Attorney General Opinion JM-0269

JIM MAllOX Attorney General Supreme Cowl BulldIng P. 0. 80x 12S48 Austin. TX. 711711.2S4a 512l4752501 Telex 91ws7c13a7 Telecopier 512/47402+6 714 Jackson. Suite 700 Dallas, TX. 75202-4SOS 2lU742.SSU 4824 Albwta Ave.. Sulle 160 El Paso. TX. 799052793 915/533-3494 4001 Texas. Suite 700 Houston, TX. 77W2.3111 713l223.5886 505 Broadway. Suite 312 Lubbock. TX. 7S401-3419 80817476238 4302 N. Tenth. Suite B McAllm. TX. 78501.1685 512/SS2-4S47 200 Main Plaa. Suite 400 San Antonio. TX. 781052797 5120254191 An Equal Opportunity/ Affirmative Action Employer The Attorney General of Texas :)ecember 27, 1984 Ronorable Mike Driscoll Rarris County Attorney 1001 Preston, Suite 634 Rouston, Texas 77002 Opinion No. JM-269 Re: Whether the real and personal property of the Blue Bird Circle is exempt from ad valorem taxes Dear Mr. Driscoll: You have asked this . office to determine whether section 11.18 of tne state Property Tax Code exempts from ad valorem taxation the real and personal prope,rty of the Blue Bird Circle. Section 11.18 exempts charitable organizations from taxation of their buildings and tangible property. provides that the organization can meet certain stated requirements. We conclude that the Blue Bird Circle does not meet these statutory requirements for exemption under section 11.18. We limit our answer to the particular facts which you have given us. You inform us that the Blue Bird Circle [hereinafter Circle] is a non-profit Texas corporation which owns a tract of land on which it maintains an offi’:s building and two resale shops. The Circle uses the office bulldir~e; for its various programs and meetings; the resale shops sell merchandise which has been donated to the Circle. The Circle uses all profits from its various activities to support the Blue Bird Clinic for Pediatric Neurology, which is located in the Texas Uedical Center, several miles away from the property in question. Section ll.lIl~:c) of the Texas Tax Code lists the requirements which an organir.ation must meet to qualify ‘-6 a charitable organization under the statute: (c) To qualify as a charitable organixaiion for the purposes of this section. an organization (whethe:, operated by an lndlvldual. as a corporation, or as an association) must: (1) be organized exclusively to perform relic ious, charitable, scientific, literary, or educa,tlonal purposes rind. except as permitted by subsection (d) of this section, engage p. 1200 Honorable Mike Driscoll - PaSe 2 (Jhi-269) exclusively in performing one or more of the folloving charitable functions: (A) providing medical care without regard to the beneficiaries’ ability to pay; . . . . As this office noted in Attornev General Ooinion MW-288 (1980). the court in Hilltop Villa:Qs, Inc. -v. Kerrvilie Independent School District, 426 S.W.2d 943 (Tax. 1968). indicated that the activity of providing facilities which m,eet special residential requirements of the aged-might qualify as au institution for tax exemption as one of purely public charity, but only where it also qualified under the statutory definition of such institutions for tax exemption purposes. Because the controlling st:a.tute (former article 7150. section 7, V.T.C.S.) at that time restricted exemptions to property of institutions dispensing aid “vithout regard to [the] poverty or riches of the reciuient.” a reauirement which the claimant failed to meet. the exemption was denied: 426 S.W.2d at 948. See also City of (Waco v. Texas Retired Teacher Re!aidence Corporation, 464 S.W.Zd 346 Tex. 1971). Accordingly, if the F’roperty of the Circle is to be accorded a charitable exemption, the Circle itself must be exempt under section 11.18. We must conclude that the Circle does not qualify for a section 11.18 tax exemption. We note that the burden of establishing the requirements for exemptlox from taxation is on the institurion claiminn the exemution. and the exemption must be proved in such a manner as to leave no doubt:. Willacy County Appt&d District v. North Alamo Water Supply Corporation. No. 13-83-318-0 (Tex. App. - Corpus Christi. June 28. lTB4). Further, in such cases, exemptions from taxation are never favored. and, in construing laws exempting an organization.’ all doubts uust be resolved against the institution claiming the exemption. HeQecroft v. City of Housron. 244 S.W.2d 632 (Tex. 1951). Both statutory and constitutional provisions purporting to grant exemption from taxation will be given a narrow and strict construction. and all doubts must be resolved against the granting of the tax exemption. Hillto) Village v. Kerrvifie Independent School District, supra. Section 11.18(c)(3)(B) of the Tax Code requires that charter, bylaws, or regulations adopted by the organization to govern its affairs must direct that on d::scontinuance of the organization by dissolution or otherwi.se the assets are to be transferred to this state or CO an educational, religious, charitable, or other similar organira- tion that is qualified as a charitable p. 1201 . q Honorable Mike Driscoll - Prtge 3 (JM-269) organization under Section 501(c)(3). Internal Revenue Code of 1!154, as amended. Article I, section 3 o:: the Circle's bylaws reads: Section 3. No part of the property of this Corporation shall ever be utilized for the private gain or profit of any officer, director, or member, as such, oi1 the Corporation. In its brief, the Circle refers to section 3 as ensuring that its assets are "perpetually dedicated to use in performing the organization's charitable function." The Circle asserts that this provision satisfies the staeutory requirements of section 11.18(c)(3). We disagree. There is no provision in the documents submitted to us that directs the Circle's assets to be transferred in the required manner in the event of its Hacontinuance. The tax status of the c,orporation for this year is determined by its qualifications on January 1. 1984. Prop. Tax Code 511.42. Because the Circle does not meet the section 11.18(c) statutory requirements of a charitat~le organization, we conclude that its property is not exempt from ad valorem taxation. SUMMARY The Blue Ri::d Circle does not meet the statutory requirements to qualify as a charitable organization and, therefore, is not exempted from ad valorem taxaticn by section 11.18 of the state Property Tax Code. JIM MATTOX Attorney General of Texas TOM GREEN First Assistant Attorney G+eral DAVID R. RlCRARDS Executive Assistant Attorncfy General RICK GILPIN Chairman, Opinion Committee! p. 1202 Honorable Mike Driscoll - Page 4 (JM-269) Prepared by Rick Gilpin Assistant Attorney General APPROVED: OPINION COMMITTEE Rick Gilpin. Chairman Colin Carl Susan Garrison Tony Guillory Jim Hoellinger Jennifer Riggs p. 1x3