 

State, 135 S.W.Zd 687 (Tex. 1940). The appropriation for 

the comptroller's office, like appropriations to other state 

agencies, is itemized according to programs or functions of 

the office. It does not identify each salaried position 

or each contemplated expenditure; nor is such minute 

detail necessary to comply with article VIII, section 6, of 

the Texas Constitution. See S. & G. Construction Co. v. 

p. 4585 
Honorable Bob Bullock - Page 5 (JM-916) 

Bullock, 545 S.W.2d 953 (Tex. 1977) (appropriation from 

Available University Fund for permanent improvements and new 

construction may be used to pay judgment against University 

of Texas for additional work under a construction contract); 

Attorney General Opinion Nos. MW-251 (1980); H-1275 (1978); 

H-944 (1977): H-289 (1974); WW-865 (1960) (construing terms 

of appropriations). 

Your current appropriation provides in part: 

COMPTROLLER OF PUBLIC ACCOUNTS 

STATE COMPTROLLER'S OFFICE 

For the Years Ending 

August 31, August 31, 

1988 1989 

1. Central Administration 

a. Executive Administration 

b. Budget and Internal Accounting 

C. Revenue Estimating and Research 

d. Legal Services 

Total, Central Administration 

2. Tax Administration: 

a. Tax Policy and Taxpayer 

Services 

b. Tax information 

C. Field Operations: Headquarters 

d. Field Overations: Enforcement 

e. Field Operations: In-State Audit 

f. Field Operations: Out-of-State Audit 

. . . . 

Total, Tax Administration 

3. Funds Management: 

a. Fund Accounting 

b. Claims 

Total, Funds Management 

4. Aircraft Operations 

5. Cost of Cigarette Tax Stamps, 

estimated 

6. State Government Accounting Division 

p. 4586 
Honorable Bob Bullock - Page 6 (JM-916) 

7. Imvlementation of Bills Passed bv 

the 70th Leaislature. Resular Session 

GRAND TOTAL, COMPTROLLER OF 

PUBLIC ACCOUNTS, STATE 

COMPTROLLER'S OFFICE 

(Emphasis added.) 

Acts 1987, 70th Leg., 2d C.S., ch. 78, at 319 (amounts of 

appropriation items omitted). Specific amounts are appropriated for each item and the purpose of each expenditure 

is stated. We find no provision which bars the use of 

appropriated funds to make payments for article 4344g, 

V.T.C.S., contracts. See senerally, In the matter of DH 556 S.W.2d 628 (Tex. Civ. App. - Waco 1977, writ ref'd 

n=L.) (rider barring use of appropriated funds to pay 

judgment unless such payment was specifically authorized in 

an item of appropriation). The fiscal note to House Bill 

No. 921 states that the bill "would have negligible fiscal 

implications to the State. . . .I1 Fiscal Note to H.B. No. 

921, 70th Leg. (1987), on file at the Legislative Reference 

Library. Thus, the legislature would be unlikely to devote 

a separate line item to appropriations authorized by article 

4344g, V.T.C.S. See oenerallv Mutchler v. Texas Devartment 

of Public Safety 681 S.W.2d 282 (Tex. App. - Austin 

no writ) (approp;iated funds could not be used for 

1984, 

overtime 

pay where program would cost over $4,000,000 per year and 

legislature had consistently refused to fund it). Our 

concern is whether there are line items in your appropriation that could be used to fund article 4344g contracts 

consistent with the legislature's items 

of appropriation. 

intent in adopting 

Item 7 is subject to a rider which states that it shall 

be used to administer several specifically identified bills 

adopted by the 70th session of the legislature. Acts 1987, 

70th Leg., 2d C.S., ch. 78, rider 16, at 323. House Bill 

No. 921 is not included in this list: therefore, we conclude 

that the legislature did not intend item 7 to be a source of 

payments for information received pursuant to article 4434g, 

V.T.C.S. However, the acquisition of information leading to 

the state's recovery of revenue or other property would 

fall within the purpose of other items. The items of the 

appropriations to your office reflect the functions and 

programs of your office. If you reasonably determine that 

the article 4344g, V.T.C.S., contracts should be handled 

under a particular program activity of your office, then 

the funds appropriated 

implement article 

for that purpose may be spent to 

4344g, V.T.C.S. You are in the best 

P. 4587 
Honorable Bob Bullock - Page 7 (JM-916) 

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position to determine where this new statutory authority 

fits into the overall structure of your agency, but we can 

suggest some items which could reasonably be used to pay for 

information leading to the recovery of revenue or property 

by the state. For example, funds appropriated as item d. 

under "Tax Administrationl' to enforce tax collection laws 

could be spent to acquire information about taxes owing the 

state. See aenerallv Comptroller of Public Accounts, Budget 

Estimates for Fiscal Years 1988 and 1989 (July 1986), at 

135 (description of Tax Administration: Field Operations: 

Enforcement). Items 2e. and 2f., for in-state and out-ofstate audit, might also be used to acquire information about 

revenues and other property which the state may be entitled 

to claim. 

We do not overlook the possibility that your office has 

already budgeted its appropriation so that no funds for 

article 43449, V.T.C.S., contracts are available from any of 

the appropriation items which might be used for that purpose 

consistent with the legislature's intent in making the 

appropriation. Article 4344g, V.T.C.S., authorizes you to 

enter into contracts but does not require you to do so, and 

you have discretion to allocate appropriated funds to other 

authorized activities of your office rather than to this 

one. 

You finally ask whether your office would be authorized 

to show the informant information otherwise deemed confidential under sections 111.006, 151.027 or 171.206 of the Tax 

Code to demonstrate that he is not entitled to compensation 

or is receiving the correct compensation for the information 

he furnished.1 

Title II of the Tax Code contains the laws on state 

taxation, including chapters 111, 151, and 171. Chapter 111 

of the Tax Code sets out the comptroller's powers and duties 

in collecting taxes imposed by title II. Tax Code §111.001. 

He has authority to adopt rules not in conflict with the 

laws or constitution for the enforcement of the provisions 

of title II and the collection of taxes and other revenues thereunder. Tax Code 5111.002(a). To carry out the 

provisions of title II he may examine a taxpayer's books and 

P 

1. Sections 154.308 and 155.185 of the Tax Code, which 

formerly provided for the confidentiality of information 

relevant to tax or cigarettes, cigars, and tobacco products, 

have been repealed. Acts 1985, 69th Leg., ch. 58, 544. 

P 

p. 4588 
Honorable Bob Bullock - Page 8 (JM-916) 

records. Tax Code 5§111.004: 111.0041; 111.0043. Section 

111.006 of the Tax Code provides for the confidentiality of 

information obtained by examining a taxpayer's records: 

(a) The followins matter is confidential 

and mav not be used vubliclv. opened to 

public insvection. or disclosed excevt as 

permitted under Subsection fb1 of this 

section: 

(1) a federal tax return or federal 

tax return information required to have 

been submitted to the comptroller with a 

state tax return or report: and 

(2) all information secured, derived, 

or obtained by the comptroller or the 

attorney general during the course of an 

examination of the taxpayer's books, 

records, papers, officers, or employees, 

including an examination of the business 

affairs, operations, source of income, 

profits, losses, or expenditures of the 

taxpayer. 

(b) All information made confidential in 

this title may not be subject to subpoena 

directed to the comptroller or the attorney 

general except in a judicial or administrative proceeding in which this state, 

another state, or the federal government is a 

party. 

(c) The comptroller or the attorney 

general may use information or records made 

confidential by provisions of this title to 

enforce any provisions of this title or may 

authorize their use in a judicial or an 

administrative proceeding in which this 

state, another state, or the federal government is a party. (Emphasis added.) 

Tax Code 5111.006. See aenerallv Attorney General Opinion 

H-661 (1975); H-223 (1974); Open Records Decision No. 300 

(1981) (members of the public are not entitled to inspect 

unde'r Open Records Act taxpayer records in comptroller's 

custody which are protected by confidentiality provisions). 

Section 

tia lity prov 

111.006 of the Tax Code is a strict confidenision. Subsection (c) of that section allows 

p. 4589 
Honorable Bob Bullock - Page 9 (JM-916) 

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the comptroller or attorney general to use such information 

to enforce the tax laws in title II or to authorize their 

use in specified judicial or administrative proceedings. It 

contains no language that would authorize the comptroller to 

reveal confidential information to an informant with whom he 

has contracted under article 4344g, V.T.C.S. Chapter 151 of 

the Tax Code, which deals with the administration of sales, 

excise, and use tax, and chapter 171, which pertains to 

franchise tax liability, are subject to the confidentiality provision of section 111.006 of the code and include 

specific confidentiality provisions as well. Tax Code 

§§151.027, 171.206. The comptroller may not disclose to an 

informant under a section 4344g contract information deemed 

confidential under sections 111.006, 151.027 or 171.206 of 

the Tax Code. 

SUMMARY 

Article 43449, V.T.C.S., which authorizes 

the comptroller to contract with informants to 

pay them for information about revenue or 

property the state may be entitled to recover, 

does not violate article III, section 51, of 

the Texas Constitution. State employees are 

not authorized to contract with the comptroller to provide such information in 

exchange for consideration under an article 

4344g, V.T.C.S., contract. Funds appropriated 

to the comptroller's office may be used to 

fund article 4344g, V.T.C.S., contracts, 

even though the appropriation act does not 

expressly state that such contracts may be 

funded. Whether a particular line item may be 

used to fund such contracts depends upon the 

legislature's intent in adopting that line 

item. The comptroller's office would not be 

authorized to show an informant information 

that is confidential under sections 111.006, 

151.027, or 171.206 of the Tax Code. 

JIM MATTOX 

Attorney General of Texas 

P 

MARY KELLER 

First Assistant Attorney General 

p. 4590 
Honorable Bob Bullock - Page 10 (JM-916) 

MU MCCREARY 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAKLEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Susan L. Garrison 

Assistant Attorney General 

p. 4591