Wednesday, February 5, 2014
NY Trial Court Orders Property Tax Exemption for Drug Policy Alliance HQ Despite Alleged "Advocacy" Focus
A New York court has granted the Drug Policy Alliance's petition for real estate property tax exemption for its New York City headquarters, rejecting the previous denial by the New York City Department of Finance, which had been affirmed by the New York City Tax Commission. In Drug Policy Alliance v. New York City Tax Comm'n, NY Slip Op 33273 (U), the court rejected the city agencies' argument that the Alliance's alleged primary focus on legislative and policy change disqualified it from exemption as an "exclusively" educational organization. The court noted that the Alliance already enjoyed exempt status under federal (501(c)(3)), state, and city authorities, a fact the Commission failed to mention in its decision, and that similar organizations had been granted exemption under a liberal interpretation of the relevant regulation. Given these conclusions, the court declined to reach the Alliance's constitutional claims that the denial was based on the content of the Alliance's public advocacy, which relates to reducing the harms of both drug use and drug prohibition.
While not a surprising result, this dispute indicates the continuing struggle many otherwise tax-exempt organizations face in convincing local authorities that the term "educational" as generally used in both federal and state law is broad enough to encompass public education and advocacy, including with respect to controversial issues. Kudos to the New York Civil Liberties Union Foundation, the Asian American Legal Defense Fund, and the Lawyers Alliance for New York for supporting the Alliance in this case through amicus briefs.