RELIGIOUS
AND CHARITABLE ORGANIZATIONS EXEMPTIONS
INTRODUCTION
QUALIFICATION DATE
RELIGIOUS ORGANIZATIONS
CHARITABLE ORGANIZATIONS
DEFINITION OF CHARITABLE ORGANIZATION
ANNUAL FILINGS
APPEALS
INTRODUCTION
Institutions and organizations, such as hospitals, schools, churches and cultural
institutions, may qualify for an exemption from local taxes on real and personal property
they own. Ownership, however, does not automatically entitle an organization to an
exemption. An explanation of the general criteria that must be met and procedures for
applying for an exemption are set forth as follows:
QUALIFICATION DATE
Exemption status is determined as of July 1, which is the first day of the fiscal year. An
organization must meet all eligibility requirements as of July 1 to receive an exemption
from taxes for that year. Exemption from taxation is a privilege and the organization must
prove clearly and unequivocally that it qualifies.
RELIGIOUS ORGANIZATIONS
(M.G.L. Ch. 59 S.5 Clauses 10 and 11)
A religious organization is exempt from property taxation on:
* All personal property (a) owned by, or (b) held in trust within
Massachusetts for use by the organization for religious or charitable purposes.
* A church or house of religious worship (a) owned by, or held in trust
for, the organization and (b) used and occupied for religious services or instruction. The
exemption also applies to parking lots and halls used for religious classes and other
church activities. Incidental or occasional use for other purposes will not affect the
exemption, but any portion regularly occupied for other purposes is taxable.
* A parsonage (a) owned by, or held in irrevocable trust for the
exclusive benefit of, the organization, and (b) used and occupied as a residence for
clergy.
All other property owned by a religious organization is taxable unless it qualifies for a
charitable exemption.
CHARITABLE ORGANIZATIONS
(M.G.L. Ch. 59 S.5 Clause 3)
Qualifying Property – A charitable organization is exempt from property taxation on:
* All personal property it owns regardless of use
* Real estate (a) owned by, or held in trust for, the organization, or
its officers, for its charitable purposes, or by another charity, or its officers, for its
charitable purposes.
* Real estate acquired by the organization with the intention of future
charitable use. The property need not be occupied immediately. However, if it is not
occupied for charitable use within two years of the acquisition, it becomes taxable until
put to such use.
All other real estate owned by a charitable organization is taxable. This includes
property (a) leased to individuals and non-charitable entities, or (b) occupied or used
for non-charitable purposes. In addition, property owned by a taxable individual or entity
remains taxable even if leased to and occupied by a charity.
DEFINITION OF CHARITABLE ORGANIZATION
A charitable organization for property tax exemption purposes is a corporation or trust
established for literary, benevolent, charitable, scientific or temperance purposes. Non-profit
status is not sufficient, nor is exempt status for state or federal tax purposes. The
organization must be organized for charitable purposes and must actually operate as a
public chortle. Its dominant purposes and activities must benefit the public at large, not
just a limited group of people. In addition, its income and assets cannot be distributed
to officers, directors or shareholders while it operates or when it dissolves, nor may
they be used for non-charitable purposes.
Examples of charitable organizations include non-profit, private schools, colleges,
universities, hospitals, museums and cultural facilities. Trade groups, professional
associations or social clubs generally do not qualify since they operate primarily for the
benefit of their members.
ANNUAL FILINGS – FORM 3ABC
(M.G.L. Ch. 59 S.5 Clause 3(b) and S.29)
Form 3ABC – Every charitable organization owning property on January 1 must file a
property return with the Assessors in order to receive an exemption for the fiscal year
that begins on the next July 1. The return must be received in the Assessors Office by
March 1. The Assessors' can extend that deadline if the organization applies and
demonstrates a good reason for not filing on time. An extension cannot be granted beyond
the deadline for filing an abatement application for the fiscal year. Failure to file in a
timely manner bars the organization from exemption for that year. A religious organization
does not have to file a 3ABC unless it is seeking exemption for property other than a
house of worship or parsonage.
Form PC – A copy of the organizations' most recent annual report to the Public
Charities Division of the Attorney General's Office (Form PC) must be attached to the
3ABC. Failure to submit the form PC also bars the organization.
INITIAL APPLICATION FIRST TIME APPLICANTS OR WHEN THE THIRD QUARTER TAX BILL HAS
ISSUED- FORM 1B3
An organization seeking a charitable exemption for personal
property, or a particular parcel of real property, must make an initial application to the
Assessors. This initial application is on a form 1B3. No application is required of a
religious organization to establish exempt status for a house of worship or parsonage.
Once an exemption is established, no further application is required, provided there is
no change in ownership, occupancy or other eligibility criteria. Annual filings on the
3ABC form by March 1 are required. Initially the organization must provide whatever
information is reasonably required to establish eligibility. This information may include,
but is not limited to:
* Articles of incorporation, charter, or declaration of trust
* Organization by-laws
* Identification of officers, directors, or trustees
* Description of charitable activities
* Description of the use of property, including use by all lessees ort
other occupants.
You may file this application and supporting documentation prior to the issuance of the
actual tax bill.
Once the tax bill has been issued you must file with the Assessors no later
than the due date of the "actual tax bill" (third quarter bill) , for the
fiscal year. There are no exceptions.
APPEALS
Filing an application for abatement of tax for exempt status does not
stay the collection of taxes. To preserve the right to appeal, the organization must pay
at least one-half of the personal property tax it is contesting. For appeals involving
real estate with a tax over $3,000, the organization must have paid every installment
timely without incurring interest. If an exemption is granted, a refund will be made.
The Assessors have three months to act on the applications regarding the abatement of tax
due to exempt status. If the Assessors deny your application you have three months to file
an appeal at the Appellate
Tax Board.
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