Wednesday, June 3, 2009

Minnesota Governor Signs Law Changing Property Tax Exemption Standard

The Chronicle of Philanthropy reports that Minnesota Governor Tim Pawlenty has signed a bill that changed the statutory criteria required for property tax exemption based on being an "institution of public charity."  The legislation comes in the wake of a December 2007 Minnesota Supreme Court decision that found an organization cannot be considered an "institution of purely public charity" as that term is used in the Minnesota State Constitution unless it provides free or reduced cost goods or services.  While the decision did not affect the property tax exemption of churches, hospitals, and schools, as exemption for such institutions is provided separately, it did affect other charities such as the day care center that was the subject of the decision.  The new law provides that otherwise qualified organizations that charge fees for their goods or services can still qualify as an institution of purely public charity if either "a material number of the recipients of the charity receive benefits or services at reduced or no cost" or if "the organization provides services to the public that alleviate burdens or responsibilities that would otherwise be borne by the government."  The Minnesota Council of Nonprofits, which led the campaign for the legislation, has announced it will work with the state Department of Revenue and local Assessors on implementing this new law.


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