Washingtonpost.com:
Prince William County staff and the state of Virginia should find ways to allow for real-estate tax exemptions for religious institutions that own vacant land, the Prince William Board of County Supervisors directed Tuesday.
About 30 church leaders and congregation members told county supervisors during an evening board session that the tax assessor’s office was too strict when it comes to taxes on their charitable nonprofits, which are generally tax-exempt.
One of the prime examples is New Life Gainesville church, which is taxed on about half of its property that has only trees and streams on it. While the church building and parking lot remain exempt from taxes, the remainder of its wooded property is taxed about $1,000 per year, leaders have said.
Because it’s in the county’s protected rural area, the church can’t sell or subdivide the land. County officials say they are abiding by state law, which says that land can only be tax-exempt when it is used “exclusively” for religious use.
New Life’s situation, or a similar predicament, is shared by a total of 13 churches in Prince William, according to county officials. Other pastors said Tuesday they had run into the county tax collector when it comes to vacant land that they have bought and plan to build on in the future
Why should these churches escape paying taxes on land not being used for worship? It seems like that land is simply an investment at that point. What if the churches don’t use the land and sell it later for profit?
“While you’re at home, we are up helping families,” said Pastor John Peyton, who leads Reconciliation Community Church of Manassas. “We are worked to death, and now I got to deal with taxes? That’s ridiculous.”
What a self-serving pity-party! Single moms holding down 2 jobs to support their families are also worked to death and still have to pay taxes.
Peyton has plans to buy 2,400 acres to offer a variety of services for Prince William residents. He bristles at the thought of paying taxes on the land while he gets plans and funding together for an extensive facility. “It’s going to cost me millions, and the people I’m serving are going to tax me?” he said.
I am wondering, where is there 2,400 acres of contiguous land in Prince William County? Nowhere! And furthermore, is this man planning on building a theme park in the Rural Crescent? Churches are still subject to zoning regulations or do they expect ALL the rules to be changed just for them.
FYI, you don’t “serve” all the people, you only serve people who follow your faith and you are making a personal choice to do so. You aren’t “owed” anything by anyone. All the rest of us do our good deeds, some more than others, and don’t expect any compensation. In fact, I would contend, that those who truly serve don’t expect ANYTHING in return.
If the land is restricted from development, and cannot be sold or subdivided, then it shouldn’t be taxed, regardless of who owns it.
The land can be developed. The church could put in a nature trail dedicated to God’s natural wonders. It can’t be subdivided in the rural crescent if less than 10 acres. If you owned the land you would be taxed.
I’ll preface my writing with saying in my small consulting business, I work with a variety of nonprofits of all shapes and sizes in all aspects of nonprofit management. And for simplicity, I’ll just use Churches to represent all Religious Organizations/Denominations.
I personally lean to local governments should review all RE holdings of all nonprofits. What most nonprofits anywhere forget is that the IRS provides the exemption for tax purposes; primarly income and then on facilities and equipment DIRECTLY related to the purpose of the nonprofit. Virginia, like most States, provide the tax exemptions under State Codes based on the IRS Letter of Determination for Exemption.
Emphasis on the word “directly” since that is also the center of the debate in Tuesday’s work session.
Churches on their RE holdings and buildings are no different than, for example, a hospital. A hospital has tax exemption on that which supports direct care for people. However, that which does not directly support care of people, such as having a seperate building for your Information Technology department, is not direct care….it is a supporting aspect (aka indirect costs/overhead costs in the bean counting world). That IT Department building and the land it sits on is subject to RE taxes.
When it comes to Churches, the IRS has a ton of rules. Many activites within Churches is labeled a “ministry”, and this is one area the IRS is looking at and it does apply to RE taxes. A Church runs a Thrift Store as a ministry and says it it tax exempt. Yes, the income if received and applied directly back to the Church is exempt. The building though is not considered as such since it is technically a retail activity. I could also write a lot of other examples where the RE tax comes in to play about facilities by other nonprofits.
One thing also with taxes being looked at by the IRS is Unrelated Business Tax Income. Say a Church is running a child care or adult day care as a ministry. If that day care is soley for the members of the Church, it meets the clear definition of religious activitiy. However, if they open it to the general public, even if they offer a bible study as part of their program, once you open it to the general public it falls under the definitions of what is unrelated to the direct purpose of the nonprofit.
All I can say to sum up is….this is going to get interesting.
Thanks for your input, Ray.
It sounds like our tax assessment office is on target and the supervisors need to read what you have written.
I don’t think anything should change. I am also very curious what that one church is planning on putting in the county. Do I hear the murmurings of theme park? Tell me we won’t have people riding dinosaurs. PLEASE!
Cargo,
ALL land is zoned, no matter where you live! Commercial land can’t be developed as housing and visa versa. Community planning isn’t a free for all.
What I meant, is that if private land is prevented by the authorities from being sold or developed….why should it be taxed? It has no value. It’s effectively owned by the authority.
I am my own non-profit. I own land. The County will not let me increase the footprint of my house, effectively preventing me from developing my land further. I don’t want to pay real estate tax. I help people. I want the Board to include me in their tax free give-away to churches.
I will sponsor you, BS.
Me too!
Cargo does raise a good point….and it is the issue where there are real “hang fires” over. A nonprofit buys a section of land, and puts their building on it. Now, it may not cover the total property, but the owner of the land is the nonprofit. In the case of many of the larger Religious Denominations (i.e. Roman Catholic, Lutheran, Episcopal), it is owned by the Diocese. And the total area of the land may not be in use for a variety of reasons such as stormwater management, conservation easements, utility easements, etc etc etc. So if the land cannot be used, why is it taxed.
Just for fun is the general rules of easement anyway. Take my little 1/3 acre in this City cul-de-sac. Down on the street side are the underground utilities and also the sidewalk. All within the easement. If the sidewalk needs to be fixed, I call the City. If the water line breaks in that easement area, call the City. And yet, each year I pay RE taxes on that stretch of property that I maintain to include having to remove snow from the sidewalk.