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# The Attorney General of Texas

December 31, 1982 MARK WHITE Attorney General

Supreme Court Building P. 0. BOX 12548 Austin, TX. 78711. 2548 51214752501 Telex 9101874.1367 Telecopier 5121475.0266

1607 Main St., Suite 1400 Dallas. TX. 75201-4709 2141742-8944

4824 Alberta Ave.. Suite 160 El Paso, TX. 79905.2793 9151533-3484

1220 Dallas Ave., Suite 202 Houston, TX. 77002.6986 7131650.0666

806 Broadway. Suite 312 Lubbock, TX. 79401.3479 8061747-5238

4309 N. Tenth. Suite S McAllen, TX. 78501-1685 5121682.4547

200 Main Plaza, suite 400 San Antonio, TX. 78205-2797 5121225-4191

An Equal Opportunity/ Affirmative Action Employer HonorableMike Driscoll Harris CountyAttorney 1001Preston, Suite 634 Houston,Texas 77002
Dear Mr. Driscoll: OpinionNo.MW-553
Re: Tax exemptionof property used for religiouspurposes

You ask two questions concerning ad valorem tax exemption of propertyused for religiouspurposes. Your firstquestion is:

Is it the duty of the county tax assessorcollector to collect delinquent taxes on land owned in fee by a church with a reversionary interest in the grantor who has not claimed an exemption when said property is claimed to be exempt from taxationbecause it is used as a home for a needy family and said property yields rent revenue to said church? The thresholdquestion is whether property owned by this church canbe exempt from advalorem taxationwhen it is used as a home for a needy familyand the propertyyields rent revenue to the church. Our answer is limited to the particular circumstances considered. We conclude that the propertyhere is not tax exempt because it fails to qualify either as exempt property of a religious organization or as property of a charitable organization exempt under present statutes. Therefore, it is the duty of the county tax assessor-collector to collectdelinquentad valorem taxes on theproperty. Article VIII, section 2 of the Texas Constitution provides the following inpertinentpart:

[Tlhe legislature may, by general laws, exempt from taxation... actual places of religious worship, also any propertyownedby a churchor by a strictlyreligious society for the exclusiveuse as a dwellingplace of theministry of such church or religious society, and which yields no revenue whatever to such church or religious society; provided that such exemption shall not extend to more property than is reasonably necessary for a dwellingplace and in no eventmore than one acre

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of land;
... and institutions of purely public charity; and all laws exempting property from taxationother than thepropertymentioned in this Section shallbe null andvoid. The foregoing constitutionalprovision is not self-executing; it permits (butdoesnot require) the legislatureto exempt certain types of property from taxation. Pursuant to this authority, the legislature enacted section 11.20, Property Tax Code, exempting certain specified property of religious organizations, and section 11.18, Property Tax Code, exempting certain specified property of organizations meeting listed criteria which qualify them as "charitableorganizations".
In order to qualify for exemption from ad valorem taxation, property must fall within either a self-executing constitutional provision or a statuteadopted pursuant to article VIII, section 2 of the Texas Constitution. See River Oaks Garden Club V. City of Houston, 370 S.W.Zd 851 (Tex.'1963). Moreover, though property falls within a ournorted statutorvexemntion. itwill be exemnt onlv if such

. . . I an exemption ispermittedby the constitution. DickisonV. Woodmen of theWorld Life Insurance Society, 280 S.W.Zd 315, 317 (Tex.Civ. App.

- San Antonio 1955, err. ref'd); Santa Rosa InfirmaryV. City of San Antonio, 259 S.W. 926, 931 (Tex. 1924). In this instance,we need not reach the constitutional issue because the subject property falls within the ambit of neither section 11.18 nor section 11.20 of the Property Tax Code. We will first address whether the property is exemptunder section 11.20,which pertains to religiousorganizations. Section 11.20declares the following inpertinentpart:

(4 An organization that qualifies as a religious organization as provided by Subsection (c) of this section is entitled to an exemption from taxationof:

(1) the real property that is owned by the religious organization, is used primarily 8s a place of regular religiousworship, and is reasonably necessary for engaging in religious worship; (2) the tangible personal property that is owned by the religious organization and is reasonablynecessary for engaging inworship at the place of worship specified in Subdivision (1)of this subsection; (3) the real property that is owned by the religious organization and is reasonably

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necessary for use as a residence (butnot more than one acre of land for each residence) if the property:

(A) is used exclusively as a residence for those individuals whose principal occupation is to serve in the clergy of the religiousorganization;and (B) produces no revenue for the religiousorganization;and (4) the tangible personal property that is owned by the religious organization and is reasonably necessary for use of the residence specified by Subdivision (3) of this subsection.

. . .. (d) Use of property that qualifies for the exemptionprescribedby Subdivision (1) or (2) of Subsection (a) of this section for occasional secularpurposesother than religiousworship does not result in loss of the exemption if theprimary use of the property is for religiousworship and all income from the other use is devoted exclusively to the maintenance and development of thepropertyas a place of religiousworship. (e) For the purposes of this section, 'religious worship' means individual or group ceremonyor meditation,education,and fellowship, the purpose of which is to manifest or develop reverence, homage, and commitment in behalf of a religious faith. Section 11.20 exempts real and tangible persons1 property if it is owned by a religious organization, used primarily as, or at, a place of regular religious worship, and is reasonably necessary for engaging in religiousworship. In construingarticleVIII, section 2 and the now repealed article 7150,V.T.C.S., (thepredecessor statute to section 11.20) the Texas Supreme Court declared that "["Ihat constitutes an actual place of religious worship as those words are used in the Constitution and statutes is a fact issue which the claimanthas the burden to prove." Davies V. Meyer, 541 S.W.Zd 827, 829 (Tex. 1976). We do not resolve issues of fact in the opinion process, but we note that there is no allegation in the materials submitted to us that the subject property is used as an actual place of religiousworship. Assuming this to be the case, it is clear that

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the subjectproperty doesnot fallwithin section 11.20(a)(l)and (2); therefore, we need not consider by whom property subject to a reversionary interest is "owned" within the meaning of the statute. We turn to the second exemptionpermitted for religiousorganizations. Section 11.20(a)(3) exempts only real property owned by the religious organization and reasonably necessary for use as a residence. This exemption applies only if the property is used exclusivelyas a residence for the clergy and producesno revenue for the religious organization. Again, assuming the truth of the facts presented to us. the subject property is not used exclusively as a residence for the clergy and does produce revenue for the religious organizations. Thus, the property is not exempt under section 11.20(a)(3). (Such restrictions =PPlY only to the religious organization'sparsonage. Property Tax Code 911.20(a)(3)(A)and (B). We note that neither the statute, section 11.20(s) and (b), Property Tax Code, nor the constitution, require that the actual place of religious worship be exclusively so used or that it produce no revenue. Davis V. Congregation Agudas Achier,456 S.W.2d 459, 461 (Tex.Civ.App. - SanAntonio 1970,no writ).) Under the facts given us, clearly, the subject property is not exemptunder any of the provisionsof section 11.20exemptingproperty belonging to a religiousorganization. Section 11.18 of the Property Tax Code concerns exemptions for charitable organizations. It provides the following in pertinent part: (a) An organization that qualifies as a

charitable organizationas provided by Subsection (c) of this section is entitled to an exemption from taxation of the buf~ldings and tangible personalproperty that:

(1) are owned by the charitable organization;and (2) except as permitted by Subsection (b) of this section, are used exclusively by qualifiedcharitableorganizations. (b) Use of exempt property by personswho are not charitable organizationsqualifiedas provided by Subsection (c) of this section does not result in the loss of an exemption authorized by this section if the use is incidental to use by qualified charitable organizationsand limited to activities that benefit the beneficiaries of the

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charitable organizations that own or use the property. (c) To qualify as a charitable organization for the purposes of this section, an organization (whether operated by an individual, as a corporation,or as an association)must:

(1) b= organized exclusively to perform religious,charitable,scientific, literary, or educational purposes and, except as permitted by Subsection (d) of this section, engage exclusively in performing one or more of the following charitablefunctions:

(A) providing medical care without regard **t0** the beneficiaries'ability to pay; (B) providing support or relief to orphans, delinquent, dependent,or handicapped children in need of residential care, abused or battered spouses or children in need of temporary shelter, the impoverished, or victims of natural disaster without regard **t0** the beneficiaries'ability topay; (C) providing support **t0** elderlypersons or thehandicapped without regard **t0** the beneficiaries'ability to pay; (D) preserving a historical landmarkor site; (E) promoting or operating a museum, zoo, library, theater of the dramatic arts, or symphony orchestraor choir; (F) promoting or providing humane treatmentof animals; (G) acquiring, storing, transporting, selling, or distributing water forpublic use;

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(H) answering fire alarms and extinguishing fires with no compensation or only nominal compensationto themembers of the organization; (I) promoting the athletic developmentof boys or girls under the age of 18years; (.I)preserving or conserving wildlife; (K) promoting educational development through loans or scholarshipsto students; (L) providing halfway house services pursuant to a certification ss a halfway house by the Board of Pardonsand Paroles;or (M) providing permanent housingand related social,health care, and educational facilities for persons who are 62 years of age or olderwithout regard to the residents'ability to pay; (2) be operated in away that doesnot result in accrual of distributable profits, realization of private gain resulting from payment of compensation in excess of a reasonable allowance for salary or other compensation for services rendered,or realizationof any other form of private gain and, if the organization performs one or more of the charitable functions specifiedby Paragraph (C), (D), (E), 093 (G), (J), (K), or CM) of Subdivision (1) of this subsection, be organized as a nonprofit corporation as defined by the Texas Non-Profit CorporationAct; and (3) by charter, bylaw, or other regulation adopted by the organization to govern its affairs:

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(A) pledge its assets for use in performing the organization’s charitable functions;and (B) direct that on discontinuance of the organization by dissolution or otherwise the assets are to be transferred to this state or to an educational, religious, charitable, or other similar organization that is qualified as a charitable organization under Section 501(c)(3), Internal Revenue Code of 1954,as amended. (d) Performance of noncharitable functionsby a charitableorganizationthat owns or uses exempt property does not result in loss of an exemption authorized by this section if those other functions are incidental to the organizations’s charitable functions. (e) In this section, ‘building’ includes the land that is reasonably necessary for use of, access to, and ornamentationof thebuilding. (f) An exemption authorized by Paragraph (J) of Subdivision (1) of Subsection (c) of this section is limited to land and improvements and may not exceed 1,000acres in any one county. Based on the informationwhich we have received,we conclude that the subjectmatter is not exempt as a charitable institution from ad valorem taxes for two reasons. First,we have been presentedwith no charter or bylaw indicating that the church is “organized exclusively to perform religious... purposes and... engage exclusively in performing one or more of [a list ofthirteen specified] charitable functions.” (Emphasis added). Section 11.18(c)(l)(A)-(~),Property Tax Code. Indeed,no charteror bylawsmay exist at all. As we noted in Attorney General Opinion MW-288 (1980),section 11.18 “establishes new criteria for deter-raining whether property owners are eligible for charitabletax exemptions.”

In our opinion, the definition of ‘charitable functions’ in section 11.18(c)(l) clearly serves not to enlarge the meaning of ‘purely public charity’ but to deny tax exemptions to property owned by institutions of purely public charity that are not organized to perform the charitable functions defined. Where section 11.18 has the effect of denying tax exemptions to organizations

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that might otherwise have been properly allowed them, itwill be enforced. (Emphasisadded). Id. The organizationwhich owns the subjectproperty is apparentlya religious organization organized, however informally, for primsrily religious purposes. It is not a charitable organization incidently engaging in religiousactivities. While the organization is organized to perform religious purposes, it does not in addition engage "exclusively" (or even primarily) in one or more of the enumerated charitablepurposes set out in the statute. The fact that a claimant performs some charitable activity has not been sufficient to qualify the organization for tax exemptionas a charitableorganization. City of AmarilloV. Amarillo LodgeNo. 731,A.F. a A.M., 488 S.W.Zd 69, 72 (Tex. 1972). In order to determinewhether an ornanizationaualifies. one must look to the principal activity of the claimant. See Most -- Worshipful PrinceHall Grand Lodge, F. 8 A.M. of TexasV. City of Fort Worth, 435 S.W.2d 274 (Tex. Civ. App. - Fort Worth 1968,writ ref'd n.r.e.). The principal activity of the church is religious, not charitable. The organization does not meet the requirements of section 11.18(c)(l)(A)-(M),PropertyTax Code.
We are not unmindful of the holding in City of McAllen V. Evangelical Lutheran Good Samaritan Society, 530 S.W.2d 806 (Tex. 1975),wherein the supreme court, in construingarticle VIII, section 2 of the Texas Constitution together with the now repealed article 7150, V.T.C.S. (the predecessor to section 11.18, Property Tax Code) stated that although charitable institutions are entitled to an exemption of only that property which is used by the institution exclusively for the purposes of a purely public charity, it does not follow: that every use of the property must be

gratuitous.... Nor does it follow that all religious or other benevolent activities must be excluded in the operations of the hospital or home. It is no fatal defect to join charitable and religiouspurposes; the exemptionwill not be withdrawn so long ss the charitable requirements aremet. 530 S.W.Zd at 810-11. As we declared in Attorney General Opinion MW-288 (1980), "[tlhe key is the emphasized language 'so long as the charitable requirements are met.' Former article 7150, section 7, V.T.C.S., did not require that the institution claiming an exemption be organizedexclusivelyfor certain charitablepurposesand no other. The present statutedoes." (Emphasisadded). As we statedabove, the claimantorganizationisnot so organized. Second, section 11.18(c)(3)requires that the charter,bylaws, or regulationsadoptedby the organizationto govern itsaffairs:

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(A) pledge its assets for use in performing the organization's charitable functions; and (B) direct that on discontinuanceof the organization by dissolution or otherwise the assets are to be transferred to this state or to an educational, religious, charitable, or other similar organization that is qualified under Section 501(c)(3), Internal Revenue Code of 1954, as amended. (Emphasisadded). The organization'sgoverningdocumentmakes no suchprovision. Again, under the facts submitted, the organization fails to satisfy the "charitable" requirementsof section 11.18; the property is therefore taxable in the absence of another applicable exemption. See City of McAllenV. EvangelicalLutheran Good SamaritanSociety,supra; Hilltop VillageV. Kerrville IndependentSchoolDistrict, 426 S.W.Zd 943 (Tex. 1968); City of Waco V. Texas Retired Teacher Residence Corporation, 464 S.W.Zd 346 (Tex. 1971). Because we are aware of no other applicable exemption,we advise in answer to your first question that it is clearly the duty of a county tax assessor-collectorto collect delinquent taxes on propertynot exempt fromad valorem taxes.
Your second question is:
Is it the duty of the County Tax AssessorCollector to collect delinquent taxes on land presently owned in fee by a church with reversionary interest in the grantor if the taxes were imposed on a non-exempt owner for tax years prior to the donation of the building to the church?
From your question,we understand the following to be the case. Ad valorem taxeswere assessedagainst the propertywhile itwas owned in fee simple absolute by a person who later conveyed the property, subject to a reverter clause, to the church. The taxeswere not paid and are presently delinquent. We understand you to be asking upon whom the liability for the delinquent ad valorem taxes should rest, the present or former owner. We conclude that the grantor, who, we understand,was the owner of the property when the delinquent taxes were imposed, is personally liable. Section 32.07, PropertyTax Code,provides inpertinentpart: (a) Except as providedby Subsection (b) of this section, property taxes are the personal obligation of the person who owns or acquires the property on January 1 of the year for which the tax is imposed. A person is not relieved of the

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obligationbecausehe no longer owns the property. (Emphasisadded).
We therefore conclude that the person who owned the property on January 1 of the year for which the unpaid tax was imposed is personably liable for the tax. Of course, the taxable interest in the property is itself subject to sale for the satisfaction of unpaid taxes validly assessed against it, whoever might have been its owner when the taxes accrued. Tax Code 032.01. See Attorney General Opinion H-1108 (1977). But see Tax Code 933.06(Residence homesteads of aged -- deferred collection).
SUMMARY
It is the duty of the county tax assessor-collectorto collect delinquent taxes on church-owned property in the fact situation presented. The person who owned the property on January 1 of theyear forwhich theunpaid taxwas imposed is personally liable for thedelinquentad valorem taxes, but the taxable interest in the proprety is subject to sale for the satisfaction of unpaid taxesvalidly assessed,whoevermight be personally liable for the taxes.

M A R-K WHITE Attorney General of Texas
JOHNW. FAINTER,JR. FirstAssistantAttorney General
RICHARD E. GRAY III ExecutiveAssistantAttorneyGeneral Preparedby JimMoellinger AssistantAttorney General
APPROVED: OPINION COMMITTEE
SusanL. Garrison,Chairman Jon Bible Rick Gilpin Bob Lattimore JimMoellinger

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