Southwest Chinese Baptist Church (SWCBC)
12525 Sugar Ridge Blvd., Stafford, Texas 77477
(281) 495-1511
A Non-Profit Organization in the State of Texas
Texas Taxes FAQ
Franchise tax
exemption:
- The Texas franchise tax is a tax on corporations, savings and loan associations,
limited liability companies, and banks for the privilege of doing business in Texas.
- Corporations pay a tax on the greater of net taxable capital or net taxable earned
surplus.
- If a franchise tax report is not filed by the due date, the
Comptroller may estimate
the tax due and send a jeopardy determination to the corporation. The jeopardy
determination becomes final in 20 days. Once the jeopardy becomes final, the
Comptroller will assess a 10 percent determination penalty and may file liens, freeze
bank accounts, seize assets or certify the account to the Texas Attorney General
for collection.
- A nonprofit corporation seeking franchise tax exemption as a religious organization must be an
organized group of people regularly meeting for the primary purpose of holding, conducting, and
sponsoring religious worship services according to the rites of their sect. The corporation must be
able to provide evidence of an established congregation showing that there is an organized group
of people regularly attending these services. A corporation that supports and encourages religion
as an incidental part of its overall purpose, or one whose general purpose is furthering religious
work or instilling its membership with a religious understanding, will not qualify for exemption
under this provision. No part of the net earnings of the organization may inure to the benefit of any
private party or individual other than as reasonable compensation for services rendered to the
organization. Some examples of corporations that do not meet the requirements for exemption
under this definition are conventions or associations of churches, evangelistic associations,
churches with membership consisting of family members only, missionary organizations, and
groups who meet for the purpose of holding prayer meetings, bible study or revivals. Although
these organizations do not qualify for exemption under this category of exemption as religious
organizations, they may qualify for the exemption under the Tax Code, Section 171.063, if they obtain an
exemption from the Internal Revenue Service (IRS) under Internal Revenue Code, Section 501(c).
Sales tax exemption:
- Exempt status is not favored under the laws of the State of Texas; thus, an
organization must show without doubt that it meets the strict requirements when
applying for an exemption from the state sales tax.
- Some organizations that cannot qualify for exempt status include professional
groups, certain mutual benefit or social groups, and political, trade, business, bar,
medical, homeowners or cemetery associations.
- Not all nonprofit organizations qualify for exemption from the Texas limited sales,
excise and use tax. Generally, business leagues, social groups, cemeteries,
homeowners associations and water supply corporations are not sales tax exempt
organizations.
- Religious Organization is defined as an organized group of people associating for the primary purpose of regularly
holding, conducting and sponsoring religious worship according to the rites of the
sect.
- An organization simply supporting and encouraging religion as an incidental purpose
or furthering religious work or teaching its membership religious understanding does
not qualify for exemption as a religious organization unless all of its other activities
and purposes fall within one or more of the other definitions of an exempt
organization (Charitable Organization; Educational Organization; Civic, Employee, Fraternal, Veterans, Consumer, Environmental and Voter
Education Groups; Chambers of Commerce, Convention and Tourist Agencies;
Youth Athletic Organization; Volunteer Fire Department and Government Entities.)
- All volunteer, nonprofit organizations may hold a tax-free annual banquet or other
food sale provided the affair is not professionally catered, not held in a restaurant,
hotel or similar place of business, not in competition with a retailer required to
collect tax, and the food is prepared, served and sold by members of the
organization. This exemption from the requirement to collect sales tax does not
extend to the sale of alcoholic beverages.
- Each chapter of an organization qualifying for sales tax exemption under the
religious, educational or charitable category and organizations exempted from sales
tax based on their IRS exemption under 501 (c)(3), (4), (8), (10) or (19) may hold
two one-day, tax-free sales or auctions each calendar year. For each one-day
sale or auction only, sales tax need not be collected on the sale of taxable items.
- To receive a letter of exemption from the
Comptroller, an organization must submit
to the Comptroller a written statement setting out in detail the nature of the activities
conducted or to be conducted, a copy of the articles of incorporation, a copy of its
bylaws or a copy of its constitution. A copy of a letter granting exemption from the
Internal Revenue Service under an authorized section of the code may be
acceptable in lieu of the preceding.
The Comptroller may require an organization to furnish additional information
including, but not limited to, documentation showing all services performed by the
organization and all income, assets and liabilities of the organization.
After a review of the material, the Comptroller will inform an organization in writing
if it qualifies for exemption.
Property tax exemption
Links about Nonprofits:
Information for Nonprofits
Meta-Index for Non-Profit Organizations
The Society For Nonprofit Organizations
Bob Bamont's Non-Profit Organizations
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Copyright
1995-2005 Southwest Chinese Baptist Church
Last modified: June 9, 2005
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