By: Carona S.B. No. 1581
A BILL TO BE ENTITLED
AN ACT
1-1 relating to registration of and reporting by certain charitable
1-2 organizations; providing penalties.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. SCOPE OF ACT; SHORT TITLE. (a) Except as
1-5 provided by this Act, this Act applies to all charitable
1-6 organizations that engage in telephone solicitation in this state.
1-7 The solicitation of contributions from persons in this state shall
1-8 be considered to be engaging in telephone solicitation in Texas,
1-9 regardless of where the solicitation originates.
1-10 (b) This Act may be cited as the Charitable Telephone
1-11 Solicitation Act.
1-12 SECTION 2. CONSTRUCTION. This Act may not be construed to
1-13 unreasonably burden legitimate charitable organizations.
1-14 SECTION 3. DEFINITIONS. In this Act:
1-15 (1) "Charitable organization" means a person who
1-16 solicits contributions and is or holds himself, herself, or itself
1-17 out to be established or operating for a charitable purpose, except
1-18 for volunteers that have been authorized to solicit on behalf of a
1-19 charitable organization that is registered under this Act.
1-20 (2) "Charitable purpose" means:
1-21 (A) a purpose described by Section 501(c)(3) of
1-22 the Internal Revenue Code of 1986 (26 U.S.C. Section 501(c)(3)); or
1-23 (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 the
2-16 gift of money, credit, property, financial assistance, or other
2-17 thing of any kind or value, except volunteer services. The term
2-18 does not include bona fide fees, dues, or assessments paid by
2-19 members if membership is not conferred solely as consideration for
2-20 making a 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.
3-1 (8) "Telephone solicitation" means the use of a
3-2 telephone to solicit another person to make a charitable
3-3 contribution to an organization.
3-4 SECTION 4. EXEMPTION FROM REGISTRATION. The following
3-5 persons are not required to register under Section 6 of this Act:
3-6 (1) a charitable organization that is exempt from
3-7 federal income tax under Section 501(c), Internal Revenue Code of
3-8 1986 (26 U.S.C. Section 501(c)), and exempt from filing annual
3-9 information returns with the Internal Revenue Service under Section
3-10 6033, Internal Revenue Code of 1986 (26 U.S.C. Section 6033), and
3-11 the treasury regulations issued under that section;
3-12 (2) a public or private institution of higher
3-13 education that has current accreditation from a regional
3-14 accrediting association and a charitable organization controlled by
3-15 or affiliated with and designated by such an institution;
3-16 (3) a nonprofit hospital that is required by law to
3-17 file a financial report at least annually with a state and a
3-18 charitable organization controlled by or affiliated with and
3-19 designated by such a hospital; and
3-20 (4) a private foundation, as defined by Section
3-21 509(a), Internal Revenue Code of 1986 (26 U.S.C. Section 509(a)),
3-22 that does not solicit.
3-23 SECTION 5. REGISTER TO BE MAINTAINED. (a) The attorney
3-24 general shall establish and maintain a register of charitable
3-25 organizations subject to this Act.
4-1 (b) All documents required to be filed with the attorney
4-2 general under this Act are public information and shall be
4-3 available to the public under the open records law, Chapter 552,
4-4 Government Code, except those documents that identify the donors of
4-5 a charitable organization, which information is confidential and is
4-6 not subject to disclosure.
4-7 SECTION 6. REGISTRATION. (a) The attorney general shall
4-8 maintain a registry of charitable organizations that submit to the
4-9 attorney general completed registration statements that contain:
4-10 (1) the legal name and each assumed name, the mailing
4-11 address and street address, and each telephone number and facsimile
4-12 number of each office, chapter, local unit, branch, and affiliate
4-13 of the charitable organization;
4-14 (2) the employer identification number of the
4-15 charitable organization;
4-16 (3) the name, title, address, and telephone number of
4-17 each officer, director, and executive director or other chief
4-18 operating officer of the charitable organization;
4-19 (4) the name of each officer, director, or employee
4-20 who is compensated by the charitable organization or who has
4-21 custody and control of funds of the charitable organization and who
4-22 has been convicted of or pleaded nolo contendere to a misdemeanor
4-23 involving fraud or the theft, misappropriation, misapplication, or
4-24 misuse of property of another, or any felony, including the offense
4-25 and the state, court, and date of each conviction or plea of nolo
5-1 contendere;
5-2 (5) the date the charitable organization was
5-3 incorporated and the state of incorporation or, if not
5-4 incorporated, the type of organization and the date established;
5-5 the day and month on which the organization's fiscal year ends; and
5-6 whether the organization is eligible to receive tax-deductible
5-7 contributions under Section 170, Internal Revenue Code of 1986 (26
5-8 U.S.C. Section 170);
5-9 (6) a statement as to whether the organization has
5-10 applied for or been granted tax exempt status by the Internal
5-11 Revenue Service and, if so, the date of the application, the date
5-12 the exemption was granted or denied, the Internal Revenue Code
5-13 section on which the application was based, and a statement as to
5-14 whether or when the tax exemption has ever been denied, revoked, or
5-15 modified;
5-16 (7) the date the organization began doing business in
5-17 this state and the name and address of the organization's
5-18 registered agent in this state;
5-19 (8) a statement of the charitable organization's
5-20 charitable purposes and a list of the programs for which funds are
5-21 solicited;
5-22 (9) a statement that includes:
5-23 (A) the names, addresses, and telephone numbers
5-24 of the organization's accountants and auditors and the method of
5-25 accounting used;
6-1 (B) a statement that the charitable organization
6-2 has attempted in good faith to comply with all Texas county and
6-3 municipal ordinances regarding telephone solicitation that have
6-4 been filed with the attorney general or, if none apply, a statement
6-5 to that effect;
6-6 (C) for charitable organizations that engage the
6-7 services of commercial telephone solicitors, the name and address
6-8 of each commercial telephone solicitor engaged in the preceding 12
6-9 months, as well as written confirmation from the commercial
6-10 telephone solicitor that it has complied with all state and local
6-11 registration laws;
6-12 (D) the amount paid to commercial telephone
6-13 solicitors during the preceding 12 months;
6-14 (E) the total contributions received during the
6-15 preceding 12 months; and
6-16 (F) the total fund-raising costs during the
6-17 preceding 12 months, computed pursuant to generally accepted
6-18 accounting principles;
6-19 (10) a copy of the charitable organization's most
6-20 recently filed Internal Revenue Service Form 990 and other federal
6-21 tax returns, including all supplements, amendments, and attachments
6-22 to those returns and requests for extensions to file those returns
6-23 or, if the charitable organization does not file federal tax
6-24 returns:
6-25 (A) a statement as to the reason none is filed;
7-1 and
7-2 (B) the charitable organization's most recent
7-3 financial statements, including audited financial statements, if
7-4 any have been prepared; and
7-5 (11) a sworn statement verifying that the information
7-6 contained in the registration statement and all attachments to the
7-7 statement are true, correct, and complete to the best of the
7-8 affiant's knowledge.
7-9 (b) A charitable organization shall file its initial
7-10 registration statement before the 10th working day preceding the
7-11 date on which the organization begins telephone solicitation in
7-12 this state.
7-13 (c) Registration expires on the 15th day of the fifth month
7-14 after the last day of a charitable organization's fiscal year.
7-15 Renewal registration statements shall be filed on the same forms
7-16 required for initial registration statements and must include the
7-17 name and employer identification number of the charitable
7-18 organization and any changes to the information previously
7-19 submitted to the attorney general. For items on which there is no
7-20 change from the previous year's registration statement, "no change"
7-21 may be indicated.
7-22 (d) A filing fee not to exceed $50 must accompany the
7-23 initial registration statement. A $50 filing fee must accompany
7-24 all renewal registration statements.
7-25 (e) The registration statements shall be submitted on forms
8-1 prescribed or approved by the attorney general.
8-2 SECTION 7. NOTIFICATION OF NONCOMPLIANCE. (a) A charitable
8-3 organization that is not in compliance with this Act shall be
8-4 notified of noncompliance by the attorney general by first class
8-5 mail at the organization's last reported address. Noncompliance
8-6 includes failure to file any documents required by this Act or the
8-7 filing of incomplete or inaccurate documents.
8-8 (b) A charitable organization violates this Act if the
8-9 organization:
8-10 (1) fails to file complete documents within 30 days
8-11 after the date the notice required by Subsection (a) of this
8-12 section has been mailed; or
8-13 (2) knowingly files materially inaccurate documents.
8-14 SECTION 8. RECORDKEEPING; AUDIT POWERS OF ATTORNEY GENERAL.
8-15 (a) Each charitable organization required to file a registration
8-16 statement shall keep true books and records as to its activities
8-17 within this state in a form to enable it to accurately provide the
8-18 information required by this Act. The books and records shall be
8-19 retained for a period of at least three years after the end of the
8-20 period to which the registration statement relates. All books and
8-21 records of a charitable organization shall be made available for
8-22 inspection and copying by authorized personnel of the attorney
8-23 general on written request by authorized personnel of the attorney
8-24 general.
8-25 (b) A charitable organization shall make available the
9-1 information requested by authorized personnel of the attorney
9-2 general at the organization's principal place of business within 10
9-3 working days of the date of the request, or at a time and place as
9-4 may be agreed.
9-5 (c) The authority established by this section is in addition
9-6 to other statutory or common law audit or investigative authority
9-7 of the attorney general.
9-8 SECTION 9. USE OF FEES. All fees collected by the attorney
9-9 general under this Act are dedicated for use by the attorney
9-10 general during the biennium of receipt to administer this Act, to
9-11 enforce this Act, and to educate the public about this Act and
9-12 charitable organizations and solicitations generally.
9-13 SECTION 10. REGISTRATION DOES NOT IMPLY ENDORSEMENT.
9-14 Registration under this Act does not imply endorsement by this
9-15 state or the attorney general, and charitable organizations are
9-16 prohibited from stating or implying to the contrary.
9-17 SECTION 11. REMEDIES. (a) The attorney general may
9-18 institute an action for failure to fully and accurately comply with
9-19 this Act and may obtain injunctive relief to restrain a person from
9-20 continuing a violation, cancellation or suspension of the
9-21 registration, an order restraining the person from doing business
9-22 in this state while violating this Act, a civil penalty of not more
9-23 than $25,000 per violation, or injunctive relief and a civil
9-24 penalty. A person who violates an injunction issued under this
9-25 section is liable to the state for a civil penalty of not less than
10-1 $100,000.
10-2 (b) The remedies authorized by this Act are not exclusive
10-3 but are in addition to any other procedure or remedy provided for
10-4 by other statutory or common law.
10-5 (c) In any proceeding successfully prosecuted by the
10-6 attorney general under this Act, the court may allow the attorney
10-7 general to recover civil penalties and the reasonable costs,
10-8 expenses, and attorney's fees incurred in bringing the suit.
10-9 SECTION 12. DEDICATION OF FEES AND CIVIL PENALTIES. In
10-10 addition to other money, all fees assessed under this Act and all
10-11 recovered expenses incurred in obtaining injunctive relief and
10-12 administrative and civil penalties authorized by this Act are
10-13 dedicated for use by the attorney general in enforcing and
10-14 administering this Act. Recovered expenses include investigative
10-15 costs, witness fees, attorney's fees, and deposition expenses.
10-16 SECTION 13. VENUE. An action under this Act shall be
10-17 brought in a court of competent jurisdiction in Travis County, in
10-18 the county in which the charitable organization has its principal
10-19 place of business or has a fixed and established place of business
10-20 at the time the suit is brought, or in the county in which
10-21 solicitation occurred.
10-22 SECTION 14. RULES. The attorney general may adopt rules,
10-23 procedures, and forms that are consistent with and necessary for
10-24 the proper administration and enforcement of this Act.
10-25 SECTION 15. TRANSITION. (a) The changes in law made by
11-1 this Act apply only to a solicitation that takes place on or after
11-2 the effective date of this Act. A solicitation that takes place
11-3 before the effective date of this Act is governed by the law in
11-4 effect on the date of the solicitation, and the former law is
11-5 continued in effect for that purpose.
11-6 (b) A charitable organization engaging in telephone
11-7 solicitation in this state on the effective date of this Act that
11-8 is required to register under Section 6 of this Act shall file the
11-9 organization's initial registration statement required under that
11-10 section before January 1, 1998.
11-11 SECTION 16. EFFECTIVE DATE. This Act takes effect September
11-12 1, 1997.
11-13 SECTION 17. EMERGENCY. The importance of this legislation
11-14 and the crowded condition of the calendars in both houses create an
11-15 emergency and an imperative public necessity that the
11-16 constitutional rule requiring bills to be read on three several
11-17 days in each house be suspended, and this rule is hereby suspended.