Office of the Attorney General
Mr. James M. Kuboviak
Letter Opinion No. 89-070
Dear Mr. Kuboviak:
Thank you for your letter of July 31, asking whether Attorney General Opinion JM-1060 (1989) is altered by the 71st Legislature's addition of section 6.036 to the Tax Code. See H.B. 432, Acts 1989, 71st Leg., ch. 796, s 5, at 3592. After reviewing the newly adopted legislation, we conclude that it modifies Attorney General Opinion JM-1060.
Attorney General Opinion JM-1060 considered "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." That opinion concluded: (1) section 6.03(a) of the Tax Code does not prohibit an attorney from becoming director of the appraisal district which includes that taxing unit; (2) chapter 171 of the Local Government Code does not require a director who has a contract to collect delinquent taxes for a local taxing unit to recuse himself from participating in board decisions on appraisal policy; and (3) the common law doctrine of incompatibility does not prohibit a director from contracting under section 6.30 of the Tax Code with a local political subdivision to collect its delinquent taxes. We noted, however, that there might be other circumstances where an "attorney's interest in a contract for delinquent tax collections might require him to recuse himself." Attorney General Opinion JM-1060 at 5. We also listed disciplinary rules and Penal Code provisions directed at curtailing abuses in such a situation. Id. at 6.
Section 6.036 of the Tax Code, which places certain limitations on contracts entered into between individuals, appraisal districts, and the appraisal review board, provides:
(a) An individual is not eligible to be appointed to or to serve on the board of directors of an appraisal district if the individual or a business entity in which the individual has a substantial interest is a party to a contract with:
(1) the appraisal district; or
(2) a taxing unit that participates in the appraisal district, if the contract relates to the performance of an activity governed by this title.
(b) An appraisal district may not enter into a contract with a member of the board of directors of the appraisal district or with a business entity in which a member of the board has a substantial interest.
(c) A taxing unit may not enter into a contract relating to the performance of an activity governed by this title with a member of the board of directors of an appraisal district in which the taxing unit participates or with a business entity in which a member of the board has a substantial interest.
(d) For purposes of this section, an individual has a substantial interest in a business entity if:
(1) the combined ownership of the individual and the individual's spouse is at least 10 percent of the voting stock or shares of the business entity; or
(2) the individual or the individual's spouse is a partner, limited partner, or officer of the business entity.
(e) In this section, 'business entity' means a sole proprietorship, partnership, firm, corporation, holding company, joint-stock company, receivership, trust, or other entity recognized by law.
(f) This section does not limit the application of any other law, including the common law relating to conflicts of interest, to an appraisal district director.
Tax Code s 6.036. (Emphasis added.)
Section 6.036 prohibits contracts of the type discussed in Attorney General Opinion JM-1060 if the director has a substantial interest in a business entity that contracts with a taxing unit or appraisal district. Both substantial interest and business entity are defined. Tax Code s 6.036(d), (e). Subsection (f) states that this section should be construed along with any other laws applicable to an appraisal district director, including those discussed in Attorney General Opinion JM-1060. Therefore, Attorney General Opinion JM-1060 still remains in effect, but it is modified to include the additional limitations imposed by section 6.036 of the Tax Code.
Very truly yours,
Susan L. Garrison
Assistant Attorney General
Letter Opinion Section