CHEYENNE — Tighter property tax exemptions for benevolent, secret and charitable organizations is a goal of the state Legislature’s Joint Interim Committee on Revenue.
Some people have found loopholes in the laws to save money on property taxes.
Rep. Keith Gingery, R-Jackson, is working with the Revenue Committee on draft legislation that will require a charitable trust to benefit the people of the state, not people of another state or country.
That should solve the problem of a charitable trust in Teton County that claimed property tax exempt status that benefited the University of Lima in Peru.
“That’s what the bill is trying to do,” Gingery said Friday.
There are other similar cases of abuses in the state, said Rep. Mike Madden, R-Buffalo, the chairman of the House Revenue Committee.
What happens, he said, is that someone will set up a charitable trust, separate some of their property from the house and dedicate that property to charitable recipients.
These trusts represent a chunk of property tax revenue lost to county governments. This is particularly important in Teton County, which has no mineral income and relies on residential and commercial property for its tax base.
In other cases, a charitable organization will buy a piece of property and say it is exempt but the organization doesn’t use the property.
Madden said he will have an amendment to make the law on charitable, secret and benevolent organizations as tight as the one on exemptions for religious organizations.
“The law works well,” Madden said. It specifies that any property exempted from tax must be used for clergy or other religious purposes.
This means that property left to a church, such as an apartment complex, cannot be exempt from property taxes unless it is used for religious purposes.
Gingery wants to make clear that organizations seeking tax-exempt status must meet all three of the requirements: charitable, secret and benevolent.
He said the Department of Revenue adopted a rule changing “and” to “or” so that the organizations need to be only one of the three types to qualify.
Gingery believes some nonprofit organizations are taking advantage of the department’s interpretation of the law to get the exemption.
However, if an organization must be all three of the types eligible for the property tax exemption, no one would qualify, Brenda Arnold, director of the Department of Revenue’s Ad Valorem Tax Division, said Friday.
The department’s interpretation of the law has been in effect for about 20 years, she said.
The Revenue Committee meets Oct. 28 and Oct. 29 in Cheyenne.