1-1 AN ACT
1-2 relating to the qualification of a nonprofit charitable or
1-3 religious organization, school, or youth association for an
1-4 exemption from ad valorem taxation.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 11.18(f), Tax Code, is amended to read as
1-7 follows:
1-8 (f) A charitable organization must:
1-9 (1) use its assets in performing the organization's
1-10 charitable functions or the charitable functions of another
1-11 charitable organization; and
1-12 (2) [,] by charter, bylaw, or other regulation adopted
1-13 by the organization to govern its affairs[:]
1-14 [(1) pledge its assets for use in performing the
1-15 organization's charitable functions; and]
1-16 [(2)] direct that on discontinuance of the
1-17 organization by dissolution or otherwise:
1-18 (A) the assets are to be transferred to this
1-19 state, the United States, or [to] an educational, religious,
1-20 charitable, or other similar organization that is qualified as a
1-21 charitable organization under Section 501(c)(3), Internal Revenue
1-22 Code of 1986, as amended; or
1-23 (B) if required for the organization to qualify
1-24 as a tax-exempt organization under Section 501(c)(12), Internal
2-1 Revenue Code of 1986, as amended, the assets are to be transferred
2-2 directly to the organization's members, each of whom, by
2-3 application for an acceptance of membership in the organization,
2-4 has agreed to immediately transfer those assets to this state or to
2-5 an educational, religious, charitable, or other similar
2-6 organization that is qualified as a charitable organization under
2-7 Section 501(c)(3), Internal Revenue Code of 1986, as amended, as
2-8 designated in the bylaws, charter, or regulation adopted by the
2-9 organization.
2-10 SECTION 2. Section 11.19(d), Tax Code, is amended to read as
2-11 follows:
2-12 (d) To qualify as a youth development association for the
2-13 purposes of this section, an association must:
2-14 (1) be organized and operated [engage] primarily for
2-15 the purpose of [in] promoting the threefold spiritual, mental, and
2-16 physical development of boys, girls, young men, or young women;
2-17 (2) be operated in a way that does not result in
2-18 accrual of distributable profits, realization of private gain
2-19 resulting from payment of compensation in excess of a reasonable
2-20 allowance for salary or other compensation for services rendered,
2-21 or realization of any other form of private gain;
2-22 (3) operate in conjunction with a state or national
2-23 organization that is organized and operated for the same purpose as
2-24 the association; [and]
2-25 (4) use its assets in performing the association's
2-26 youth development functions or the youth development functions of
2-27 another youth development association; and
3-1 (5) by charter, bylaw, or other regulation adopted by
3-2 the association to govern its affairs[:]
3-3 [(A) pledge its assets for use in performing the
3-4 association's youth development functions; and]
3-5 [(B)] direct that on discontinuance of the
3-6 association by dissolution or otherwise the assets are to be
3-7 transferred to this state, the United States, or [to] a charitable,
3-8 educational, religious, or other similar organization that is
3-9 qualified as a charitable organization under Section 501(c)(3),
3-10 Internal Revenue Code of 1954, as amended.
3-11 SECTION 3. Section 11.20(c), Tax Code, is amended to read as
3-12 follows:
3-13 (c) To qualify as a religious organization for the purposes
3-14 of this section, an organization (whether operated by an
3-15 individual, as a corporation, or as an association) must:
3-16 (1) be organized and operated primarily for the
3-17 purpose of engaging in religious worship or promoting the spiritual
3-18 development or well-being of individuals;
3-19 (2) be operated in a way that does not result in
3-20 accrual of distributable profits, realization of private gain
3-21 resulting from payment of compensation in excess of a reasonable
3-22 allowance for salary or other compensation for services rendered,
3-23 or realization of any other form of private gain; [and]
3-24 (3) use its assets in performing the organization's
3-25 religious functions or the religious functions of another religious
3-26 organization; and
3-27 (4) by charter, bylaw, or other regulation adopted by
4-1 the organization to govern its affairs[:]
4-2 [(A) pledge its assets for use in performing the
4-3 organization's religious functions; and]
4-4 [(B)] direct that on discontinuance of the
4-5 organization by dissolution or otherwise the assets are to be
4-6 transferred to this state, the United States, or [to] a charitable,
4-7 educational, religious, or other similar organization that is
4-8 qualified as a charitable organization under Section 501(c)(3),
4-9 Internal Revenue Code of 1954, as amended.
4-10 SECTION 4. Section 11.21, Tax Code, is amended by amending
4-11 Subsection (d) and adding Subsection (f) to read as follows:
4-12 (d) To qualify as a school for the purposes of this section,
4-13 an organization (whether operated by an individual, as a
4-14 corporation, or as an association) must:
4-15 (1) be organized and operated primarily for the
4-16 purpose of engaging in educational functions;
4-17 (2) normally maintain a regular faculty and curriculum
4-18 and normally have a regularly organized body of students in
4-19 attendance at the place where its educational functions are carried
4-20 on;
4-21 (3) [(2)] be operated in a way that does not result in
4-22 accrual of distributable profits, realization of private gain
4-23 resulting from payment of compensation in excess of a reasonable
4-24 allowance for salary or other compensation for services rendered,
4-25 or realization of any other form of private gain and, if the
4-26 organization is a corporation, be organized as a nonprofit
4-27 corporation as defined by the Texas Non-Profit Corporation Act;
5-1 [and]
5-2 (4) use its assets in performing the organization's
5-3 educational functions or the educational functions of another
5-4 educational organization; and
5-5 (5) [(3)] by charter, bylaw, or other regulation
5-6 adopted by the organization to govern its affairs[:]
5-7 [(A) pledge its assets for use in performing the
5-8 organization's educational functions; and]
5-9 [(B)] direct that on discontinuance of the
5-10 organization by dissolution or otherwise the assets are to be
5-11 transferred to this state, the United States, or [to] an
5-12 educational, charitable, religious, or other similar organization
5-13 that is qualified as a charitable organization under Section
5-14 501(c)(3), Internal Revenue Code of 1954, as amended.
5-15 (f) Notwithstanding Subsection (a), a person is entitled to
5-16 an exemption from taxation of the buildings and tangible personal
5-17 property the person acquires for use for a school that meets each
5-18 requirement of Subsection (d) if:
5-19 (1) the person authorizes the former owner to continue
5-20 to use the property pending the use of the property for a school;
5-21 and
5-22 (2) the former owner would be entitled to an exemption
5-23 from taxation of the property if the former owner continued to own
5-24 the property.
5-25 SECTION 5. Sections 11.421 and 11.422, Tax Code, are amended
5-26 to read as follows:
5-27 Sec. 11.421. QUALIFICATION OF RELIGIOUS ORGANIZATION.
6-1 (a) If the chief appraiser denies a timely filed application for
6-2 an exemption under Section 11.20 [of this code] for an organization
6-3 that otherwise qualified for the exemption on January 1 of the year
6-4 but that did not satisfy the requirements of Subsection (c)(4)
6-5 [(c)(3)] of that section on that date, the organization is eligible
6-6 for the exemption for the tax year if the organization:
6-7 (1) satisfies the requirements of Section 11.20(c)(4)
6-8 [11.20(c)(3) of this code] before the later of [the following
6-9 dates]:
6-10 (A) June 1 of the year to which the exemption
6-11 applies; or
6-12 (B) the 60th [30th] day after the date the chief
6-13 appraiser notifies the organization of its failure to comply with
6-14 those requirements; and
6-15 (2) within the time provided by Subdivision (1) [of
6-16 this subsection] files with the chief appraiser a new completed
6-17 application for the exemption together with an affidavit stating
6-18 that the organization has complied with the requirements of Section
6-19 11.20(c)(4) [11.20(c)(3) of this code].
6-20 (b) If the chief appraiser cancels an exemption for a
6-21 religious organization under Section 11.20 [of this code] that was
6-22 erroneously allowed in a tax year because he determines that the
6-23 organization did not satisfy the requirements of Section
6-24 11.20(c)(4) [11.20(c)(3)] on January 1 of that year, the
6-25 organization is eligible for the exemption for that tax year if the
6-26 organization:
6-27 (1) was otherwise qualified for the exemption;
7-1 (2) satisfies the requirements of Section 11.20(c)(4)
7-2 [11.20(c)(3) of this code] on or before the 60th [30th] day after
7-3 the date the chief appraiser notifies the organization of the
7-4 cancellation; and
7-5 (3) within the time provided by Subdivision (2) [of
7-6 this subsection] files with the chief appraiser a new completed
7-7 application for the exemption together with an affidavit stating
7-8 that the organization has complied with the requirements of Section
7-9 11.20(c)(4) [11.20(c)(3) of this code].
7-10 Sec. 11.422. QUALIFICATIONS OF A SCHOOL. (a) If the chief
7-11 appraiser denies a timely filed application for an exemption under
7-12 Section 11.21 [of this code] for a school that otherwise qualified
7-13 for the exemption on January 1 of the year but that did not satisfy
7-14 the requirements of Subsection (d)(5) [(d)(3)] of that section on
7-15 that date, the school is eligible for the exemption for the tax
7-16 year if the school:
7-17 (1) satisfies the requirements of Section 11.21(d)(5)
7-18 [11.21(d)(3) of this code] before the later of [the following
7-19 dates]:
7-20 (A) July 1 of the year for which the exemption
7-21 applies; or
7-22 (B) the 60th [30th] day after the date the chief
7-23 appraiser notifies the school of its failure to comply with those
7-24 requirements; and
7-25 (2) within the time provided by Subdivision (1) [of
7-26 this subsection], files with the chief appraiser a new completed
7-27 application for the exemption together with an affidavit stating
8-1 that the school has complied with the requirements of Section
8-2 11.21(d)(5) [11.21(d)(3) of this code].
8-3 (b) If the chief appraiser cancels an exemption for a school
8-4 under Section 11.21 [of this code] that was erroneously allowed in
8-5 a tax year because the appraiser determines that the school did not
8-6 satisfy the requirements of Section 11.21(d)(5) [11.21(d)(3) of
8-7 this code] on January 1 of that year, the school is eligible for
8-8 the exemption for that tax year if the school:
8-9 (1) was otherwise qualified for the exemption;
8-10 (2) satisfies the requirements of Section 11.21(d)(5)
8-11 [11.21(d)(3) of this code] on or before the 30th day after the date
8-12 the chief appraiser notifies the school of the cancellation; and
8-13 (3) in the time provided in Subdivision (2) [of this
8-14 subsection] files with the chief appraiser a new completed
8-15 application stating that the school has complied with the
8-16 requirements of Section 11.21(d)(5) [11.21(d)(3) of this code].
8-17 SECTION 6. Subchapter C, Chapter 11, Tax Code, is amended by
8-18 adding Sections 11.423 and 11.424 to read as follows:
8-19 Sec. 11.423. QUALIFICATION OF CHARITABLE ORGANIZATION OR
8-20 YOUTH ASSOCIATION. (a) If the chief appraiser denies a timely
8-21 filed application for an exemption under Section 11.18 or 11.19 for
8-22 an organization or association that otherwise qualified for the
8-23 exemption on January 1 of the year but that did not satisfy the
8-24 requirements of Section 11.18(f)(2) or 11.19(d)(5), as appropriate,
8-25 on that date, the organization or association is eligible for the
8-26 exemption for the tax year if the organization or association:
8-27 (1) satisfies the requirements of Section 11.18(f)(2)
9-1 or 11.19(d)(5), as appropriate, before the later of:
9-2 (A) June 1 of the year to which the exemption
9-3 applies; or
9-4 (B) the 60th day after the date the chief
9-5 appraiser notifies the organization or association of its failure
9-6 to comply with those requirements; and
9-7 (2) within the time provided by Subdivision (1) files
9-8 with the chief appraiser a new completed application for the
9-9 exemption together with an affidavit stating that the organization
9-10 or association has complied with the requirements of Section
9-11 11.18(f)(2) or 11.19(d)(5), as appropriate.
9-12 (b) If the chief appraiser cancels an exemption for an
9-13 organization or association under Section 11.18 or 11.19 that was
9-14 erroneously allowed in a tax year because the chief appraiser
9-15 determines that the organization or association did not satisfy the
9-16 requirements of Section 11.18(f)(2) or 11.19(d)(5), as appropriate,
9-17 on January 1 of that year, the organization or association is
9-18 eligible for the exemption for that tax year if the organization or
9-19 association:
9-20 (1) was otherwise qualified for the exemption;
9-21 (2) satisfies the requirements of Section 11.18(f)(2)
9-22 or 11.19(d)(5), as appropriate, on or before the 60th day after the
9-23 date the chief appraiser notifies the organization or association
9-24 of the cancellation; and
9-25 (3) within the time provided by Subdivision (2) files
9-26 with the chief appraiser a new completed application for the
9-27 exemption together with an affidavit stating that the organization
10-1 or association has complied with the requirements of Section
10-2 11.18(f)(2) or 11.19(d)(5), as appropriate.
10-3 Sec. 11.424. CONFLICT BETWEEN GOVERNING REGULATION OF
10-4 NONPROFIT ORGANIZATION, ASSOCIATION, OR ENTITY AND CONTRACT WITH
10-5 UNITED STATES. To the extent of a conflict between a provision in
10-6 a contract entered into by an organization, association, or entity
10-7 with the United States and a provision in the charter, a bylaw, or
10-8 other regulation adopted by the organization or entity to govern
10-9 its affairs in compliance with Section 11.18(f)(2), 11.19(d)(5),
10-10 11.20(c)(4), or 11.21(d)(5), the existence of the contract or the
10-11 organization's compliance with the contract does not affect the
10-12 eligibility of the organization, association, or entity to receive
10-13 an exemption under the applicable section of this code, and the
10-14 organization, association, or entity may comply with the provision
10-15 in the contract instead of the conflicting provision in the
10-16 charter, bylaw, or other regulation.
10-17 SECTION 7. Section 11.434(d), Tax Code, is amended to read
10-18 as follows:
10-19 (d) An application may not be filed under this section after
10-20 December 31, 1997 [1992].
10-21 SECTION 8. Section 23.55(j), Tax Code, as added by Chapter
10-22 471, Acts of the 74th Legislature, Regular Session, 1995, applies
10-23 to a change of use of land:
10-24 (1) on or after June 12, 1995; or
10-25 (2) before June 12, 1995, if:
10-26 (A) the change of use occurred on or after June
10-27 12, 1990; and
11-1 (B) on June 12, 1995, the owner of the land had
11-2 not been determined to be liable for the sanctions provided by
11-3 Section 23.55(a), Tax Code, by a final and nonappealable order or
11-4 judgment.
11-5 SECTION 9. The chief appraiser of an appraisal district
11-6 shall accept and approve or deny an application for an exemption
11-7 from ad valorem taxation under Section 11.21(f), Tax Code, as added
11-8 by this Act, for the ad valorem tax year that began January 1,
11-9 1997, if the application is filed as provided by Section 11.434,
11-10 Tax Code.
11-11 SECTION 10. The importance of this legislation and the
11-12 crowded condition of the calendars in both houses create an
11-13 emergency and an imperative public necessity that the
11-14 constitutional rule requiring bills to be read on three several
11-15 days in each house be suspended, and this rule is hereby suspended,
11-16 and that this Act take effect and be in force from and after its
11-17 passage, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2383 was passed by the House on May
15, 1997, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 2383 on May 29, 1997, by the
following vote: Yeas 143, Nays 0, 1 present, not voting.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 2383 was passed by the Senate, with
amendments, on May 21, 1997, by the following vote: Yeas 30, Nays
0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor