Primarily Charitable OrganizationNew Property Tax Exemption Brings Questions
Effective beginning in 2002, Tax Code Section 11.184 provides for a new local option property tax exemption for charitable organizations engaged primarily in charitable activities. This new exemption is at the discretion of local taxing units. The January STATEMENT included a detailed article about this new exemption.
As with any new law, questions arise. Some of the more common ones are listed below. For more information about this new exemption, contact the technical assistance hotline at the Comptroller’s Property Tax Division by calling 1-800-252-9121, option 2. In Austin, call 512/305-9999. Or, e-mail questions to firstname.lastname@example.org.
Q: Who would qualify for this new exemption?
A: This exemption is for those charitable organizations that are not exclusively performing charitable functions (as required by Tax Code Section 11.18). They perform primarily charitable functions. Some of these organizations include the Masons, Eastern Star and similar groups.
Q: Must local taxing units grant this new exemption?
A: No, this exemption is at the local option of each taxing unit.
Q: May the taxing unit pick and choose which primarily charitable organizations to be eligible for this property tax exemption?
A: No, the taxing units choice is adopt or not to adopt the exemption.
Q: How does the taxing unit adopt this exemption?
A: The taxing unit’s governing body may adopt this exemption, or the governing body may call for an election upon the petition by 20 percent of the qualified voters who voted in the unit’s last election. If by election, a favorable vote of a majority of the qualified voters of the taxing unit adopts the exemption.
Q: May the taxing unit adopt this exemption next year (for tax year 2003) and not for 2002?
A: Yes, the unit may adopt the exemption in any year.
Q: What is the deadline for adopting the exemption?
A: The Tax Code does not set forth a deadline to adopt the exemption.
However, Texas Constitution Article 3, Section 55, precludes a taxing unit from forgiving a tax liability. A tax liability is set once the taxing unit adopts the tax rate.
To allow for efficient and effective administration of this exemption, a taxing unit should adopt it as soon as possible in the tax year. Charitable organizations must apply for the exemption by April 30, although Tax Code Section 11.42(d) allows the chief appraiser to extend this deadline for up to 60 days for good cause.
Tax Code Section 6.08 requires a taxing unit to notify the appraisal district office within 30 days of adopting, amending, or repealing an exemption that the unit has the option to adopt or not.
Q: If the taxing unit adopts the exemption and an eligible organization receives a Comptroller determination letter that it is primarily charitable, does the organization automatically receive the property tax exemption?
A: No, the organization must apply for exemption with the county appraisal district where the property is located. The chief appraiser must determine if the organization uses that property for its charitable functions.