Mr. Henry Wade                           Opinion No. M-755
District Attorney
Dallas, Dallas County, Texas             Re:   Date to be used in pro-
                                               rating and collecting
                                               ad valorem taxes due
                                               under Article 7151,
                                               Section 2, V.C.S., as
Dear Mr. Wade:                                 amended.
     You have requested the opinion of this office on a question
involving the interpretation of Article 7151, Section 2, Title
122, Taxation, Vernon's Civil Statutes, as amended, relative to
prorating ad valorem taxes. This question was stated in your
request as follows:

           "Must Mr. Gentle, as Tax Assessor and Collector of
           Dallas County, collecting taxes therefor and for the
           State and various agencies, prorate such taxes down
           to the very date on which the realty becomes exempt
           from taxation, and accept and collect only the amount
           of taxes so calculated, or may he prorate and calcu-
           late such taxes, and accept and collect their amount,
           as of the end of the month in which the land becomes
           exempt from taxation?
     In accordance with information submitted by you, it is
felt be Mr. Gentle that under Section 2 of Article 7151, supra,
he is merely required to prorate and accept and collect down
to the end of the month in which the land becomes exempt; that
to require him and his deputies to calculate taxes down to the
date of the deed or acquisition of title, as to each particular
tract - on the very large number of tracts which he must pro-
rate each year - will place an unreasonable burden on his
office, which the law does not require. But various title
companies contend otherwise; that their contract-forms provide
for proration of taxes down to the date of conveyance; . . ."
     Article 7151, Section 2, reads:




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Mr. Henry Wade, Page 2 (M-755 )
           "During the tax year between January 1 and October 1,
           when title to or any interest in land being acquired
           by the United States or the State of Texas, or any
           of its agencies, including cities, towns, villages,
           water or conservation districts, flood control, levee,
           or waterway improvement districts, is voluntarily
           conveyed by the owner thereof or is acquired for
           public use by condemnation as provided by law, such
           agency's authorized tax official shall estimate the
           amount of taxes which would have been or will become
           due and payable for the year had the land not been
           acquired for public purposes.
           When such estimate of yearly taxes is determined as
           aforesaid, such tax official of the taxing author-
           ities or agencies of this state shall prorate such
           taxes on the basis of the number of months the land
           remained in private ownership or control, such date
           to be determined by the date of conveyance to the
           government or the date of order of possession of the
           court having jurisdiction thereof, and shall certify
           same, and shall accept or collect said prorated taxes
           and issue his receipt therefor which receipt shall
           constitute a full and complete release of all taxes
           and shall be in full satisfaction of all such liens,
           express or inchoate in favor of the tax units afore-
           said. Such proration shall be based upon the tax
           assessed for the preceding year unless the tax for the
           current year shall have been by then determined and
           set, in which event the proration shall be based on.
           the new assessment and rate. The legally designated
           tax official shall account for the funds collected as
           herein provided in the same manner as required under
           existing law relating to such taxes."
     Section 2, supra, provides the method to be used in deter-
mining the ad valorem taxes due on real property where the real
property becomes exempt during a tax year. The period for which
tax is due is based upon the number of months the land remains
in private ownership or control. The cutoff date for determining
the total amount of tax due is the date that this office has been
asked to determine, that is, whether a tax official can prorate
and collect the taxes to the end of the calendarmonth during
which the property acquires an exempt status or whether he
should prorate and collect the taxes duetonly to tee "date of
conveyance to the government or the date of the order Of




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Mr. Henry Wade, Page 3 (M- 75s )

possession of the court having jurisdiction thereof," thereby
excluding the remainder of the month from the taxable period.
     Section 2 was made a part of Article 7151 by an amendment
effective May 29, 1969. Prior to this amendment, Section 1
constituted the whole of Article 7151. The language of Section 1
prior to the 1969 amendment is carried forward by that amendment
verbatim with one exception which is that the law was made
applicable to "all" instead of only "state and county" taxation.
There are no case suthorities interpreting Section 2; however,
there are'authorities Interpreting Section 1 and dealipg with
the point to be determined.
     In the case of Childress County v. Schultz, 199 S.W. 2d
860,(Tex. Civ. App., 194b, no writ)  the court dealt with a
reverse fact situation. The properly in that case was owned by
the City and was therefore exempt from sd valorem taxation. It
was conveyed to a purchaser on September 22, 1944, and having
lost its exempt status became subject to taxation. The court
construed Article 7151, a relevant portion of which reads ine
same now as then, as follows:
           "If any property has, by reason of any special law,
           contract, or fact, been exempt or has been claimed
           to be exempted from taxation for any period or limit
           of time and such period of exemption shall expire
           between January 1st and December 31st of any year,
           said property shall be assessed and listed for taxes
           as other property; but the taxes assessed against
           said property shall be for only the pro rata of
           taxes for the portion of such year remaining."
     The court in the Childress County Case in determining
when the liability of the purchaser for ad valorem taxes began
stated:
           "The title was therefore, in the city of Childress
           on January 1, 1944, and the property was not subject
           to taxation as long as it was so held. When the
           tit conveyed it to the appellee on September 22,
           194% however, it immediately became subject to
         . taxaiion and was liable for th.etaxes that accrued
           between that date and December 31 of that year."
           (emphasis-         (at p. 863).




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Mr. Henry Wade, Page 4 (M- 755 )

     Thus, the court used the precise date on which the non-
exempt status was obtained as the date for beginning the
taxable period for ad valorem purposes under Article 7150, supra.
     Attorney General Opinion No. 0-5767, dated January 15, 1944,
reached a conclusion similar to the decision in the Childress
              The question presented in that opinion was whether
%?P=- axes should be assessed on property which was owned by the
Farm Security Administration, but conveyed by it in August, 1943,
to individuals. If the taxes were assessable against the
property, a second question was for what period of time should
they be due. The opinion determined that the property was tax-
able, but only for the pro rata portion of the year after the
conveyance. The taxable period was "from the date of the deed
for the remaining portion of the year."
     A factual situation wherein property was non-exempt and
then became exempt, as is the fact situation under consideration,
was presented in-Dickison v. City of San Antonio, 349 S. W. 2d -
640 (Tex. Civ. App., lgbl, error ref. n.r.e.). In this case the
date‘of purchase of a street transportation system by the City
was May 1, 1959. The Court construed what is now Section 1,
Paragraph 2, Article 7151, supra, and used the date of the pur-
chase as the cutoff date for determining the ad valorem tax
liability of the seller. This fact was made clear by the follow-
ing statement:
           "Having held that . . . no taxes were due after
                        the Transit Company owned nothing and
           Miumed           nothing . . ." (emphasis added at
           p. 644).
     The apparent logic for the determination in the Dickison
Case that no further taxes were due under Article 7151, supra,
wore    the addition of Section 2) after the actual date on
which the property obtained its exempt standing, and the rule
likewise applicable to Section 2, is that property can no longer
be taxed once it becomes exempt. Thus, from the authorities
cited, it is the opinion of this office that under Article 7151,
Section 2, supra, a tax official cannot prorate and collect ad
valorem taxes through the end of the calendar month during which
the property gains an exempt status, but must prorate the taxes
to the date of the conveyance or date of the order of possession.




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Mr. Henry Wade, Page 5 (M- 755)

                        SUMMARY
     Ad valorem taxes on realty which becomes exempt between
     January 1 and October 1, under the provisions of Article
     7151, Vernon's Civil Statutes, must be prorated to the
     date of the conveyance or date of the order of possession,
     as provided in that Article. /,




Prepared by Harriet D. Burke
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Kerns Taylor, Chairman
W. E. Allen, Co-Chairman
Steve Hollahan
Ben Harrison
Wm. J. Craig
Sally Phillips
NEADE F. GRIFFIN
Staff Legal Assistant
ALFRED WALKER
Executive Assistant
NOLA WHITE
First Assistant




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