. ,

Hon. D. D. Williams CountyAttorney ThrockmortonCounty Throckmorton,Texas OpinionNo. V-166
Re: (1) Can penalty and interest

be collected on the taxes on land which has not been assessed or rendered for taxationwhen placed on the tax rolls in accordancewith Article 7207 ofV.C.S. of Texas (2) Taxability of corporate stock in the hands of residents of th;.sState.
Dear Mr.Williams:

You submit for the opinion of this Department two ques-- tions stated in your letter,which we answer in the order stated. Your letter follows:

"1

. Can penaltyand interestbe collected on the taxes on landwhich has not been assessed or rendered for taxationwhen placed on the tax rolls in accordancewith Article 7207 of the R.C.S. of Texas, 1925?
"PARTICULARFACT SITUATION: There are several tracts of land located in Throckmorton County, Texas, which have been carried on the rolls for many years. If, for example, the assessor assesses a tract of such land for the year 1940, shouldpenalty and Interestbe collected on the taxes as though the tract of land had been placed on the rolls in the year 1940 and carried as being delinquent since that time? "2

. Should the stock in theWest Texas Utilities Co. and other corporations owned by the citizens of this county be rendered and assessed for taxation in this and School purposes?" county for State and.Countg.

Hon. D. D. Williams, Page 2, 

### V-166

Before answering specificallyyour first question we shoulddetermine to what extent, if any, Articles 7207, 

### 7346and 

### 7347are modified by S.B. 

### 407,Ch. 128,Acts of the 44th Lcglslature, page 

### 355,and codifiedas Article 

### 7336f,V.C.S. In answering your questions we must consider not only Article 7207 but also Articles 

### 7346,7347and 7348 as we shall explain later. Article 

### 7336freads in part as follows:

"Section 1. The collection of all delinquent, ad valorem taxesdue the State, County, Municipality or otherdefined Subdivision that were delinquent prior to December jlst, 1919, is forever barred."
We thlnk the Legislature in the enactment of said S. B. No. 407 (Article

### 7336f,V.C.S.) meant to accomplishmore than merely the passage of a limitation statuteagainst the collection of delinquent taxes, but declared the public policy of the State to be that no taxes were to be assessed and collectedby the State, county,municipality, or otherdefined subdivisions of the State, if such taxes were delinquent prior to December 

### 31, 1919. This Ismanifest by a careful reading of the entire act, including the caption and emergency clause, for the caption merely says, "AnAct limiting the timewithin which ad valorem taxes may be collectedby the State, any county, Irslnlclpallty, or otherdefined subdivision of the State"; in the emergency clause we find, "the fact that the people have already passed a constitutionalamendment giving the Legislature the right to remit taxes that were delinquent for a period of ten years or more; and the fact that to remit taxes prior to December 

### 31, 1919,would clarify the record and remove a cloud from the title of property in this State creates an emergency", etc.

In otherwords, we think the manifest intention of the Legislature in the passage of thfs act, and we so hold,was to "wipethe slate clean" of all back taxes,whetherupon the assessment rolls or not, thatwere delinquent prior to December 

### 31, 1919. To the extent that this opinion conflictswith the prior opinions of this department, numbered O-2083 and O-7278, they are expressly overruled. With this collateralmatter out of the way, we proceed to answer your first question.

We quote below the parts of Articles 7207, 

### 7346,7347and 7348, necessary to be considered in answering your question. These Articles provide:

"Article7207,V. C. S. "If the assessor of taxes shall discover In his county any real propertywhich has not been assessed or rendered for taxation for any year.

Hon. D. D. Williams, 

### Page 3, V-166

since 1870, he shall list and assess the same for each year for which it has not been assessed, In the manner prescribed in the precedingarticle; and such assessment shall be as valid and binding ai though,,it

had been rendered by the owner thereof;

. . . . . 'Article

### 7346,V.C.S. "Wheneverany commissioners court shall discover through notice from the tax collector or otherwise that any real property has been omitted from the tax rolls for any year or years since 1884,

. . . . they may, at any meeting of the court, order a list of such properties to be made In triplicate and fix a compensation therefor; the said list to showa complete description of such propertiesand for what years such propertieswere omltted from the tax rolls,

. . ." "Article

### 7347,V.C.S. "When said list has been so made up the commissioners court may, at any meeting, order a cancellation of such properties in said list that are shown to have been previouslyassessed, but which assessments are found to be Invalidand have not been canceled by any former order ofthe commissioners court, or by decree of any district court; and shall then refer such list of properties to be assessed or re-assessed to the tax assessor who shall proceed at once to make an assessment of all said properties, from the data given by said list ( the certificate of the Comptrolleras to assessments or re-assessmentsmade by the tax assessor shallnot be necessary as requiredunder Article 7207, but ,he shall furnish all blank forms needed, thatuniformity may be had In all counties),and when completed shall submit the same to the commissioners court, who shall passupon the valuations flxed by him; and, when approved as to the values, shall cause the taxes to be computed and extendedat the tax rate in effect for each separateyear mentioned in said list; and, In addition thereto, shall cause to be added a penalty equal In amount to what would be six per cent interest to the date of making said list from the date such propertieswould have been delinquent had same been properly rendered by the owner thereof at the time and for the years stated in said list;

II

. . . . .. .

Hon. D. D. Williams, Page 

### 4, v-166

"Article7348,V.C.S. "The said list,when complete ln all respects, and filed with the tax collector, shall constitute a valid lien against all the propertiesmentioned in said list for the full amount of taxes, penalties, officers costs, advertisingand six per cent interest from the date of said list to the date of the payment of the full sum due on each separatepiece of property. A copy of said list and all cancellation orders shall be furnished to the Comptroller,and a copy filedwith the county clerk.'
We shall consider these articles in the order stated above. Article 

### 7207was enacted in 

### 1888, (Acts 

### 1888,page 

### 4; G.L.Vol. 9, p. 1002) and at this time and severalyears thereafter penaltles and interestupon delinquent taxeswere not imposed. It Is observed that no provision is made in said article for penaltiesand Interestupon the taxes assessed by virtue thereof. It does nothingmore than to impose a duty upon the assessor, if he discovers in his county any real propertywhich has not been assessed or rendered for taxation for any year since 1870, to "listand assess the same for each year for which It has not been assessed". As modified by what we have said above said article should now in effect read since 1918 instead of 1870.

In 1905 the Legislature enactedArticles 

### 7346,7347and 7348 (Acts 1905, page 318) at which time penalties and interest had theretoforebeen imposedby the Legislatureupon delinquent taxes for severalyears. Article 

### 7346,provides substantiallyas does Article 7207 for the assessment of property omitted from the tax rolls for any year or years since 1884, (shouldnow be since 1918) but goes further and provides a comprehensivemethod of assessing and collecting such taxesupon such omittedproperty. Article 

### 7347and 7348, a part of the same act, speclfles the penalty or interest that should be collectedupon such taxes. This is the first time the Legislature in deflnite terms gives the penalty and interestapplicable to taxes assessed and collected upon property theretofore omitted from the tax rolls. We are governed by these statutesas to the penalty and interest that shouldbe collected,regardless ofwhether the assessment of such omittedpropertyarises under Article 7207 or 7346. These two articles are in & materla and should be construed together. The Legislaturedid not expressly, or by implication,repeal Artlclo 7207 in the enactment ofArticles 

### 7346and 

### 7347. Indeed,a reading of Article 

### 7347dlsclosos that the Legislature intended for Article 7207 to continue In effect for the purposes for which itwas originally enactedand to continue In effect the duties imposedupon the Tax Assessor to put omitted propertyupon the tax rolls and assess itwhen he discovers It has been omitted. We lookHon. D. D. Williams, Page 5, 

### V-166

to Artfcles 

### 7346,7347and 

### 7348,the lateract, to find the penalty and interest that should be Imposed in such Instance.

In our opinion it is not material from what source comes the information that property has been omitted from the tax rolls and has been escaping taxation; the important thing is that It get on the rolls, be assessed, of the tax burden. and begin to bear Its just portion Whether the omission Isdiscovered by the Tax Assessor as provided InArticle 7207, or the tax collectoras provided in 

### 7346,,the duty remains the same, to proceed in the statutorymanner to subject such omittedproperty to taxation. It 1s observed that Article 

### 7346provides that the Commissioners1Court shall "Ordera llat of such property to be made ln triplicate and fix a compensation therefor; the said llrt to show a complete list of such propertyand for what year such propertywas omitted from the tax rolls". Article 

### 7347provides 'Whenthe said list has been so made up the Commissionera'Court may, at any meeting,

. . . and shall then refer such list of property to be asaessed or reassessed to the Tax Assessor who shall proceed at once to make an assessment of all said propertyandwhen completed shall submit the same to the Commissioners1Court who shallpassupon the valuation fixed by him; and when approved as to the value shall cause the taxes to be computed and extendedat the rate In effect each separate year mentioned in said llat.” Article 

### 7348provides that said list,when completed In all respects and filedwith the tax collector, shall constitutea valid lien against all of the propertymentioned In said list for the full amount of the taxes, penalties, officers costs, and advertising.

Article 

### 7347and 7348 state specificallyand separately the penalty and interest to be imposedupon taxes that are found owingupon such omittedproperty. After the taxes have been computed for theNrespectIveyears aa shownupon the list there is added thereto a penalty equal in the amount to what would be six per cent interestat the date of making said list from the date such prooertieswould have been dellnauent had same been properlr rendered by the owner thereof at the time and for the years stated in said list." (gmphaslsadded) Said Article 7348 provides 6% interest from the date of said list to the date of payment for the full amount due on each separatepiece of property. It is observed that the 

### 6% is called a penalty when first calculated from the date such propertieswould have been delinquent to the date of making said list and in Article 7348 It calls the 

### 6% interest. It makes no difference whether we call this 

### 6% a penalty or interest, It is the same, and in effect is calculated from the date the property would have become delinquent had It been rendered by the owner to the date of payment. This calculation in either event Is on an annual basis. We have no doubt that Articles 

### 7347and 7348 are the governing statutes in determining the penalty and interest that should be collected by the Tax Collectorupon taxes assesseduponHon. D. D. Williams, Page 

### 6, V-166

omitted property. We think the case of Electra IndependentSchool District vs.W.T. Waggoner Estate, Supreme Court of Texas, 

### 168 S.W. (2d) 

### 645,confirms our view, and from this case we quote:

II

. . .The legislature has provided a procedure for the reassessment of property for taxationwhere property has been for any reason omitted from the tax rolls, or where assessments have beenfound to be invalid. Chapter 11, Title 122 of the Revised Civil Statutes of Texas, Article 

### 7346 et seq. . . ."
It would serveno useful purpose forus to enterupon an academicdiscussion of why the penaltiesand interest imposed Articles 

### 7347and 7348 might In sane Instances impose a lesser by burdenupon the taxpayerwhere his property had been omitted from the rolls and assessed by vlrtue of Article 7207 or 

### 7346than would be imposedupon a delinquent taxpayerwho might have regularly rendered his property for taxation but had refused or neglected to pay his taxeswithin the time prescribedby statute,whereby his taxes had become delinquent, as this is a matter vested solely In the Legislature. Conceivablythe Legislaturemay have thought that the omission of property from the tax rolls may have resulted from negligenceupon the part of the taxing officialsas well as neglect upon the part of the property owner, and imposedpenalties and interest it thought commensurateto meet the problemdealt with.

All that we have said above, applicable to State and County taxes, applieswith 'equalforce to common schooldistricts' taxes which, by virtue of Article 2795,V.C.S., are required to be llsted, assessed, and collectedby the County officials. A ten year statute of limitationsapplies to school taxes.

You are, therefore,advised that it is our opinion that taxes assessedupon omittedproperty, such as comprehendedunder Articles 7207 and 

### 7346,bear 

### 6s penalty or interest, calculated upon an annual basis, from the date such propertywould have become delinquent if rendered by the owner, to the date of payment, together with such officer's cost and cost of advertising, if such costs have been Incurred.

We pass to your secondquestion, which for conveniencewe restate as follows:

"2

. Should the stock in the West Texas Utilities Co. and other corporations owned by the Citizens of this county be rendered and assessed for taxation in this county for State and County and School purposes?"
In answering this question,we shouldnote certainHon. D. D. Willlams, Pa8e 7, 

### v-166

statutoryprovlslons,which, for clarity, we state as follows:

“Article7147,V. C. S. “Personalproperty, for the purposes of taxation, shall be construed to include

. . . . . all stock in

. . . other corporations (except national banks) out of the State, owned bx lnhabitants of this State;
. . . .” “Article

### 7161,V. C. S. “Eachperson required by law to list property shallmake and sign a statement,verified by his oath, as requiredby law, of all property, both real and personal, in his possesslon, or under his control and which he Is required to list for taxation, eitheras owner or holder thereof, or as guardian, parent, husband, trustee, executor,administrator,receiver,,,aocounting officer,partner, agent or faotor. “Article 

### 7162,v. C. S. 

### 11 Such statement shall truly and dlstlnctli iei forth:

. . . . .
stock”3a’ Amount and value of shares of capital

companiesand associationsnot incorporated by th& laws of this State.

“39. Value of property of companiesand corporations other than property hereinbefore enumerated.” “Article

### 7163,V. C. S.
“Noperson shall be required to list or render or to include In his statementas a part of his personalproperty,which is required to be listed any share or portion of the capital stock or property Of any company or corporationwhich is required to iist or return its capital and property for taxation.
We answer this questionwith a statement from 11 Texas Jurisprudence,page 219.

“Underthe Texas scheme of taxation, .theproperty of a corporation is taxed only to the corporation; the stockholdersare not separatelyassessedupon their stock. Indeed, there la express provision that, inHon.D. D. Williams, Page 

### 8, V-166

.

rendering a return of hla personalproperty for taxation, no person is required to include In his statementany share or portion of the capital stock or property of an@ corporationwhich Is required to return its capital and property for taxation;and under this article stoek 1s not taxable to the stockholder evenwhere the oompany has not returned its property for taxation in accordancewith law.

Under the statute law of Texas stock in foreigi dorporations owned by inhabitantsAf Texas Is expressly included in the deflnltlon of 'personal property,' The validity of such taxes has been upheld as against constitutionalobjeotlons," Conceivably the provisions of Article 

### 7163may rest upon the well-recognizedprinciple of law that a stockholder Is not the owner of the property owned by a oorporatlon inwhich he owns shares of stock. Instead, a stoakholdermerely possesses, in common with all other stockholders,an interest evidencedby shares of stockwhich authorlzea him, through selected officers and directors, to participate in corporatemanagement, an8 receive dividends when declared, and todemand his pro rata share of corporate assets upon dissolution of the corporation.

Stock of State and National banks are partially excepted from the provisions of Article

### 7163,for by specialprovisions, banks payupon the real estate owned by them, but not upon their personal property. This, in effect,results Ln taxes against the stockholdersupon the stock ownedby them, the value of which i.s reduced by the factor of the real estatewhich the banks themselves render and payupon.

We hold that stook indomestic corporations, owned by residents of this State, is not subject to advalorem taxes, but stock in foreign corporations,owned by residents of this State, is subject to ad valorem taxes,

We believe we have answered your questionwithout the necessity of stating categoricallywhether or not the capital stock of any particular corporationwould be subject to ad valorem taxes as personal property in the hands of the owner.

asses:& Property omitted irom the tax poll and

by the virtue of Artioles 7207 and 

### 7346 V.C.S., for all years since 1918 is subject to 

### 64 penalty or interest, caloulatadannually, from the date such propertywould have beoome delinquent ifHon. D. D. Williams, Page 9, 

### v-166

rendered by the owner to the date of payment. Electra Independent SchoolDistrict (SupremeCourt) 

### 168S.W. (2) 

### 645. 2. Stock of domestic corporations owned by residents of this State is not subjects to ad valorem taxes in the hands of the owner, but stock of foreign corporations owned by residen;s of this State Is subject to ad valorem taxes In the hands of the owner. Yours very truly
ATTORNEY GENERAL OF TEXAS

By SL L. P. Lollar L. P. Lollar Assistant APPFiOVIP>

APR. 28, 1947 s/ PriceDaniel ATTORNEY GENERAL LPL:mmc:jrb:wc