Forming Your County Taxpayer Association 🏛️

What is a Taxpayer Association?

A taxpayer association is a nonprofit, nonpartisan organization formed by citizens to act as a watchdog for local government spending. Its primary mission is to advocate for fiscal responsibility, government transparency, and lower taxes on behalf of the community.

These groups work by researching local budgets, educating the public on how their tax dollars are being used, and providing a unified voice for taxpayers at public meetings and hearings. They ensure that the interests of everyday citizens are represented when local governments make financial decisions.

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Forming a taxpayer association is a powerful way to bring your community together. The first official step is filing a Certificate of Formation with the Texas Secretary of State to create your legal entity. The next critical step is to establish your organization's internal rules by adopting bylaws.

This guide will walk you through both of these essential founding documents. You can find downloadable templates for these forms at the bottom of this page.

What Are Bylaws and Why Do You Need Them?

Bylaws are the internal rulebook for how your nonprofit organization will be governed and operated. While the Certificate of Formation creates the legal entity, the bylaws define how it actually works. Think of them as your association's constitution.

Bylaws are necessary because they:

• Establish Structure: They define the roles and responsibilities of the Board of Directors and officers, ensuring clear leadership.
• Set Procedures: They outline procedures for electing directors, holding meetings, voting on issues, and managing finances, which prevents confusion and conflict.
• Define Membership: They specify who can become a member, what their rights are, and how the annual meeting of members will be conducted.
• Ensure Compliance: Having well-drafted bylaws is often a requirement for opening a bank account, applying for grants, and obtaining tax-exempt status from the IRS.

In short, bylaws provide a clear, agreed-upon framework that allows your organization to run smoothly and effectively. We provide a template to help you get started.

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A Step-by-Step Guide to Form 202 (Certificate of Formation)

This state form officially establishes your organization as a Texas nonprofit corporation. Here is a breakdown of each article on the form.

Article 1: Entity Name and Type

This article officially names your organization. The name must be unique and distinguishable from any other business name on file with the secretary of state. While you can use an organizational designator like "Inc." or "Corporation," it is not required for a nonprofit.

• Action: Perform a name availability search on the Texas Secretary of State's official portal. You will need to create a free account to access the search tool. Use this Business and Record Search page to ensure your chosen name isn't already taken.

Article 2: Registered Agent and Registered Office

You must designate a registered agent and office to receive official legal and state correspondence.

• The Registered Agent can be an individual who resides in Texas or another organization registered to do business in Texas. Your association cannot act as its own registered agent. The person you designate must consent to serve in this role.
• The Registered Office must be a physical street address in Texas where the agent can be served process during business hours. It cannot be only a mailbox service.

Article 3: Management

This article specifies how the association will be governed. For most new associations, management is vested in a board of directors.

• You must have a minimum of three directors. A director must be an individual but does not need to be a Texas resident.
• List the full name and address of each initial director. If privacy is a concern, you may use a business or P.O. box address for the directors.
• Alternatively, a nonprofit can be managed directly by its members, but you must state this in the certificate.

Article 4: Membership

Here you must state whether the nonprofit corporation will have members. You can select either "shall have members" or "will have no members". If you stated in Article 3 that the corporation is managed by its members, you must check the box that it "shall have members".

Article 5: Purpose

You must state the purpose of the corporation. While a general statement like "any or all lawful purposes" is allowed by the state, you will likely need a more specific purpose to apply for state and federal tax-exempt status.

• Example Purpose: "The corporation is organized for charitable and educational purposes, including promoting civic engagement, educating the public on matters of local taxation and government spending, and advocating for fiscally responsible policies within [County Name], Texas."

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Completing the Form 202

Initial Mailing Address

You must provide an initial mailing address where the Texas Comptroller can send franchise tax information and other correspondence. This can be a street address or a P.O. box.

Supplemental Provisions/Information

This optional section is highly recommended if you plan to seek tax-exempt status. You should include an IRS-required dissolution clause, which specifies that upon dissolution, any remaining assets will be distributed to another tax-exempt organization.

Organizer

The organizer is the person or entity submitting the form. Only one organizer is required. The organizer must be at least 18 years old or a legal entity and does not need to be a Texas resident. They must sign and date the form.

Effectiveness of Filing

You can choose for the certificate to become effective immediately upon filing, or you can specify a later date up to 90 days in the future.

Filing and Fees

The filing fee for a nonprofit corporation is $25. You can submit the form by mail, courier, or electronically using the SOSUpload system.

Disclaimer: This guide provides general information and is not a substitute for the advice of an attorney or tax specialist. For detailed information on tax exemptions, you should consult the IRS and the Texas Comptroller of Public Accounts.

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Formation Document Downloads 📄

Use the links below to download the official Certificate of Formation (Form 202), our template bylaws, and a helpful checklist to guide you through the process.