In Texas, property owners associations (“Associations”) are typically non-profit corporations created under Chapter 22 of the Texas Business Organizations Code. As a result, many Associations want to know if they qualify for certain tax exemptions reserved for non-profit entities, which can be significant over the life of the Association. Texas tax law provides an exemption from sales tax on goods and services purchased for use by organizations exempt under Section 5.01(c)(3), (4), (8), (10) or (19) of the Internal Revenue Code (the “Code”). This article will focus on the qualifications required for an Association to pursue 501(c)(3) or 501(c)(4) designation from the IRS, as well as some helpful guidance from IRS Revenue Rulings, in which the IRS has provided an official interpretation of the Code as it related to a specific set of facts.
Source: winstead.com
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