Nonprofits and Property Tax Exemption--Tips and Resources
The Helen Bader Institute for Nonprofit Management at UWM sponsors an ongoing series of community Forums on the Nonprofit Sector that focus on nonprofit finance. In June 2010, local and national experts explored the property tax exemption for nonprofit organizations in partnership with Marquette University's Legal Initiative for Nonprofit Corporations (M-LINC). Panelists included
The summary below is based on the presentations. It provides a basic overview of real property tax exemption for nonprofits in Wisconsin, but it is not intended as legal advice. Property tax exemption is a complex issue that is evolving locally, statewide and nationally. Nonprofit leaders should inform themselves and seek guidance from trusted advisors.
Property tax exemption in Wisconsin is defined by the legislature through statute at the state level and applied and interpreted by the assessor's office at the municipal level. Note that the criteria for property tax exemption differ from the criteria for 501(c)(3) status and attendant exemption from federal income tax liability and deductibility of charitable donations.
Four principles apply to property tax exemption in Wisconsin:
Familiarize yourself with the property tax exemption statutes and how they relate to your organization.
Be vigilant. Be aware of events or activities that can trigger a change in exempt status for property tax purposes: change in ownership or use, commercial activities, leasing activity, etc.
Communicate accountability. Be prepared to "calculate and communicate" the public benefit--the social return on investment--that your organization provides, and make sure that your communication is aligned with practice.
Stay abreast of local, state and national trends relating to tax exemption.
IF YOU PLAN TO PURCHASE PROPERTY
Familiarize yourself with the exemption application process and timeline.
Remember, property is considered taxable until exemption is granted.
Get to know your assessor. If possible, meet with the assessor to ask questions before you purchase property. Most will give you a preliminary idea of exemption status if you provide enough information beforehand and come prepared.
State of Wisconsin Property Tax Exemption Request, Form PR-230
Wisconsin Association of Assessing Officers
Section 70.11, Wisconsin Statutes. Detailed information on different categories of exemption.
Books, Chapters and Manuals
Anderson, Brian, Ed. 2010. A Guide for Wisconsin Nonprofit Organizations (3rd Edition). State Bar of Wisconsin CLE Books. See Chapter 2, "Tax Treatment," by Evelyn Brody, John Yentz, Paul W. Seidenstricker, and Lynette M. Zigman. Available at the Marquette University Law Library and Greenfield Public Library.
Brody, Evelyn, Ed. 2002. Property-Tax Exemption for Charities: Mapping the Battlefield. Washington, DC: The Urban Institute Press. A comprehensive overview by nonprofit scholars of the legal, social, economic and political issues surrounding property-tax exemption for charities.
Sjoquist, David L. and Rayna Stoycheva. 2010. "The Property Tax Exemption for Nonprofits." In Seaman, Bruce and Dennis R. Young, Nonprofit Economics and Management: The State of Research. Edward Elgar. Reviews the scholarly literature on property tax exemption for nonprofit organizations and identifies gaps. Available as a working paper.
Wisconsin Department of Revenue. 2009. Wisconsin Property Assessment Manual. Madison: Wisconsin Department of Revenue. See Chapter 22, "Guide to Property Exempt from General Property Tax."
Articles and Reports
Kearns, Kevin, Jonathan Livingston and Christine Waller. 2009. "The Charitable Property Tax-Exemption Debate." Nonprofit Quarterly, Winter 2009.
Steinberg, Richard and Marc Bilodeau. "Should Nonprofit Organizations Pay Sales and Property Taxes?" A "debater's guide" to the nonprofit tax exemption prepared for the National Council on Nonprofit Associations (NCNA).