R-325




PRICE  DANIEL
ATTORNEYGENERA‘



                                May   1,   1947
      Hon. George H. Sheppard
      Comptroller of Public Accounts
      Austin, Texas                        Opin,Son No. V-176
                                           Re:    The accrual of interest
                                                  and penalties on real
                                                  estate taxes on property
                                                  vested under the Allen
      Dear Sir:                                   Property Act.
             You have requested the opinion of this Department on
      the following situation:
              "Under the provisions of Public Law 671, 79th
           Congress, approved August 8, 1946, the Alien
           Property Custodian now is empowered to pay real
           estate taxes and special assessments affecting
           vested properties whether the taxes accrued prior
           or subsequent to the date of vesting. Provided,
           however, that under this statute such payments may
           only be made where there are sufficient funds held
           in the account of the former owner to cover same.
              "This department is informed that it is the de-
           sire of the Custodian to pay all taxes which are
           due and payable, where the Custodian has on hands
           proceeds from the property or other funds of the
           same owner in amount sufficient to pay taxes ap-
           propriate under the law. It is the contention of
           the Custodian that no interest and/or penalties ac-
           crue after vesting date of the property.
              "This department has been requested to in-
           struct Tax Collectors, where property has vested
           under the Alien Property Law, to revise their rolls
           or statements for delinquent taxes on such property
           to conform with the proposals outlined by the Alien
           Property Custodian.
              "This department will, therefore, thank you to
           advise us whether or not we have the authority to
           authorize such Tax Collectors to accept the money
           as tendered by the Alien Property Custodian In pag-
           ment of taxes and clear the rolls of such interest
           and penalties as may be shown to be due."
Eon. George H. Sheppard - page 2,   v-176


        The pertinent parts of Public Law 671, 79th Congress,
approved August 6, 1946, relating to the payment of taxes by
the Alien Property Custodian upon property or Interest therein
which has been transferred to or vested in him, are as follows:
        "Sec. 36. (a) The vesting in or transfer to
    the Alien Property'Custodian of any property or
    interest (other than any property or interest ac‘
    quired by the United States prior to December 18,
    19&l), or the receipt by him of any earnings, in-
    crement, or proceeds therof shall not render in-
    applicable any Federal, -9
                             State Territorial, or
    local tax for any p eriod prior or subseauent to
    the date of such vesting or transfer, nor render
    applicable the exemptions provided in title II of
    the Social Security Act with respect to service
    performed in the employ of the United States Gov-
    ernment or of any instrumentality of the United
    States. (Emphasis added)
       "'(b) The Alien Property Custodian shall, not-
   withstanding the filing of any claim or the insti-
   tution of any suit under this Act, pay any tax
   Incident to any such property or interest, or the
   earnings, Increment, or proceeds thereof, at the
   earliest time appearing to him to be not contrary
   to the interest of the United States. The former
   owner shall not be liable for any such tax accruing
   while such property, interest, earnings, increment,
   or proceeds are held by the Alien Property Custodian,
   unless they are returned pursuant to this Act with-
   out aayment of such tax by the Allen Property
   Custodian. Every such tax shall be paid by the Alien
   Property Custodian to the same extent, as nearly as
   may be deemed practicable, as though the property or
   interest had not been vested in or transferred to the
   Alien Property Custodian, and shall be paid only out
   of the property or interest, or earnings, Increment,
   or proceeds thereof, to which they are incident or
   out of other property or interests acquired from the
   same former owner, or earnings, increment, or pro-
   ceeds thereof. Non tax liability may be enforced
   from any property or interest or the earnings, in-
   crement, or proceeds thereof while held by the
   Alien Property Custodian except with'his consent.
   Where any property or interest is transferred, other-
   wise than pursuant to section 9 (a) or 32 hereof,
   the Alien Property Custodian may transfer the prop-
   erty or interest free and clear of any tax, except
   to the extent of any lien for a tax existing and
Hon. George H. Sheppare   -   Page 3, v-176


    perfected at the date of vesting, and the proceeds
    of such transfer shall, for tax purposes, replace
    the property or interest in the hands of the Alien
    Property Custodian.


       "(d) The word ‘tax’ as used in this section
    shall include, without limitation by reason of
    this enumeration, any property income, excess-
    profits, war-proflts, excise, Estate and employ-
    ment &x, import duty, and special assessment;
    and also any interest, penaltg, additional amount,
    or addition thereto not arising from any act, omis-
    sion neglec,t,fallure, or delay on the oart of
    the&stodLan."(Emphasis     added)
       In view of the emphasized verbiage of subsection (d),
supra, it is clear that the Alien Property Custodian need not
w   any interest or penalty arising from any act, omission,
neglect, failure or neglect on his part, But such conduct on
the part of the Alien Property Custodian does not prevent the
statutory accrual of the interest and/or penalty upon the basic
tax in view of the emphasized portion of subsection (a), which
provides that the vesting of the title to the property in the
Alien Property Custodian shall not render Inapplicable any
State tax for any period prior or subsequent to the date of
vesting or transfer.
       The contention of the Alien Property Custodian stated
in your request is without merit, subject to the exception in
subsection (d) referred to above, and the Comptroller does not
have the authority to authorize the Tax Collector to accept the
taxes and clear the rolls without the payment of the accrued
penalties and interest.
                          SUMMARY
       The Comptroller of Public Accounts is not
    authorized to direet Tax Collectors to receive
    payment of taxes from the Alien Property Custodian
    under the provisions of Public Law 671, 79th Con-
    gress, and clear the rolls without payment of
    accrued interest and penalties thereon.
Hon. George H. Sheppard   -   Page 4, v-176


                                 Yours very truly
                              ATTORNEY GENERAL OF TEXAS
                                 By   s/C.K.  Rkhards
                                         Assistant
CKR/lh/wc

APPROVED:~MAY 1, 1947
s/Price Daniel
ATTORNEY GENERAL OF TEXAS