Understanding the Tax Implications of Running a Non-Profit Organization in Tarrant County

Are you looking to understand the tax implications of running a non-profit organization in Tarrant County? Certain government and nonprofit organizations are eligible for exemption from paying Texas taxes for their purchases. Federal and Texas government entities are automatically exempt, while non-profit organizations must apply to the Comptroller's Office for the exemption and receive it before making tax-free purchases. In this article, we'll discuss the requirements for obtaining an exemption, as well as other important information about taxes and non-profit organizations in Tarrant County.In order to qualify for an exemption from taxes, non-profit organizations must meet certain criteria. These include being a student organization at a college or university affiliated with a higher education institution in Texas, or being a youth athletic organization that only offers sports competitions to people under the age of 19. Additionally, the organization must be dedicated exclusively to teaching (especially in the arts, sciences, and commonly accepted professions) and have a regular curriculum, with enrolled teachers and students attending a place where educational activities take place. Non-profit organizations may also contract with another organization to offer traveling theatrical productions and qualify for the exemption.

To do so, the entity providing the production must enter into a contract with an organization that meets the requirements to offer at least five productions a year for a period of at least five years. Exempt sales that meet these requirements must be intended to raise funds for the organization. It's important to note that while federal and state and local government entities in Texas are automatically exempt from the taxes listed in the table, non-profit organizations must apply to the Comptroller's Office and receive the exemption. Additionally, if the price of an item includes taxes, customers must be informed that taxes are included in the price. Student organizations at colleges or universities affiliated with a higher education institution in Texas can hold a one-day, tax-free sale each month. An exempt organization or other nonprofit organization sometimes enters into a contract with a company that raises funds to sell taxable items, such as wrapping paper, gifts, candles, or candy.

In these cases, they must obtain a sales tax permit (PDF) and collect and remit sales tax for all taxable items they sell, unless an exemption or exception applies. An exempt organization or government entity that paid sales tax in error or that was denied the exemption by a seller may be entitled to a refund. Section 552.003 (A) of the Public Information Act defines the term “government body” as “the part, section, or portion of an organization, corporation, commission, committee, institution, or agency that spends or receives full or partial support from public funds”.Finally, it's important to note that in order to create a nonprofit corporation in Texas, you must submit a certificate of incorporation to the Secretary of State in accordance with the Texas Code of Business Organizations (BOC). A representative who requests an exemption and is not an employee of the exempt organization must pay the hotel directly with the organization's funds in order to qualify for the exemption.

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