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Response to DURHAM D (Reply #34)

Sun Oct 14, 2012, 10:31 AM

37. It was settled by the SCOTUS long ago that the exemption doesn't apply to commercial properties.


Tax Exemptions of Religious Property.—Every State and the District of Columbia provide for tax exemptions for religious institutions, and the history of such exemptions goes back to the time of our establishment as a polity. The only expression by a Supreme Court Justice prior to 1970 was by Justice Brennan, who deemed tax exemptions constitutional because the benefit conferred was incidental to the religious character of the institutions concerned.178 Then, in 1970, a nearly unanimous Court sustained a state exemption from real or personal property taxation of “property used exclusively for religious, educational or charitable purposes” owned by a corporation or association which was conducted exclusively for one or more of these purposes and did not operate for profit.179 The first prong of a two-prong argument saw the Court adopting Justice Brennan’s rationale. Using the secular purpose and effect test, Chief Justice Burger noted that the purpose of the exemption was not to single out churches for special favor; instead, the exemption applied to a broad category of associations having many common features and all dedicated to social betterment. Thus, churches as well as museums, hospitals, libraries, charitable organizations, professional associations, and the like, all non-profit, and all having a beneficial and stabilizing influence in community life, were to be encouraged by being treated specially in the tax laws. The primary effect of the exemptions was not to aid religion; the primary effect was secular and any assistance to religion was merely incidental.



4. No Tax Exemptions for Commercial Activity
Tax exemptions are almost entirely restricted to those affairs which are religious rather than commercial in nature. Thus, there are numerous tax exemptions on property owned by churches and used for religious worship, but exemptions are normally denied on property used for commerce and business. The site of an actual church will be exempt, but the site of a church-owned shoe store will rarely, if ever, be exempt.

Court Cases:

Gibbons v. District of Columbia
Diffenderfer v. Central Baptist Church
The same is true for income from sales. Money a church receives from donations of members and from financial investments are normally treated as tax-exempt. On the other hand, money which a church receives from the sale of goods and services — even including goods like religious books and magazines — will normally have sales tax applied, though not income tax at the other end.


Here is an example of the law in my state. The exemption applies to non-profits in general, not just churches, and it doesn't apply to property owned by non-profits but used for commercial purposes.


Nonprofit organizations in the state of Washington may be eligible for an exemption from property tax. In most situations, nonprofit ownership is required to qualify for an exemption. In addition, the organization must conduct an activity specifically identified in the exemption laws.
The use of the property determines the exemption. Not all nonprofit organizations have a purpose and activity that entitles them to an exemption.

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DeSwiss Oct 2012 OP
DURHAM D Oct 2012 #1
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pnwmom Oct 2012 #26
DURHAM D Oct 2012 #34
LineLineLineLineReply It was settled by the SCOTUS long ago that the exemption doesn't apply to commercial properties.
pnwmom Oct 2012 #37
DURHAM D Oct 2012 #39
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