Posted: May 5, 2017
The Nonprofit Association of Oregon (NAO) is very concerned by Senate Bill 181 currently making its way through the Oregon Legislature and scheduled for a hearing on Tuesday, May 9, 2017 in the House Committee on Revenue.
SB181, as engrossed by the Senate, proposes the following:
Requires certain institutions seeking property tax exemption to file information return that states basis for exemption claim in terms derived from Oregon case law. Requires information return to be accompanied by institution’s most recently required and timely filed Form 990 or Form CT-12[, as applicable, filed for current tax year]. Requires institution that files Form 990-N to file information return [postcard instead of information return] containing information on institution’s most recently required and timely filed Form 990-N. Denies exemption for noncompliance.
NAO provided testimony opposed to SB181 when it was being heard on the Senate side. While there were some small technical issues that NAO pointed out that were incorporated into later amendments, our largest concern was not addressed:
We do not believe it is in the best interest of the government or the people of Oregon to ask nonprofits to provide annual reporting that will determine property tax exemption status. This extra layer of bureaucracy is unnecessary and burdensome to charitable nonprofits and is designed to trip up unsuspecting nonprofits with the very real result of unfair levies of property taxes that are undeserved and poorly defined in statute.
Legislators themselves know that the property tax laws in Oregon are broken and have several times talked about the fixes necessary, but then lose political will. This year, nonprofits have become an easy target in an attempt to pull revenue into county and state coffers. The Legislative Revenue Office (LRO) published a “Review of Oregon’s Property Tax Exemption for Literary, Charitable and Scientific” on February 13, 2017 in which the LRO describes property that is used for charitable purposes as a “loss” to the government. This one dimensional and “revenue-for-government” driven view of the value of charitable nonprofits (and the property they hold) is at the core of the problem with the Legislature’s view of nonprofit property taxes. Our legislators are missing the vital work that community does through nonprofits. In fact, a study conducted just last year by Independent Sector clearly showed that taxpayers would rather give $1,000 to charity than to the government in taxes.
If the Legislature wants to pass new requirements on nonprofits for filing to receive property tax exemption, they should actually listen to the suggestions of the LRO and first create those “bight lines” in existing statute: see Section VIII – Nonprofit Reporting and “Bright Lines.”
Creating and clarifying these “bright lines” is essential before new reporting requirements should be imposed as suggested in SB181. NAO’s belief is that the cart is in front of the horse on this issue. SB181 is creating a new reporting requirement that will leave the statute unclear and individual county tax assessors are left to interpret that statute using their own ideas of eligibility as they respond to political pressures to bring in more revenue.
We believe the result of passing SB181 will create a huge potential for a number of nonprofits to lose their tax exempt status based on interpretations that may not be fair, valid or are inconsistent. We have particular concerns for smaller rural, culturally-specific and all volunteer nonprofits who may not realize they have been burdened by a new hoop to jump through courtesy of their Legislators.
Action is needed NOW!
- Remind Legislators of the importance of your nonprofit’s work in your community and that property tax exemption for nonprofits is not given at the deficit of government, but at the productive use of community!
- Demand that SB181 be shelved and that the Legislature do the necessary work of clarifying existing statue before creating new bureaucratic hoops for nonprofits to jump through. Download a sample letter of testimony here. Instructions on submitting testimony can be found here.
- Express your strong opposition to SB181 by coming and testifying at 1:00pm on Tuesday May 9th in Salem!
Please let NAO know of your action by either sending an update or copying us on your letters to Oregon Representatives. Contact or copy firstname.lastname@example.org.