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TEXAS APPLICATION FOR EXEMPTION — CHARITABLE ORGANIZATIONS
SUSAN COMBS • TEXAS COMPTROLLER OF PUBLIC ACCOUNTS
Nonprofit charitable organizations should use this application to request exemption from Texas sales tax, hotel occupancy
tax and franchise tax, if applicable. To receive a state tax exemption as a charitable organization, a nonprofit charitable
organization must devote all or substantially all of its activities to the alleviation of poverty, disease, pain and suffering
by providing food, drugs (medicine), medical treatment, shelter, clothing or psychological counseling directly to indigent
or similarly deserving individuals for little or no fee. The organization's funds must be derived primarily from sources
other than fees or charges for its services. Exemption from federal tax as a 501(c) organization is not required to
qualify for exemption from state tax as a charitable organization.
The exemption for charitable organizations is provided for in Sections 151.310, 156.102 and 171.062 of the Texas Tax
Code, and more detailed information can be found in Comptroller’s Rules 3.322, 3.161, 3.541 and 3.583.
Some organizations will not qualify for an exemption as a charitable organization as that term is defined in Texas'
law and rules, even though their activities may be charitable in nature. Such an organization might still qualify for
exemption from Texas sales tax and franchise tax, if applicable, based on their exemption under certain sections of
the Internal Revenue Code (IRC).
Texas tax law provides an exemption from sales taxes on goods and services purchased for use by organizations
exempt under Section 501(c)(3), (4), (8), (10) or (19). However, exempt organizations are required to collect tax on
most of their sales of taxable items. See Exempt Organizations - Sales and Purchase