By Chisum, Counts, Hope, Turner of Harris, H.B. No. 1689
77R6698 SMH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to an exemption from ad valorem taxation for certain
1-3 organizations engaged primarily in performing charitable functions.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
1-6 adding Section 11.184 to read as follows:
1-7 Sec. 11.184. ORGANIZATIONS ENGAGED PRIMARILY IN PERFORMING
1-8 CHARITABLE FUNCTIONS. (a) In this section:
1-9 (1) "Local charitable organization" means an
1-10 organization that:
1-11 (A) is a chapter, subsidiary, or branch of a
1-12 statewide charitable organization; and
1-13 (B) with respect to its activities in this
1-14 state, is engaged primarily in performing functions listed in
1-15 Section 11.18(d).
1-16 (2) "Qualified charitable organization" means a
1-17 statewide charitable organization or a local charitable
1-18 organization.
1-19 (3) "Statewide charitable organization" means a
1-20 statewide organization that, with respect to its activities in this
1-21 state, is engaged primarily in performing functions listed in
1-22 Section 11.18(d).
1-23 (b) A qualified charitable organization is entitled to an
1-24 exemption from taxation of:
1-25 (1) the buildings and other real property and the
2-1 tangible personal property that:
2-2 (A) are owned by the organization; and
2-3 (B) except as permitted by Subsection (c), are
2-4 used exclusively by the organization and other organizations
2-5 eligible for an exemption from taxation under this section or
2-6 Section 11.18; and
2-7 (2) the real property owned by the organization
2-8 consisting of:
2-9 (A) an incomplete improvement that:
2-10 (i) is under active construction or other
2-11 physical preparation; and
2-12 (ii) is designed and intended to be used
2-13 exclusively by the organization and other organizations eligible
2-14 for an exemption from taxation under this section or Section 11.18;
2-15 and
2-16 (B) the land on which the incomplete improvement
2-17 is located that will be reasonably necessary for the use of the
2-18 improvement by the organization and other organizations eligible
2-19 for an exemption from taxation under this section or Section 11.18.
2-20 (c) Use of exempt property by persons who are not charitable
2-21 organizations eligible for an exemption from taxation under this
2-22 section or Section 11.18 does not result in the loss of an
2-23 exemption authorized by this section if the use is incidental to
2-24 use by those charitable organizations and limited to activities
2-25 that benefit the charitable organization that owns or uses the
2-26 property.
2-27 (d) Before an organization may submit an application for an
3-1 exemption under this section, the organization must apply to the
3-2 comptroller for a determination of whether the organization is
3-3 engaged primarily in performing functions listed in Section
3-4 11.18(d) and is eligible for an exemption under this section. In
3-5 making the determination, the comptroller shall consider:
3-6 (1) whether the organization is recognized by the
3-7 Internal Revenue Service as a tax-exempt organization under Section
3-8 501 of the Internal Revenue Code of 1986;
3-9 (2) whether the organization holds a letter of
3-10 exemption issued by the comptroller certifying that the
3-11 organization is entitled to issue an exemption certificate under
3-12 Section 151.310;
3-13 (3) whether the charter or bylaws of the organization
3-14 require charitable work or public service;
3-15 (4) the amount of monetary support contributed or
3-16 in-kind charitable or public service performed by the organization
3-17 in proportion to:
3-18 (A) the organization's operating expenses;
3-19 (B) the amount of dues received by the
3-20 organization; and
3-21 (C) the taxes imposed on the organization's
3-22 property during the preceding year if the property was taxed in
3-23 that year or, if the property was exempt from taxation in that
3-24 year, the taxes that would have been imposed on the property if it
3-25 had not been exempt from taxation; and
3-26 (5) any other factor the comptroller considers
3-27 relevant.
4-1 (e) Not later than the 30th day after the date the
4-2 organization submits an application under Subsection (d), the
4-3 comptroller may request that the organization provide additional
4-4 information the comptroller determines necessary. Not later than
4-5 the 90th day after the date the application is submitted or, if
4-6 applicable, the date the additional information is provided, the
4-7 comptroller shall issue a letter to the organization stating the
4-8 comptroller's determination.
4-9 (f) The comptroller may:
4-10 (1) adopt rules to implement this section;
4-11 (2) prescribe the form of an application for a
4-12 determination letter under this section; and
4-13 (3) charge an organization a fee not to exceed the
4-14 administrative costs of processing a request, making a
4-15 determination, and issuing a determination letter under this
4-16 section.
4-17 (g) An organization applying for an exemption under this
4-18 section shall submit with the application a copy of the
4-19 determination letter issued by the comptroller under Subsection
4-20 (e). The chief appraiser shall accept the copy of the letter as
4-21 conclusive evidence as to whether the organization engages
4-22 primarily in performing charitable functions and is eligible for an
4-23 exemption under this section.
4-24 (h) A property may not be exempted under Subsection (b)(2)
4-25 for more than three years.
4-26 (i) For purposes of Subsection (b)(2), an incomplete
4-27 improvement is under physical preparation if the charitable
5-1 organization has:
5-2 (1) engaged in architectural or engineering work, soil
5-3 testing, land clearing activities, or site improvement work
5-4 necessary for the construction of the improvement; or
5-5 (2) conducted an environmental or land use study
5-6 relating to the construction of the improvement.
5-7 (j) An exemption under this section expires at the end of
5-8 the fifth tax year after the year in which the exemption is
5-9 granted. To continue to receive an exemption under this section
5-10 after that year, the organization must obtain a new determination
5-11 letter and reapply for the exemption.
5-12 SECTION 2. Section 11.43(b), Tax Code, is amended to read as
5-13 follows:
5-14 (b) Except as provided by Subsection (c) and by Sections
5-15 11.184 and [Section] 11.436, a person required to apply for an
5-16 exemption must apply each year the person claims entitlement to the
5-17 exemption.
5-18 SECTION 3. (a) This Act takes effect September 1, 2001.
5-19 (b) An organization may not receive an exemption under
5-20 Section 11.184, Tax Code, as added by this Act, before the tax year
5-21 that begins January 1, 2002.