Form Ap-206 - Application For Exemption - Homeowners' Association
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4APPLICATION FOR EXEMPTION — HOMEOWNERS’ ASSOCIATION
SUSAN COMBS • TEXAS COMPTROLLER OF PUBLIC ACCOUNTS
A nonprofit corporation that is a homeowners’ association should use this application to request exemption from
Texas franchise tax. The homeowners’ association exemption extends only to franchise tax and is applicable to
franchise tax reports due on or after May 1, 1982.
To receive a state franchise tax exemption as a homeowners’ association, the association must be a nonprofit
corporation organized and operated primarily to obtain, manage, construct and maintain the property in or of a
residential condominium or residential real estate development that is legally restricted for use as residences. The
property cannot be used for any commercial activity. Additionally, the individual resident owners of the lots,
residences or residential units must have at least 51% voting control of the association.
The exemption for a homeowners’ association is provided for in Section 171.082, Texas Tax Code, and more
detailed information is available in Franchise Tax Rule 3.541.
Texas tax law provides an exemption from sales tax on goods and services purchased for use by organizations
exempt under Section 501(c)(3), (4), (8), (10) or (19), Internal Revenue Code (IRC). 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 franchise 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 state tax
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, Texas 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 exemption. 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 1-800-252-5555 or, in Austin, call 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-206-1 (Rev.1-07/4)
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