By: Barrientos S.B. No. 1554
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
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 organization that:
1-10 (A) is a chapter, subsidiary, or branch of a statewide charitable
1-11 organization; and
1-12 (B) with respect to its activities in this state, is engaged
1-13 primarily in performing functions listed in Section 11.18(d).
1-14 (2) "Qualified charitable organization" means a statewide
1-15 charitable organization or a local charitable organization.
1-16 (3) "Statewide charitable organization" means a statewide
1-17 organization that, with respect to its activities in this state, is
1-18 engaged primarily in performing functions listed in Section
1-19 11.18(d).
1-20 (b) A qualified charitable organization is entitled to an
1-21 exemption from taxation of:
1-22 (1) the buildings and other real property and the tangible
1-23 personal property that:
2-1 (A) are owned by the organization; and
2-2 (B) except as permitted by Subsection (c), are used exclusively by
2-3 the organization and other organizations eligible for an exemption
2-4 from taxation under this section or Section 11.18; and
2-5 (2) the real property owned by the organization consisting of:
2-6 (A) an incomplete improvement that:
2-7 (i) is under active construction or other physical preparation;
2-8 and
2-9 (ii) is designed and intended to be used exclusively by the
2-10 organization and other organizations eligible for an exemption from
2-11 taxation under this section or Section 11.18; and
2-12 (B) the land on which the incomplete improvement is located that
2-13 will be reasonably necessary for the use of the improvement by the
2-14 organization and other organizations eligible for an exemption from
2-15 taxation under this section or Section 11.18.
2-16 (c) Use of exempt property by persons who are not charitable
2-17 organizations eligible for an exemption from taxation under this
2-18 section or Section 11.18 does not result in the loss of an
2-19 exemption authorized by this section if the use is incidental to
2-20 use by those charitable organizations and limited to activities
2-21 that benefit the charitable organization that owns or uses the
2-22 property.
2-23 (d) Before an organization may submit an application for an
2-24 exemption under this section, the organization must apply to the
2-25 comptroller for a determination of whether the organization is
2-26 engaged primarily in performing functions listed in Section
3-1 11.18(d) and is eligible for an exemption under this section. In
3-2 making the determination, the comptroller shall consider:
3-3 (1) whether the organization is recognized by the Internal Revenue
3-4 Service as a tax-exempt organization under Section 501 of the
3-5 Internal Revenue Code of 1986;
3-6 (2) whether the organization holds a letter of exemption issued by
3-7 the comptroller certifying that the organization is entitled to
3-8 issue an exemption certificate under Section 151.310;
3-9 (3) whether the charter or bylaws of the organization require
3-10 charitable work or public service;
3-11 (4) the amount of monetary support contributed or in-kind
3-12 charitable or public service performed by the organization in
3-13 proportion to:
3-14 (A) the organization's operating expenses;
3-15 (B) the amount of dues received by the organization; and
3-16 (C) the taxes imposed on the organization's property during the
3-17 preceding year if the property was taxed in that year or, if the
3-18 property was exempt from taxation in that year, the taxes that
3-19 would have been imposed on the property if it had not been exempt
3-20 from taxation; and
3-21 (5) any other factor the comptroller considers relevant.
3-22 (e) Not later than the 30th day after the date the organization
3-23 submits an application under Subsection (d), the comptroller may
3-24 request that the organization provide additional information the
3-25 comptroller determines necessary. Not later than the 90th day
3-26 after the date the application is submitted or, if applicable, the
4-1 date the additional information is provided, the comptroller shall
4-2 issue a letter to the organization stating the comptroller's
4-3 determination.
4-4 (f) The comptroller may:
4-5 (1) adopt rules to implement this section;
4-6 (2) prescribe the form of an application for a determination letter
4-7 under this section; and
4-8 (3) charge an organization a fee not to exceed the administrative
4-9 costs of processing a request, making a determination, and issuing
4-10 a determination letter under this section.
4-11 (g) An organization applying for an exemption under this section
4-12 shall submit with the application a copy of the determination
4-13 letter issued by the comptroller under Subsection (e). The chief
4-14 appraiser shall accept the copy of the letter as conclusive
4-15 evidence as to whether the organization engages primarily in
4-16 performing charitable functions and is eligible for an exemption
4-17 under this section.
4-18 (h) A property may not be exempted under Subsection (b)(2) for
4-19 more than three years.
4-20 (i) For purposes of Subsection (b)(2), an incomplete improvement
4-21 is under physical preparation if the charitable organization has:
4-22 (1) engaged in architectural or engineering work, soil testing,
4-23 land clearing activities, or site improvement work necessary for
4-24 the construction of the improvement; or
4-25 (2) conducted an environmental or land use study relating to the
4-26 construction of the improvement.
5-1 (j) An exemption under this section expires at the end of the
5-2 fifth tax year after the year in which the exemption is granted.
5-3 To continue to receive an exemption under this section after that
5-4 year, the organization must obtain a new determination letter and
5-5 reapply for the exemption.
5-6 SECTION 2. Section 11.43(b), Tax Code, is amended to read as
5-7 follows:
5-8 (b) Except as provided by Subsection (c) and by Sections 11.184
5-9 and [Section] 11.436, a person required to apply for an exemption
5-10 must apply each year the person claims entitlement to the
5-11 exemption.
5-12 SECTION 3. (a) This Act takes effect September 1, 2001.
5-13 (b) An organization may not receive an exemption under Section
5-14 11.184, Tax Code, as added by this Act, before the tax year that
5-15 begins January 1, 2002.