Countries differ on nonprofit tax policy

FORT WAYNE -- Counties across Indiana are following different policies in exempting religious and nonprofit organizations from property taxes; a practice that could be costing local governments thousands of dollars a year, a newspaper reports.\nAlthough churches and charities are largely tax-exempt, state law provides an exemption for only the first 15 acres of property owned by the organizations.\nWhat has emerged is a system in which one group is taxed while a similar group in another county is not, The Journal Gazette reported in a story Sunday.\nFor instance, the Christian Care Retirement Community -- a nonprofit organization sponsored by two Apostolic churches -- uses about 29 acres in Bluffton for an extensive retirement community.\nWells County officials legally tax the 14 acres exceeding the 15-acre threshold, meaning the nonprofit group must pay hundreds of dollars in taxes a year.\nIn Allen County, which has historically ignored the acreage limitation, tax records show Grace Fellowship Church owns 66 acres in two parcels for future expansion, but pays no property taxes on any of it.\nExcluding the 15 exempt acres, the church should have been billed about $490 this year.\nAltogether, non-profit groups and churches in Allen County own more than 1,700 acres -- in excess of the 15-acre rule -- that could be taxable.\n"It varies from county to county, but they are supposed to get no more than 15 acres exempt, and that's what we do," Wells County Assessor Connie Prible said. "Churches are getting fire and police protection and paying nothing. The more we exempt, the more someone else has to pay."\nAllen County could have taxed its untaxed parcels about $23,000, said F. John Rogers, attorney for the Allen County Property Tax Assessment Board of Appeals.\nState legislators last spring approved a bill to increase the amount of land from 15 to 150 acres before a church or nonprofit could be taxed. Gov. Frank O'Bannon vetoed the bill, saying a provision would have superseded existing law requiring the land be used predominantly for charitable or religious purposes.\n"The governor's concern was not the acreage change, but was focused on a last-minute drafting error that we believe jeopardized a substantial amount of statutory and case law on exemptions," said Jon Laramore, O'Bannon's chief counsel.\nThe bill also would have required that refunds be paid to entities that had been taxed legally in the past.\nOne such group, the Granger Community Church near South Bend, bought about 30 acres in 1996, assuming that it would not have to pay property taxes on the land.\nHowever, in 2000, the church was told that only 15 acres would be exempt, and it would have to pay about $2,500.\nSen. Joseph Zakas, R-Granger, said he decided to sponsor the bill increasing the land exemption because he believes most counties do not tax it anyway.\n"I discovered most places are not taxing these entities at all -- even when they are above the 15 acres. So I tried to get them a refund," Zakas said. "We need to have a more evenhanded treatment of these organizations"