Nonprofit Property Tax Update: 03/27/2010
Local property tax challenges threaten all Georgia nonprofits
Nonprofit organizations rely on property and sales tax exemptions to provide vital services to their clients, many of whom are those most in need. However, due to a 2009 Court decision regarding Nuçi’s Space in Athens, Georgia, changes to the definition of "organizations of purely public charity" could have drastic effects on many nonprofits' ability to receive these tax exemptions. In order to protect the nonprofit sector and those who rely on its services, the Georgia Center for Nonprofits has been supporting Nuçi’s in their appeal. Georgia’s Supreme Court has decided to hear the case. The decision in this case may set a dramatic precedent that could have a sweeping impact for any nonprofit that charges for its services–including camps, training programs, revenue generating social businesses, etc.
The Georgia Center for Nonprofits is also supporting SB 513. This bill allows for conditions under which a charitable institution receiving an exemption may rent or lease buildings for a fee without invalidating such exemption. "The renting or leasing of such buildings to third parties for a fee shall not invalidate the exemption for such property so long as: (A) The third-party user of the property is not using it to generate income, other than generating income for the charitable institution itself or for another purely public charity or entity that would be entitled to the exemption if it owned the property; and (B) All income generated from the rental of such property is used exclusively: (i) For the charitable institution that owns the property; (ii) For another purely public charity; (iii) For another entity that would be entitled to the exemption if it owned the property; or (iv) To defray the actual costs of using the building to generate income for the charitable institution, another purely public charity, or another entity that would be entitled to the exemption if it owned the property." At the time of this alert post, it seems that the bill may not make it out of the Finance Committee and may be taken up in the tax committee established to review revenues over the summer.
Supreme Court Case may have Profound Impact on Georgia Non-Profits
The Supreme Court of Georgia has agreed to review a case that will have a profound impact on non-profits in the state of Georgia. The Court will review the classification of “purely public charity” in reference to whether or not the property owned by charitable nonprofit organizations should be exempt from property taxes. Clarification of what it means to use the property "exclusively" for charitable purposes is expected from the Court.
On March 15th, 2010 the Supreme Court granted the writ of certiorari in the case Nuçi Phillips Memorial Foundation, Inc. v. Athens-Clarke County Board of Tax Assessors. The case was assigned to the June 10 oral argument calendar.