By M.H. Cavanaugh
Christian Action League
March 27, 2015
RALEIGH – Neal Jackson, pastor of Beulah Baptist Church, in Bennett, North Carolina, and his congregation were shocked when they learned last year that the Randolph County Tax Department had assessed their property and determined they would have to pay taxes on it. The assumption was that property used for religious purposes was exempt from paying taxes by state law.
Tax assessors, however, found a loophole in the property tax law and were sticking it to the folks at Beulah Baptist. North Carolina General Statutes say that buildings “shall be exempt from taxation,” if the edifice is “wholly and exclusively used by its owner for religious purposes.”
At the time, Beulah Baptist was building a new sanctuary that was still under construction. Because the construction was not finished, and, therefore, they had yet to obtain their occupancy permit, the Tax Department determined the new construction was not being used “wholly and exclusively for religious purposes” and should be taxed.
The church appealed their tax bill of more than $7,000 to the Randolph County Board of Equalization and Review and the Board reversed the decision. Nevertheless, Pastor Jackson always remained concerned about where this same situation might be happening to other churches in the state.
It turns out that He was right to be concerned. It was occurring in other parts of North Carolina.
Jeff Clawson, pastor of Vienna Baptist Church, in Pfafftown, says his church was building a new building on a piece of land that was owned by the church near the place where his church was already meeting. The land, he says, was not tax exempt because they didn’t meet on it. Still, they were in the process of constructing their new building on that property. “After the building was completed and the occupancy permit received, which was in late March of 2012, we were notified that we would have to pay taxes on the church building because the building was not occupied as of January 1, 2012,” says Clawson.
Clawson adds that his church appealed the decision of its county tax assessors to the Forsyth County Board of Equalization and Review and lost. So the church appealed to the North Carolina Property Tax Commission, but was denied there too. The state Property Tax Commission ruled the present use of the property was the determining factor. “Thus, property merely being held for planned future religious purposes is not exempt.”
Clawson said that in taxes and attorney’s fees the cost to the church has been over $13,000. “While we have no intention of not paying taxes we should pay, it would seem the intention of the tax code was never to charge taxes on a place of worship while its being constructed, then, no longer tax it when occupied, he said.”
Rep. Allen McNeill (R-Randolph) agreed and filed HB 229 – Modify Religious Property Exemption earlier this month. McNeill’s bill closes the loophole and clarifies what most would assume has always been the real intent of the tax law. It specifically exempts buildings and land occupied by the structure from local property taxes if the edifice is “intended to be wholly and exclusively used by its owner for religious purposes upon completion.” The tax exemption for incomplete religious buildings ends after 90 days from the date of the issuance of a certificate of occupancy or 180 days after the end of construction.
HB 229 was taken up in the House Finance Committee early Thursday morning. McNeill made his case for the bill before the committee, along with Rep. Garland Pierce (D-Scotland), who is also a black Baptist minister.
“As I was watching the proceedings of the bill’s consideration,” said Dr. Mark Creech, executive director of the Christian Action League, “and as Rep. McNeill explained the reason for it, the looks on the faces of some of the lawmakers was one of shock and dismay. You could tell they were troubled such a loophole would even be employed. These are my words and not theirs, but I think the feeling was, we need to fix this now. This is really unjust.”
“There was little discussion on HB 229 in Committee,” said Dr. Creech. “Two lawmakers actually seemed to be racing to be the first to give the bill a favorable report. It passed with ease.”
HB 229 was taken up by the House Finance Committee and also taken up for consideration on the House floor on the same day. The bill passed unanimously in the House, 114-0.
The legislation now moves to the Senate for consideration.