Texas 2009 - 81st Regular

Texas House Bill HB831 Compare Versions

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1	1	By: Taylor, Pea, Fletcher, Oliveira, H.B. No. 831
2	2	Sheffield, et al.
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the exemption from certain taxation of certain
8	8	organizations.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 11.18(d), Tax Code, as amended by
11	11	Chapters 1034 (H.B. 1742) and 1341 (S.B. 1908), Acts of the 80th
12	12	Legislature, Regular Session, 2007, is reenacted and amended to
13	13	read as follows:
14	14	(d) A charitable organization must be organized exclusively
15	15	to perform religious, charitable, scientific, literary, or
16	16	educational purposes and, except as permitted by Subsections (h)
17	17	and (l), engage exclusively in performing one or more of the
18	18	following charitable functions:
19	19	(1) providing medical care without regard to the
20	20	beneficiaries' ability to pay, which in the case of a nonprofit
21	21	hospital or hospital system means providing charity care and
22	22	community benefits in accordance with Section 11.1801;
23	23	(2) providing support or relief to orphans,
24	24	delinquent, dependent, or handicapped children in need of
25	25	residential care, abused or battered spouses or children in need of
26	26	temporary shelter, the impoverished, or victims of natural disaster
27	27	without regard to the beneficiaries' ability to pay;
28	28	(3) providing support without regard to the
29	29	beneficiaries' ability to pay to:
30	30	(A) elderly persons, including the provision of:
31	31	(i) recreational or social activities; and
32	32	(ii) facilities designed to address the
33	33	special needs of elderly persons; [,] or
34	34	(B) [to] the handicapped, including training and
35	35	employment under 41 U.S.C. Sections 46-48c:
36	36	(i) in the production of commodities; or
37	37	(ii) in the provision of services [without
38	38	regard to the beneficiaries' ability to pay];
39	39	(4) preserving a historical landmark or site;
40	40	(5) promoting or operating a museum, zoo, library,
41	41	theater of the dramatic or performing arts, or symphony orchestra
42	42	or choir;
43	43	(6) promoting or providing humane treatment of
44	44	animals;
45	45	(7) acquiring, storing, transporting, selling, or
46	46	distributing water for public use;
47	47	(8) answering fire alarms and extinguishing fires with
48	48	no compensation or only nominal compensation to the members of the
49	49	organization;
50	50	(9) promoting the athletic development of boys or
51	51	girls under the age of 18 years;
52	52	(10) preserving or conserving wildlife;
53	53	(11) promoting educational development through loans
54	54	or scholarships to students;
55	55	(12) providing halfway house services pursuant to a
56	56	certification as a halfway house by the parole [pardons and
57	57	paroles] division of the Texas Department of Criminal Justice;
58	58	(13) providing permanent housing and related social,
59	59	health care, and educational facilities for persons who are 62
60	60	years of age or older without regard to the residents' ability to
61	61	pay;
62	62	(14) promoting or operating an art gallery, museum, or
63	63	collection, in a permanent location or on tour, that is open to the
64	64	public;
65	65	(15) providing for the organized solicitation and
66	66	collection for distributions through gifts, grants, and agreements
67	67	to nonprofit charitable, education, religious, and youth
68	68	organizations that provide direct human, health, and welfare
69	69	services;
70	70	(16) performing biomedical or scientific research or
71	71	biomedical or scientific education for the benefit of the public;
72	72	(17) operating a television station that produces or
73	73	broadcasts educational, cultural, or other public interest
74	74	programming and that receives grants from the Corporation for
75	75	Public Broadcasting under 47 U.S.C. Section 396, as amended;
76	76	(18) providing housing for low-income and
77	77	moderate-income families, for unmarried individuals 62 years of age
78	78	or older, for handicapped individuals, and for families displaced
79	79	by urban renewal, through the use of trust assets that are
80	80	irrevocably and, pursuant to a contract entered into before
81	81	December 31, 1972, contractually dedicated on the sale or
82	82	disposition of the housing to a charitable organization that
83	83	performs charitable functions described by Subdivision (9);
84	84	(19) providing housing and related services to persons
85	85	who are 62 years of age or older in a retirement community, if the
86	86	retirement community provides independent living services,
87	87	assisted living services, and nursing services to its residents on
88	88	a single campus:
89	89	(A) without regard to the residents' ability to
90	90	pay; or
91	91	(B) in which at least four percent of the
92	92	retirement community's combined net resident revenue is provided in
93	93	charitable care to its residents;
94	94	(20) providing housing on a cooperative basis to
95	95	students of an institution of higher education if:
96	96	(A) the organization is exempt from federal
97	97	income taxation under Section 501(a), Internal Revenue Code of
98	98	1986, as amended, by being listed as an exempt entity under Section
99	99	501(c)(3) of that code;
100	100	(B) membership in the organization is open to all
101	101	students enrolled in the institution and is not limited to those
102	102	chosen by current members of the organization;
103	103	(C) the organization is governed by its members;
104	104	and
105	105	(D) the members of the organization share the
106	106	responsibility for managing the housing;
107	107	(21) acquiring, holding, and transferring unimproved
108	108	real property under an urban land bank demonstration program
109	109	established under Chapter 379C, Local Government Code, as or on
110	110	behalf of a land bank; [or]
111	111	(22) acquiring, holding, and transferring unimproved
112	112	real property under an urban land bank program established under
113	113	Chapter 379E, Local Government Code, as or on behalf of a land bank;
114	114	or
115	115	(23) providing access to affordable financial
116	116	products and services for underserved communities, if the
117	117	organization is:
118	118	(A) a certified community development financial
119	119	institution; and
120	120	(B) exempt from federal income taxation under
121	121	Section 501(a), Internal Revenue Code of 1986, as amended, by being
122	122	listed as an exempt entity under Section 501(c)(3) of that code.
123	123	SECTION 2. Section 11.184, Tax Code, is amended by amending
124	124	Subsection (c) and adding Subsections (l), (m), and (n) to read as
125	125	follows:
126	126	(c) A [If approved under Subsection (b), a] qualified
127	127	charitable organization is entitled to an exemption from taxation
128	128	of:
129	129	(1) the buildings and other real property and the
130	130	tangible personal property that:
131	131	(A) are owned by the organization; and
132	132	(B) except as permitted by Subsection (d), are
133	133	used exclusively by the organization and other organizations
134	134	eligible for an exemption from taxation under this section or
135	135	Section 11.18; and
136	136	(2) the real property owned by the organization
137	137	consisting of:
138	138	(A) an incomplete improvement that:
139	139	(i) is under active construction or other
140	140	physical preparation; and
141	141	(ii) is designed and intended to be used
142	142	exclusively by the organization and other organizations eligible
143	143	for an exemption from taxation under this section or Section 11.18;
144	144	and
145	145	(B) the land on which the incomplete improvement
146	146	is located that will be reasonably necessary for the use of the
147	147	improvement by the organization and other organizations eligible
148	148	for an exemption from taxation under this section or Section 11.18.
149	149	(l) Notwithstanding the other provisions of this section, a
150	150	corporation that is not a qualified charitable organization is
151	151	entitled to an exemption from taxation of property under this
152	152	section if:
153	153	(1) the corporation is exempt from federal income
154	154	taxation under Section 501(a), Internal Revenue Code of 1986, by
155	155	being listed as an exempt entity under Section 501(c)(2) of that
156	156	code;
157	157	(2) the corporation holds title to the property for,
158	158	collects income from the property for, and turns over the entire
159	159	amount of that income, less expenses, to a qualified charitable
160	160	organization; and
161	161	(3) the qualified charitable organization would
162	162	qualify for an exemption from taxation of the property under this
163	163	section if the qualified charitable organization owned the
164	164	property.
165	165	(m) Before a corporation described by Subsection (l) may
166	166	submit an application for an exemption under this section, the
167	167	qualified charitable organization for which the corporation holds
168	168	title to the property must apply to the comptroller for the
169	169	determination described by Subsection (e) with regard to the
170	170	qualified charitable organization. The application for the
171	171	determination must also include an application to the comptroller
172	172	for a determination of whether the corporation meets the
173	173	requirements of Subsections (l)(1) and (2). The corporation shall
174	174	submit with the application for an exemption under this section a
175	175	copy of the determination letter issued by the comptroller. The
176	176	chief appraiser shall accept the copy of the letter as conclusive
177	177	evidence of the matters described by Subsection (h) as well as of
178	178	whether the corporation meets the requirements of Subsections
179	179	(l)(1) and (2).
180	180	(n) Notwithstanding Subsection (k), in order for a
181	181	corporation to continue to receive an exemption under Subsection
182	182	(l) after the fifth tax year after the year in which the exemption
183	183	is granted, the qualified charitable organization for which the
184	184	corporation holds title to property must obtain a new determination
185	185	letter and the corporation must reapply for the exemption.
186	186	SECTION 3. Subchapter B, Chapter 11, Tax Code, is amended by
187	187	adding Section 11.231 to read as follows:
188	188	Sec. 11.231. NONPROFIT COMMUNITY BUSINESS ORGANIZATION
189	189	PROVIDING ECONOMIC DEVELOPMENT SERVICES TO LOCAL COMMUNITY. (a)
190	190	In this section, "nonprofit community business organization" means
191	191	an organization that meets the following requirements:
192	192	(1) the organization has been in existence for at
193	193	least the preceding five years;
194	194	(2) the organization:
195	195	(A) is a nonprofit corporation organized under
196	196	the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
197	197	Vernon's Texas Civil Statutes) or a nonprofit corporation formed
198	198	under the Texas Nonprofit Corporation Law, as described by Section
199	199	1.008, Business Organizations Code;
200	200	(B) is a nonprofit organization described by
201	201	Section 501(c)(6), Internal Revenue Code of 1986; and
202	202	(C) is not a statewide organization;
203	203	(3) for at least the preceding three years, the
204	204	organization has maintained a dues-paying membership of at least 50
205	205	members; and
206	206	(4) the organization:
207	207	(A) has a board of directors elected by the
208	208	members;
209	209	(B) does not compensate members of the board of
210	210	directors for service on the board;
211	211	(C) with respect to its activities in this state,
212	212	is engaged primarily in performing functions listed in Subsection
213	213	(d);
214	214	(D) is primarily supported by membership dues and
215	215	other income from activities substantially related to its primary
216	216	functions;
217	217	(E) does not employ a person who is required to
218	218	register under Section 305.003, Government Code; and
219	219	(F) is not, has not formed, and does not
220	220	financially support a political committee as defined by Section
221	221	251.001, Election Code.
222	222	(b) An association that qualifies as a nonprofit community
223	223	business organization as provided by this section is entitled to an
224	224	exemption from taxation of:
225	225	(1) the buildings and tangible personal property that:
226	226	(A) are owned by the nonprofit community business
227	227	organization; and
228	228	(B) except as permitted by Subsection (c), are
229	229	used exclusively by qualified nonprofit community business
230	230	organizations to perform their primary functions; and
231	231	(2) the real property owned by the nonprofit community
232	232	business organization consisting of:
233	233	(A) an incomplete improvement that:
234	234	(i) is under active construction or other
235	235	physical preparation; and
236	236	(ii) is designed and intended to be used
237	237	exclusively by qualified nonprofit community business
238	238	organizations; and
239	239	(B) the land on which the incomplete improvement
240	240	is located that will be reasonably necessary for the use of the
241	241	improvement by qualified nonprofit community business
242	242	organizations.
243	243	(c) Use of exempt property by persons who are not nonprofit
244	244	community business organizations qualified as provided by this
245	245	section does not result in the loss of an exemption authorized by
246	246	this section if the use is incidental to use by qualified nonprofit
247	247	community business organizations and limited to activities that
248	248	benefit the beneficiaries of the nonprofit community business
249	249	organizations that own or use the property.
250	250	(d) To qualify for an exemption under this section, a
251	251	nonprofit community business organization must be engaged
252	252	primarily in performing one or more of the following functions in
253	253	the local community:
254	254	(1) promoting the common economic interests of
255	255	commercial enterprises;
256	256	(2) improving the business conditions of one or more
257	257	types of business; or
258	258	(3) otherwise providing services to aid in economic
259	259	development.
260	260	(e) In this section, "building" includes the land that is
261	261	reasonably necessary for use of, access to, and ornamentation of
262	262	the building.
263	263	(f) A property may not be exempted under Subsection (b)(2)
264	264	for more than three years.
265	265	(g) For purposes of Subsection (b)(2), an incomplete
266	266	improvement is under physical preparation if the nonprofit
267	267	community business organization has:
268	268	(1) engaged in architectural or engineering work, soil
269	269	testing, land clearing activities, or site improvement work
270	270	necessary for the construction of the improvement; or
271	271	(2) conducted an environmental or land use study
272	272	relating to the construction of the improvement.
273	273	(h) Sections 11.42(d) and 11.43(c) apply to an exemption
274	274	under this section in the same manner as those subsections apply to
275	275	the exemptions described by those subsections.
276	276	(i) This section expires December 31, 2011.
277	277	SECTION 4. Subchapter B, Chapter 171, Tax Code, is amended
278	278	by adding Section 171.0615 to read as follows:
279	279	Sec. 171.0615. EXEMPTION--CERTAIN NONPROFIT LIMITED
280	280	LIABILITY COMPANIES. A limited liability company treated as a
281	281	disregarded entity for federal tax purposes under Treasury
282	282	Regulation Section 301.7701-3 whose sole member is exempted from
283	283	federal taxation under Section 501(a), Internal Revenue Code of
284	284	1986, by being listed as an exempt organization under Section
285	285	501(c)(3) of that code, is exempted from the franchise tax if the
286	286	limited liability company is formed solely to carry out the
287	287	charitable activities of the limited liability company's sole
288	288	member.
289	289	SECTION 5. Section 11.184(b), Tax Code, is repealed.
290	290	SECTION 6. This Act applies only to an ad valorem tax year
291	291	that begins on or after the effective date of this Act.
292	292	SECTION 7. To the extent of any conflict, this Act prevails
293	293	over another Act of the 81st Legislature, Regular Session, 2009,
294	294	relating to nonsubstantive additions to and corrections in enacted
295	295	codes.
296	296	SECTION 8. This Act takes effect January 1, 2010.