Fixing the Charitable Property Tax Catch-22

By Zachary Kester, JD, LLM, CFRM

Recently a charity purchased property to use as a part of its charitable programming. Unfortunately, it was not permitted to apply for a property tax exemption that year because the property sale closed after the May 15th deadline to apply for the tax exemption. The county assessor subsequently issued a more than $25,000.00 property tax bill. The property already had a property tax exemption, but the assessor claimed the purchase destroyed the exemption because there was now a new owner, despite the fact that the use was still charitable.

The charity wound up getting the matter resolved with the assistance of an attorney, but a better potential fix would actually be legislative. A very simple sub-section could be added to IC § 6-1.1-10-16 allowing a charity that acquires property in a calendar year to apply for the property tax exemption on May 15th, or within 90 days of the acquisition, whichever is later.

Brent Auberry of Faegre, Baker & Daniels (M) came to a similar conclusion in February, 2014, stating “Nonprofits May Be Able to Find ‘Lost’ Property Tax Exemptions” through a legislative option.

Sometimes the legal solution is the best one. Other times, resources and time can be saved if an equitable legislative solution can be identified and achieved.

Charitable Allies is a 501(c)(3) charity that serves the legal and administrative needs of nonprofits in Indiana and beyond. Contact Zac Kester, Executive Director, at 317-429-1649 or zkester@charitableallies.org with any questions.