State Free to Select the Subjects of Taxation and to Grant Exemptions

A Texas appeals court rejected a claim that a state law exempting religious periodicals from

Bio

State: Texas
Categories: Tax Exemption

A Texas appeals court rejected a claim that a state law exempting religious periodicals from the sales tax on magazines unconstitutionally discriminated against non-exempt periodicals.

The court observed that "it is inherent in the exercise of the power to tax that a state be free to select the subjects of taxation and to grant exemptions. Equal protection does not impose on a state any rigid equality of taxation. Inequalities which result from singling out one particular class for taxation or exemption infringe on no constitutional limitations." Bullock v. Texas Monthly, Inc., 731 S.W.2d 160 (Tex. App. 1987).

Legal Developments

Tax-Exempt Organizations Engaged in an Unrelated Trade or Business Not Reporting to the IRS

Representative J.J. Pickle (Democrat, Texas), chairman of the House Ways and Means Subcommittee on Oversight,

Richard R. Hammar, Attorney, CPA

Bio

State: Texas
Categories: Tax Exemption

Representative J.J. Pickle (Democrat, Texas), chairman of the House Ways and Means Subcommittee on Oversight, has announced plans to conduct hearings later this year on the subject of television evangelists.

Representative Pickle's subcommittee recently concluded hearings on the unrelated business activities of tax-exempt organizations. Concern was expressed over the unfair competition that universities and certain health facilities allegedly pose to taxable entities. IRS records reveal that fewer than 3% of all tax-exempt organizations report unrelated business income to the IRS (on Form 990-T).

Many believe that there are several tax-exempt organizations engaged in an unrelated trade or business that are not reporting their activities to the IRS as required by law. Any legislative change in this area will probably await the results of an IRS technical compliance audit of 3,000 tax-exempt organizations.

Source: Church Law & Tax Report 1987