This section discusses the aspects of the law that specifically apply to associations.

An association is an organization created by an agreement between its member-owners for the performance or transaction of specified business affairs. Associations frequently have continuity of life even though the membership is changed (i.e., by addition, withdrawal, death, etc.) Frequently the conduct and management of the business is vested in a group or individual from among the member-owners.

In most respects, the law in Texas treats an unincorporated association as if it were a partnership (rather than a corporation). As a consequence, the members and officers of an unincorporated association are usually treated as partners rather than as employees (i.e., officers) of the association.

For a discussion regarding the Texas Professional Association Act, see Chapter 1 - Professional Associations.

If an unincorporated association possesses substantially all of the attributes of a business corporation, services performed by its member-officers may in rare instances be considered the same as services performed by an incorporated employing unit. Among these attributes of a business corporation are:

In investigations made to determine the "partnership" or "corporate" nature of an association, the first thing that should be examined is the instrument or document creating the association. If the association is incorporated, Paragraph 1.3.2 "Creation" is applicable. In the event the association is not incorporated the examiner is likely to find documented agreements executed by the members. These agreements usually state the purposes for which the association is organized, the type of organization it purports to be and sometimes the powers and duties of various officers or an executive board of the association. These documents and the agreements and relationships undertaken are of primary importance in determining just what type of association or employing unit is being considered. The Commission will hold the officers or executives of the association liable for any reports and information that is required under the law.

Texas Professional Association Act

The Texas Professional Association Act (Article 1528f, V.A.C.S.) became effective June 18, 1969, and permits one or more persons duly licensed to practice a profession to form a professional association. Professions eligible to form a Professional Association Corporation under the Texas Professional Corporation Act (Article 1528e, V.A.C.S.) are likewise eligible to form a professional association.

Pertinent provisions are:

Comment: An association formed under the Texas Professional Association Act is actually neither a partnership nor a corporation, but for purposes of the Texas Unemployment Compensation Act, the association will be treated as a corporation. The officers of the professional association will be treated as employees of the corporation and remuneration paid to the officers for services rendered to the corporation is subject to the unemployment tax.