TAXATION--PURCHASE OF UTILITIES BY CHURCH FOR CHURCH SCHOOL USE--EXEMPTION FROM MUNICIPAL PUBLIC SERVICE TAX
To: Julian B. Lane, Senator, 23rd District, Tampa
Prepared by: Patricia S. Turner, Assistant Attorney General
QUESTION:
Are purchases of utilities by a church when said utilities are used for Sunday School services, vacation bible school, and church day schools exempt from municipal public service tax pursuant to s. 166.231(4), F. S. (1974 Supp.)?
SUMMARY:
Purchases of utilities by a church when said utilities are used for Sunday School services and vacation bible school are exempt from municipal public service tax pursuant to s. 166.231(4), F. S. (1974 Supp.), since these activities directly or primarily further the religious purposes of the congregation even though said activities may serve incidental nonreligious purposes. Purchases of utilities by a church when said utilities are used for church day schools are exempt from said municipal public service tax if the church conducts day schools in the area of church-owned property for the purpose of caring for children of working parents and if the church utilizes any excess funds derived from the operation of said schools to further church or religious purposes.
Your question is answered in the affirmative as discussed herein.
Section 166.231(4), F. S. (1974 Supp.), states:
"A municipality may exempt from taxation hereunder the purchase of the taxable items by the United States Government, the State of Florida, or any other public body as defined in s. 1.01, and shall exempt [purchases by] any recognized church in this state for use exclusively for church purposes." (Emphasis supplied.)
This statute was considered by the Supreme Court of Florida in Dickinson v. City of Tallahassee, Case No. 46,580 (Fla. Sup. Ct., filed Dec. 10, 1975), in determining that the State of Florida and its agencies and departments, Leon County, and the Leon County School Board were immune from the 10 percent utility tax levied by the City of Tallahassee, since neither s. 9(a), Art. VII, State Const., the authorizing constitutional provision, nor s. 166.231(1) and (4), F. S. (1974 Supp.), the implementing statute, constituted a waiver of that immunity. The Supreme Court reached this decision even though the language of the statute is permissive. An examination of this case reveals that the court did not consider the questions presented by your inquiry.
Initially, it must be noted that your enclosed letter dated April 30, 1973, from Henry E. Williams, Jr., City Attorney of Tampa, to Melvin B. Smith, City Comptroller of Tampa, defining the word "church" to mean "only the church proper and not the broader nonprofit religious institution carrying on its customary religious activities," was based upon Ch. 72-721, Laws of Florida, which amended Ch. 167, F. S., by creating a new section providing the following:
"Exemption of churches, utility tax. -- All churches that are entitled to exemption from the state sales and use tax law shall be exempt from the payment of any municipal tax on utility services as defined in section 167.431, Florida Statutes, furnished to church property used exclusively for church purposes."
Chapter 167, supra, was subsequently repealed by the Legislature. Chapter 73-129, Laws of Florida, effective October 1, 1973, states:
"AN ACT relating to local government . . . repealing chapters 166, 167 . . . Florida Statutes, and all existing sections thereof not otherwise transferred . . . ."
Section 5(1) of Ch. 73-129, supra, specifically states:
"Except as otherwise provided in sections 2 and 3, the following enumerated chapters of Florida Statutes, and all sections thereof as presently constituted, relating to powers of local officials, are repealed: chapter 167 (sections 167.005 through 167.78, inclusive) . . . ."
Sections 2 and 3 of Ch. 73-129, supra, did not transfer s. 167.431, F. S., but said Ch. 73-129 did create the above-quoted s. 166.231(4), supra, which deletes that portion of s. 167.431 entitling a church to exemption from municipal tax on utility services furnished to church property used exclusively for church purposes if a church is entitled to exemption from state sales and use tax pursuant to Ch. 212, F. S. Therefore, City Attorney Williams' letter is no longer relevant to the question sub judice.
Therefore, the instant issue must be resolved by construing the clause, "for use exclusively for church purposes," as contained in s. 166.231(4), supra. Under the statute, it is the use to which the utility is put which is determinative of its exempt status and this is consistent with other Florida statutory and case law regarding exemptions. [See Maxwell v. Good Samaritan Hospital Association, 161 So.2d 31 (2 D.C.A. Fla., 1964); State v. Doss, 8 So.2d 15 (Fla. 1942); Lummus v. Florida Adirondack School, 168 So. 253 (Fla. 1934); AGO's 046-369 and 063-138; ss. 196.195, 196.196, 196.197, 196.198, and 196.199, F. S.]
This phrase has been construed previously to mean that a nonreligious, incidental use of property does not prevent the granting of an exemption. 15A Words and Phrases Exclusively for Religious Purpose p. 199 (1950). The phrase "exclusively used" has reference to a primary use as opposed to a mere secondary and incidental use. 15 Words and Phrases Exclusively Used p. 201 (1950). Incidental purposes do not effect a change in the purpose for which property is held and used, as long as the primary use of such property is to further religious purposes. Jasper v. Mease Manor, Inc., 208 So.2d 821 (Fla. 1968).
Applying the above definition, courts have previously held that the fact that a building, occupied by a church for church services at stated times, is rented for lectures, concerts, and readings, and the rent from such entertainments is used to defray the expenses of the church and society, does not prevent the use of the building by the church from being its exclusive occupation pursuant to a statute exempting from taxation all buildings exclusively occupied as churches, First Unitarian Society of Hartford v. Town of Hartford, 34 A. 89 (Conn. 1895); that earning one's livelihood or performing certain incidental services does not convert property otherwise used exclusively for religious purposes into property which is not used for said purposes, Lummus v. Florida Adirondack School, supra; that use of church-owned property as a parking lot for parishioners attending church services, although said parking lot was used as a commercial parking area during weekdays, serves a religious purpose, Central Baptist Church of Miami v. Dade County, 216 So.2d 4 (Fla. 1968), rev'd on other grounds, 404 U.S. 412 (1972).
In the latter case, the Central Baptist Church of Miami, Florida, Inc., owned a city block in downtown Miami on which its church building was located. A large portion of the lot, 59 percent, was utilized as a parking area. During the weekday business hours, this area, with the exception of a small part reserved at all times for the church staff, was rented for and used as a commercial parking lot, the net income from which was devoted in its entirety to world missions and educational programs of the church. On Sundays and evenings the parking area served as a gratuitous parking facility for the congregation during hours of church services and church-related activities.
The Supreme Court of Florida, in construing s. 192.06, F. S. 1967, which stated in part:
"192.06 Property exempt from taxation. -- The following property shall be exempt from taxation:
* * * * *
(4) All houses of public worship and lots on which they are situated, and all pews or steps and furniture therein, every parsonage and all burying grounds not owned or held by individuals or corporations for speculative purposes, tombs and right of burial; but any building being a house of worship which shall be rented or hired for any other purpose except for schools or places of worship, shall be taxed the same as any other property"
determined that the church property was exempt from ad valorem taxation when said property was used for religious purposes and that the limited part-time rental of a portion of the church lot for commercial parking during weekday business hours was reasonably incidental to the primary use of the church property for religious purposes and was not a sufficiently divergent commercial use to eliminate the exemption. Central Baptist Church of Miami v. Dade County, supra.
At p. 6, the Supreme Court specifically stated:
". . . [I]t does not appear that the Legislature intended by the language of Section 192.06(4) to remove the church property tax exemption where the rental of a portion of a church lot is limited in nature and does not result in the portion rented being placed beyond its regular and customary church use, and the rental funds derived are used for purposes contemplated by Section 16, Article XVI, State Constitution. The legislative wisdom and policy of the statute are that if certain church related property (parsonages and burying grounds) is held by private persons for speculative purposes or if the house of worship itself is rented for a nonworship or nonschool purpose, these are diversions from church use sufficient in degree to warrant lifting the tax exemption. However, lesser and more limited divergent uses of church property are apparently not deemed by the Legislature sufficiently inconsistent with church purposes to lift the exemption, provided the funds derived from such uses are not diverted to purposes not contemplated by Section 16, Article XVI." (Emphasis supplied.)
Emphasizing that each individual situation must be examined on its own merits to determine factually whether the organization and the activity are exempt from taxation, my predecessor, in response to the question of whether the word "exclusively" in s. 166.231(4), supra, permitted the exemption from municipal public service tax to be applied to church purchases for nonprofit church properties and operations such as schools, clinics, recreation areas, playgrounds, convents, and rectories restated the interpretation of the clause "exclusively for church purposes" as follows, which I quoted in AGO 075-209:
". . . [T]he term 'used exclusively for church purposes'has a broader meaning than the use of the church auditorium for Sunday sermons or preaching services, but extends to such services as the Sunday school services, the young people's Sunday services in the church, and other services in the church directly furthering the religious purposes of the congregation." [Attorney General Opinion 057-255; emphasis supplied.]
Applying this interpretation to the above-quoted issue, my predecessor determined that the exemption from municipal public service tax does not apply to church purchases for nonprofit church properties and activities such as schools, clinics, recreation areas, etc., unless the activity constitutes a direct adjunct of the church and its congregation, i.e., a parsonage, whether or not physically located on church premises, furnished to the minister without cost of any nature (including cost of utility services). Attorney General Opinion 075-209.
Applying these requirements to your particular question, it is clear that the operation of Sunday School services and vacation bible schools on church property falls within the exemption granted by s. 166.231(4), supra. Both further religious purposes, such as teaching stories from the Bible. However, the application of the above-stated requirements to the operation of church day schools presents a more complicated issue. It is common knowledge that many churches operate day schools on church premises for the purpose of caring for children of working parents. Thus, utilities used in operating such schools are used in the area of the church property where said schools are operated during the period of operation. Additionally, it is presumed that any excess funds derived from the operation of day schools are used to further church or religious purposes.
The above-described situation would then be quite similar to that before the Florida Supreme Court in the Central Baptist case wherein the parking area was rented during weekday business hours, with proceeds from such rentals used for religious or educational purposes. Therefore, it would appear that utilities purchased for use in day schools located on church premises would come within the exemption granted in s. 166.231(4), supra, provided the funds derived therefrom were used for religious purposes and not diverted to other uses. If church property, used and operated as a commercial parking lot during the week, was found to meet the test of "exclusive use" for tax exemption purposes, then the same should be true of a day school operated on the church premises by the church, provided no diversion of funds to nonreligious purposes or uses occurred.
However, it must be emphasized that each individual situation must be examined on its own merits to determine factually whether the organization and the activity meet the above-stated requirements.
FAQs
You can submit Form 3605 (The Application for Recognition of Exemption) to the Georgia Income Tax Division. Along with the form you will need to submit your Georgia nonprofit's Articles of Incorporation, bylaws, statement of activities in Georgia, and a copy of your Letter of Determination from the IRS.
Who is exempt from school taxes in Georgia? ›
The L5A - Senior School Tax Exemption is for those whose Georgia taxable income does not exceed the maximum authorized by Social Security plus $25,000, which for 2023 is $112,048. The S3 - Regular School Tax Exemption and L3A - $20,000 Senior Exemption are for those whose Georgia taxable income does not exceed $10,000.
Who is exempt from paying property taxes in Georgia? ›
To be granted a homestead exemption: A person must actually occupy the home, and the home is considered their legal residence for all purposes. Persons that are away from their home because of health reasons will not be denied homestead exemption.
What are the requirements for homestead exemption in Georgia? ›
To be eligible for a homestead exemption:
- You must have owned the property as of January 1.
- The home must be considered your legal residence for all purposes.
- You must occupy the home.
- You cannot already claim a homestead exemption for another property in Georgia or in any other state.
Other tax-exempt items in Georgia
| Category | Exemption Status |
|---|
| Food and Meals |
|---|
| Janitorial Services | EXEMPT |
| Software and Digital Products |
| Canned Software - Downloaded | EXEMPT * |
18 more rowsThe state sales tax rate of Georgia is 4%, but counties and cities may impose additional taxes. For example, as of December 2021, Fulton County has a 3% sales tax rate, and Atlanta has an additional 1.9% rate.
When can I stop paying school tax in GA? ›
Must be 62 on or before January 1. Household income from social security and other retirement pension cannot exceed $87,048. Reduces the taxable value by your standard home- stead exemption plus $30,000 on the portion to which school taxes are applied. Must be 65 on or before January 1.
What age do you stop paying taxes in GA? ›
A retirement exclusion is allowed provided the taxpayer is 62 years of age or older, or the taxpayer is totally and permanently disabled.
At what age do you stop paying state taxes in Georgia? ›
Veterans 62 and younger are now exempt from paying taxes on up to $17,500 of their military retired pay. Those with at least $17,500 of earned income are eligible for up to $35,000 in exemptions. Veterans older than 62 qualify for the same tax exemptions as all older Georgia taxpayers.
Do my property taxes go down when I turn 65 in Georgia? ›
A homeowner 65-years-old or older who applies may receive the double homestead exemption. This exempts up to $4,000 of the assessed value of the home from state and county property taxes. Property Tax Deferral.
S5 - Disabled Veteran Exemption
Extends to the unremarried spouse or minor children provided they continue to claim homestead within the same county. Includes an annually-adjusted amount set by the U.S. Secretary of Veterans Affairs, off the assessed value on county, county bond, school, school bond, and recreation.
What is the S4 exemption in Georgia? ›
The (S4) is offered to those residents over the age of 65 as of January first the year they file for the homestead exemption. This exemption authorizes said individual to receive a tax exemption of $6,000 for county taxes, and $20,000 for school tax, and $100.00 off their sanitation bill each year.
How much does Georgia homestead exemption save you? ›
A homestead exemption reduces the taxable value of your home. For example, if your home is appraised at $200,000, then the assessed value is 50 percent of that amount, or $100,000. With a $25,000 homestead exemption, you only pay taxes on $75,000.
What happens if I forgot to file my homestead exemption in Georgia? ›
Late submissions received after April 1 will apply for the following year. You may file a Homestead Exemption Application any time of year. The only requirements are that you own the home on January 1st and submit the application by April 1.
What counties in Georgia have senior tax exemption? ›
Tax breaks for seniors: Can counties afford them?
| County | Exemption | Restrictions (Age; Income) |
|---|
| DeKalb | 100% | 62; $10,000 |
| Gwinnett | 100% | 65; $25,000 |
| Forsyth | 100% | 65 |
| Fayette | 100% | 65; $15,000 |
3 more rowsJun 2, 2010
Accordingly, most states offer product-specific exemptions for items such as food, clothing, prescription medicines, and medical (prosthetic) devices. Those states that don't provide a complete exemption for these items often impose a lower tax rate on them. Exemptions based on type of purchaser.
Is rental income taxable in Georgia? ›
In Georgia, residential rental income is taxed at a flat rate of 5%. However, operating expenses such as mortgage interest, property taxes, property insurance, structural improvements, and pest control can reduce your taxable rental property income.
Is selling personal items considered income? ›
The gain on the sale of a personal item is taxable. You must report the transaction (gain on sale) on Form 8949, Sales and Other Dispositions of Capital AssetsPDF, and Form 1040, U.S. Individual Income Tax Return, Schedule D, Capital Gains and LossesPDF.
How much is local service tax? ›
What you need to know
| Amount of monthly income earned (in Shs) | Rate of LST (in Shs) per year |
|---|
| Exceeding 100,000/= but not exceeding 200,000/= | 5,000 |
| Exceeding 200,000/= but not exceeding 300,000/= | 10,000 |
| Exceeding 300,000/= but not exceeding 400,000/= | 20,000 |
| Exceeding 400,000/= but not exceeding 500,000/= | 30,000 |
6 more rowsOct 31, 2022
Single filers and married individuals who file separately could receive a maximum refund of $250. Head of household filers could receive a maximum refund of $375. Married individuals who file joint returns could receive a maximum refund of $500.
State Tax Collections: T99 Taxes, Not Elsewhere Classified for Georgia (QTAXT99QTAXCAT3GANO)
Is paying for your kids school a tax write off? ›
Tuition is not tax-deductible
In California, as in most states, private school tuition is paid by parents, without significant government support or subsidy. Private school is costly, and not generally tax-deductible.
Will homestead exemption lower my mortgage in Georgia? ›
You cannot get your payments lowered once you get your homestead exemption in place. That is a function that your mortgage company does. They review your escrow, and it'll take them about 18 months after you get your homestead exemption.
At what age do you stop paying school tax in Hall county GA? ›
Must be 62 on or before January 1. Household income from social security and other retirement pension cannot exceed $87,048. Reduces the taxable value by your standard home- stead exemption plus $30,000 on the portion to which school taxes are applied. Must be 65 on or before January 1.
How much can a 70 year old earn without paying taxes? ›
Basically, if you're 65 or older, you have to file a tax return in 2022 if your gross income is $14,700 or higher. If you're married filing jointly and both 65 or older, that amount is $28,700. If you're married filing jointly and only one of you is 65 or older, that amount is $27,300.
Is Georgia a good place to retire for taxes? ›
Georgia is very tax-friendly toward retirees. Social Security income is not taxed. Withdrawals from retirement accounts are partially taxed. Wages are taxed at normal rates, and your marginal state tax rate is 5.75%.
Do you stop paying taxes at age 70? ›
There is no age at which you no longer have to submit a tax return and most senior citizens do need to file taxes every year. However if Social Security is your only form of income then it is not taxable. In the case of a married couple who file jointly, this must be true of both spouses.
Is Georgia getting rid of state taxes? ›
Georgia lawmakers brought a tax reform package across the finish line in 2022 that will change the state's progressive income tax to a 5.49 percent flat tax beginning in 2024, with triggers to provide additional rate reductions.
Is pension considered income? ›
Most pension payments are taxable, and the amount of tax withheld depends on your total income for the year and the income tax withholding election you make.
What is the most tax friendly state for seniors? ›
Alaska. Alaska is the most tax-friendly state for retirees because it has no state income tax or tax on Social Security.
Tax Benefits of Retiring in Georgia
Social Security income in Georgia is not taxed. Withdrawals from retirement accounts and pensions (both public and private) in Georgia are only partially taxed. Anyone over 65-years-old can deduct up to $65,000 of retirement income.
Does Georgia have a senior discount on property tax? ›
Property Tax
The qualifying applicant receives a substantial reduction in property taxes. Currently, there are two basic requirements. You must be at least 62 years or older on January 1st of the year in which you are applying, and you must meet certain income requirements.
What is the lowest property tax in Georgia? ›
Low on Taxes
Cobb County has the lowest property taxes in the Metro Atlanta Area compared to neighboring counties.
What is L7 exemption in GA? ›
Floating Exemption – L7
A base value for the exemption is determined for each homesteaded property within the county that can only be increased, annually, by the lessor of 3% or the inflation rate, plus any additions or improvements to the property, for the purposes of calculating the school portion of the tax bill.
What is S1 exemption in GA? ›
S1 - Regular Homestead Exemption. For all property owners who occupy the property as of January 1 of the application year. No income or age limit. Includes $5,000 off the assessed value on County, $5,000 off School and $2,000 off State.
What is L2 exemption in Georgia? ›
Age Exemption (Code L2-age 62)
If you are 62 on January 1, this exemption will be an additional reduction of $20,000 of your assessed value towards your school tax. (Code L6-age 68) If you are 68 on January 1, this exemption will be an additional reduction of $120,000 of your assessed value towards your school tax.
Do you get money back from homestead? ›
There are two types of Homestead Credit Refund: A regular refund based on your income and property taxes. A special refund based on how much your property tax increased.
Which county has the highest property taxes in Georgia? ›
Fulton County collects the highest property tax in Georgia, levying an average of $2,733.00 (1.08% of median home value) yearly in property taxes, while Warren County has the lowest property tax in the state, collecting an average tax of $314.00 (0.51% of median home value) per year.
Can you have two homestead exemptions in Georgia? ›
You must own and occupy the property as your primary residence as of January 1 of the application year; otherwise, the application, if approved, will be for the following year. You can have a homestead exemption on only one property. Married couples by law can have only one homestead exemption between them.
Can husband and wife claim separate primary residence? ›
It comes as a surprise to many that under California law, married couples have the right to opt for separate residency status. And this arrangement can lead to large tax savings for high-income marriages.
In Georgia, any overdue property taxes automatically become a lien on your home. If you don't pay the amount due, the sheriff will likely hold a nonjudicial tax sale (the most common type of tax sale in Georgia) and sell the home to a new owner.
How are property taxes calculated in GA? ›
How to Figure Tax: The assessed value (40 percent of the fair market value) of a house that is worth $100,000 is $40,000. In a county where the millage rate is 25 mills the property tax on that house would be $1,000; $25 for every $1,000 of assessed value or $25 multiplied by 40 is $1,000.
How can I lower my property taxes in Georgia? ›
A homestead exemption can give you tax breaks on what you pay in property taxes. A homestead exemption reduces the amount of property taxes homeowners owe on their legal residence. You must file with the county or city where your home is located.
How do I apply for tax exemption in Georgia? ›
You can submit Form 3605 (The Application for Recognition of Exemption) to the Georgia Income Tax Division. Along with the form you will need to submit your Georgia nonprofit's Articles of Incorporation, bylaws, statement of activities in Georgia, and a copy of your Letter of Determination from the IRS.
How much does homestead exemption save in Georgia? ›
Homestead Exemptions
A homestead exemption reduces the taxable value of your home. For example, if your home is appraised at $200,000, then the assessed value is 50 percent of that amount, or $100,000. With a $25,000 homestead exemption, you only pay taxes on $75,000.
How do I get a gate card in Georgia? ›
To qualify for a GATE card, you must provide a taxpayer ID number. This information will be submitted to the Georgia Department of Revenue for verification. You must use the taxpayer ID number that you use when filing your farming revenue.
Do seniors pay property tax in Georgia? ›
Every homeowner who lives in the home and applies will receive the standard homestead exemption. A homeowner 65-years-old or older who applies may receive the double homestead exemption. This exempts up to $4,000 of the assessed value of the home from state and county property taxes. Property Tax Deferral.
Is there a cap on property tax increase in Georgia? ›
The second variable is the tax (millage) rate, determined by the local governing body. This year, Georgia legislators have proposed capping increases in assessed value at a maximum 3 percent per year.
What is the minimum acreage for farm tax in Georgia? ›
A minimum of 50 acres is required, with no maximum. Assessment is 175% of the CUVA value. The agreement is subject to annual certification, and there is no penalty for withdrawing land from the covenant. To watch Izlar's presentation, visit https://agforecast.caes.uga.edu/previous-outlooks/2021.html.
What is the gate tax exemption in Georgia? ›
The Georgia Agriculture Tax Exemption (GATE) is a legislated program that offers qualified agriculture producers certain sales tax exemptions. If you qualify, you can apply for a certificate of eligibility.
The cost is $150, and your new card will be valid starting on the date that you paid for it. If you already have a GATE Card number, check your card status to see whether that number is valid for 2023.
Do seniors get a tax break in Georgia? ›
Yes. A retirement exclusion is allowed provided the taxpayer is 62 years of age or older, or the taxpayer is totally and permanently disabled. Retirement income includes items such as: interest, dividends, net rentals, capital gains, royalties, pensions, annuities, and the first $4000.00 of earned income.
What benefits do seniors get in Georgia? ›
While these senior care options can be expensive, financial assistance is available through Medicaid and Medicare. Georgia Medicaid works in partnership with the federal government to provide seniors and other Georgia residents with funding for nursing home care or in-home care.
Are over 65 exempt from property taxes in Georgia? ›
If you own and live in your home, you are likely eligible for the Regular Homestead Exemption. 770-822-8800 for assistance. If you are 65 years old as of Jan. 1, 2023, and your 2022 GA return line 15C is less than $112,048, you may be eligible for the Senior School Exemption (L5A).
What is L7 exemption in Georgia? ›
Floating Exemption – L7
This exemption is available to all taxpayers holding a current exemption with the exception of those receiving the benefit of a 100% reduction in school taxes and will reduce the school tax portion of your tax bill.
Do veterans pay property taxes in Georgia? ›
Georgia Homestead Tax Exemption for Disabled Veteran, Surviving Spouse or Minor Children: Georgia offers a homestead property tax exemption for eligible disabled Veterans, their Surviving Spouse or minor Children. The amount for 2023 is $109,986.
