Can a lawyer who sits on a county appraisal district board also be hired to collect that area's delinquent property taxes?

Texas AG Opinion JM-1060: Can an Appraisal District Director Also Collect Delinquent Taxes?

Plain-English summary

Texas counties each have an appraisal district, run by a five-member board of directors, that sets the value of property for tax purposes. The board itself does not send tax bills; it hires a chief appraiser who values property, and a separate appraisal review board checks that work. Meanwhile, when property owners fall behind on their taxes, a city, county, or school district can hire a private attorney to chase the delinquent taxes, usually for a fee of up to 20 percent of what is collected. Representative Mark Stiles asked a natural question about wearing both hats: can a lawyer who serves on the appraisal district board also take one of those delinquent-tax collection contracts with a taxing unit inside the district? Does that create a disqualification or a conflict of interest?

The Attorney General said the lawyer may do both, and worked through three separate hurdles to get there.

The first was a statutory eligibility rule. Tax Code section 6.03(a) says an employee of a taxing unit that participates in the district generally cannot serve on the appraisal district board. So is a collection attorney an "employee" of the taxing unit that hired him? No. The AG concluded the attorney is an independent contractor, not an employee. An independent contractor takes on a specific piece of work, supplies and controls his own helpers, and does the job without the client dictating the details. A delinquent-tax collection attorney fits that description, and the Tax Code itself calls him a "private attorney." Because he is not an employee, the section 6.03(a) bar does not touch him.

The second hurdle was the general conflict-of-interest law for local officials, chapter 171 of the Local Government Code. Under that chapter, an official with a substantial interest in a business (here, the lawyer's own firm) must step aside from a board decision if the action would have a special economic effect on that business that is different from its effect on the public. The worry was obvious: the board sets appraisal policy, appraisals drive tax bills, and the attorney's fee is a cut of the taxes collected, so higher values could mean bigger fees. But the AG concluded, as a matter of law, that the board's appraisal-policy decisions do not have that kind of special economic effect on a collection contract. The reasons stack up. The board does not set tax rates; that is the job of each taxing unit's governing body. The board's policies have to comply with the Tax Code, and the chief appraiser's numbers are reviewed by a separate appraisal review board that can order corrections. The appraisal district and the review board are legally distinct bodies. And crucially, the board has no power to jack up appraised values just to fatten collection fees. Whatever effect board policy has on the value of a collection contract is minor and predictable, not a special economic effect. So chapter 171 does not require the director to recuse from ordinary appraisal-policy votes.

The third hurdle was the old common-law doctrine of incompatible offices, which stops one person from holding two public positions whose duties clash. That doctrine, the AG noted, does not apply to an independent contractor working for a public agency under contract. Combined with the chapter 171 analysis, the lack of any real connection between the board's appraisal work and the taxing unit's collection efforts meant the two roles were not incompatible.

The opinion did not hand out a blank check. It flagged that recusal could be required in other situations. If the appraisal district itself contracts to collect taxes for a unit under section 6.24 of the Tax Code, a director who also collects delinquent taxes for that same unit might have to sit out board actions tied to the district's own collection contract. And it pointed to the professional and criminal backstops that police abuse without banning the dual role: the lawyer disciplinary rules on soliciting employment and on holding public office, and the Penal Code provision that makes it an offense for a public servant to use nonpublic official information to acquire a financial interest. None of those forbids serving as a director while holding a collection contract, but all of them are aimed at the abuses that could arise if someone tried.

Currency note

This opinion was issued in 1989. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Tax Code appraisal and collection provisions cited here, the chapter 171 conflict-of-interest rules, and the lawyer disciplinary rules have all been amended since 1989. The Texas Code of Professional Responsibility referenced in this opinion was later replaced by the Texas Disciplinary Rules of Professional Conduct, so the specific rule numbers used here no longer map directly to current rules. Anyone weighing a present-day appraisal district conflict-of-interest question should check the current Tax Code, the current Local Government Code chapter 171, and the current disciplinary rules rather than rely on the 1989 provisions named here.

Who this opinion affected (as of 1989)

Appraisal district directors who are practicing lawyers: The opinion told them they could hold a delinquent-tax collection contract with a taxing unit in the district without losing their board seat or having to recuse from routine appraisal-policy decisions, while warning them to watch for the narrower situations where recusal still applied.

Taxing units (cities, counties, school districts): The opinion confirmed they could hire a board member's law firm to collect delinquent taxes, keeping their pool of experienced collection attorneys open rather than excluding anyone who sat on the appraisal board.

Property owners and the public: The opinion set the boundaries meant to keep the arrangement honest, resting in part on the fact that the board cannot inflate appraised values to boost an attorney's fees, and pointing to the disciplinary and criminal rules that guard against misuse.

Common questions

Is a delinquent-tax collection attorney an "employee" of the taxing unit that hired him?
No. The Attorney General concluded that an attorney who contracts to collect delinquent taxes under Tax Code section 6.30(c) is an independent contractor, not an employee, so the section 6.03(a) rule that bars employees of participating taxing units from the appraisal district board does not disqualify him.

Does the director have to recuse from appraisal-policy votes because higher values could mean bigger fees?
No, not from ordinary appraisal-policy decisions. The AG held as a matter of law that board appraisal policy does not have a "special economic effect" on a collection contract, because the board does not set tax rates, cannot raise values to increase fees, and its work is checked by a separate appraisal review board.

Are there situations where the director would still have to recuse?
Yes. The opinion noted that if the appraisal district itself contracts to collect taxes for a unit under section 6.24, a director who collects delinquent taxes for that same unit may have to recuse from board actions related to the district's collection contract.

Does the common-law rule against holding incompatible offices block this?
No. That doctrine does not apply to an independent contractor who works for a public agency under contract, so it does not bar a director from also holding a section 6.30 collection contract.

Background and statutory framework

Representative Mark W. Stiles, chairman of the House County Affairs Committee, asked whether a private attorney who is a director of an appraisal district may contract to collect delinquent taxes for a taxing unit that participates in the district. An appraisal district is established in each county to appraise property for the ad valorem tax purposes of the taxing units in the district, including the county, cities, school districts, and other political units that tax property. Tax Code § 6.01; see id. § 1.04(12) (defining "taxing unit"). The five-member board of directors is elected by the governing bodies of the county, cities, and school districts. Id. § 6.03. Section 6.03(a) sets eligibility rules, providing that an individual is not ineligible because of membership on a taxing unit's governing body or because he is an elected official, but that an employee of a participating taxing unit is not eligible to serve on the board unless the individual is also a member of the governing body or an elected official of a participating taxing unit.

Section 6.30(c) authorizes contracts between a taxing unit and an attorney to enforce the collection of delinquent taxes, for total compensation not to exceed 20 percent of the delinquent tax, penalty, and interest collected. An attorney who contracts under this provision is an independent contractor, not an employee of the taxing unit. An independent contractor contracts to do a specific piece of work, furnishes and controls his assistants, and does the work without being subject to the other's orders on its details. Halliburton v. Texas Indemnity Ins. Co., 213 S.W.2d 677 (Tex. 1948). Section 6.30(a) refers to the attorney as a "private" attorney. See generally Attorney General Opinion JM-14 (1983) (county may not contract with county attorney under section 6.30(a)). Attorney General Opinion V-137 (1947) had determined that the predecessor of section 6.30 did not authorize a commissioners court to hire individuals to collect delinquent taxes on a commission basis except by contract. Because such an attorney is not an employee, he is not disqualified from board service under section 6.03(a).

The opinion then addressed whether the contract creates a conflict of interest, outlining the tax process. The Tax Code contemplates three steps: appraisal, assessment, and collection. See Attorney General Opinion JM-35 (1983). The appraisal district participates only in the first step. The board establishes an appraisal office and appoints a chief appraiser, who values property and decides exemption applications. Tax Code § 6.05; chs. 11, 22, 23, 25; see generally Attorney General Opinion JM-499 (1986). The board also appoints the appraisal review board, which reviews the chief appraiser's records and can order corrections. Tax Code §§ 6.41, 25.22, 41.01, 41.02; see Attorney General Opinion JM-981 (1988). Once approved, the records constitute the appraisal roll, id. § 25.24, and the chief appraiser certifies the relevant part to each taxing unit's assessor, id. § 26.01. The governing body adopts a tax rate, the assessor computes and bills the tax, id. §§ 26.05, 26.09, 31.01, and if the tax is unpaid the unit may sue to collect, id. § 33.41, and may contract with an attorney to enforce collection. Id. § 6.30(c).

Chapter 171 of the Local Government Code governs conflicts of interest of "local public officials," including appraisal district directors. Local Gov't Code § 171.001(1). A local public official commits an offense if he knowingly participates in a vote or decision on a matter involving a business entity in which he has a substantial interest if the action will have a special economic effect on the business entity distinguishable from the effect on the public, and such an official must file an affidavit and abstain. Local Gov't Code §§ 171.003(a)(1), 171.004; see Acts 1987, 70th Leg., ch. 362, § 4, at 1799 (amending former article 988b, section 4, V.T.C.S., recodified as chapter 171 by Acts 1987, 70th Leg., ch. 149); Gov't Code §§ 311.025(b), 311.031(c). The attorney's law firm is a business entity within chapter 171, and presumably he has a substantial interest in it. The question was whether the board's appraisal-policy actions would have a special economic effect on that firm because the attorney's fee is a percentage of delinquent taxes collected and tax bills depend on values. See Tax Code § 6.30; Attorney General Opinion JM-857 (1988).

The opinion concluded they would not. Officials and boards other than the appraisal district board make decisions affecting valuation; the board's policies and the chief appraiser's determinations must comply with the Tax Code; and the chief appraiser's decisions are reviewed by the appraisal review board, whose members the district board appoints for two-year terms but who cannot include district directors or appraisal office employees. Tax Code § 6.41. The appraisal district and the appraisal review board are separate and distinct bodies. Towne Square Associates v. Angelina County Appraisal District, 709 S.W.2d 776, 778 (Tex. App. - Beaumont 1986, no writ). The board does not control the property values submitted to the taxing units, has no part in setting the tax rate (the second main determinant of a tax bill), and lacks power to increase appraised values to increase delinquent-collection fees. Board appraisal policies should have only a minor and predictable effect on the value of collection contracts. As a matter of law, the board's actions in establishing appraisal policies do not have a special economic effect on an attorney who has contracted under section 6.30 to collect delinquent taxes, so chapter 171 does not require the director to recuse from appraisal-policy decisions. Under other circumstances recusal might be required, for example if the district contracts to collect a unit's taxes under section 6.24, a director who collects delinquent taxes for that unit may have to recuse from some board actions related to the district's contract. See also Tax Code § 6.26.

On incompatibility, Letter Advisory No. 87 (1974) had stated that the common-law doctrine of incompatibility does not apply to an independent contractor who works for a public agency under contract, and the chapter 171 analysis showed the lack of connection between the board's functions and the unit's collection efforts, which would probably also prevent the two positions from being incompatible. See Attorney General Opinion JM-203 (1984). Finally, the attorney is subject to the Texas Code of Professional Responsibility. Disciplinary Rule 2-103 restricts a lawyer from recommending his own employment to a non-lawyer who has not sought his advice, and Disciplinary Rule 8-101, on action as a public official, bars a lawyer who holds public office from accepting anything of value offered to influence his official action. Penal Code section 39.03 makes it an offense for a public servant, relying on nonpublic information obtained in his official capacity, to acquire or aid another in acquiring a pecuniary interest in property, a transaction, or an enterprise that may be affected by the information. None of these prohibits the dual service, but they are directed at curtailing abuses that might arise.

Citations

Statutory authority:

• Tax Code §§ 1.04(12), 6.01, 6.03, 6.03(a), 6.05, 6.24, 6.26, 6.30, 6.30(a), 6.30(c), 6.41
• Tax Code §§ 25.22, 25.24, 26.01, 26.05, 26.09, 31.01, 33.41, 41.01, 41.02; chs. 11, 22, 23, 25
• Local Gov't Code ch. 171, §§ 171.001, 171.001(1), 171.003(a)(1), 171.004
• Gov't Code §§ 311.025(b), 311.031(c)
• Penal Code § 39.03
• Texas Code of Professional Responsibility, DR 2-103, DR 8-101
• Acts 1987, 70th Leg., ch. 149; ch. 323, § 1, at 1733; ch. 362, § 4, at 1799 (former V.T.C.S. art. 988b)

Cases cited:

• Halliburton v. Texas Indemnity Ins. Co., 213 S.W.2d 677 (Tex. 1948)
• Towne Square Associates v. Angelina County Appraisal District, 709 S.W.2d 776, 778 (Tex. App. - Beaumont 1986, no writ)

Attorney General materials referenced:

• JM-14 (1983); V-137 (1947); JM-35 (1983); JM-499 (1986); JM-981 (1988); JM-857 (1988); JM-203 (1984); Letter Advisory No. 87 (1974)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-1060
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1989/jm1060.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor OCR errors may remain; the linked PDF is authoritative.

June 16, 1989

Honorable Mark W. Stiles
Chairman
County Affairs Committee
Texas House of Representatives
P. O. Box 2910
Austin, Texas 78769

Opinion No. JM-1060

Re: May an attorney who serves on the board of directors of an appraisal district contract with a participating taxing unit to collect delinquent taxes (RQ-1650)

Dear Representative Stiles:

You ask whether a private attorney who is a director of an appraisal district may contract to collect delinquent taxes for a taxing unit that participates in the appraisal district. We will first consider whether the attorney would be disqualified by statute from serving on the appraisal district board.

An appraisal district is established in each county to appraise property for ad valorem tax purposes of the taxing units in the district, which include the county, cities, school districts, and any other political unit that imposes ad valorem taxes on property. Tax Code § 6.01; see id. § 1.04(12) (defining "taxing unit"). The five member board of directors of the appraisal district is elected by the governing bodies of the county, the cities, and the school districts in the appraisal district. Id. § 6.03. Section 6.03 of the Tax Code, which sets out the eligibility requirements for directors of the appraisal district, includes the following restriction:

An individual . . . is not ineligible because of membership on the governing body of a taxing unit or because the individual is an elected official. However, an employee of a taxing unit that participates in the district is not eligible to serve on the board unless the individual is also a member of the governing body or an elected official of a taxing unit that participates in the district. (Emphasis added.)

Id. § 6.03(a).

Section 6.30(c) of the Tax Code authorizes contracts between a taxing unit and an attorney to enforce the collection of delinquent taxes. In our opinion, an attorney who contracts under this provision is an independent contractor and not an employee of the taxing unit. An independent contractor contracts to do a specific piece of work for another, furnishes and controls his assistants, and does the work without being subject to the other's orders on its details. Halliburton v. Texas Indemnity Ins. Co., 213 S.W.2d 677 (Tex. 1948). Section 6.30(a) refers to the attorney as a "private" attorney. See generally Attorney General Opinion JM-14 (1983) (county may not contract with county attorney under section 6.30(a) of the Tax Code).

Attorney General Opinion V-137 (1947) determined that the predecessor of section 6.30 did not authorize a commissioners court to hire individuals to collect delinquent taxes on a commission basis. The county had authority to arrange for delinquent tax collections on a commission basis only by contract pursuant to the predecessor of section 6.30. Id. at 2. An attorney who contracts to collect delinquent taxes for a taxing unit is not an employee of that unit and is therefore not disqualified from service on the board of directors under the quoted provision of section 6.03(a).

You ask whether the contract creates a conflict of interest for the director of the appraisal district, because the board of directors establishes policy for the chief appraiser's determinations of taxable values and exemptions and the contracting attorney may eventually derive a fee based on those values. We will outline the process of tax appraisal and collections to provide a context for our discussion of your question.

The Tax Code contemplates a three-step process: appraisal, assessment, and collection of taxes. See Attorney General Opinion JM-35 (1983). The appraisal district participates in this process only during the first step. The district board of directors establishes an appraisal office and appoints a chief appraiser who determines the value of property and decides whether applicants for exemptions are entitled to them. Tax Code § 6.05, chs. 11, 22, 23, 25; see generally Attorney General Opinion JM-499 (1986). The appraisal district board also appoints the board which reviews the appraisal records prepared by the chief appraiser. Tax Code §§ 6.41, 25.22, 41.01. If the appraisal review board finds that the appraisals do not comply with law, it directs the chief appraiser to make the necessary corrections. Id. §§ 41.01, 41.02; see Attorney General Opinion JM-981 (1988).

When the appraisal records have been approved by the appraisal review board, they constitute the appraisal roll for the district. Id. § 25.24. The chief appraiser certifies the relevant part of the appraisal roll to the assessor for each taxing unit participating in the district. Id. § 26.01. The governing body adopts a tax rate, and the assessor computes the tax owed on each property and sends a tax bill to the property owner. Id. §§ 26.05, 26.09, 31.01.

If the tax is not paid on time, the taxing unit may file suit to collect it. Id. § 33.41. The governing body of the taxing unit may contract with an attorney to enforce the collection of its delinquent taxes for a total compensation not to exceed 20 percent of the amount of delinquent tax, penalty, and interest collected. Tax Code § 6.30(c).

Chapter 171 of the Local Government Code1 deals with conflicts of interest of "local public officials," including directors of an appraisal district. Local Gov't Code § 171.001(1). A local public official commits an offense if he knowingly participates in a vote or decision on a matter involving a business entity in which he has a substantial interest if "the action on the matter will have a special economic effect on the business entity that is distinguishable from the effect on the public." Acts 1987, 70th Leg., ch. 362, § 4, at 1799 (amending article 988b, section 4, V.T.C.S., now codified as section 171.004 of the Local Gov't Code).2 A local public official who has such an interest in a business entity must file an affidavit describing that interest and abstain from participation in the matter. Local Gov't Code § 171.004.

The attorney's law firm is a business entity within chapter 171 of the Local Government Code. Id. § 171.001. Presumably, he has a "substantial interest" in his firm. Chapter 171 of the Local Government Code will apply to the attorney's participation in decisions of the appraisal district if action by the board on a matter "will have a special economic effect on the business entity that is distinguishable from the effect on the public." The issue before us is whether the appraisal district board's actions in establishing appraisal policy will have a special economic effect on the law firm of the attorney who holds the delinquent tax collection contract because tax bills are based on property values and tax rates and the attorney's fee is usually a percent of the amount of delinquent tax, penalty, and interest collected. Tax Code § 6.30; see also Attorney General Opinion JM-857 (1988).

Our summary of the tax appraisal and collections process shows that officials and boards other than the appraisal district board make decisions that affect property valuation. You indicate that the board establishes policy implemented by the chief appraiser in determining taxable values and exemptions, but the board's policy and the chief appraiser's determinations must also comply with Tax Code provisions. See generally Attorney General Opinion JM-499 (1986). The chief appraiser's decisions are reviewed by the appraisal review board, which may order him to make changes. Members of the appraisal review board are appointed by the appraisal district board for two year terms of office. Tax Code § 6.41. Directors of the appraisal district and employees of the appraisal office are among the persons disqualified from service on the appraisal review board. Id. The county appraisal district and the appraisal review board are separate and distinct bodies. Towne Square Associates v. Angelina County Appraisal District, 709 S.W.2d 776, 778 (Tex. App. - Beaumont 1986, no writ) (notice of appeal served on the district board does not constitute notice to the review board). The appraisal district board does not control the property values submitted to the taxing units.

The appraisal board's participation in the taxing process ends when the chief appraiser certifies the appropriate part of the appraisal roll to each taxing unit in the district. Thus, it has no part in establishing the second main determinant of tax bills, the tax rate adopted by the governing body of each taxing unit. Moreover, the board's appraisal policies must necessarily be consistent with law, and the board would seem to lack power to increase appraised values in order to increase fees for collecting delinquent taxes. Board actions in adopting appraisal policies should have only a minor and predictable effect on the value of tax collections contracts within the district. We conclude, as a matter of law, that under the Tax Code provisions we have discussed, the board's actions in establishing policies for property appraisals do not "have a special economic effect" on an attorney who has contracted under section 6.30 of the Tax Code to collect delinquent taxes for a local taxing unit. Therefore, chapter 171 of the Local Government Code does not require the director to recuse himself from the board's decisions on appraisal policy.

Under other circumstances, however, the attorney's interest in a contract for delinquent tax collections might require him to recuse himself. For example, if the appraisal district board of directors contracts with a taxing unit to collect its taxes under section 6.24 of the Tax Code, a director who collects delinquent taxes for the same taxing unit may have to recuse himself from some board actions related to the district's contract. See also Tax Code § 6.26 (election to require that appraisal district collect property taxes for all taxing units).

You ask whether the office of director of an appraisal district is incompatible with the duties, loyalties, and responsibilities of a private attorney collecting delinquent taxes for a participating taxing unit. In Letter Advisory No. 87 (1974), this office stated that the common law doctrine of incompatibility does not apply to an independent contractor who works for a public agency pursuant to contract. Moreover, our discussion of chapter 171 of the Local Government Code is relevant to your question about incompatibility. The lack of connection between the functions of the appraisal district board and the taxing unit's collection of delinquent taxes would probably also prevent the two positions from being incompatible. See generally Attorney General Opinion JM-203 (1984) (discussing common law doctrine of incompatibility).

The attorney is subject to the Texas Code of Professional Responsibility, which includes provisions relevant to the conflicting loyalties which might arise in cases like the one you present. Disciplinary Rule 2-103 provides in part:

(A) A lawyer shall not recommend employment, as a private practitioner, of himself, his partner, or associate to a non-lawyer who has not sought his advice regarding employment of a lawyer, except as follows: [Exceptions omitted.]

Supreme Court of Texas, Rules Governing the State Bar of Texas art. X, § 9 (Code of Professional Responsibility) DR 2-103 (1982). Disciplinary Rule 8-101, which relates to action as a public official, provides in part:

(A) A lawyer who holds public office shall not:

. . . .

(3) Accept any thing of value from any person when the lawyer knows or it is obvious that the offer is for the purpose of influencing his action as a public official.

Id. DR 8-101 (1971).

Finally, section 39.03 of the Penal Code provides:

(a) A public servant commits an offense if, in reliance on information to which he has access in his official capacity and which has not been made public, he:

(1) acquires or aids another to acquire a pecuniary interest in any property, transaction, or enterprise that may be affected by the information.

Neither the disciplinary rules nor the Penal Code provision prohibit the dual service you inquire about, but they are directed at curtailing the abuses that might arise under those circumstances.

1. Former article 988b, V.T.C.S., was recodified as chapter 171 of the Local Government Code by the 70th session of the Legislature. Acts 1987, 70th Leg., ch. 149. The same session of the legislature adopted amendments to former article 988b, V.T.C.S., without reference to the repeal and recodification of that provision. The amendments are preserved and given effect as part of the code provision. Gov't Code § 311.031(c).

2. Section 171.003(a)(1) of the Local Government Code bars a local public official from knowing participation in a vote or decision "on a matter involving a business entity" in which he has a substantial interest if it is reasonably foreseeable that an action on the matter would confer an economic benefit to the business entity. Senate Bill 1131 of the 70th Legislature inserted the language "or real property" after "business entity" in this provision. Acts 1987, 70th Leg., ch. 323, § 1, at 1733. House Bill 1948 of the 70th Legislature adopted a new standard for the circumstances which barred a local public official with a substantial interest in a matter from participating in board action. Acts 1987, 70th Leg., ch. 362, at 1799. These amendments can be harmonized by adopting the standard of House Bill 1948, which also applies to real property. See Gov't Code §§ 311.025(b), 311.031(c).

SUMMARY

An attorney who has contracted with a taxing unit to collect its delinquent taxes is not an "employee" under section 6.03(a) of the Tax Code and is not ineligible under that provision to be a director of the appraisal district which includes that taxing unit.

An appraisal district director's contract to collect delinquent taxes for a local taxing unit does not require him to recuse himself pursuant to chapter 171 of the Local Government Code from participation in board actions establishing policy to be implemented by the chief appraiser.

The common law doctrine of incompatibility does not bar a director of an appraisal district from contracting under section 6.30 of the Tax Code with a local political subdivision to collect its delinquent taxes.

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Susan L. Garrison
Assistant Attorney General