A call to centralize tax-exempt determination
As state lawmakers consider changing how certain tax-exempt institutions are defined in Pennsylvania, one tax lawyer is suggesting that court battles are inevitable unless laws on the subject are made less complex.
Stakes are high for such definitions: getting such a designation makes the institution tax-exempt. The issue was forced by a court ruling revoking a Pike County summer camp’s status (the application was first rejected by the county’s assessment board). Since then, lawmakers have swooped in to try to clarify the rules defining such charities, beginning with a lengthy constitutional amendment process to grant themselves the power to decide which charities are purely public.
Jeff Engle, a Dauphin County Board of Assessment solicitor, sees the laws themselves as the problem. Many determinations land in court. And according to Engle, it’s because boards like his, especially in rural counties, are often overwhelmed by the legal tests necessary to determine a group’s tax-exempt status.
“The local boards don’t have the boots on the ground and necessarily the personnel to deal with it,” Engle said. “I mean, we’re all electricians and plumbers and you’re asking us to build a space shuttle.”
Engle plans to testify at a Thursday hearing on the law governing purely public charities. He said short of shedding state laws, one remedy that may keep these battles out of the courts is creating some kind of centralized way station office to take tax-exempt status applications.
“Every proposed tax-exempt entity would have to go, and state their case,” said Engle. “If there was somewhat of a centralized entity that could deal with it, it may help out the 67 counties that don’t have necessarily the ability to deal with each one of these cases.”
Otherwise, Engle said, the court battles will continue – even with additional legal tests added to clarify which institutions are purely public charities, and therefore tax-exempt.
“If you’re going to keep this legislation and carry it on, the tools that are necessary for your typical board of assessment appeals office are not there,” he said.
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