Texas Religious Organizations Property Tax Exemptions – Take 2
Many have contacted me about the Freeman Law Insights blog – Texas Religious Organizations Property Tax Exemptions (https://freemanlaw.com/texas-religious-organizations-property-tax-exemption/) – and I am grateful that the content has served so many well and opened so many eyes on the subject.
This Insights blog will supplement that former religious organizations property tax exemption blog.
In Texas, taxes are imposed upon real property each year as of January 1. On that date a lien authorized by article VIII, section 15 of the Texas Constitution attaches to the property to secure their payment. The amount of taxes assessed is not determined until later in the year, when appraisals have been completed and tax rates set.
Article VIII, section 2(a) of the Texas Constitution authorizes the Legislature to exempt the property of religious organizations from taxation, and the Legislature has exercised this authority. See Tex. Tax Code § 11.20 (religious organization exemption); id. at § 11.421 (qualification of religious organization). To be entitled to the exemption, a religious organization must apply to the chief appraiser in the district where the property is located before May 1 of the first year for which the tax exemption is claimed. Application for the exemption in subsequent years need not be made unless the chief appraiser requires it.
In this regard, section 11.43 of the Tax Code provides as follows:
To receive an exemption the eligibility for which is determined by the claimant’s qualifications on January 1 of the tax year, a person required to claim an exemption must file a completed exemption application form before May 1 and must furnish the information required by the form. A person who after January 1 of a tax year acquires property that qualifies for an exemption covered by Section 11.42(d) [which includes religious organizations exemption] or (f) must apply for the exemption for the applicable portion of that tax year before the first anniversary of the date the person acquires the property. For good cause shown the chief appraiser may extend the deadline for filing an exemption application by written order for a single period not to exceed 60 days.
Tex. Tax Code § 11.43(d) (emphasis added).
However, and as noted in section 11.43 of the Tax Code, “[p]ersons in some categories exempt from property taxes must ordinarily apply for an exemption before May 1 of the year for which taxes are imposed. The Legislature has extended this deadline, however, for certain exemptions, including the religious organization exemption.” Corpus Christi People’s Baptist Church, Inc. v. Nueces County Appraisal Dist., 904 S.W.2d 621, 622 (Tex. 1994) (internal citations to Tex. Tax Code § 11.433 omitted; finding that section 11.433 is constitutional).
Section 11.433 of the Texas Tax Code provides as follows:
(a) The chief appraiser shall accept and approve or deny an application for a religious organization exemption under Section 11.20 after the filing deadline provided by Section 11.43 [i.e., May 1st of the tax year] if the application is filed not later than December 31 of the fifth year after the year in which the taxes for which the exemption is claimed were imposed.
(b) The chief appraiser may not approve a late application for an exemption filed under this section if the taxes imposed on the property for the year for which the exemption is claimed are paid before the application is filed.
(c) If a late application is approved after approval of the appraisal records for the year for which the exemption is granted, the chief appraiser shall notify the collector for each taxing unit in which the property was taxable in the year for which the exemption is granted. The collector shall deduct from the organization’s tax bill the amount of tax imposed on the property for that year if the tax has not been paid and any unpaid penalties and accrued interest relating to that tax. The collector may not refund taxes, penalties, or interest paid on the property for which an exemption is granted under this section.
(d) The chief appraiser may grant an exemption for property pursuant to an application filed under this section only if the property otherwise qualified for the exemption under the law in effect on January 1 of the tax year for which the exemption is claimed.
See Tex. Tax Code § 11.433(a)-(d) (emphasis added).
The Texas Supreme Court, in Corpus Christi People’s Baptist Church, Inc., found as follows:
Section 11.433 does not on its face extinguish any liabilities owed to a taxing authority. Indeed, if a religious organization does not apply for exemption within the extended period, the taxing unit is entitled to recover all delinquent taxes. Rather, the effect of section 11.433 is merely to delay the taxing authority from collecting taxes for a prescribed period of time until either the religious organization files for exempt status or fails to make late application. When an application is no longer allowed, the taxing unit is free to collect its taxes.
Corpus Christi People’s Baptist Church, Inc., 904 S.W.2d at 625 (emphasis added).
The opinion of Corpus Christi People’s Baptist Church, Inc. is (as of September 27, 2024) one of only three judicial opinions that cite section 11.433 of the Tax Code, and neither of the other two opinions are instructive in any manner.
Appraisal districts across Texas have taken great liberty with the statutory language of section 11.433 (and to the detriment of the applying religious organization) by simply denying an application submitted within the time period permitted by section 11.433 – “Hey, the statute says ‘accept or deny’, so…DENIED.”
It is this author’s opinion that the liberty so taken by the government is not in line with legislative intent behind section 11.433. But, no religious organization (to my knowledge) has challenged the appraisal district’s approach in such matters, and the Texas Legislature has not taken an initiative to adjust the language in the statute to prevent appraisal district discretion that has, essentially, eliminated any benefit to be advanced for religious organizations by the adoption of section 11.433.
