Sales Tax on 501c3 Organization's Adoption Fees
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It was brought to our attention this week that 501c3 tax exempt organizations are required by the letter of the law in Texas to collect sales tax on adoption fees/donations.
Not only does this need to start being done immediately, but 7 years of back taxes and penalties are also required to be paid. While this is the letter of the law, it does not appear that this is the way the law was intended nor the way the law has been interpreted by rescues, CPA's, or the comptroller office itself until this week.
This change and the back taxes and penalties will cause many rescues in the state to close their doors. This puts the animal population at higher risk and will cost the state more in housing, caring for, and euthanizing animals that would have been helped by rescues.
We need the law to be rewritten to make 501c3 rescue organizations exempt as shelter's are in the state of Texas.
Our Congress men and women need to amend the Texas Tax Code Sec. 151.343 and the Texas Administrative Code Title 34 Part 1 Chapter 3 Subchapter O Rule 3.316 to read:
(m) Sales by nonprofit animal shelters and rescues. The sale, including the acceptance of a fee for adoption, of an animal by a nonprofit animal shelter or 501(c)(3) rescue is exempt from sales and use taxes. The term "animal shelter" is defined in Health and Safety Code, §823.001, as a facility that keeps or legally impounds stray, homeless, abandoned, or unwanted animals. The term "501(c)(3) animal rescue is one that is recognized by the Internal Revenue Service as one operating for the purpose of saving homeless, abandoned or unwanted animals and is in good standing with the IRS.
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