Southwest Chinese Baptist Church (SWCBC)

A Non-Profit Organization in the State of Texas

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:

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