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) An exemption under this section may not be granted
1-24 unless the exemption is adopted either:
2-1 (1) by the governing body of the taxing unit; or
2-2 (2) by a favorable vote of a majority of the qualified
2-3 voters of the taxing unit at an election called by the governing
2-4 body of a taxing unit, and the governing body shall call the
2-5 election on the petition of at least 20 percent of the number of
2-6 qualified voters who voted in the preceding election of the taxing
2-7 unit.
2-8 (c) If approved under Subsection (b), a qualified charitable
2-9 organization is entitled to an exemption from taxation of:
2-10 (1) the buildings and other real property and the
2-11 tangible personal property that:
2-12 (A) are owned by the organization; and
2-13 (B) except as permitted by Subsection (d), are
2-14 used exclusively by the organization and other organizations
2-15 eligible for an exemption from taxation under this section or
2-16 Section 11.18; and
2-17 (2) the real property owned by the organization
2-18 consisting of:
2-19 (A) an incomplete improvement that:
2-20 (i) is under active construction or other
2-21 physical preparation; and
2-22 (ii) is designed and intended to be used
2-23 exclusively by the organization and other organizations eligible
2-24 for an exemption from taxation under this section or Section 11.18;
2-25 and
2-26 (B) the land on which the incomplete improvement
2-27 is located that will be reasonably necessary for the use of the
3-1 improvement by the organization and other organizations eligible
3-2 for an exemption from taxation under this section or Section 11.18.
3-3 (d) Use of exempt property by persons who are not charitable
3-4 organizations eligible for an exemption from taxation under this
3-5 section or Section 11.18 does not result in the loss of an
3-6 exemption authorized by this section if the use is incidental to
3-7 use by those charitable organizations and limited to activities
3-8 that benefit the charitable organization that owns or uses the
3-9 property.
3-10 (e) Before an organization may submit an application for an
3-11 exemption under this section, the organization must apply to the
3-12 comptroller for a determination of whether the organization is
3-13 engaged primarily in performing functions listed in Section
3-14 11.18(d) and is eligible for an exemption under this section. In
3-15 making the determination, the comptroller shall consider:
3-16 (1) whether the organization is recognized by the
3-17 Internal Revenue Service as a tax-exempt organization under Section
3-18 501 of the Internal Revenue Code of 1986;
3-19 (2) whether the organization holds a letter of
3-20 exemption issued by the comptroller certifying that the
3-21 organization is entitled to issue an exemption certificate under
3-22 Section 151.310;
3-23 (3) whether the charter or bylaws of the organization
3-24 require charitable work or public service;
3-25 (4) the amount of monetary support contributed or
3-26 in-kind charitable or public service performed by the organization
3-27 in proportion to:
4-1 (A) the organization's operating expenses;
4-2 (B) the amount of dues received by the
4-3 organization; and
4-4 (C) the taxes imposed on the organization's
4-5 property during the preceding year if the property was taxed in
4-6 that year or, if the property was exempt from taxation in that
4-7 year, the taxes that would have been imposed on the property if it
4-8 had not been exempt from taxation; and
4-9 (5) any other factor the comptroller considers
4-10 relevant.
4-11 (f) Not later than the 30th day after the date the
4-12 organization submits an application under Subsection (e), the
4-13 comptroller may request that the organization provide additional
4-14 information the comptroller determines necessary. Not later than
4-15 the 90th day after the date the application is submitted or, if
4-16 applicable, the date the additional information is provided, the
4-17 comptroller shall issue a letter to the organization stating the
4-18 comptroller's determination.
4-19 (g) The comptroller may:
4-20 (1) adopt rules to implement this section;
4-21 (2) prescribe the form of an application for a
4-22 determination letter under this section; and
4-23 (3) charge an organization a fee not to exceed the
4-24 administrative costs of processing a request, making a
4-25 determination, and issuing a determination letter under this
4-26 section.
4-27 (h) An organization applying for an exemption under this
5-1 section shall submit with the application a copy of the
5-2 determination letter issued by the comptroller under Subsection
5-3 (f). The chief appraiser shall accept the copy of the letter as
5-4 conclusive evidence as to whether the organization engages
5-5 primarily in performing charitable functions and is eligible for an
5-6 exemption under this section.
5-7 (i) A property may not be exempted under Subsection (c)(2)
5-8 for more than three years.
5-9 (j) For purposes of Subsection (c)(2), an incomplete
5-10 improvement is under physical preparation if the charitable
5-11 organization has:
5-12 (1) engaged in architectural or engineering work, soil
5-13 testing, land clearing activities, or site improvement work
5-14 necessary for the construction of the improvement; or
5-15 (2) conducted an environmental or land use study
5-16 relating to the construction of the improvement.
5-17 (k) An exemption under this section expires at the end of
5-18 the fifth tax year after the year in which the exemption is
5-19 granted. To continue to receive an exemption under this section
5-20 after that year, the organization must obtain a new determination
5-21 letter and reapply for the exemption.
5-22 SECTION 2. Section 11.43(b), Tax Code, is amended to read as
5-23 follows:
5-24 (b) Except as provided by Subsection (c) and by Sections
5-25 11.184 and [Section] 11.436, a person required to apply for an
5-26 exemption must apply each year the person claims entitlement to the
5-27 exemption.
6-1 SECTION 3. (a) This Act takes effect September 1, 2001.
6-2 (b) An organization may not receive an exemption under
6-3 Section 11.184, Tax Code, as added by this Act, before the tax year
6-4 that begins January 1, 2002.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1689 was passed by the House on May
8, 2001, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 1689 on May 25, 2001, by a non-record
vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1689 was passed by the Senate, with
amendments, on May 23, 2001, by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: __________________________
Date
__________________________
Governor