79th Texas Legislature – 2005

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Bills in the 2005 legislature affected nonprofits in the following areas:

Amendments to the Texas Non-Profit Corporation Act, Article 1396:

Note: Effective Jan. 1, 2006, all of Article 1396 will be found in Chapter 22, Business Organizations Code.

SB 1215 (=HB 3417) **: Would impose federal-type (Sarbanes-Oxley) practices and liabilities on nonprofit corporations having annual revenues in excess of $500,000, including formal annual audit or review procedures and penalties for noncompliance
Status: Passed Senate 4-21-05; left in House Business & Industry Committee; HB 3417 left pending in House Business & Industry Committee 4-12

HB 3437: State Comptroller would be given oversight and enforcement powers over nonprofit corporations with broad authority to make agency rules for enforcement
Status: left in Business & Industry Committee

HB 1620: Allows for a court award of attorney’s fees to the prevailing party when a nonprofit’s director is sued for misconduct
Status: left in Business & Industry Committee 3-29-05

HB 1319 (=SB 586): Non-substantive amendments to Article 1396
Status: PASSED; effective 1-1-06

Amendments to Charitable Immunity statutes in Chapter 84, Civil Practices & Remedies Code:

HB 507: Limits liability of volunteer health care providers
Status: left in House Civil Practices Committee

HB 654-655: Insurance coverage for liability of volunteer health care providers who may be retired and unlicensed could be provided by nonprofit or faith-based organizations
Status: HB 654 PASSED; effective 5-27-05; HB 655 PASSED; effective 5-30-05

HB 1577: Limits liability of physicians assistants
Status: PASSED; effective 6-17-05

Exemptions from state taxes now extended to nonprofit entities:

HB 3 (property tax/school finance reform and business tax bill): Would impose a new 1.15% tax on all payrolls, business tax on all business operations, and increased sales tax; House version passed exempts nonprofit Sec.501(c)(3) corporations, small businesses, and government employers from the taxes
Status: House and Senate versions not reconciled by end of regular session

HB 117-118-119 (=HB 229): Exemptions from corporate/sales/property taxes enjoyed by nonprofit corporations would periodically face “sunset” (be canceled) unless renewed by the legislature
Status: left in Ways & Means Committee 1-31-05

HB 155: “Sunset” process every six years for nonprofits’ exemption from state taxes
Status: left in Ways & Means Committee 1-31-05

HB 2095: Nonprofit entities assisting a local economic development agency would be exempt from property taxes
Status: left in Ways & Means Committee

>Nonprofit board, officer, employee and volunteer issues:

SB 876 (=HB 2268): Requires a nonprofit’s board to prepare corporation’s annual financial report within 180 days of end of fiscal year
Status: passed Senate; withdrawn from House floor before voting; HB 2268 left in Business & Industry Committee

SB 1576: Criminal penalties for misinformation given intentionally to an outside auditor
Status: left in Senate Criminal Justice Committee 3-22-05

HB 84: Criminal background checks would be required for volunteers involved in children’s sports programs
Status: left in House Civil Practices Committee

Open meetings/open records issues:

SB 452 (=SB 727): TBPC would lose oversight of state agencies’ compliance with OR/OM laws, costs and procedures to Attorney General’s Office
Status: PASSED; effective 9-1-05

Advocacy/Ethics Commission (lobbying) issues:

None

Other nonprofit organization issues:

HB 2839: Authorizes county jails to contract with nonprofit corporations, higher education institutions, and private sector prison operators to use inmate labor
Status: PASSED; effective 9-1-05

HB 129 (=HB 508, HB 2839, SB 154, SB 159, SB 951) : Permits a county to direct jail inmate labor for use by a local nonprofit designated as performing work in the public interest
Status: PASSED; effective 6-18-05
*Above list does not include bills introduced relating to the following: Nonprofit hospitals, health care or nursing institutions and plans; credit unions; electric or rural cooperatives; condo/property owners associations; private and charter schools; cemetery corporations; local bingo and gambling proposals; insurance plans/HMOs; quasi-public nonprofit entities.

**Many bills have an identical “companion” bill in the other house, bearing a different bill number. Access pending bills at Texas Legislature Online, www.capitol.state.tx.us