OPN Jan 27, The Honorable Ruth D. Lee Clay County Tax Collector P.O. Box 218 Green Cove Springs, Florida

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1 OPN Jan 27, 1994 The Honorable Ruth D. Lee Clay County Tax Collector P.O. Box 218 Green Cove Springs, Florida RE: Taxes; Refunds; Surplus Funds; Distribution of Interest and Principal of Unclaimed Tax Refunds Sections , , , , , , , , , , , and , F.S. You inquired how a tax collector should distribute funds held as tax refunds that taxpayers have failed to claim. ISSUE How should the principal and interest of unclaimed tax refunds held by the tax collector be distributed? SUMMARY Tax refunds, and interest earned thereon, issued and held by tax collectors should be paid to taxpayers making claim on a timely basis. Refunds not claimed by taxpayers before the running of the statutory time limit escheat to the state. ANALYSIS Tax refunds issued, and which the taxpayer has been determined to have legal right to receive, should be paid along with interest earned if in an interest bearing account, to the taxpayer by the tax collector, and escheat to the state if not claimed. Any monies held by the tax collector for tax refunds which are never issued should be paid along with interest earnings to taxing authorities by the tax collector.

2 Refunds are comprised of taxes collected pro rata from taxing authorities. Sections (2)(b) and (3), Florida Statutes (1993). The tax collector is merely like a bailee throughout the refund process and never takes ownership of refund monies. Such funds are the property of the taxing authorities up until the tax collector issues a refund check to the taxpayer, at which point ownership of such money transfers to the taxpayer. Section (1), Florida Statutes (1993). If the funds which the taxpayer has the legal right to receive remain unclaimed for one year after becoming payable and the address of the taxpayer is known the monies escheat to the state, or alternatively, escheat after three years if the taxpayer's address is unknown and the taxpayer has not contacted the tax collector in writing. Sections and , Florida Statutes (1993). Unissued and unclaimed refunds plus interest earned held by the tax collector remain the property of the taxing authorities and should be returned. Specifically, issued but unclaimed tax refunds appear to be "surplus funds" or "Public money." Section (3), Florida Statutes (1993) provides: "Surplus funds" means any funds in any general or special account or fund of a unit of local government... which in reasonable contemplation will not be immediately needed for the purposes intended. (emphasis added) Alternatively such unclaimed refunds could be considered county "public money," pursuant to section (2), Florida Statutes (1993): The term "public money" shall be taken to mean and include all money collected by a county officer which he is required or authorized by law, as such county officer, to collect, and underpayments, overpayments, partial payments and deposits of such money,except his salary when his sole compensation is provided by such salary. (emphasis added) Section , Florida Statutes (1993) provides: (1)(a) Except where another procedure is prescribed by law

3 or by ordinance as to particular funds, a tax collector or any other county officer having, receiving, or collecting any money, either for his office or on behalf of and subject to subsequent distribution to another office of state of local government, while such money is surplus to current needs of his office or is pending distribution, shall invest such money, without limitation... (b)... The investment earnings shall be reasonably apportioned and allocated and shall be credited to the account of and paid to, the office or distributee, together with the principal on which such earnings accrued. Therefore, it would appear that "surplus funds" of a "local government" or "overpayments" of county "public money," such as tax refunds, should be "apportioned and allocated" by the tax collector to the "distributee," or taxpayer, to include the "investment earnings" on the principal. Sections (3), (2) and (1), Florida Statutes (1993); see also AGO The interest accruing from such tax refunds should be maintained in the same account as the principal, absent statutory provision otherwise. AGOs and A. After the passage of time, issued but unclaimed tax refunds to which the taxpayer has a legal right to receive in possession of the tax collector become "unclaimed property" of the taxpayer. The distribution of such unclaimed taxpayer money appears to be determined by the general default provisions of chapter 717, Disposition of Unclaimed Property. Section , Florida Statutes (1993) states: All intangible property held for the owner by any court, government or governmental subdivision or agency, public corporation, or public authority that has remained unclaimed by the owner for more than 1 year after it became payable or distributable is presumed abandoned. (emphasis added) "Intangible property" includes "money, checks, drafts, deposits, interest, dividends and income." Section (9)(a), Florida Statutes (1993). "Abandoned" property is that which has remained unclaimed after it becomes payable or distributable for

4 the time period provided by statute. Section (1), Florida Statutes (1993). Section , Florida Statutes (1993) provides: (1) All intangible property, including, but limited to, any interest, dividend, or other earnings thereon, less any lawful charges, held by a business association, federal, state, or local government or governmental subdivision, agency, or entity, or any other person or entity, regardless of where the holder may be found, if the owner has not claimed or corresponded in writing concerning the property within 3 years after the date prescribed for payment or delivery, is presumed abandoned and subject to the custody of this as unclaimed property if: (a) The last known address of the owner is unknown; (b) The person or entity originating or issuing the intangible property is this state or any political subdivision of this state, or the person or entity is incorporated, organized, or created in this state. (2) The provisions of subsection (1) shall not apply to property which is or may be presumed abandoned and subject to the custody of this state pursuant to any other provision of law containing a dormancy period different than that prescribed in subsection (1). (emphasis added) When issued and unclaimed tax refunds escheat to the state pursuant to chapter 717, Florida Statutes, the taxpayer has five years in which to claim such monies from the state. Section , Florida Statutes (1993). Essentially, the state is merely substituted for the tax collector as like a bailee for five years. Id. After the passage of five years, the state takes full title to escheated funds and the taxpayer is barred from recovery. Id., section (5), Florida Statutes (1993). Note that issued bank drafts for taxpayer refunds may not be presented for payment after a "reasonable time," or 30 days. Section (2), Florida Statues (1993). It is my opinion that this law merely precludes the taxpayer from exchanging that particular "stale" bank draft for cashing, but does not otherwise affect the taxpayer's right to receive a tax refund due. Such taxpayer should merely present such unhonored bank

5 draft to the tax collector in exchange for a newly issued check for the same principal plus any additional interest earned. The distribution of any monies collected by the tax collector from the taxing authorities which for some reason have not been issued to a taxpayer, does not appear to be addressed by statute. It is my opinion that such funds and the interest earned should simply be distributed pro rata to the governing body of the taxing authorities from which the monies were originally collected, pursuant to section , Florida Statutes. CONCLUSION Tax refunds in the hands of the tax collector should be paid along with interest to the taxpayer until such time as the funds become unclaimed by statutory definition, at which point such monies should be remitted to the state in the manner provided by law, Chapter 717, Florida Statutes. I trust this opinion adequately addresses your inquiry. This opinion is advisory in nature, represents the department's opinion and may not be conclusive in an audit. Should or your auditor have additional questions as to this matter, please feel free to contact me. Sincerely, Mark S. Thomas