October 21, 2010
No State Property Tax Exemption for Vacant Property in Wisconsin
We have previously blogged about Massachusetts putting property back on the tax roles when churches close down parishes or schools and leave the property vacant. In this earlier post we predicted that we would see more of this kind of litigation, and indeed the trend apparently has migrated to the Midwest. A recent decision by the U.S. District Court in the Western District of Wisconsin (Asbury United Methodist Church v. City of La Crosse) has held the same thing. In this case, Asbury United Methodist Church in La Crosse owned property that had been used as a parsonage, but which was vacant at the time of property tax assessment (January 1, 2008). The church later converted the parsonage to a "hospitality house" to provide housing for people being treated at local hospitals that could not afford to stay at a motel. This conversion, however, did not begin until April, 2008. The court held that under Wisconsin law, property must be used for charitable purposes at the date of assessment in order to qualify for exemption. In this case, the property in question was vacant and not being used for charitable purposes at the relevant date.
The court also considered the church's claim that Wisconsin law permits exemption for vacant property if it is being "readied" for charitable use (for example, undergoing renovation as a predicate to a charitable use). The court noted, however, that the conversion of the parsonage did not get underway until April 2008, over three months after the relevant assessment date. Accordingly, the property was not being "readied" for a charitable use at the key time in question. The court also rejected free exercise and due process arguments presented by the Church.
October 20, 2010
EU Probing Property Tax Exemptions in Italy
The EU has opened a probe into property tax exemptions provided by Italy to the Catholic Church and some other nonprofit organizations. According to another report, the issue involves an Italian law that shields these organizations from property taxes even on property used for some commercial purposes, like hostels and athletic clubs.
October 19, 2010
Microsoft Moves to Protect Nonprofits from Government Piracy Claims
The NY Times reports that Microsoft will provide free software licenses to more than 500,000 advocacy groups, independent media outlets and other nonprofit organizations in 12 countries with tightly controlled governments, including Russia and China, in order to prevent those governments from using software piracy claims to shut down anti-government advocacy groups. The move comes after an earlier Times story reported that Microsoft lawyers often encouraged and/or participated in crackdowns on anti-government advocacy groups in Russia, and that Russian security services confiscated computers from dozens of advocacy groups under the guise of enforcing piracy laws.
October 18, 2010
Another Property Tax Fight with a Hospital
The New Jersey Star-Ledger reports on another fight between a local community and a nonprofit hospital over property taxes. Morristown is seeking $1 million in back taxes from Morristown Memorial Hospital relating to property that the hospital leases to doctors for their offices. The hospital, which has already lost in state court, plans to appeal, but the city apparently isn't done, yet, either: the story quotes the mayor saying, "There is a lot more of the hospital that we believe that could be taxed."
While I'm not an expert on New Jersey property tax law, in most jurisdictions property is exempt from tax only if the property is both owned AND USED for charitable purposes, and many states tax property owned by charities that is leased to for-profit businesses or otherwise used for for-profit purposes. This appears to be the grounds on which the trial court held against the hospital.
More importantly, the court refused to dismiss issues raised by Morristown regarding the overall exemption of the hospital. The judge cited various disclosures on the hospital's form 990, particularly the levels of executive compensation and charity care, that according to the judge raised material issues regarding whether the hospital as a whole was operated for profit.
This is a case that may bear watching in the future.