1-1 By: Barrientos S.B. No. 1554
1-2 (In the Senate - Filed March 9, 2001; March 14, 2001, read
1-3 first time and referred to Committee on Intergovernmental
1-4 Relations; May 7, 2001, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 5, Nays 1;
1-6 May 7, 2001, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1554 By: Lindsay
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to an exemption from ad valorem taxation for certain
1-11 organizations engaged primarily in performing charitable functions.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
1-14 adding Section 11.184 to read as follows:
1-15 Sec. 11.184. ORGANIZATIONS ENGAGED PRIMARILY IN PERFORMING
1-16 CHARITABLE FUNCTIONS. (a) In this section:
1-17 (1) "Local charitable organization" means an
1-18 organization that:
1-19 (A) is a chapter, subsidiary, or branch of a
1-20 statewide charitable organization; and
1-21 (B) with respect to its activities in this
1-22 state, is engaged primarily in performing functions listed in
1-23 Section 11.18(d).
1-24 (2) "Qualified charitable organization" means a
1-25 statewide charitable organization or a local charitable
1-26 organization.
1-27 (3) "Statewide charitable organization" means a
1-28 statewide organization that, with respect to its activities in this
1-29 state, is engaged primarily in performing functions listed in
1-30 Section 11.18(d).
1-31 (b) A qualified charitable organization is entitled to an
1-32 exemption from taxation of:
1-33 (1) the buildings and other real property and the
1-34 tangible personal property that:
1-35 (A) are owned by the organization; and
1-36 (B) except as permitted by Subsection (c), are
1-37 used exclusively by the organization and other organizations
1-38 eligible for an exemption from taxation under this section or
1-39 Section 11.18; and
1-40 (2) the real property owned by the organization
1-41 consisting of:
1-42 (A) an incomplete improvement that:
1-43 (i) is under active construction or other
1-44 physical preparation; and
1-45 (ii) is designed and intended to be used
1-46 exclusively by the organization and other organizations eligible
1-47 for an exemption from taxation under this section or Section 11.18;
1-48 and
1-49 (B) the land on which the incomplete improvement
1-50 is located that will be reasonably necessary for the use of the
1-51 improvement by the organization and other organizations eligible
1-52 for an exemption from taxation under this section or Section 11.18.
1-53 (c) Use of exempt property by persons who are not charitable
1-54 organizations eligible for an exemption from taxation under this
1-55 section or Section 11.18 does not result in the loss of an
1-56 exemption authorized by this section if the use is incidental to
1-57 use by those charitable organizations and limited to activities
1-58 that benefit the charitable organization that owns or uses the
1-59 property.
1-60 (d) Before an organization may submit an application for an
1-61 exemption under this section, the organization must apply to the
1-62 comptroller for a determination of whether the organization is
1-63 engaged primarily in performing functions listed in Section
1-64 11.18(d) and is eligible for an exemption under this section. In
2-1 making the determination, the comptroller shall consider:
2-2 (1) whether the organization is recognized by the
2-3 Internal Revenue Service as a tax-exempt organization under Section
2-4 501, Internal Revenue Code of 1986, as amended;
2-5 (2) whether the organization holds a letter of
2-6 exemption issued by the comptroller certifying that the
2-7 organization is entitled to issue an exemption certificate under
2-8 Section 151.310;
2-9 (3) whether the charter or bylaws of the organization
2-10 require charitable work or public service;
2-11 (4) the amount of monetary support contributed or
2-12 in-kind charitable or public service performed by the organization
2-13 in proportion to:
2-14 (A) the organization's operating expenses;
2-15 (B) the amount of dues received by the
2-16 organization; and
2-17 (C) the taxes imposed on the organization's
2-18 property during the preceding year if the property was taxed in
2-19 that year or, if the property was exempt from taxation in that
2-20 year, the taxes that would have been imposed on the property if it
2-21 had not been exempt from taxation; and
2-22 (5) any other factor the comptroller considers
2-23 relevant.
2-24 (e) Not later than the 30th day after the date the
2-25 organization submits an application under Subsection (d), the
2-26 comptroller may request that the organization provide additional
2-27 information the comptroller determines necessary. Not later than
2-28 the 90th day after the date the application is submitted or, if
2-29 applicable, the date the additional information is provided, the
2-30 comptroller shall issue a letter to the organization stating the
2-31 comptroller's determination.
2-32 (f) The comptroller shall:
2-33 (1) adopt rules to implement this section;
2-34 (2) prescribe the form of an application for a
2-35 determination letter under this section; and
2-36 (3) charge an organization a reasonable fee not to
2-37 exceed the administrative costs of processing a request, making a
2-38 determination, and issuing a determination letter under this
2-39 section.
2-40 (g) An organization applying for an exemption under this
2-41 section shall submit with the application a copy of the
2-42 determination letter issued by the comptroller under Subsection
2-43 (e). The chief appraiser shall accept the copy of the letter as
2-44 conclusive evidence as to whether the organization engages
2-45 primarily in performing charitable functions and is eligible for an
2-46 exemption under this section.
2-47 (h) A property may not be exempted under Subsection (b)(2)
2-48 for more than three years.
2-49 (i) For purposes of Subsection (b)(2), an incomplete
2-50 improvement is under physical preparation if the charitable
2-51 organization has:
2-52 (1) engaged in architectural or engineering work, soil
2-53 testing, land clearing activities, or site improvement work
2-54 necessary for the construction of the improvement; or
2-55 (2) conducted an environmental or land use study
2-56 relating to the construction of the improvement.
2-57 (j) An exemption under this section expires at the end of
2-58 the fifth tax year after the year in which the exemption is
2-59 granted. To continue to receive an exemption under this section
2-60 after that year, the organization must obtain a new determination
2-61 letter and reapply for the exemption.
2-62 SECTION 2. Subsection (b), Section 11.43, Tax Code, is
2-63 amended to read as follows:
2-64 (b) Except as provided by Subsection (c) and by Sections
2-65 11.184 and [Section] 11.436, a person required to apply for an
2-66 exemption must apply each year the person claims entitlement to the
2-67 exemption.
2-68 SECTION 3. (a) This Act takes effect September 1, 2001.
2-69 (b) An organization may not receive an exemption under
3-1 Section 11.184, Tax Code, as added by this Act, before the tax year
3-2 that begins January 1, 2002.
3-3 * * * * *