Taxing non profits does your state and your opinions

LETS KEEP THIS CIVIAL!!! My state is trying to tax non profit groups and it is a can of worms to say the least. Example tractor club would have to pay some reduced rate on its buildings and so on. Problem seems to be the idea has been active but no one can seem to come up with a plan at all let alone one that will work. With me I say the need some tier system based on value of holdings and how much the non profit makes or some such method. So fire away and has your state done this??? (yet)

Haven't heard anything but something like a tractor, boat, car or gun club only benefits a relatively small segment of the population. Yet the general population pays for the extra cops directing traffic and other things. I can see where communities/counties want to recoup so of that money. I think there are other ways like just billing a club for services rendered. I know a smaller show near me has 4-5 deputies out there working over and above the normal patrols.

Rick

Yes I should have added the for it argument is: They use municipal services. 2. Land is taken off tax rolls as in a shooting/gun club owning 100 acres.

We have way to much non taxable property in my county. We have a non profit childrens school,(reform school)that pays no taxes. Several hundred acres of land,provide about 700 mostly minimum wage job. their existence has forced the Sheriffs department to man a sub station on site. We actually pay rent for that building! The volunteer ambulance and fire department are there several times a week. They are solely responsible for 15 or 20 cases added to our family court calendar every month.
The directors of this "non-profit" sit in the city 70 miles away pulling in salaries in the high 6 figures.
Cornell University has a lot of orchard,or farm land that they pay no tax on.
There needs to be something in place. I see these groups getting way to much benefit,when normal folks either cannot afford a house or are being forced out of their homes by rising taxes.

I only know currently of four states that have filing requirements thru treasury. Of these I believe three are just information returns with nothing more than a filing fee to keep the state updated on what is happening. Texas may require the filing of their franchise tax return or similar but I am not going to swear to that. I have "profit" clients who operate in TX but non of the non profit entities that are (or have been) my clients have ever operated in TX. Other states have information returns that are filed thru other agencies. For example, Michigan has an annual report that is filed. Modest fee, no tax. You did not say what state you are in. I would be interested from a professional point of view.

Dave I tried sending you an email.

Well, it seems that _some_ "non-profit" groups tend to take advantage of that status. Seems to me that the only reasonable way to handle it would be some sort of means testing.
For instance, if a group with a non-profit status can afford to pay administrators a huge salary (say over the prevailing wage of the area), then they should also be able to afford reasonable taxes.

BTW, what is "civial"?

They take the troubled kids out or town thinking they will leave the troubles behind but all it does is bring the troubles someplace that didn't have them yet.

Jocco...I'm confused. Are you talking about property taxes or some sort of income/sales tax?

Well...that usually works, but it has not come thru yet. You can post what state you are in on the forum. Nothing bad will come of it. My state is in my handle and my handle is most of my name and I make no secret of my profession. Never had an issue. In fact, some good has come of it from time to time.

You think you are confused. We have some on this site saying eliminate the IRS! No taxes etc etc.
Others saying tax them! tax them! It's no wonder I go around in a constant state of confusion. (or so my wife says)

'BTW, what is "civial"?' Possibly a typo? TDF

Well, I proofread my posts before I post them. And, if a typos slips by, I go back and edit it. One this obvious should have been caught and edited unless it was intentional hence my question.

As I understand it, "non-profit" primarily means:

1) It provides some benefit to the community
2) It can make a profit. But that cannot be distributed to the owners, it has to be reinvested in the non-profit (however, owners can work for the non-profit and collect a "reasonable" salary)
3) The owners get a lot of protection from liability.
4) It is exempted from paying some or all state and local taxes

I think the question is whether the community receives sufficient benefit from the non-profit's activities to offset the loss of tax revenue. It seems to me that instead of a blanket exemption, the non-profit should have to document the value of that benefit and get a tax credit for that amount. But (as you say) that's a big can of worms.

Does my local watershed association's river cleanup activities benefit me enough to offset the property tax on their headquarters? I might think so; the jerk who tosses a few old tires over a bridge railing might disagree.

There are several levels of Non Profits.
In MA some are taxed Real estate taxes and some are not. None for Income Tax that I know of.

Florida had an interesting item in their tax code. When we purchased our house the individual who owned it before us was a disabled Veteran, an thus paid no property taxes, how ever he was assessed for "Municipal Services" so his property tax was about 10-20% of what it would normally be. IRRC he had to pay storm water, street lights and 911 fees. Of course since it was already on the rolls that year with him the owner we only had a property tax liability for the first 5 months we owned the house of about $100, the next year it was $1200. This is a good concept but could be abused by local governments, and like any government good luck getting them to follow the rules.

When I worked for the county there was a lot of animosity between us and the city and city workers because the county didn't pay property taxes. It was so bad that the city would actively block the county from acquiring any land adjacent to the Courthouse as then they couldn't tax it. At the same time the city wouldn't address the issue that on any given day more than half the parking spaces in the Courthouse parking lots were occupied by employees and customers of various for profit entities, increasing our need for parking spaces. When the storm water tax was implemented we had to pay it, they attacked us drunken with power taxing is in a few instances for more square footage then the entire parcel was. At that time you had a situation where the county was paying storm water tax on about twice the parking spaces that the county really needed as half our parking lots were used by private business. In effect the county was subsidizing a bank, several title companies and a few law offices.

Other problems in the Northern part of our County where in some townships the majority of land was county Forest, State Forest, State Park, National Forest or Commercial Forest Reserve. The Commercial Forest Reserve didn't hurt them as much as they got a percentage of the stumpage but revenue went down when lumber went down. On the State lands the state would pay an offset BUT any time money got tight in Madison the offset would get reduced by the representatives from Madison, Milwaukee, Racine and Kenosha, so aid to cities would be increased.

There is a lot of good reading about non profit rules on the net. When I was a director at the local threshing show someone raised a stink about some non profit rules being violated so I Googled for several days looking up the rules just so I could act like I knew what I was talking about if I was challenged. I found out some interesting rules that could have been used against the challenger if it would have gone that far.

Both: and any additional fees for service like water, fire surcharge etc.

I'm impressed with your thoroughness and perfection. TDF

(quoted from post at 06:43:36 03/21/15) LETS KEEP THIS CIVIAL!!! My state is trying to tax non profit groups and it is a can of worms to say the least. Example tractor club would have to pay some reduced rate on its buildings and so on. Problem seems to be the idea has been active but no one can seem to come up with a plan at all let alone one that will work. With me I say the need some tier system based on value of holdings and how much the non profit makes or some such method. So fire away and has your state done this??? (yet)

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I think everybody should pay there taxes. Exemptions for religion is the big one.

What burns me is that the colleges both public and private in my area are buying some prime real estate and pay no property taxes.
We also have hospitals and medical facilities that are nonprofit and pay no taxes.

The volunteer fire dept that I belong to is a 501C-3 organization. We do not pay taxes on anything, and no one in the dept is payed.

IF CHURCHES WANT TO PREACH AND DICTATE POLITICS TAX THEM THEN LET THEM SCWALK

I've never understood letting some off tax-free and then charging the rest higher taxes to cover it.

Not just non-profits, but here in NY you can get off tax-free for 10 years by moving/starting your for-profit business here. If you know the right people. Then they raise taxes on everyone else. When your 10 years are up, you move somewhere else and the clock starts over.

If everyone paid, everyone would have to pay less.

(quoted from post at 18:48:29 03/21/15)
If everyone paid, everyone would have to pay less.

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Not true, our politicians, from all parties, would just spend that too without lowering taxes!

Rick

This is a sore subject for me. The closest city to me, Ogdensburg NY (not a "city" compared to most), has either 70or 80% of the land within the city in a tax exempt status. Most is owned by State or it's entities, followed by the city, schools, churches and IIRC some Federal property. Our "richest" villages, Canton and Potsdam, are covered in tax free property owned by the State or private Universities. In our little town of 7-800 souls the state owns huge tracts of tax free land. In the Adirondack Park the State owns a large amount of the 6 million acres there. The State actually pays tax to the towns there at a reduced rate. That's right- the State taxes it's citizens to pay a tax on land the State owns, that the citizens are basically barred form making use of other than to walk on it or look at it.

Does this sound sustainable to you? I don't know how things are elsewhere, but here in NY the Gov has shifted a lot of costs onto the counties and they push it onto the tax payer. The NYS Real Property Division, the people who tell us what our towns property is worth and how much we have to raise through taxes, are reported to actively be working to value ALL land at the same rate as residential land! Think about that, who benefits except the politicians running the state that will have oodles more money to use to get themselves re-elected?

So, IMO, no one should be tax free. I don't care if it's your tractor club, a school, a church, the USMC, the Army, National Parks, public authorities, NASA, a college or university or the White House itself. They should all be paying the same income, land and school taxes the rest of us do. Non-profits, not for profit, tax exempt, I don't care what you call it. It all adds up to the land owner and tax payer getting the shaft over and over and over again. Tax them all at a reduced rate or at the full rate, I don't care. But not having to pay any taxes is simply wrong. The alternative is to cut taxes on the land owner and taxpayer drastically. I know that won't happen.

(quoted from post at 20:39:12 03/21/15) IF CHURCHES WANT TO PREACH AND DICTATE POLITICS TAX THEM THEN LET THEM SCWALK

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ctually you will find most political organizations are non profit and do not get taxed, why single out churches. I do agree however that churches should not dictate politics, and so far as I know are not able to. Members can encourage politicians to be moral, but that is pretty tough to dictate.