This is the second installment in a series of blogs about the legal issues we at ADF are most often asked to assist pastors and churches with.  They are listed in order of importance, with number one being the area where churches are currently seeing the most restriction of their religious freedom. The first blog focused on legal road blocks to church land use. The second most significant legal threat to churches is property tax.

The economic downturn has made many local government officials so desperate they’re attempting to tax churches to make up budget shortfalls.  This often takes the form of the denial of property tax exemption for portions of church property.  We’re currently representing three different churches on this very issue, one of which is Christ Church in Nashville, Tennessee.  The church was denied tax exemption for its gymnasium, coffee shop, and bookstore even though they operate at a loss and clearly support the mission of the church.  The matter is currently on appeal and we’ve presented evidence to the court that similar uses by other non-profits like the YMCA and hospital and university bookstores have been ruled tax exempt.  To reduce the risk of their property being taxed, churches should ensure that all uses directly relate to the mission of the church and avoid any use that is an income generator for the church.   The church should document the religious purpose of such use, and then have such document approved by a governing board of the church.

Check back soon for the #3 issue - Other Taxes.

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