Nonprofit Property Tax Update: 07/28/2010
Does your nonprofit own property? If so, some tax breaks you currently enjoy may be in jeopardy
Nonprofit organizations rely on property and sales tax exemptions to provide vital services to their clients. Over time, as diversified revenue sources have become increasingly important, many nonprofit property owners have earned revenue by renting their space out for receptions and meetings, others have started thrift stores, and some have launched other innovative revenue producing programs that earn money to be driven back into the mission related work of the entity. Sounds great right? Not to many local tax assessors. Due to ambiguity in the Georgia Code that defines a “purely public charity”, many nonprofits throughout Georgia have had their exemption from property tax challenged. Some have lost their appeals, others have prevailed.
The Georgia Center for Nonprofits, as the leading voice of Georgia’s nonprofit sector has weighed in on many of these fights over the years by providing resources to combat legal battles, organizing local opposition, and providing legal resources. But sometimes it takes more than one voice regardless of how loud it is. Therefore, we want to bring your attention to a troubling and immediate concern that if ignored could change the definition of what is considered charitable in Georgia and immediately impact a great number of nonprofit property owners.
Nuçi’s Space, a nonprofit in Athens serving the mental health needs of artists was found to be subject to property tax on its land and facility because it occasionally rented the space for receptions and concerts. These revenues were used for the organization’s charitable purpose however the way that Georgia law is written, the rental must be “exclusively” for charitable purposes. In other words, the assessors in Athens Clarke interpreted the law to state that, regardless of whether earned revenue supports a charitable purpose, the actual earning of revenue (i.e. rental of facility, etc.) must also be exclusively a charitable purpose.
Nuçi lost its case and appealed to the Georgia Supreme Court. GCN wrote an Amicus brief on behalf of our membership and thankfully the Court granted a hearing, which took place on June 8, 2010. We felt the arguments went well and were favorable to Nuçi’s. However, the Athens Clarke Assessor filed a supplemental brief that was much more aggressive. GCN and approximately fifteen other agencies will be filing a second Amicus brief in response. However, you should be aware of the risks if this case is decided unfavorably.
The Potential Impact:
Each time a case such as this is lost, the definition of what is charitable in Georgia narrows. This case in particular will, if lost, open the door to a sweeping loss of property tax exemption throughout the state for those who own property and have a revenue generating activity on that property. Literally millions of charitable dollars that would otherwise go to cause related activity would be redirected to local government tax payments. There are certain other outright exemptions, for example, churches are specifically exempt, as are hospitals and veterans organizations (See the actual code for a full list).
What Can you Do?
There are two avenues of action. The first is to help us fight for a favorable ruling in the Nuçi case. The second is to organize a coalition that will work toward a more permanent fix in the Georgia Code.
1. Regarding the Supreme Court Case: If you would like to be a party to the Amicus Brief please contact us immediately. This is highly time sensitive.
2. Regarding a more permanent fix: If you would be interested in working with a group that is looking at legislation to clarify the Georgia Code as it pertains to the definition of charity and expansion of allowable use of property. Please email Karen Beavor, [email protected] with the subject line GA Property Tax.
Want to Learn More?
Click the links below for supplemental documentation of the issue and actual court-filed documents: