1-1 By: Chisum, et al. (Senate Sponsor - Barrientos) H.B. No. 1689
1-2 (In the Senate - Received from the House May 9, 2001;
1-3 May 10, 2001, read first time and referred to Committee on
1-4 Intergovernmental Relations; May 11, 2001, reported favorably by
1-5 the following vote: Yeas 5, Nays 0; May 11, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to an exemption from ad valorem taxation for certain
1-9 organizations engaged primarily in performing charitable functions.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
1-12 adding Section 11.184 to read as follows:
1-13 Sec. 11.184. ORGANIZATIONS ENGAGED PRIMARILY IN PERFORMING
1-14 CHARITABLE FUNCTIONS. (a) In this section:
1-15 (1) "Local charitable organization" means an
1-16 organization that:
1-17 (A) is a chapter, subsidiary, or branch of a
1-18 statewide charitable organization; and
1-19 (B) with respect to its activities in this
1-20 state, is engaged primarily in performing functions listed in
1-21 Section 11.18(d).
1-22 (2) "Qualified charitable organization" means a
1-23 statewide charitable organization or a local charitable
1-24 organization.
1-25 (3) "Statewide charitable organization" means a
1-26 statewide organization that, with respect to its activities in this
1-27 state, is engaged primarily in performing functions listed in
1-28 Section 11.18(d).
1-29 (b) A qualified charitable organization is entitled to an
1-30 exemption from taxation of:
1-31 (1) the buildings and other real property and the
1-32 tangible personal property that:
1-33 (A) are owned by the organization; and
1-34 (B) except as permitted by Subsection (c), are
1-35 used exclusively by the organization and other organizations
1-36 eligible for an exemption from taxation under this section or
1-37 Section 11.18; and
1-38 (2) the real property owned by the organization
1-39 consisting of:
1-40 (A) an incomplete improvement that:
1-41 (i) is under active construction or other
1-42 physical preparation; and
1-43 (ii) is designed and intended to be used
1-44 exclusively by the organization and other organizations eligible
1-45 for an exemption from taxation under this section or Section 11.18;
1-46 and
1-47 (B) the land on which the incomplete improvement
1-48 is located that will be reasonably necessary for the use of the
1-49 improvement by the organization and other organizations eligible
1-50 for an exemption from taxation under this section or Section 11.18.
1-51 (c) Use of exempt property by persons who are not charitable
1-52 organizations eligible for an exemption from taxation under this
1-53 section or Section 11.18 does not result in the loss of an
1-54 exemption authorized by this section if the use is incidental to
1-55 use by those charitable organizations and limited to activities
1-56 that benefit the charitable organization that owns or uses the
1-57 property.
1-58 (d) Before an organization may submit an application for an
1-59 exemption under this section, the organization must apply to the
1-60 comptroller for a determination of whether the organization is
1-61 engaged primarily in performing functions listed in Section
1-62 11.18(d) and is eligible for an exemption under this section. In
1-63 making the determination, the comptroller shall consider:
1-64 (1) whether the organization is recognized by the
2-1 Internal Revenue Service as a tax-exempt organization under Section
2-2 501 of the Internal Revenue Code of 1986;
2-3 (2) whether the organization holds a letter of
2-4 exemption issued by the comptroller certifying that the
2-5 organization is entitled to issue an exemption certificate under
2-6 Section 151.310;
2-7 (3) whether the charter or bylaws of the organization
2-8 require charitable work or public service;
2-9 (4) the amount of monetary support contributed or
2-10 in-kind charitable or public service performed by the organization
2-11 in proportion to:
2-12 (A) the organization's operating expenses;
2-13 (B) the amount of dues received by the
2-14 organization; and
2-15 (C) the taxes imposed on the organization's
2-16 property during the preceding year if the property was taxed in
2-17 that year or, if the property was exempt from taxation in that
2-18 year, the taxes that would have been imposed on the property if it
2-19 had not been exempt from taxation; and
2-20 (5) any other factor the comptroller considers
2-21 relevant.
2-22 (e) Not later than the 30th day after the date the
2-23 organization submits an application under Subsection (d), the
2-24 comptroller may request that the organization provide additional
2-25 information the comptroller determines necessary. Not later than
2-26 the 90th day after the date the application is submitted or, if
2-27 applicable, the date the additional information is provided, the
2-28 comptroller shall issue a letter to the organization stating the
2-29 comptroller's determination.
2-30 (f) The comptroller may:
2-31 (1) adopt rules to implement this section;
2-32 (2) prescribe the form of an application for a
2-33 determination letter under this section; and
2-34 (3) charge an organization a fee not to exceed the
2-35 administrative costs of processing a request, making a
2-36 determination, and issuing a determination letter under this
2-37 section.
2-38 (g) An organization applying for an exemption under this
2-39 section shall submit with the application a copy of the
2-40 determination letter issued by the comptroller under Subsection
2-41 (e). The chief appraiser shall accept the copy of the letter as
2-42 conclusive evidence as to whether the organization engages
2-43 primarily in performing charitable functions and is eligible for an
2-44 exemption under this section.
2-45 (h) A property may not be exempted under Subsection (b)(2)
2-46 for more than three years.
2-47 (i) For purposes of Subsection (b)(2), an incomplete
2-48 improvement is under physical preparation if the charitable
2-49 organization has:
2-50 (1) engaged in architectural or engineering work, soil
2-51 testing, land clearing activities, or site improvement work
2-52 necessary for the construction of the improvement; or
2-53 (2) conducted an environmental or land use study
2-54 relating to the construction of the improvement.
2-55 (j) An exemption under this section expires at the end of
2-56 the fifth tax year after the year in which the exemption is
2-57 granted. To continue to receive an exemption under this section
2-58 after that year, the organization must obtain a new determination
2-59 letter and reapply for the exemption.
2-60 SECTION 2. Section 11.43(b), Tax Code, is amended to read as
2-61 follows:
2-62 (b) Except as provided by Subsection (c) and by Sections
2-63 11.184 and [Section] 11.436, a person required to apply for an
2-64 exemption must apply each year the person claims entitlement to the
2-65 exemption.
2-66 SECTION 3. (a) This Act takes effect September 1, 2001.
2-67 (b) An organization may not receive an exemption under
2-68 Section 11.184, Tax Code, as added by this Act, before the tax year
2-69 that begins January 1, 2002.
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