Honorable Garry Mauro Opinion No. JM-1085 

Commissioner 

General Land Office Re: Whether taxes accrue 

Stephen F. Austin Building against real property held in 

1700 North Congress Avenue the Veterans' band Fund after 

Austin, Texas 78701 forfeiture in a contract of 

sale by the Veterans* Land 

Board (RQ-1697) 

Dear Mr. Mauro: 

You inform us that the Veterans' Land Board. recently 

received tax bills from taxing units for current and 

delinquent ad valorem taxes levied on real property that had 

been conveyed by contract of sale to qualifying veterans but 

reverted to the board after forfeiture of such contracts. 

Consequently, you ask two questions regarding the taxation 

of real property comprising the Veterans' Land Fund: 

1. Do taxes accrue against ~real property 

held in the Veterans band Fund after 

forfeiture of a contract of sale by the 

Veterans Land Board? 

2. Do penalties and interest on preexisting tax liabilities continue to accrue 

against the real property after forfeiture 

reverts full title to the property in the 

State of Texas? 

We answer your first question in the negative. Taxes 

may not be imposed against real property held in the 

Veterans' Land Fund after there has been a forfeiture of a 

contract of sale and equitable and legal title to the 

property has reverted to the possession and control of the 

board. We answer your second question in the affirmative. 

Penalties and interest continue to accrue on preexisting tax 

liabilities against real property after forfeiture vests 

full title to the property in the state. We also note, 

however, that while the tax lien created by the previous 

P. 5664 
Honorable Garry Mauro - Page 2 (JM-1085) 

owner's failure to properly tender his taxes remains in 

force during that period when the title to the real property 

reverts to the Veterans* Land Board, such a lien is 

unenforceable against the state. Such a lien would be 

enforceable against any subsequent purchaser, and the 

veteran-purchaser against whom the taxes were originally 

imposed, of course, remains personally liable. 

The Veterans* Land Board [hereinafter the board] was 

created by amendment to the Texas Constitution in 1946 in 

order to make low-interest loans available to eligible 

veterans who served in the armed forces of the United States 

during specified periods. Tex. Const. art. III, 5 49-b, 

inter-p. commentary (Vernon 1984): see aenerallv Nat. Res. 

Code 5 161.001 et . 

public funds, purchzzes 

The Veterans' Land Board, using 

a particular plot of land at the 

request of an eligible veteran. The land then is resold by 

the state to the veteran under a contract for a deed. The 

contract delivers equitable title and possession to the 

veteran: the state, through the board, retains legal title 

until the full purchase price, interest, and fees have been 

paid. m Venable v. Patti, 490 S.W.2d 194 (Tex. Civ. APP. 

- Texarkana 1973, writ ref'd n.r.e.); Citv of Garland v. 

Wentzel, 294 S.W.2d 145 (Tex. Civ. App. - Dallas 1956, writ 

ref'd n.r.e.); see also Attorney General Opinion JM-774 

(1987). 

If a purchaser defaults on a contract, then the board 

may declare a forfeiture and take possession of the 

property. Nat. Res. Code 55 161.311-161.324. Once forfeiture proceedings have been completed, both equitable and 

legal title are vested in the Veterans' Land Board, and the 

property belongs to the state. See Ma crick Countv Water 

Control & Imnroveme t Dist. No. 1 v. St&e 456 S.W.2d 204 

(Tex. Civ. App. - Stn Antonio 1970, writ rei'd). 

Article VIII, section 1, of the Texas Constitution 

provides in relevant part: "All real property and tangible 

personal property in this State . . . shall be taxed in 

proportion to its value, which shall be ascertained as may 

be provided by law." Article VIII, section 2, provides in 

relevant part that "[t]he legislature may, by general laws, 

exempt from taxation public property used for public 

P. 5665 
Honorable Garry Mauro - Page 3 (JPr-1085) 

purposes.111 Pursuant to article VIII, section 2, the 

legislature enacted section 11.11 of the Tax Code, governing 

the taxation of public property, which provides in pertinent 

part: 

(4 Except as provided by Subsections (b) 

and (c) of this section, property owned by 

this state or a political subdivision of this 

state is exempt from taxation if the orooertv 

is used for Dub 11 'c DUrDOSeS. 

. . . . 

(d) prooertv owned bv the state that is 

not used f r DUbliC ourooses is 

Prooertv owzed bv a state 

taxable. 

aaencv or institution is not used for DUbliC ournoses if the 

pronertv is . . . used to DrOVide orivate 

residential housina for comuensation to 

members of the oublic other than students and 

emolovees of the state aaencv or institution 

ownina the orooertv. unless the residential 

use is secondarv to its use bv an educational 

institution orimarilv for institutional 

purooses. Any notice required by Section 

25.19 of this code shall be sent to the 

agency or institution that owns the property, 

and it shall appear in behalf of the state in 

any protest or appeal related to taxation of 

the property. (Emphasis added.) 

It is suggested that the real property that comprises 

the Veterans' band Fund is taxable under subsection Cd) 

because such property appears to be "used to provide private 

residential housing for compensation to members of the 

1. Article XI, section 9, of the Texas Constitution 

by its terms exempts "property of counties, cities and 

towns, owned and held only for public purposes, . . . and 

all other property devoted exclusively to the use and 

benefit of the public . . . from taxation . . . .'I, This 

section is self-executing. Because the last clause has 

never been construed to apply to property owned by the 

state, we need not discuss the cases involving counties and 

cities that rely upon this provision. 

p. 5666 
Honorable Garry Mauro - Page 4 (JM-1085) 

public other than students and employees of the state agency 

or institution owning the property." It is also suggested 

that such property is not used for a public purpose, that 

the board stands in no different legal position from that 

of any other mortgage company that is required to pay ad 

valorem taxes on any real property on which its mortgagors 

default, and that real property comprising the fund falls 

squarely within subsection (d) of section 11.11 of the Tax 

Code. 

The quoted language of subsection (d) of section 11.11 

of the Tax Code does not require the taxation of real 

property comprising the Veterans ' Land Fund when legal title 

to such real property rests with the state. The Veterans' 

Land Board does not provide "residential housing for compensation to members of the public . . . .I1 Rather, it 

provides the financing needed to purchase private residential housing, and it offers it on1 to qualifying veterans 

of the United States' armed forces. ?i 

In addition, the legislative history of subsection 

11.11(d) does not indicate that the legislature intended to 

deviate from the long-accepted practice of exempting from ad 

valorem taxation the real property comprising the Veterans' 

2. A brief submitted to us argues that the fact that 

only qualifying veterans may participate in the land program 

necessarily means that the program is not for a public 

purpose under article VIII of the Texas Constitution. We 

disagree. The test for determining whether public property 

is tax exempt is whether it is used primarily for the 

health, comfort, and welfare of the public. It is not 

essential that it be used for governmental purposes; it is 

sufficient that it be used for "proprietary" purposes. 

A& M onsol. nde . an, 184 

S.W.Zd 914 (Tex. 1945). It is immaterial whether only 

residents of a taxing unit are benefitted or whether others 

benefit as well; the fact that property is owned by the 

public and is used primarily for the health, comfort, and 

welfare of the public of some portion of the state is 

sufficient to entitle such property to tax-exempt status. 

State v. Houston Liahtina & Power Co ., 609 S.W.2d 263 (Tex. 

Civ. App. - Corpus Christi 1980, writ ref'd n.r.e.); 

see also Attorney General Opinions JW-405 (1985); MW-430 

(1982); WW-391 (1981). 

p. 5667 
Honorable Garry Mauro - Page 5 (JM-1085) 

Land Fund. See Hearings on Tex. H.B. 30 before the Senate 

Finance Committee, 67th Leg. 22-31 (August 5, 1981) (transcript available from Senate Staff Services). It appears 

that the legislature intended that property owned by a 

political subdivision but not used for the public purpose 

for which it was originally acquired should not be tax 

exempt. The real property at issue here, however, is being 

used for the purpose for which it was acquired originally, 

namely the creation of a "land fund" to facilitate the 

purchase of real property by veterans through the granting 

of low-interest loans. Article III of the Texas Constitution was amended by the addition of section 49-b to permit 

the legislature to do what the constitution otherwise would 

prevent it from doing, namely the "giving or lending, of the 

credit of the State in aid of, or to any person . . .'I or 

the granting of "public moneys to any individual." See Tex. 

Const. art. III, 55 50, 51. The very establishment of such 

a fund in the Texas Constitution impresses upon it the 

nature of a public purpose. 

Moreover, the Texas Constitution exempts real property 

comprising the Veterans' Land Fund from ad valorem taxation 

after the purchaser of such property has defaulted on his 

payments and full title to the property reverts to the 

control of the state. Section 49-b of article III of the 

Texas Constitution provides in relevant part: 

Such lands heretofore or hereafter purchased 

and comprising a part of said Fund are hereby 

declared to be held for a governmental purpose, although the individual purchasers 

thereof shall be subject to taxation to the 

same extent and in the same manner as are 

purchasers of lands dedicated to the 

Permanent Free Public School Fund. 

We recently declared in Attorney General opinion 

JM-1049 (1989) that the interest in real property comprising 

the permanent school fund that is retained by the state when 

it leases such real property to private businesses is exempt 

from ad valorem taxation, but the leasehold estates conveyed 

to the private businesses are themselves taxable. The 

reasoning that we employed in Attorney General Opinion 

J&l-1049, regarding the proper construction of both the Texas 

Constitution and the relevant Tax Code provisions, is 

equally applicable here. By its terms, section 49-b of 

article III likewise would exempt from ad valorem taxation 

real property comprising the Veterans' Land Fund. 

P. 5668 
Honorable Garry Mauro - Page 6 (JM-1085) 

Finally, case law in this area of law compels us to 

answer your first question in the negative. On the basis of 

M&j 

st&,C&, we conclude that real pzoperty compri:ing tit;? 

Veterans' band Fund, equitable title to which has reverted 

back to the state after the default of the purchaser, is not 

subject to taxation while it is in the hands of the state. 

In Maverick County the Veterans' Land Board sought a 

declaration that certai; real property owned by the board 

was free of all claims for taxes or other charges made, 

levied, or assessed by a water control and improvement 

district, an independent school district, and a county. A 

veteran had purchased real property comprising part of the 

Veterans' Land Fund in 1956; he failed to make the required 

payments and the board declared his rights under the 

contract forfeited in 1962. After the forfeiture, the board 

held full legal and equitable title to the property. The 

trial court declared that the land was free of all taxes and 

other charges levied by the taxing units after the rights of 

the veteran under the contract of sale were terminated, 

i.e., after the veteran had defaulted and the state reacquired both the equitable and legal title to the property. 

The court of appeals agreed. It held that where real 

property had been purchased by the board and sold to an 

eligible veteran but subsequently repossessed, the real 

property, thereafter, was subject neither to ad valorem 

taxation nor to special assessments levied during the 

veteran's possession. 

It has been suggested that Maverick Countv is no longer 

controlling law in this area. It is contended, first, that 

section 11.11 of the Tax Code was enacted after Mm 

Countv was handed down and constitutes the legislature's 

most recent statement regarding its intention to tax 

publicly-owned property that is not used for the public 

purpose for which the property was originally acquired. As 

we noted earlier, the 1981 amendment to section 11.11 does 

not compel us to conclude that real property comprising the 

Veterans' Land Fund is taxable. Neither the actual language 

used in the amendment nor the legislative history indicating 

the evident intention of the legislature in passing the 

amendment supports such's reading. And, as we stated above, 

we believe that the real property comprising the Veterans' 

band Fund is being used for the precise public purpose for 

which the real property was acquired by the board in the 

first place. 

P. 5669 
Honorable Garry Mauro - Page 7 (JM-1085) 

It is also contended that the Maverick County case is 

suspect because it appears to be predicated upon a Texas 

Supreme Court case that is itself of doubtful precedential 

value. We agree that the court in Waverick Count!? did rely 

in part on a Texas Supreme Court case whose precedential 

value has been undermined by subsequent decisions, but we 

disagree that a court considering the matter again would 

reach a different result. 

The case that the Maverick County court cited is City 

of Beaumont v. Fertitta, 415 S.W.Zd 902 (Tex. 1967). In 

Fertitta, the court considered whether real property owned 

by a city, though leased to private persons for the purpose 

of carrying on a private commercial enterprise, was exempt 

from ad valorem taxation regardless of the fact that the use 

to which the property was put was not public. The court in 

Fertittq departed from the method of constitutional analysis 

that courts traditionally had invoked when the issue was 

whether property owned by a political subdivision was 

entitled to receive tax-exempt status. See Fertitta, m, 

(dissenting opinion). 

Prior to Fertitta, courts had always looked to whether 

the property was both owned by a political subdivision and 

used or held for a public purpose, and assuming that it was 

not so used, it would be taxable under article VIII, 

sections 1, and 2, of the Texas Constitution. See A&M 

Consol. Indeo.~Schbol Dist. v. Citv of Brvan 184 S.W.2d 914 

(Tex. 1945); Dauahertv v. Thomn son, 9 S.W. 49 (Tex. 1888); 

City of Abilene v. State. -. 1 13 S.W.Zd 631 (Tex. Civ. App. - 

Eastland 1937, writ dism'd) (holding disapproved of on other 

grounds in Fertitta). The court in Fertitta departed from 

the traditional mode of constitutional analysis in declaring 

that the constitution does not require that property owned 

by a municipality but not used for a public purpose be 

taxed. It only requires that private property held by 

natural persons or private corporations be taxed. 

Therefore, since the constitution does not require municipal 

property to be taxed, the legislature needs no 

constitutional authority to exempt it. It chose to do so in 

the now-repealed article 7145, V.T.C.S. This statute 

required that all property, except that which is expressly 

exempted, be taxed. The now-repealed article 7150, 

V.T.C.S., exempted "[a]11 property, whether real 

personal, belonging exclusively to this State, or a:; 

political subdivision thereof, or the United States . . . .'I 

Public ownership was enough; no public use was required. 

P. 5670 
Honorable Garry Mauro - Page 8 (JM-1085) 

The dissent in pertittq correctly pointed out that this 

constitutional and statutory construction is novel: indeed, 

earlier decisions, which went to great length discussing the 

holding and using requirements of public property, make 

sense only if one accepts the claim that the constitution 

requires u property to be taxed unless it is specifically 

exempted pursuant to a constitutional provision, i.e., that 

public property, in order that it be deemed tax-exempt, must 

fall within the limitations set forth in article VIII, 

section 2, or article XI, section 9, of the Texas Constitution. No subsequent case explicitly has employed such an 

analysis. Moreover, the Texas Supreme Court clearly 

narrowed the reach of Pertitta * leander Indeo. School 

Dist.v.CedarPark CzlJ 479 S.W.2d 908 (Tex. 

1972) and in 2, atte ee v. GU f 

576 S.W.2d 773 (Tex. 1978). 

The leander case did not concern property owned by a 

political subdivision leased to a private person for the 

purpose of a private commercial enterprise; rather, it 

concerned-property owned by a private person but used for 

public purposes. In overturning a lower court judgment 

sustaining the tax-exempt status of such property, the court 

specifically held that property, to be exempt, must be used 

for public purposes. The court in bander did not, however, 

explicitly reject the' mode of constitutional analysis 

employed in Fertitta. In Satterlee the court reaffirmed 

the requirement that there be a pubiic use before property 

owned by a political subdivision be declared tax-exempt. 

If the traditional method of analysis were applied to 

the instant situation, namely that public property must be 

put to a public use before it may be exempt from ad valorem 

taxation, we think that a court would hold that by virtue of 

the inclusion of section 49-b of article III of the Texas 

Constitution, the real property comprising the Veterans' 

band Board is exempt from taxation so long as full title to 

that property rests with the state. If the Fertitta test 

were adopted, on the other hand, a court would disregard any 

necessity that such property be used for a public purpose 

and look only to whether the property was owned and 

controlled by the state or a political subdivision of the 

state;~it would conclude, although for different reasons, 

that the property described here is tax-exempt. 

We note, moreover, that the argument undermining 

Maverick because of its reliance on Fertitta is 

refuted effectively by the fact that the Texas Supreme Court 

Pm 5671 
Honorable Garry Mauro - Page 9 (JM-1085) 

explicitly reaffirmed in a later case its approval of the 

the court concluded 

improvements located 

Waverick County case. In Satterlee, 

that certain real property and the 

thereon that were purportedly "owned" by local taxing units 

were not exempt from taxes because the ownership interest 

of the taxing units was not exclusive. In discussing the 

public use and public ownership requirements for tax exemption, the court declared: 

After Fertitta, we approved without qualification the opinion of the Court of Civil 

Appeals in Maverick Countv Water Control 8 

Imorovement District # 1 v. State 456 S.W.2d 

204 (Tex. Civ. App. 1970, writ rei'd). There 

the Court recognized Pertitta but cited State 

V. Bexar-Medina-Atascosa Counties Water 

Imorovement District, 310 S.W.2d 641 (Tex. 

Civ. App. 1958, writ ref'd), also approved by 

this Court, where it was held that land did 

not belong exclusively to the State while the 

contract with the Veterans Land Board 

remained in effect. As to this, the Court in 

maverick wrote that 'While the contract was 

the land was l'owned by the 

&e~~~;lO S W 2d at 643 with the State 

holding'only the' legal titie.’ The Court 

upheld the tax exemption in Maverick for the 

reason as stated in the opinion that the 

Veterans Land Board 'held full legal and 

equitable title to the land.' We approved 

the principles of law declared in the opinion 

by unqualified refusal of writ of error. 

Our conclusion that the Authority was not 

vested with the requisite exclusive ownership 

renders unnecessary a re-examination of the 

holding in Fertitta that Article 7150, § 4, 

provides for the exemption from taxation of 

municipal property regardless of the use to 

which it is put or the purposes for which it 

is held. 

576 S.W.2d at 777-8. 

Therefore, we answer your first question in the 

negative and conclude that real property comprising part of 

the Veterans' Land Fund is exempt from ad valorem taxation 

while legal and equitable title to such real property is 

P* 5672 
Honorable Garry Mauro - Page 10 (JM-1085) 

vested in the state. Such real property is taxable to the 

purchaser under the contract for sale so long as the 

contract is in effect; after the purchaser defaults and 

legal title reverts to the control of the state, such real 

property is ex,empt from taxation. We now turn to your 

second question. 

You next ask: 

Do penalties and interest on preexisting. 

tax liabilities continue to accrue against 

the real property after forfeiture reverts 

full title to the property in the State of 

Texas? 

Section 33.01 of the Tax Code governs the imposition of 

penalties and interest on delinquent taxes and provides the 

following: 

(a) A delinquent tax incurs a penalty of 

six percent of the amount of the tax for the 

first calendar month it is delinquent plus 

one percent for each additional month or 

portion of a month the tax remains unpaid 

prior to July 1 of the year in which it 

becomes delinquent. However, a tax delinquent on July 1 incurs a total penalty of 

twelve percent of the amount of the delinquent tax without regard to the number of 

months the tax has been delinquent. 

(b) If a person who exercises the splitpayment option provided by Section 31.03 of 

this code fails to make the second payment 

before July 1, the second payment is delinquent and incurs a penalty of twelve percent 

of the amount of unpaid tax. 

(c) A delinquent tax accrues interest at 

a rate of one percent for each month or 

portion of a month the tax remains unpaid. 

You assert that penalties and interest may not continue 

to accrue on preexisting tax liabilities after the state 

again assumes both legal and equitable title to the real 

property against which delinquent taxes are due. YOU 

suggest two different arguments in support of your 

P. 5673 
Honorable Garry Mauro - Page 11 (JM-1085) 

proposition. First, YOU claim that such a result is 

required by the Maverick County case. We disagree. 

As we noted previously, Waverick Countv involved an 

action by the Veterans' band Board for a declaration that 

real property whose title had reverted to the board after' a 

veteran defaulted on his payments was free of all liens for 

taxes or other charges made, levied, or assessed on the 

property by a water control and improvement district, an 

independent school district, and a county. Specifically at 

issue were tax liens created when the veteran-purchaser 

failed to pay both taxes properly levied on his property by 

the school district and the county and assessments in the 

form of flat rate fees imposed by the water control and 

improvement district. 

The court of appeals described the trial court judgment 

in the following fashion: "The trial court's judgment 

declares the land free from taxes and other charges levied 

by defendants after the rights of the veteran under the 

contract of sale were terminated." 456 S.W.Zd at 205. It 

is not clear from the court of appeals' decision whether the 

trial court distinguished between those taxes and flat rate 

assessments imposed while the veteran's contract was still 

in force and those that the taxing units sought to enforce 

after the full title had reverted to the state. 

The court of appeals in Maverick County held that taxes 

cannot be imposed on real property comprising the Veterans' 

Land Fund after the title to the property reverts to the 

state; the property in question was subject to taxation only 

during that period of time 'during which the veteran-purchaser owned the equitable title. Based upon an earlier 

case, the court also held that liens for pre-existing taxes, 

i.e., taxes levied on the property while the contract with 

the veteran was still in force, were still in effect. The 

court, however, apparently did hold that no lien for the 

assessment of the flat rate taxes was created by the 

veteran's failure to tender such assessments. 

You rely upon the language from the Maverick Countv 

case declaring the property free from taxes "or other 

charges levied" by the taxing units to support the proposition that penalties and interest on the preexisting taxes do 

not continue to accrue. You apparently construe this to 

mean that any penalties and interest imposed for failing to 

pay the taxes levied in a timely fashion may not continue to 

accrue after title reverts to the state. In other words, 

P. 5674 
Honorable Garry Mauro - Page 12 (JM-1085) 

you assert that the phrase "or other charges" includes 

penalties and interest imposed when accrued taxes become 

delinquent. You state in your request for an opinion: 

The Court affirmed the determination of the 

trial court that the property itself is 'free 

of all liens and claims for taxes or other 

charges . . . made, levied or assessed' by 

any taxing entities. L at 205. 

Brief of Texas Veterans Land Board at 8. 

We disagree with this construction of M-y 

The l'chargesl' referred to by the court do not include 

interest and penalties. The "c~harges,~' when understood in 

the context of Maverick CountY and the authorities it cites, 

are special assessments made by the water district. 

See. v, Cit 26 S.W.2d 910 

(Tex. 193;)); eCountv Ha ris 7 S.W. 713 (Tex. 1888): 

W'ch'ta 1 ount Wate Citv of 

Wichita, 323 S.W.Zd 298 (Tex. Civ. App. - Fort Worth 

1959, writ ref'd n.r.e.); see also Attorney General Opinions 

JM-1035 (1989); JM-523 (1986) . The Maverick court 

merely held that a special district could not impose flat 

rate fees against the property in that instance while title 

to it was held by the state. Maverick County does not stand 

for the proposition that penalties and interest for 

delinquent taxes may not be imposed on real property that 

has reverted to the state: it ~does not even mention 

penalties and interest. 

Your second argument in support of the proposition that 

penalties and interest may not continue to accrue against 

real property whose title has reverted to the Veterans' Land 

Board is that permitting such accrual of penalties and 

interest is tantamount to permitting the taxation of such 

property, however indirectly. On the other hand, a brief 

submitted to us suggested that the lien created by the 

veteran's failure to properly tender the taxes due extends 

also to the penalties and interest that accrue. 

Both arguments rest on the presupposition that penalties and interest are to be treated as though they were 

taxes. On the one hand, if accrued penalties and interest 

are the equivalent of taxes and if taxes may not be imposed 

upon real property while title is in the possession and 

control of the Veterans' Land Board, it can be argued that 

penalties and interest likewise may not continue to accrue 

P. 5675 
Honorable Garry Mauro - Page 13 (JM-1085) 

against such real property. On the other hand, if aCCNed 

penalties and interest are the equivalent of taxes and if an 

enforceable lien is created by the veteran's failure to 

properly tender the taxes before they became delinquent, it 

can be argued that any waiver of aCCNed penalties and 

interest violates the Texas constitutional prohibitions 

against releasing or extinguishing the indebtedness of any 

individual owed to the state or to any political subdivision 

of the state, Tex. Const. art. III, 5 55, or against the 

release from the payment .of taxes. Id. art. VIII, 5 10. 

A surface reading of article VIII, section 15, of the 

Texas Constitution lends support to your presupposition that 

penalties and interest should be treated as though they were 

taxes. That section provides: 

The annual assessment made upon landed 

property shall be a special lien thereon; 

and all property, both real and personal, 

belonging to any delinquent taxpayer shall be 

liable to seizure and sale for the payment of 

all the taxes and penalties due by such 

delinquent: and such property may be sold for 

the payment of the taxes and penalties due by 

such delinquent, under such~ regulations as 

the Legislature may provide. 

While section 15 clearly does not create a lien on any 

property for failing to pay any penalties and interest that 

are imposed along with delinquent taxes,3 it might be argued 

that, at least as to summary seizure and sale and judicial 

sale and execution, penalties and interest are treated in 

the same manner as the delinquent taxes on which the 

calculation of such penalties and interest are based. 

However, the Texas Supreme Court has not construed section 

15 to require that penalties and interest be treated as 

though they were taxes that were levied. 

3. While section 15 of article VIII of the Texas 

Constitution does not create a lien for failing to pay any 

penalties and interest imposed, section 32.01 of the Tax 

Code does. Of course, any lien that the legislature sees 

fit to create by statute can also be amended by the legislature by statute. 

P. 5676 
Honorable Garry Mauro - Page 14 (JM-1085) 

In Jones v. Williams, 45 S.W.Zd 130 (Tex. 1931), the 

Texas Supreme Court upheld the constitutionality of a 

statute that provided: 

That all interest and penalties accrued and 

as now fixed by law, on all . . . taxes . . . 

other than [taxes of] incorporated cities and 

towns, delinquent up to and including October 

20, 1931, shall be, and the same are hereby 

released, provided said taxes are paid on or 

before January 31, 1932. 

Jones, m, at 131. 

The court in Jones first rejected the assertion that 

the statute could be sustained by reference to section 10 

of article VIII of the Texas Constitution. Section 10 provides: 

The Legislature shall have no power to 

release the inhabitants of, or property in; 

any county, city or town from the payment of 

taxes levied for State or county purposes, 

unless in case of great public calamity in 

any such county, city or town, when such 

release may be made by a vote of two-thirds 

of each House of the Legislature. 

If the exactions (FLn, penalty and interest) imposed upon 

taxpayers for failing to timely tender payment of accrued 

taxes are themselves "taxes" for purposes of article VIII, 

section 10, then the court, after concluding that the 

statute at issue was not enacted pursuant to the "great 

public calamity" requirement, would perforce have struck 

down the statute. Because it did not, it is clear that the 

court did not conclude that such exactions constitute 

lYaxes.U1 

Nor did the court in Jones consider such exactions an 

instance of an "indebtedness, liability, or obligation" for 

purposes of article III, section 55, of the Texas Constitution. Section 55 provides: 

The Legislature shall have no power to 

release or extinguish, or to authorize the 

releasing or extinguishing, in whole or in 

part, the indebtedness, liability or obligation of any corporation or individual, to 

P. 5677 
Honorable Garry Mauro - Page 15 (JM-1085) 

this State or to any county or defined 

subdivision thereof, or other municipal 

corporation therein, except delinquent taxes 

which have been due for a period of at least 

ten years. 

If the court in Jones had concluded that such exactions were 

in reality interest e imposed by the state as 

compensation for the detention of its money, rather than 

viewing such exactions as a form of "penal interest," the 

statute would have run afoul of sections 51 and 55 of 

article III. The court set forth the history surrounding 

attempts to enforce public revenue and tax collection 

procedures and declared: 

On the whole, we have concluded that~ the 

impositions made for delinquency in rendering 

property for taxation, and for failure to 

pay taxes, whether these impositions are 

denominated 'penalties,' 'interest,! 'forfeitures,' or whether prescribed without 

definition or name, are all in reality 

penalties imposed for delinquency or failure 

of duty, and all enacted in aid of the 

state's revenue, rather than as charges made 

by the state for the use or detention of its 

money. In other words, the exactions are 

8 enalties' rather than \int.erest' in the 

commercial or statutory sense. (Emphasis in 

original.) 

45 S.W.2d at 133. The court concluded: 

We think the act is constitutional for the 

reason that the Legislature has the power to 

release, cancel, annul, or suspend penalties 

previously accrued for delinquent taxes, so 

long as these penalties have not been reduced 

to final judgment. 

Finally, in response to the claim that the statute at 

issue violated article III, section 56, of the Texas 

Constitution, which prohibits the legislature from passing 

certain local and special laws remitting penalties, the 

Jones court concluded that the legislature by implication 

could remit such penalties by aeneral law: 

P. 5678 
Honorable Garry Mauro - Page 16 (JM-1085) 

The only express limitation on the right 

of the Legislature to remit penalties is that 

specified in section 56 of article 3, which 

prohibits the Legislature from 'remitting 

fines, penalties, and forfeitures by soecial 

m. ' The necessary implication from the 

language used is that 'fines, penalties and 

forfeitures' may be remitted by general laws, 

such as the one before us. . . . Nor do we 

think that the Legislature is prohibited, 

either expressly or by necessary implication, 

by the language of any other section of 

the Constitution. If it be said that the 

provisions of sections 51 and 55 apply to 

penalties imposed for tax delinquency, then, 

for the same reason, we would be compelled to 

say they apply to &l classes of oenalties, 

and to fines and forfeitures as well. Such a 

construction would render meaningless the 

power clearly reserved to the Legislature by 

the terms of section 56 of article 3, to 

release 'fines, penalties and forfeitures' by 

general law. (Citations omitted.) (Emphasis 

in original.) 

Id. at 137. 

Clearly, if the Texas Supreme Court COnStNed article 

VIII, section 15, of the Texas Constitution to require that 

penalties and interest be accorded the same treatment as 

taxes are accorded, then the court would not have concluded 

in Jones that the statute then at issue was constitutional. 

Therefore, we reject both your assertion and the suggestion 

by the law firm submitting a brief: it is not the case that 

penalties and interest must be waived, nor is it the case 

that penalties and interest cannot be waived. 

It is clear that the legislature is empowered to enact 

a statute that effectively would waive the penalties and 

interest aCCNed on unpaid delinquent taxes levied on real 

property whose title has reverted to the possession and 

control of the Veterans' Land Board. See. e.a Attorney 

General Opinion WW-780 (1960) (upholding and"construAinz 

statute that permitted that state to tender unpaid 

delinquent taxes on Veterans' Land Fund land in order 

for the state to clear title thereto): see also Attorney 

General Opinion M-139 (1967) (distinction between *%ax't and 

"penalty" well established in law). It is equally clear 

P. 5679 
Honorable Garry Mauro - Page 17 (JM-1085) 

that the legislature has not so acted. Section 33.011 of 

the Tax Code permits the governing body of a taxing unit to 

waive penalty and interest under certain circumstances and 

provides: 

The governing body of a taxing unit may 

provide for the waiver of penalties and 

interest on a delinquent tax if an act or 

omission of an officer, employee, or agent of 

the taxing unit caused the taxpayer's failure 

to pay the tax before delinquency and if the 

tax is paid within 21 days after the taxpayer 

knows or should know of the delinquency. 

No other provision of the Tax Code addresses the waiver of 

penalty and interest. 

Because the Texas Constitution does not require it and 

because the legislature has not provided for it, we conclude 

that penalties and interest will continue to accrue on the 

unpaid delinquent taxes levied upon real property comprising 

the Veterans' Land Board whose title has reverted to the 

board due to the default of the veteran-purchaser. 

We note, however, that while the tax lien created by 

the previous owner's failure to properly, tender his taxes 

remains in force during that period when the title to the 

real property reverts to the Veterans' Land Board, such a 

lien is unenforceable against the state. See. e.a., State 

V. itv of San Antonio, 209 S.W.Zd 756 (Tex. 1948); 

Childress County v. State, 92 S:W.Zd 1011 (Tex. 1936); 

Lubbock Indeo. School Dist. v. Owens, 217 S.W.2d 186 (Tex. 

Civ. App. - Amarillo 1948, writ ref'd). Such a lien would 

be enforceable against any subsequent purchaser, and the 

veteran-purchaser against whom the taxes originally were 

imposed, of course, remains personally liable. Tax Code 

§ 32.01; Attorney General Opinions JM-1049 (1989): NW-523 

(1982) ; H-1108 (1977). 

SUMMARY 

Taxes may not be imposed upon real 

property comprising the Veterans' Land Fund 

after the contract of sale has been forfeited 

and full title to the property has reverted 

to the possession and control of the state. 

Penalties and interest on unpaid delinquent 

taxes imposed on real property whose title 

P. 5680 
Honorable Garry Mauro - Page 18 (JM-1085) 

has reverted to the state continue to accrue. 

While the tax lien created by the previous 

owner's failure to properly tender his taxes 

remains in force during that period when the 

title to the real property reverts to the 

Veterans' Land Board, such a lien is unenforceable against the state. Case authority 

of long standing dictates that such a lien 

would be enforceable against any subsequent 

purchaser. The legislature could have, but 

has not, provided for waiver of such a lien 

against subsequent purchasers,, and until it 

acts, the land remains charged with the lien. 

The veteran-purchaser against whom the taxes 

originally were imposed, of course, remains 

personally liable. 

JIM MATTOX 

Attorney General of Texas 

MARY KELLER 

First Assistant Attorney General 

Lou MCCREARY 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAKLBY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Jim Moellinger 

Assistant Attorney General 

p. 5681