Articles of Interest
Nonprofit and Tax-Exempt Organizations
- This chart will be helpful to persons thinking of organizing a tax-exempt organization; whether a 501(c) (3) organization or other tax exempt organization. The chart gives a summary of the steps and a description of the steps along with a time estimate of each step.
- Individuals thinking of starting a nonprofit organization may want to purchase a copy of Starting and Managing a Nonprofit Organization: A Legal Guide (Wiley Desktop Editions) by Bruce R. Hopkins (Feb. 9, 2009).
- Generally speaking, Section 501(c)(3) organizations that are organized or operated in Texas are not subject to the Texas Open Meetings Act nor the Texas Public Information Act, sometimes referred to as the Open Records Act. Section 501 (c)(3) organizations that receive public funds may be subject to the Texas Public Information Act.
- Yet, all Texas Section 501(c)(3) organizations whether public charities or private foundations, may be subject to limited open meetings or open records requirements. These requirements, to the extent that they exist, mostly come from state law, but Federal law also imposes limited meeting and more expansive open records rules.
- You can find more information about the Texas Open Meetings Act and the Texas Public Information Act on the Texas Attorney General’s website at www.oag.state.tx.us/ under “Open Government”.
- Like most legal and regulatory issues applicable to tax-exempt organizations, the conduct of a raffle is governed both by the Federal Internal Revenue Code and its regulations, as administered by the IRS, and by Texas state law as administered by the Texas Attorney General. Compliance with just one or the other will not be sufficient, as a charitable raffle must comply with the requirements of both. Moreover, failure to comply with Texas state law may result in increased regulatory requirements and increased taxes and penalties owed to the IRS.
- Whether a large prize or a small prize is awarded in the raffle, you must comply with Texas state law for raffles, but the Federal tax rules will vary depending upon the value of the prize.
To mail tickets, you must comply with special requirements of the United States Postal Service.
- Updated in October 2011 and April 2012, with changes from the 2011 Texas Legislative Session.
- Real and tangible personal property that the State of Texas has jurisdiction to tax is taxable unless exempt by law. Recognition of exemption under IRC Sec. 501(c)(3) does not automatically translate into property tax exemption under the Texas Tax Code. To obtain a property tax exemption, the exempt organization must:
- Be a qualified organization as set forth in a section of the Texas Tax Code;
- Own the type of property that is specified as exempt; and
- Make proper application for the property to be exempt.
- A failure to meet any of these requirements may result in loss of exemption and taxation.
- This article discusses property tax exemptions for Section 501(c)(3) organizations.
- Gift acceptance by charitable organizations involve a written gift acceptance policy addressing gift asset types, entities and trusts through which gifts can be conveyed, valuation for tax purposes, as well as other considerations.
- This article discusses forming and maintaining gift acceptance policies.