Non-Profit Property Tax Exemption: 2011 General Assembly Update

On Tuesday February 15, the Indiana General Assembly’s Ways and Means Committee amended HB1285 dealing with nonprofit property tax exemption. This legislation is high on IACED’s priority list for the 2011 General Assembly. The amendment sends the issue of property tax exemption for charities to an interim study committee on Tax and Fiscal Policy. This amendment passed 16-0.

The amendment is in response to a February 11 Ways and Means Committee hearing which took testimony on the original legislation to clarify the exemption of 501-c-3 charities.  The hearing yielded significant discussion about differences in types of charities, business activity and income by nonprofits, use of property, etc.

A concern from the February 11 hearing was that the bill as written could expand the number of nonprofits that receive tax exemption (which was not the intent of the bill). The intent was simply to clarify that property owned and used for charitable purpose shall remain tax exempt. As IACED members have experienced for the last several years, nonprofits cannot afford for assessor by assessor interpretation of property tax exemption.

Rep. Milo Smith, who authored the legislation and is working closely with IACED on this issue, will remain involved in these issues as he routinely observes the challenges associated with different rules and comments by from the various agencies of government which impact property tax exemption for nonprofits including the Indiana Department of Local Government Finance, Indiana Board of Tax Review, the Indiana Tax Court and the Internal Revenue Service.

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