Honorable Robert S. Calvert Opinion No. C-286
Comptroller of Public Accounts
Capitol Station Re: Exemption of
Austin, Texas devise and be-
quest to a
charitable or-
ganization un-
der submitted
Dear Mr. Calvert: facts.
The question you have submitted involves the fol-
lowing provisions of Article 14.06, 20-A, Tax.-Gen.,
Vernon's Civil Statutes, which read as follows:
"If'passing to or for the use of
the United States, to or for the use of
any other person or rellgious,education-
al or charitable organization or
institution, or to any other person,
corporation or association not Included
in any of the classes mentioned In the
preceding portions of the original Act
known as Chapter 29 of the General
Laws of the Second Called Session of
the Thirty-eighth Legislature, the
tax shall be:
II
. . .
"Provided, however, that this Art-
icle shall not apply on property pass-
ing to or for the use of the United
States, or to or for the use of any
religious, educational or charitable
organization, incorporated, unincor-
porated or In the form of a trust, when
such bequest, devise or gift is to be
used within this State. The exemption
from tax under the preceding provisions
of this Article shall, without limit-
ing its application under other appro-
priate circumstances, apply to all or
so much cf a?y bequest.,devise of
gift to or for the use of the United
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Honorable Robert S. Calvert, Page 2 (Opinion No. C- 286)
States, or a religious, educational
or charitable organization, which is,
in writing and prior to the payment
of the tax, irrevocably committed
for use exclusively within the State
of Texas or transferred to a religious,
educational or charitable organization
for use exclusively within this State.
"Provided, further, that if the
property so passing is to or for the
use of a religious,educational or
charitable organization which conducts
its operations on a regional basis,
one such region of which includes the
State of Texas, or any part thereof,
then a bequest, devise or gift to be
used within such region shall be deemed
to be used within this State. For
purposes of this paragraph a region
shall comprise not more than five
contiguous states, either in whole
or in part, one of which is the State
of Texas. For purposes of this para-
graph, a religious, educational or
charitable organization shall include,
but not be limited to, a youth pro-
gram of physical fitness, character
development, and citizenship training
or like program.
"Provided, further, that this Art-
icle shall not apply to property pass-
ing to or for the use of any religious,
educational or charitable organization,
incorporated, unincorporated or in the
form of a trust, if (either at the time
the property passes or at any time
prior to the payment of the tax) the
laws of the jurisdiction under which
such organization is organized or is
operating provide an exemption from
death tax of any character with res-
pect to property passing (1) to or
for the use of such an organization
or (2) to or for the use of such an
organization organized or operating
.
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Honorable Robert S. Calvert, Page 3 (Opinion No. c-286 )
within the State of Texas: or (3) to
or for the use of such an organlza-
tion organized or operating within
any other jurisdiction which grants
a reciprocal exemption. Bor the pur-
poses of this paragraph, jurisdiction
means any state or territory of the
United States or the District of
Columbia."
We quote the following excerpts from a letter
which was submitted to you in oonnection with gaining
an exemption under the above quoted provisions of
Article 14.06.
"Our case In point is the estate
of F. W. Dye, deceased, who died on
March 15, 1964, a resident of Dallas,
Texas. In the Third Codicil to his
Last Will and Testament, Mr. Dye be-
queathed the residue of his estate
to the F. W. and Bessie A. Dye Founda-
tion, a Texas non-profit corporation
chartered in 1961 which is a charitable
and educational organization exempt
from federal income tax under Section
501(c)(3) of the lg.54Internal
Revenue Code. A copy of this Codicil
which has been admitted to probate
by the Probate Court of Dallas
County Is enclosed for your reference.
II. . .
"You will note that Section II of
theCodIcil, relating to Section V
of the Will, provides for three-fourths
of the bequest to be used exclusively
in the State of Texas; however, there
is no provision that the remaining
or&ourth must be used outside of
Seemingly, under the second
paragiaph of Article 14.06, the
trustees of the F. W. and Bessie
Arabella Dye Foundation would cause
this one-fourth to be exempt from
Honorable Robert S. Calvert, Page 4 (Opinion No. c-286 )
the Texas inheritance tax by filing
a written irrevocable commitment for
the use of the one-fourth exclusive-
ly within the State of Texas at
any time prior to the payment of
inheritance tax. me other three-
fourths would,automatically be ex-
cluded from taxation by the last
clause of the last sentence of such
paragraph inasmuch as same has been
transferred to a religious, education-
al, or charitable organization for use
exclusively within the state.”
An exemption could be obtained for one-fourth of
the devise and bequest by Irrevocably committing It to
use within this state at any time prior to the payment
of the tax. The statute is plain and unambiguous In
this respect.
We quote further from the aforementioned letter
with regard to exemption under the third paragraph of
Article 14.06.
II
. . . Moreover, the third paragraph
of Article 14.06 would provide an
exemption from inheritance tax of the
one-fourth since same is bequeathed
to a religious, educational or charl-
table organization which conducts its
operation on a regional basis consist-
ing of not more than five contiguous
states, one of same being the State
of Texas. me F. W. and Bessle Arabella
Dye Foundation, being a Texas non-profit
corporation, has heretofore conducted
Its operation only in the States of
Texas and Arkansas. We assume that
If an exemption were claimed under the
third paragraph of Article 14.06, the
trustees of the Foundation would still
be authorized to use the one-fourth
bequest in three additional contiguous
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Honorable Robert S. Calvert, Page 5 (Opinion No. C-286 )
states (for example- Oklahoma, Missouri
and Louisiana) without violating the
terms of this exemption."
Exemption could be obtained under the third paragraph
of Article 14.06 if the'appropriate commitment is executed
by the Foundation. This office has passed upon a similar
question in Opinion No. WW-1141, a copy of which is attached
hereto and made a part of this opinion for all purposes.
We again quote from the letter attached to the
request for an opinion of this office with regard to
exemption from inheritance taxes of the devise and
bequest in question.
"Our problem arises under the fourth
paragraph of Article 14.06 wherein an
exemption is provided for religious,
educational or charitable organizations
operating in states which provide
reciprocal exemptions for Texas charl-
ties. ?s it possible that an exemption
may be had under Article 14.06 for
the one-fourth bequest if the trustees
of the Foundation should file an
'irrevocable,commitment' in writing
and prior to the payment of the tax,
stating that the bequest, if not used
in three additional contiguous states
not including Texas and Arkansas, will
be used only in states which provide
reciprocal exemptions for organiza-
tions operating within the State of
Texas?"
That provision of the fourth oaragrawh of Article 14.06
expressly provides exemption for 'an 0Eganization
charitable 7 organized or 'oeratin within any other
f urisdiction-which grants-Y
a ret procal exemption." (Emphasis
supplied.) In view ofthe plain language of this provision
as to operation alone effectuating exemption in jurisdic-
tions which grant reciprocal exemptions, and for the same
reasons exemption was allowed in Opinion No. WW-1141
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Honorable Robert S. Calvert, Page 6 (Opinion No. c-286 )
(see particularly paragraph 2 at page 7 of Opinion
No. WW-11&l), we have concluded that a properly
drawn commitment in line with the terms of this last
quoted provision would be sufficient to effectuate
exemption.
SUMMARY
Under submitted facts, a devise
and bequest to a charitable non-
profit corporation may be exempt
from inheritance taxes pursuant
to the provisions of Article 14.06,
Title 122A, Tax.-Gen.. V.C.S.
Yours very truly,
WAGGONER CARR
Attorney General of Texas
By:
MMP/sh
APPROVED:
OPINION COMMITTEE:
W. V. Geppert, Chairman
W. E. Allen
Arthur Sandlin
Cecil Rotsch
Pat Bailey
APPROVED FOR THE ATTORNEY GENERAL
By: Stanton Stone
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