Form Ap-205 - Texas Application For Exemption - Charitable Organizations
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2TEXAS 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 Purchases, Publication 96-122.
Texas law also provides an exemption from franchise taxes for corporations exempted from the federal income tax
under IRC Section 501(c)(2), (3), (4), (5), (6), (7), (8), (10), (16), (19) or (25).
If your organization has been granted federal tax exemption under one of the qualifying sections listed above, your
organization will be granted an exemption from Texas sales tax, or sales and franchise tax, on the basis of the Internal
Revenue Service (IRS) exemption, as required by state law. Organizations that qualify for exemption based on the
federal exemption are not exempt from hotel occupancy tax because the hotel occupancy tax law does not recognize
any federal exemptions.
The laws, rules and other information about exemptions are online at:
Send the completed application along with all required documentation to:
Comptroller of Public Accounts
Exempt Organizations Section
P.O. Box 13528
Austin, TX 78711-3528
We will contact you within 10 working days after receipt of your application to let you know the status of your
application. We may require an organization to furnish additional information to establish the claimed exemp-
tion. After a review of the material, we will inform the organization in writing if it qualifies for exemption. 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.
If you have questions or need more information, contact our Tax Assistance staff at (800) 252-5555 or in Austin
at (512) 463-4600.
You have certain rights under Chapters 552 and 559, Government Code, to review, request and correct information we have on file about you.
Contact us at the address or toll-free number listed on this form.
AP-205-1 (Rev.6-08/6)
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