Texas House Bill HB1269

Texas 2009 - 81st Regular

Caption

Relating to the exemption from ad valorem taxation of property owned by certain organizations engaged primarily in performing charitable functions.

Impact

The bill is significant because it facilitates the financial operations of charitable organizations by enabling them to receive property tax exemptions through associated corporations. This could relieve these organizations of certain financial burdens, allowing them to focus more on their charitable missions. Furthermore, the new provisions introduce a mechanism where corporate entities can partner with charitable organizations for tax benefits, which may streamline the process for organizations that rely heavily on property usage for their functions.

Summary

House Bill 1269 proposes amendments to the Tax Code of Texas regarding the exemption from ad valorem taxation for properties owned by certain charitable organizations. Specifically, the bill aims to broaden the tax exemption provisions provided for organizations engaged primarily in charitable functions. It introduces new provisions that allow corporations, even if not qualified as charitable organizations themselves, to claim tax exemptions for property they hold title to, provided that they pass the income generated to a qualified charitable organization.

Contention

While the goal of supporting charitable work is widely accepted, there may be concerns about the implementation of this law. Critics might argue that permitting corporations to benefit from tax exemptions—especially those not directly recognized as charitable—can lead to misuse of the exemption provisions. Additionally, there might be apprehensions related to the transparency of income transfers and whether this could inadvertently diminish state tax revenues.

Notable_points

Another noteworthy aspect of HB1269 is the requirement for corporations to obtain a new determination letter from the comptroller every five years to maintain their tax exemption status. This provision introduces an accountability element, requiring that the relationship between the corporation and the charitable organization remains active and consistent with the law. The bill also sets an effective date of January 1, 2010, for any taxes imposed for tax years starting after this date, effectively applying the new provisions in a timely manner.