Minnesota Real Property Tax Exemptions – Churches.
Minnesota Real Property Tax Exemptions – Churches;
Sources of Exemption Authority
Minnesota Real Property Tax Exemptions – Churches
Minnesota law provides at least two sources of authority for Minnesota Real Property Tax Exemptions – Churches:
- a constitutional source; and
- one or more statutory sources.
Constitutional Source – Minnesota Real Property Tax Exemptions – Churches
Article X Section 1 of the Minnesota Constitution provides in part as follows:
Taxes shall be uniform upon the same class of subjects and shall be levied and collected for public purposes, but . . . all churches, church property, houses of worship, . . . , shall be exempt from taxation except as provided in this section.
. . . The legislature by law may define or limit the property exempt under this section other than
- houses of worship, and
- property solely used for educational purposes by academies, colleges, universities and seminaries of learning.
While the above constitutional provisions provide a firm basis for Minnesota Real Property Tax Exemptions for Churches, the scope of such exemptions is subject to interpretation, and limitation, by the Minnesota courts.
In addition, note that the term church property is missing from the second paragraph above.
This means that the Minnesota Legislature is authorized by the Minnesota Constitution to define or limit the criteria for providing tax exemptions to church property – which can generally be understood to be all real property owned by a church – other than the building(s) used for worship, and the land underneath such building(s).
Statutory Source – Minnesota Real Property Tax Exemptions
(i) General Rule – All Property is Taxable
M.S. Section 272.01, Subd. 1 identifies a general rule that:
All real and personal property in this state, is taxable, except
- Indian lands and
- such other property as is by law exempt from taxation.
Notwithstanding the above statutory provision, Article X Section 1 of the Minnesota Constitution identifies that churches and houses of worship are constitutionally exempt from taxation.
However, the Minnesota Supreme Court has repeatedly held that with respect to Minnesota Real Property Tax Exemptions for Churches that:
All property is presumed taxable, and the taxpayer has the burden of proving entitlement to a specific exemption.
Living Word Bible Camp v. County of Itasca, 829 N.W.2d 404 ,  (Minn. 2013), citing Under the Rainbow Child Care Center, Inc. v. City of Goodhue, 741 N.W.2d 880, 884 (Minn. 2007), and Camping and Educational Foundation v. State, 282 Minn. 245, 250, 164 N.W.2d 369, 372 (1969).
(ii) Statutory Exemption – Church Property
M.S. Section 272.02, Subd. 6 identifies certain church owned real property as being exempt from taxation:
Subd. 6. Church property.
All churches, church property, and houses of worship are exempt.
Please note that while church property is identified in Minnesota Statutes, Section 272.02, Subd. 6 as being exempt from taxation, the term is missing from the constitutional exemption from taxation otherwise provided to churches and houses of worship identified in Article X, Section 1 of the Minnesota Constitution.
Therefore, the Minnesota Legislature is authorized by the Minnesota Constitution to define or limit the criteria for providing tax exemptions to church property – other than with respect to churches and houses of worship.
(iii) Statutory Exemption – Corporations for Religious Purposes
M.S. Section 317A.909, Subd. 3 identifies that certain property owned by non-profit church corporations are exempt from taxation:
Except for property leased or used for profit, personal and real property that a religious corporation necessarily uses for a religious purpose is exempt from taxation.
(iv) Former Provisions
Minnesota Statutes, Section 272.02, Subd. 1a formerly identified certain statutory limitations on the tax exempt status of church property – pursuant to the authority identified in Section 1 of Article X of the Minnesota Constitution – by providing as follows:
Subdivision 1. Exempt property described.
All property described in this section to the extent limited in this section
shall be exempt from taxation.
Subd. 1a. Limitations on exemptions.
The exemptions granted by subdivision 1 are subject to the limits contained in
- the other subdivisions of this section,
- section 272.025 – [Filing Requirement]; and
- all other provisions of applicable law.
However, Section 272.02, Subd. 1 and Subd. 1a were repealed as of May 14, 2014.
According to the Minnesota Department of Revenue’s Property Tax Law Summary – 2014:
These [repealed] subdivisions contained superfluous and repetitive language that was not necessary to understand the exemptions.
M.S. Section 272.025 Filing Requirements – Minnesota Real Property Tax Exemptions – Churches
(i) Initial Filing Required
M.S. Section 272.025, Subd. 1 (a) requires a property owner claiming a property tax exemption to initially file an application for exemption with the County tax assessor in order to obtain any Minnesota Real Property Tax Exemptions for Churches:
. . . a taxpayer claiming an exemption from taxation on property described in section 272.02, subdivisions 2 to 33, must file a statement of exemption with the assessor of the assessment district in which the property is located.
The Ramsey County, Minnesota Property Tax web site identifies this requirement in the following manner:
Property is always assumed taxable until proven otherwise.
To receive an exemption from ad valorem taxes Minnesota state law (MN Statute 272.025, subd 1) mandates that you apply.
The Ramsey County Assessor must also keep up-to-date records of exempt property in the county.
Nevertheless, M.S. Section 272.025, Subd 3(c) identifies that the requirements of M.S. Section 272.025 do not apply to existing churches and houses of worship “that were exempt for taxes payable in 2011“, since the relevant provision of the statute was amended in 2010, and effective thereafter.
Therefore, it appears that churches and houses of worship are not required to file an initial application for if they “were exempt for taxes payable in 2011” – pursuant to the authority of M.S. Section 272.025 Subd 3(c).
(ii) Application Forms
The Ramsey County, Minnesota Property Tax web site identifies that there are three separate initial application forms:
A “Standard Application” is typically used for organizations such as churches, hospitals, government agencies,
a separate application is filed for “Institutions of Purely Public Charities,” and
another for “Nursing Homes.”
The Hennepin County, Minnesota Property Tax web site identifies three similar initial application forms.
(iii) Filing Deadline
M.S. Section 272.025, Subd. 3(a) requires a property owner claiming a property tax exemption to file an application for exemption with the County tax assessor by February 1 in order to obtain an exemption for the following year:
The statement required by subdivision 1, paragraph (a), must be filed with the assessor by February 1 of the assessment year, . . . .
However, the Ramsey County, Minnesota Property Tax web site identifies the filing deadline in the following manner:
First-time applicants should send their exempt application and supportive documents to the Ramsey County Assessor for approval as soon as possible after a property is acquired by a potential exempt organization.
(iv) First Year of Tax Exempt Status
The Ramsey County, Minnesota Property Tax web site identifies that the first year of eligibility for tax exempt status will be the year following application – at the earliest:
Ownership and use must be established prior to July 1st of the current year in order for the property to be exempt from taxes payable the next year.
The exemption does not apply for taxes payable in the year in which the property is acquired.
All taxes payable in the current year will be due and payable and there is no prorated or partial exemption of yearly taxes.
If the property is purchased after June 30th of the current year, the exempt class does not become effective until the following assessed year.
For example, a property acquired after June 30th, 2014 then becomes exempt for the 2015 assessment for taxes payable in 2016.
(v) Books and Records Required
M.S. Section 272.025, Subd. 2 requires a property owner claiming a real property tax exemption to provide the County tax assessor with sufficient information in order to allow the County tax assessor to verify the applicant’s right to an exemption:
Verification. Upon the written request of the assessor, the taxpayer filing a statement of exemption shall make available to the assessor all books and records relating to the ownership or use of property which are reasonably necessary to verify that the property qualifies for exemption.
(vi) Periodic Filing Required
M.S. Section 272.025 Subd. 3 requires a property owner claiming a property tax exemption to file a renewal application with the County tax assessor every third year in order to keep an exemption.
However, Module #5 of the Minnesota Property Tax Administrator’s Manual identifies that the first renewal application may be due less than three years from the date of the initial application, by providing as follows:
For most exempt properties, owners or authorized representatives must reapply for exemption every three years.
No matter what year the owner or authorized entity originally filed for exemption, reapplications must be filed in 2010, 2013, 2016, etc.
Reapplication on a three-year rotating basis does not apply to the following properties:
- churches or houses of worship
- property used solely for education purposes by academies, colleges, universities, or seminaries of learning
Churches, houses of worship, and properties used solely for educational purposes by academies, colleges, universities, or seminaries of learning are required to file for an exemption once but only once
(i.e. they are required to initially file a statement by February 1, but not after that approval).
(vii) Periodic Filing Not Required
M.S. Section 272.025, Subd 3(b) identifies that churches and houses of worship are not required to file a renewal application after an original statement of exemption has been filed.
Therefore, it appears that M.S. Section 272.025 does not require churches to file a periodic application for tax-exempt status – other than initially – at least with respect to their main church building(s) or houses of worship.
However, while the Minnesota Property Tax Administrator’s Manual exempts churches and houses of worship from filing renewal statements – it does not exempt “church property” – which has a different legal meaning than churches or houses of worship.
Relevant Government Authorities;
Minnesota Real Property Tax Exemptions – Churches
(i) The Minnesota Department of Revenue / County Assessors
The Minnesota Department of Revenue:
- to some extent supervises and directs local County assessors, and
- provides administrative guidance directing their work.
One of the primary references available to local County assessors with respect to the issue of Minnesota Real Property Tax Exemptions – Churches is the Minnesota Property Tax Administrator’s Manual – with Module #5 thereof:
- addressing the subject of exempt property, and
- identifying that real property tax exemptions may only be granted by the county assessor, or by the Minnesota Tax Court,
“They may not be granted by local or county boards of appeal and equalization.”
However, the Ramsey County, Minnesota Property Tax web site suggests that appeals of adverse tax exempt determinations be made to a special office at the Minnesota Department of Revenue, by providing as follows:
The MN Tax Court is the only authority eligible to make exempt determinations, which must be acted upon by the assessor.
Applicants may appeal its tax exempt status through the court system.
The deadline to appeal to the MN Tax Court is April 30th of the year in which the taxes become payable.
[However], There are a couple options to appeal a decision by the assessor’s office to deny an exemption.
The Review Board for Institutions of Purely Public Charity, MN Dept of Revenue.
This Advisory Board . . . will review your circumstance and issue a written response to the assessor and the applicant as to whether all required qualifications are met to award a property exemption.
The board’s opinion is non-binding and not able to formally grant or deny an exemption, however it will be carefully considered by the assessor in their determination to award or deny a property exemption.
The board will not address a request for an opinion if the exemption is under an official appeal through the court system.
(ii) The Minnesota Tax Court
The initial tribunal with respect to Minnesota Real Property Tax Exemptions for Churches cases is the Minnesota Tax Court.
However, the Minnesota Tax Court is actually a type of administrative agency – not a judicial court – and therefore a part of the executive branch of state government.
Contrary to what its name suggests – it is not a part of the judicial branch.
According to the Minnesota Tax Court web site:
The Minnesota Tax Court is a specialized, executive branch court specifically established by the Minnesota Legislature to hear only tax related cases.
Minn. Stat. ch 271 sets forth the authority and jurisdiction of the Tax Court.
The Court’s mission is to provide timely and equitable disposition of appeals of orders issued by the Commissioner of Revenue and local property tax valuations, classification, equalization and/or exemptions.
(iii) The Minnesota Supreme Court
Appeals from unfavorable decisions of the Minnesota Tax Court are made directly to the Minnesota Supreme Court – the highest court in the judicial branch of government.
- the initial tribunal with respect to real property tax exemption disputes is the Minnesota Tax Court,
- the final judicial authority is the Minnesota Supreme Court.
Conclusion – Minnesota Real Property Tax Exemptions – Churches
Minnesota law provides two sources of authority for Minnesota Real Property Tax Exemptions – Churches:
- a constitutional source; and
- one or more statutory sources.
However, Article X Section 1 of the Minnesota Constitution identifies that churches and houses of worship are constitutionally exempt from real property taxes – notwithstanding any statute(s) to the contrary.
See related article for for information on Minnesota Real Property Tax Exemptions for Cemeteries.
See related page for for information on Minnesota Real Property Tax Exemptions for Church Day Care Centers.
See related article for for information on Minnesota Real Property Tax Exemptions when there has been the Rental of Minnesota Church Property.
See related article for for information on partial real property exemptions for churches.
See related article for for information on Minnesota Real Property Tax Exemptions when there has been a change in the use of Church Property.
For additional information on Minnesota Chapter 315 churches, see also Dahlelaw.com, or also https://dahlelawchurches.com/minnesota-chapter-315-churches/
For additional information on Minnesota Chapter 317A churches, see also Dahlelaw.com, or also https://dahlelawchurches.com/minnesota-chapter-317a-corporations/
Minnesota Church Attorney
Since 1992, Attorney Gary C. Dahle has represented a variety of Minnesota churches – Baptist, Evangelical, Lutheran, Pentecostal, Presbyterian, and independent churches, with respect to:
- Minnesota Church Corporations,
- Minnesota Church Mergers,
- application for IRC Section 501(c)(3) tax exempt status,
- bond financing for construction purposes,
- bond “refinancing” in order to obtain a lower interest rate on church debt,
- clergy issues,
- employment issues,
- Minnesota church insurance issues,
- Minnesota church on-site day care issues,
- Minnesota church probate matters,
- real property easements,
- real property title issues,
- school issues,
- the sale of church real property – including the manner of congregational approval of such sales,
- congregational disputes;
- conflicts in the congregation, and
- the drafting and revising of Articles of Incorporation, Constitutions and Bylaws.
Attorney Gary C. Dahle has represented churches located in the Minnesota cities of Arden Hills, Blaine, Bloomington, Brooklyn Park, Burnsville, Chaska, Corcoran, Coon Rapids, Eden Prairie, Fridley, Glencoe, Minneapolis, Mounds View, Roseville, St. Louis Park, St. Paul and Wyoming.
Topics of Interest:
- Minnesota Chapter 315 Church Mergers – Minnesota Church Merger
- Minnesota Chapter 315 Churches
- Minnesota Chapter 317A Church Mergers – Minnesota Church Mergers
- Minnesota Chapter 317A Churches
- Minnesota Church Attorney – Minnesota Church Laws
- Minnesota Church Attorney Gary C. Dahle – Minnesota Church Lawyer
- Minnesota Church Cemeteries Property Tax Exemption
- Minnesota Church Conflicts
- Minnesota Church Corporations
- Minnesota Church Day Care Centers
- Minnesota Church Disputes – State Limits
- Minnesota Church Law – Gary C. Dahle, Attorney at Law
- Minnesota Church Meals – Minnesota Church Dinners
- Minnesota Church Property Tax Exemptions – Use Changes
- Minnesota Property Tax Exemptions – Partial Exemption by Churches
- Parsonage Allowance – IRC Section 107
- Religious Land Use Act – RLUIPA
- Rental of Minnesota Church Property
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