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