| (B) IRS documents. If an organization is applying for
exemption based on its federal exempt status under IRC, §501(c)(3),
(4), (8), (10), or (19), the organization must provide copies of all
pages of its IRS determination letter or group exemption ruling letter
and include any caveat or addendum that applies. If the original determination
letter or group exemption ruling letter is more than four years old,
the organization must also include a copy of a recent letter from
the IRS to confirm the exemption is still valid. A nonprofit organization
that claims exemption under a parent's exemption must provide a copy
of the parent organization's IRS group exemption ruling letter and
a letter from the parent organization that states the applicant nonprofit
organization is a subordinate covered by the parent organization's
group exemption.
(3) The comptroller may require an organization to
furnish additional information to further clarify the organization's
overall purpose and activities to establish the claimed exemption.
For example, the comptroller may request a written statement that
details the nature of the activities conducted, or to be conducted,
financial information, and documentation that shows all services the
organization performs.
(4) After a review of the material, the comptroller
will inform an organization in writing if it qualifies for exemption.
(5) The comptroller or an authorized representative
of the comptroller may audit the records of an organization at any
time during regular business hours to verify the validity of the organization's
exempt status.
(f) Revocations, withdrawals, or loss of exemptions.
(1) Except as provided in paragraph (2) of this subsection,
if at any time the comptroller has reason to believe that an exempt
organization no longer qualifies for exemption, a comptroller's representative
will notify the organization that its exempt status is under review.
A comptroller's representative may request additional information
that is necessary to ascertain the continued validity of the organization's
exempt status. An organization must immediately notify the comptroller
in writing of a revocation, withdrawal, or loss of exemption when
the organization no longer qualifies for exemption. If the comptroller
determines that an organization is no longer entitled to its exemption,
then the comptroller will notify the organization. The date of the
notification letter is the effective date of the revocation. All subsequent
purchases by the organization are subject to tax.
(2) For nonprofit organizations that are granted an
exemption under Tax Code, §151.310(a)(2), the revocation, withdrawal,
or loss of the federal income tax exemption automatically terminates
the sales tax exemption, effective on the date on which the IRS serves
formal written notice of the revocation on the nonprofit organization
or the date on which the IRS notifies the comptroller, whichever is
earlier. All subsequent purchases by the organization are subject
to tax.
(A) The effective date of a revocation for a nonprofit
organization that was granted an exemption as a recognized subordinate
is the date on which the organization ceased to be recognized as a
subordinate under the federal group exemption. All subsequent purchases
by the organization are subject to tax.
(B) The organization must notify the comptroller in
writing of the revocation, withdrawal, or loss of exemption immediately
upon receiving notice from the IRS of such revocation, withdrawal,
or loss.
(C) Under a federal/state exchange agreement, the IRS
may notify the comptroller when an organization no longer qualifies
for federal exemption.
(3) An organization that loses its exempt status must
immediately notify its suppliers that its purchases are subject to
tax. Failure to so notify a supplier is a violation of the sales tax
law.
(4) After revocation, the organization may re-apply
for exempt status under other provisions of this section.
(g) Purchases by an exempt organization; refund claims;
and credits. See §3.287 of this title (relating to Exemption
Certificates).
(1) The purchase, lease, or rental of a taxable item
that relates to the purpose of an exempt organization listed in subsection
(b)(1), (2), (3), (5), (10), (11) or (12) of this section is exempt
from tax when the organization or an authorized agent of the organization
pays for the item and provides the vendor with an exemption certificate
in the form prescribed by the comptroller.
(2) The purchase, lease, or rental of a taxable item
to an exempt organization listed in subsections (c) and (b)(4), (6),
(7), (8), or (9) of this section is exempt from tax when the organization
or an authorized agent pays for the taxable item and provides the
vendor with an exemption certificate in the form prescribed by the
comptroller.
(3) A purchase voucher issued by any one of the entities
identified in subsection (c) of this section is sufficient proof of
the entity's exempt status.
(4) An exemption certificate must be given to a vendor
when an authorized agent makes a cash purchase of merchandise for
an exempt organization.
(5) An employee of an exempt organization cannot claim
an exemption from tax when the employee purchases taxable items of
a personal nature even though the employee receives an allowance or
reimbursement from the organization.
(6) A person who travels on official business for an
exempt organization must pay sales tax on taxable purchases whether
reimbursed on a per diem basis or reimbursed for actual expenses incurred.
(7) Bingo equipment as defined by Occupations Code, §2001.002,
including machinery or devices used to select or hold letters or numbers,
electronic or mechanical cardminding devices, pull-tab dispensers,
bingo cards, balls, and other devices commonly used in the direct
operation of a bingo game, are exempt from sales and use taxes when
purchased, leased, or rented by an organization exempt under IRC, §501(c)(3),
(4), (8), (10), or (19), and exclusively used to conduct bingo games
authorized under Occupations Code, Chapter 2001. Commonly available
component parts of bingo equipment such as batteries, light bulbs,
and fuses do not qualify for this exemption.
(8) Refund claims and credits by organizations exempted
under Tax Code, §151.310.
(A) Qualifying organizations. The following organizations
are covered by the provisions of Tax Code, §151.310 and are subject
to the provisions of this paragraph:
(i) organizations created for religious, educational,
or charitable purposes;
(ii) organizations qualifying for an exemption from
federal income taxes under IRC, §501(c)(3), (4), (8), (10), or
(19);
(iii) nonprofit organizations engaged exclusively in
providing athletic competition among persons under 19 years old;
(iv) volunteer fire departments; and
(v) chambers of commerce or convention and tourist
promotional agencies representing at least one Texas city or county.
(B) Exemption effective dates.
(i) Organizations identified in subparagraph (A) of
this paragraph are not considered exempted from sales and use taxes
before the earlier of:
(I) the date the organization applied for exemption
with the comptroller as evidenced by the postmark date on the organization's
qualifying application for exemption as required under subsection
(e) of this section; or
(II) the date of assessment of the organization's tax
liability by the comptroller as a result of an audit.
(ii) With the exception of entities that qualify for
exemption under subsection (c) of this section, organizations' exemption
effective dates can be verified by using the comptroller's Texas Tax-Exempt
Entity Search located on the agency's Web site.
(C) Refund claims by organizations with exemption effective
dates prior to September 1, 2009. Organizations identified in subparagraph
(A) of this paragraph with an exemption effective date prior to September
1, 2009 may request a refund or credit for sales and use taxes paid
in error, retroactive to the effective date of the organization's
exemption or the four-year statute of limitations, whichever date
is more recent.
(D) Refund claims by organizations with exemption effective
dates on or after September 1, 2009. Organizations identified in subparagraph
(A) of this paragraph with an exemption effective date on or after
September 1, 2009 are not eligible to request a refund or credit for
sales or use tax paid between September 1, 2009 and the exemption
effective date. If the comptroller has determined the organization
with an exemption effective date on or after September 1, 2009, has
met the requirements for exemption from the sales tax under Tax Code, §151.310
for a period prior to September 1, 2009, the organization may request
a refund or credit for sales and use taxes paid in error on purchases
made between the earliest date the comptroller determined the organization
met the requirements for the Cont'd... |
