Bill not drafted by TLC or Senate E&E.
Line and page numbers may not match official copy.
By Hartnett H.B. No. 3251
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to registration and reporting by certain organizations;
1-3 providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. SCOPE OF ACT; SHORT TITLE. (a) Except as
1-6 provided by this Act, this Act applies to all charitable
1-7 organizations that engage in telephone solicitation in this state.
1-8 The solicitation of contributions from persons in this state shall
1-9 be considered to be engaging in telephone solicitation in Texas,
1-10 regardless of where the solicitation originates.
1-11 (b) This Act may be cited as the Charitable Telephone
1-12 Solicitation Act.
1-13 SECTION 2. CONSTRUCTION. This Act may not be construed to
1-14 unreasonably burden legitimate charitable organizations.
1-15 SECTION 3. DEFINITIONS. In this Act:
1-16 (1) "Charitable organization" means a person who
1-17 solicits contributions and is or holds himself, herself, or itself
1-18 out to be established or operating for a charitable purpose, except
1-19 for volunteers that have been authorized to solicit on behalf of a
1-20 charitable organization that is registered under this Act.
1-21 (2) "Charitable purpose" means:
1-22 (A) a purpose described by Section 501(c)(3) of
1-23 the Internal Revenue Code of 1986; or
1-24 (B) the provision of assistance to needy
2-1 individuals.
2-2 (3) "Charitable sales promotion" means any advertising
2-3 or sale conducted by a person who represents that the purchase or
2-4 use of goods or services offered by the person will benefit, in
2-5 whole or in part, any charitable organization or charitable
2-6 purpose. The provision of advertising services to a charitable
2-7 organization, either for compensation or as a donation, does not of
2-8 itself constitute a charitable sales promotion.
2-9 (4) "Commercial telephone solicitor" means a person
2-10 who is retained by a charitable organization to solicit
2-11 contributions by telephone, whether done individually or through
2-12 another person under the direction of the commercial telephone
2-13 solicitor. The term does not include a bona fide employee,
2-14 officer, director, or volunteer of a charitable organization.
2-15 (5) "Contribution" means the promise to give or gift
2-16 of money, credit, property, financial assistance, or other thing of
2-17 any kind or value, except volunteer services. The term does not
2-18 include bona fide fees, dues, or assessments paid by members if
2-19 membership is not conferred solely as consideration for making a
2-20 contribution in response to a telephone solicitation.
2-21 (6) "Knowingly" means with actual awareness, but
2-22 actual awareness may be inferred if objective manifestations
2-23 indicate that a person acted with actual awareness.
2-24 (7) "Person" means an individual, partnership,
2-25 corporation, association, or other legal entity.
2-26 (8) "Telephone solicitation" means the use of a
2-27 telephone to solicit another person to make a charitable
2-28 contribution to an organization.
2-29 SECTION 4. EXEMPTION FROM REGISTRATION. The following
2-30 persons are not required to register under Section 6 of this Act:
3-1 (1) a charitable organization that is exempt from
3-2 federal income tax under Section 501(c) of the Internal Revenue
3-3 Code of 1986 and exempt from filing annual information returns with
3-4 the Internal Revenue Service under Section 6033 of the Internal
3-5 Revenue Code of 1986 and the treasury regulations issued under
3-6 Section 6033;
3-7 (2) an institution of higher education that has
3-8 current accreditation from a regional accrediting association and a
3-9 charitable organization controlled by or affiliated with and
3-10 designated by such an institution;
3-11 (3) a nonprofit hospital that is required by law to
3-12 file a financial report at least annually with a state and a
3-13 charitable organization controlled by or affiliated with and
3-14 designated by such a hospital; and
3-15 (4) a private foundation, as defined by Section 509(a)
3-16 of the Internal Revenue Code of 1986, that does not solicit.
3-17 SECTION 5. REGISTER TO BE MAINTAINED. (a) The attorney
3-18 general shall establish and maintain a register of charitable
3-19 organizations subject to this Act.
3-20 (b) All documents required to be filed with the attorney
3-21 general under this Act are public information and shall be
3-22 available to the public under the open records law, Chapter 552,
3-23 Government Code, except those documents that identify the donors of
3-24 a charitable organization, which information is confidential and is
3-25 not subject to disclosure.
3-26 SECTION 6. REGISTRATION. (a) The attorney general shall
3-27 maintain a registry of charitable organizations that submit to the
3-28 attorney general completed registration statements that contain:
3-29 (1) the legal name and each assumed name, the mailing
3-30 address and street address, and each telephone number and facsimile
4-1 number of each office, chapter, local unit, branch, and affiliate
4-2 of the charitable organization;
4-3 (2) the employer identification number of the
4-4 charitable organization;
4-5 (3) the name, title, address, and telephone number of
4-6 each officer, director, and executive director or other chief
4-7 operating officer of the charitable organization;
4-8 (4) the name of each officer, director, or employee
4-9 who is compensated by the charitable organization or who has
4-10 custody and control of funds of the charitable organization and who
4-11 has been convicted of or pleaded nolo contendere to a misdemeanor
4-12 involving fraud or the theft, misappropriation, misapplication, or
4-13 misuse of property of another, or any felony, including the offense
4-14 and the state, court, and date of each conviction or plea of nolo
4-15 contendere;
4-16 (5) the date the charitable organization was
4-17 incorporated and the state of incorporation or, if not
4-18 incorporated, the type of organization and the date established;
4-19 the day and month on which the organization's fiscal year ends; and
4-20 whether the organization is eligible to receive tax-deductible
4-21 contributions under Section 170 of the Internal Revenue Code of
4-22 1986;
4-23 (6) a statement as to whether the organization has
4-24 applied for or been granted tax exempt status by the Internal
4-25 Revenue Service and, if so, the date of the application, the date
4-26 the exemption was granted or denied, the Internal Revenue Code
4-27 section on which the application was based, and a statement as to
4-28 whether or when the tax exemption has ever been denied, revoked, or
4-29 modified;
4-30 (7) the date the organization began doing business in
5-1 this state and the name and address of the organization's
5-2 registered agent in this state;
5-3 (8) a statement of the charitable organization's
5-4 charitable purposes and a list of the programs for which funds are
5-5 solicited;
5-6 (9) a statement that includes:
5-7 (A) the names, addresses, and telephone numbers
5-8 of the organization's accountants and auditors and the method of
5-9 accounting used;
5-10 (B) a statement that the charitable organization
5-11 has attempted in good faith to comply with all Texas county and
5-12 municipal ordinances regarding telephone solicitation that have
5-13 been filed with the attorney general or, if none apply, a statement
5-14 to that effect;
5-15 (C) for charitable organizations that engage the
5-16 services of commercial telephone solicitors, the name and address
5-17 of each commercial telephone solicitor engaged in the preceding 12
5-18 months, as well as written confirmation from the commercial
5-19 telephone solicitor that it has complied with all state and local
5-20 registration laws;
5-21 (D) the amount paid to commercial telephone
5-22 solicitors during the preceding 12 months;
5-23 (E) the total contributions received during the
5-24 preceding 12 months; and
5-25 (F) the total fund-raising costs during the
5-26 preceding 12 months, computed pursuant to generally accepted
5-27 accounting principles;
5-28 (10) a copy of the charitable organization's most
5-29 recently filed Internal Revenue Service Form 990 and other federal
5-30 tax returns, including all supplements, amendments, and attachments
6-1 to those returns and requests for extensions to file those returns
6-2 or, if the charitable organization does not file federal tax
6-3 returns:
6-4 (A) a statement as to the reason none is filed;
6-5 and
6-6 (B) the charitable organization's most recent
6-7 financial statements, including audited financial statements, if
6-8 any have been prepared; and
6-9 (11) a sworn statement verifying that the information
6-10 contained in the registration statement and all attachments to the
6-11 statement are true, correct, and complete to the best of the
6-12 affiant's knowledge.
6-13 (b) A charitable organization shall file its initial
6-14 registration statement before the 10th working day preceding the
6-15 date on which the organization begins telephone solicitation in
6-16 this state.
6-17 (c) Registration expires on the 15th day of the fifth month
6-18 after the last day of a charitable organization's fiscal year.
6-19 Renewal registration statements shall be filed on the same forms
6-20 required for initial registration statements and must include the
6-21 name and employer identification number of the charitable
6-22 organization and any changes to the information previously
6-23 submitted to the attorney general. For items on which there is no
6-24 change from the previous year's registration statement, "no change"
6-25 may be indicated.
6-26 (d) A filing fee not to exceed $50 must accompany the
6-27 initial registration statement. A $50 filing fee must accompany
6-28 all renewal registration statements.
6-29 (e) The registration statements shall be submitted on forms
6-30 prescribed or approved by the attorney general.
7-1 SECTION 7. NOTIFICATION OF NONCOMPLIANCE. (a) A charitable
7-2 organization that is not in compliance with this Act shall be
7-3 notified of noncompliance by the attorney general by first class
7-4 mail at the organization's last reported address. Noncompliance
7-5 includes failure to file any documents required by this Act or the
7-6 filing of incomplete or inaccurate documents.
7-7 (b) A charitable organization violates this Act if the
7-8 organization:
7-9 (1) fails to file complete documents within 30 days
7-10 after the date the notice required by Subsection (a) of this
7-11 section has been mailed; or
7-12 (2) knowingly files materially inaccurate documents.
7-13 SECTION 8. RECORDKEEPING; AUDIT POWERS OF ATTORNEY GENERAL.
7-14 (a) Each charitable organization required to file a registration
7-15 statement shall keep true books and records as to its activities
7-16 within this state in a form to enable it to accurately provide the
7-17 information required by this Act. The books and records shall be
7-18 retained for a period of at least three years after the end of the
7-19 period to which the registration statement relates. All books and
7-20 records of a charitable organization shall be made available for
7-21 inspection and copying by authorized personnel of the attorney
7-22 general on written request by authorized personnel of the attorney
7-23 general.
7-24 (b) A charitable organization shall make available the
7-25 information requested by authorized personnel of the attorney
7-26 general at the organization's principal place of business within 10
7-27 working days of the date of the request, or at a time and place as
7-28 may be agreed.
7-29 (c) The authority established by this section is in addition
7-30 to other statutory or common law audit or investigative authority
8-1 of the attorney general.
8-2 SECTION 9. USE OF FEES. All fees collected by the attorney
8-3 general under this Act are dedicated for use by the attorney
8-4 general during the biennium of receipt to administer this Act, to
8-5 enforce this Act, and to educate the public about this Act and
8-6 charitable organizations and solicitations generally.
8-7 SECTION 10. REGISTRATION DOES NOT IMPLY ENDORSEMENT.
8-8 Registration under this Act does not imply endorsement by this
8-9 state or the attorney general, and charitable organizations are
8-10 prohibited from stating or implying to the contrary.
8-11 SECTION 11. REMEDIES. (a) The attorney general may
8-12 institute an action for failure to fully and accurately comply with
8-13 this Act and may obtain injunctive relief to restrain a person from
8-14 continuing a violation, cancellation or suspension of the
8-15 registration, an order restraining the person from doing business
8-16 in this state while violating this Act, a civil penalty of not more
8-17 than $25,000 per violation, or injunctive relief and a civil
8-18 penalty. A person who violates an injunction issued under this
8-19 section is liable to the state for a civil penalty of not less than
8-20 $100,000.
8-21 (b) The remedies authorized by this Act are not exclusive
8-22 but are in addition to any other procedure or remedy provided for
8-23 by other statutory or common law.
8-24 (c) In any proceeding successfully prosecuted by the
8-25 attorney general under this Act, the court may allow the attorney
8-26 general to recover civil penalties and the reasonable costs,
8-27 expenses, and attorney's fees incurred in bringing the suit.
8-28 SECTION 12. DEDICATION OF FEES AND CIVIL PENALTIES. In
8-29 addition to other money, all fees assessed under this Act and all
8-30 recovered expenses incurred in obtaining injunctive relief and
9-1 administrative and civil penalties authorized by this Act are
9-2 dedicated for use by the attorney general in enforcing and
9-3 administering this Act. Recovered expenses include investigative
9-4 costs, witness fees, attorney's fees, and deposition expenses.
9-5 SECTION 13. VENUE. An action under this Act shall be
9-6 brought in a court of competent jurisdiction in Travis County, in
9-7 the county in which the charitable organization has its principal
9-8 place of business or has a fixed and established place of business
9-9 at the time the suit is brought, or in the county in which
9-10 solicitation occurred.
9-11 SECTION 14. RULES; ADVISORY COMMITTEE. The attorney general
9-12 may adopt rules, procedures, and forms that are consistent with and
9-13 necessary for the proper administration and enforcement of this
9-14 Act.
9-15 SECTION 15. TRANSITION. (a) The changes in law made by
9-16 this Act apply only to a solicitation that takes place on or after
9-17 the effective date of this Act. A solicitation that takes place
9-18 before the effective date of this Act is governed by the law in
9-19 effect on the date of the solicitation, and the former law is
9-20 continued in effect for that purpose.
9-21 (b) A charitable organization engaging in telephone
9-22 solicitation in this state on the effective date of this Act that
9-23 is required to register under Section 6 of this Act shall file the
9-24 organization's initial registration statement required under that
9-25 section before January 1, 1998.
9-26 SECTION 16. EFFECTIVE DATE. This Act takes effect September
9-27 1, 1997.
9-28 SECTION 17. EMERGENCY. The importance of this legislation
9-29 and the crowded condition of the calendars in both houses create an
9-30 emergency and an imperative public necessity that the
10-1 constitutional rule requiring bills to be read on three several
10-2 days in each house be suspended, and this rule is hereby suspended.