taxes

Religious

For a religious organization to receive a state tax exemption, it must be an organized, established group of people regularly meeting at a designated location to hold religious worship services. Religious groups do not need a federal tax exemption to qualify for Texas state tax exemptions.

Organizations that simply support and encourage religion as an incidental part of their overall purpose, promote religious work or teach religious understanding do not qualify for exempt status. These include evangelistic groups, Bible study groups, prayer groups and revivals.

What kinds of exemptions is my religious organization eligible for?

Religious organizations that are exempt under IRC Section 501(c)(3), (4), (8), (10) or (19) can apply for a sales tax exemption on items purchased for use by the organization. However, exempt organizations must collect tax on most of their sales of taxable items.

Religious organizations that are exempt under IRC Section 501(c)(2), (3), (4), (5), (6), (7), (8), (10), (16), (19) or (25) can apply for a franchise tax exemption.

A qualifying nonprofit religious organization is exempt from the state portion of hotel occupancy tax unless its exemption is based on a federal exemption.

A qualifying religious group must apply for exemption.

How do we apply for an exemption?

Complete and submit Form AP-209, Texas Application for Exemption – Religious Organizations (PDF) to the Comptroller's office, and provide all required documentation listed in the application. Unincorporated organizations must include a copy of the organization's governing document, such as the bylaws or constitution. The document must show that the organization is nonprofit. We will review the corporation's formation documents on file with the Texas Secretary of State to verify that the corporation's purpose is consistent with requirements. Non-Texas corporations must also include a copy of the corporation's formation documents and a current Certificate of Existence issued by their state of incorporation.

If your application is approved, we'll send a letter or email notification. The notification includes links to print additional verification letters and the exemption certificate (Form 01-339, Texas Sales and Use Tax Resale Certificate (PDF)) to present to vendors.

How do we use the exemption certificate?

When purchasing a taxable item, give the seller a properly completed exemption certificate to document the exempt sale.

If a seller chooses not to accept an exemption certificate, ask the seller to provide a properly completed Assignment of Right to Refund so the organization can request a refund of the tax directly from the Comptroller.

Religious organizations should present Form 12-302, Texas Hotel Occupancy Tax Exemption Certificate (PDF) to a hotel to claim exemption from the 6 percent state hotel occupancy tax. Local hotel tax must be paid, with some exceptions.

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