Case Information

*1 R-457 iaUSTIN. TEXAS

May 21, 1947 Hon. Jean Day Opinion No. V-214

County Attorney Henderson County Re: Compensation due delik Athens, Texas quent tax attorn en aollection of tax when

15% exoeeds the amount of penalty and interest collected.

Dear Mr. Day:

'Your letter requesting our opinion relative to the above-captioned matter; reads, in part, as fOl- lows:

nHutohins & Weeden, a fira of tax colJ.eoting attorneys, have a contract

with Henderson Ceunty to colleot delin- quent taxes. They have thi, regular tax collecting contract, which calls for 15$ upon the delinquent taxes collected to

be paid out of the penalty and interest.

"In July, 1946, they filed suit against Texas Power & Light Co., to ool- leot their 1945 tax. The suit was a-

mended after February 1, 1947, to ool-

lect the Texas Power E Light Co's; 1948 tax. The suit was settled Mar. 8, 1947, tile penalty and interest on the T946 tax, when collected, amounted to 2.65% on the dollar of tax collected.

"Question: "Now, are the tax attorneys, Hutbhin- soh & Weeden, entitled to 15% on all the Texas Power k Light Co. taxes for the year 1946 colleotable as exoess penalty and in- terest accrued on all the delinquent tax oollected until they receive an amount e- qua1 to the full 15s on the 1946 Texas Pow- er 8 Light Co. taxes."

. . . .

We have examined the delinquent tax contract executed by Henderson County and attorneys Hutchins & Weeden, which was duly approved by the Comptroller of Public Accounts and the Attorney General. Paragraph= reads, in part, as f~ollows:

"First Party agrees to pay to Sea- ond Party as compensation for the services hereunder required 15 per cent (not to ex- ceed fifteen (15) per cent) of the amount oolleated of all delinquent taxes, penalty and interest of the years covered hereby, actually aollected and paid to the colleat- or of taxes during the term of this aon- tract, of which Second Party is instrument- al in aolle~ting as evidence& by copies of communication, tax notioes er pbstraats filed with the tax oolleotor prior to the payment of suah tax, including collectlen of taxes on property not appearing on the assessmeht rolls nor shown delinquent but whioh would have been so shown had it been properly assessed, dlsoovered by said Sea- ond Party, as and when colleated,~follopriag the en& of each month within the period of this contract; accordingly as the colleot; 2.

or makes up his monthly regerts; provided, cost of collecting delinquent taxes shall not exceed the amount of penalty and inter- est, or an amount equal to such penalty and interest of all delinquent taxes collected under the terms of this contract. . ."

The contract in question, both as to ferm and substance, is according to a form prepared by the Attorney General and adopted by the Comptroller of Pub- lic Acaounts approximately eight years ago. The Attop ney General in its Opinion No. O-3579, approved June 4, 1941, construed the above quoted portion of the approved delinquent tax contract, and stated in part:

"To us the priviso in the contract 'coat of collecting delinquent taxes shall not exceed the amount of penalty and inter- est, or an amount equal to such penalty and interest of aI1 delinquent taxes collected.

under the terms of this contract' was meant only to guard against the use of tax money itself to pay the costs of collection, but

to make the penalty and interest col- lected under the contract as an over- all proposition subjeat to such ex-

penses. In other words, it was meant to provide that the attorney's compen-

sation under the contract and any other costs or colleation incurred, if any, should not exceed the total amount of penalties and interest collected by

him during the time of and under the

aontract, Applying this to the con-

tract in question it is our opinion that MrLr, Payne may be paid the full 7$ per oent commission stipulated in the con- tract, so long as such per cent, plus any other costs of collection incurred, if any, do not exceed an amount equal to the penalties and interest collected under the contract from its beginning,*

In other words, it has been the department- al eonstruc :tion, since the inception of such contact form, that the contracting attorney shall reaeive as compensation for his services the contracted per cent or all delinquent taxes, penalties and interest eollact- ed by him, provided that such per'cent together with other costs of collection, if any, either equals or is less than the total penalties and interest colleoted un- der suoh contract, To illustrate:

~A, the contracting attorney, makes the fol-

lowing collections during the life of his contract

Total penalties and interest = $25,000 Less other collection costs = As the $20,000 exceeds the 15% commission A will receive 318,750.OO as his compensation.

sunder the regular approved aelinquent tax contra&, the delinquent tax attorney receives the oontracted per cent of' delis- quent taxes, penalties and interest col- lected by him, provided that such per cent, together with other costs of collection, if any, equals or is a less amount than the total penalties and interest collected un- der such contract.

Yours very truly, ATMRNEY GZNSlU OF ISAS W. 7. Geppert Assistants UVQ/lh/wb

APPROIID MAY 21, 1947