On Tuesday, January 22, 2013, Allegheny County Executive Rich Fitzgerald announced that the County will begin a parcel-by-parcel review of properties currently receiving real estate tax exemption to ensure that tax exemption continues to be warranted. Letters will be sent by the County to all non-government owners of tax-exempt real estate parcels within the County requiring each organization to provide proof that the nonprofit, and use of the its real estate, continues to qualify for real estate tax exemption.
Generally, to qualify for real estate tax exemption, a nonprofit must qualify as a “purely public charity” by satisfying the criteria outlined in Pennsylvania’s Institutions of Purely Public Charity Act. Real estate owned by the purely public charity, and regularly used for the organization’s charitable purposes, will continue to qualify for real estate tax exemption.
The periodic review of the tax-exempt status of real estate in Allegheny County is provided for in the County’s Ordinance. Specifically, Allegheny County Ordinance No. 49-07 stipulates that all properties that have been designated as tax exempt by the County’s Chief Assessment Officer under the provisions of the Institution of Purely Public Charities Act be subject to a parcel review in accordance with 10 P.S. Section 375(h) at least every three years. Although this section of the Ordinance was added on November 20, 2007, this is the County’s first effort to implement a review process to determine whether a parcel continues to qualify for tax exemption.
It is critical that an organization accurately and completely respond to the County’s request in order to avoid jeopardizing its property’s exempt status. A periodic review could pose problems for an organization that does not substantiate that it qualifies as a purely public charity or does not demonstrate that its use of the real property is in furtherance of its charitable purpose.
Schneider Downs is prepared to assist nonprofits with responding to Allegheny County’s requirement to substantiate continued qualification of the exempt status of real estate parcels. If you have any questions or require assistance on this issue, please do not hesitate to contact Susan M. Kirsch at firstname.lastname@example.org or Debra A. Ries at email@example.com.
There will be more to follow on this topic as the review process progresses.
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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.