Exemptions to property tax raise questions
Posted on Sunday, April 20, 2008
URL: http://www.nwanews.com/adg/News/223309/
FAYETTEVILLE — The Springdale Chamber of Commerce hasn’t paid property taxes on its office in 10 years.
Dan Cypert, Washington County Assessor Lee Ann Kizzar’s chief deputy, discovered last week that the Springdale building was exempted by the county’s Board of Equalization in 1997.
Kizzar, who was elected in 2002, believes that the board’s decision violated state law.
After all, the Fayetteville Chamber of Commerce paid $ 4, 135 in taxes on its Mountain Street building last year. The 1997 exemption saves the Springdale chamber about $ 4, 200 a year.
The discrepancy in Washington County shows the inconsistent way that property tax exemptions are granted in Arkansas.
A working group of county assessors, including Kizzar, wants the state Legislature to eliminate the inconsistent application of property tax laws by handling all exemption requests for the state’s 75 counties.
They want to ensure that, for example, a Veterans of Foreign Wars building in one county gets the same treatment as VFW posts in other counties. State supervision also would help make exemptions consistent when one assessor leaves office and a new one takes over. Each exemption that’s granted means Arkansas businesses and residents must pay a little more in taxes to pick up the slack, said Debra Asbury, director of the state’s Assessment Coordination Department. “The more exemptions you grant, the fewer people are paying and everybody else ends up paying more,” Asbury said.
EXEMPTIONS Granting an exemption has a consequence for other taxpayers, said Jewette Farley, a former assessor in Lincoln Parish, La., and former president of the International Association of Assessing Officers. “It creates a big-time problem, because it forces everybody else to pay more taxes,” Farley said. “The first question you’ve got to ask is, ‘Should we help this group.’ The second part of that is, ‘Should we hurt these other people.’
“ One man’s loophole is another man’s noose.”
Determining that churches, public cemeteries, schools and libraries are tax exempt is easy work, Asbury said.
It’s more difficult to figure whether it’s proper to exempt land owned by a school district for future expansion. The same is true of future church sites.
Neither are exempt from taxes, Asbury said.
Assessors look at exemption requests on a case-by-case basis. Organizations, churches and chambers of commerce are willing to test what qualifies. In Washington County, there have been 54 exemption requests since Jan. 1. All but six were approved, Cypert said.
Members of the Ozark Research Institute, who say they once healed a sick goldfish through the power of thought and who say they manipulate energy to remove tumors from people, don’t want to pay taxes on their Fayetteville building.
The institute isn’t exempt even though it’s a nonprofit corporation, Kizzar said. Harold McCoy, a retired Army intelligence officer who founded the institute in 1992, plans to talk with Kizzar again.
“We do healing work,” Mc-Coy said. “We research mind phenomena. The mind works in four bands of frequency. We do that kind of research and teach people how to use their mind. Whether the tax assessor believes in what we do, we use this building for that and we should be tax exempt.”
Pope County Assessor Kar- en Martin said Erskine College asked her to exempt property in Russellville acquired in 2001. The Presbyterian college is in Due West, S. C.
“I tax them because they can’t say they use it,” Martin said.
Pulaski County Assessor Janet Troutman Ward said she’s seen so many strange exemption requests over the years that she created an exemption department five years ago.
Two employees in the department receive about 20 exemption requests each week. One or two a week are approved, adding to the county’s 6, 400 exempt properties.
There were once 11, 000 exempt parcels among the 190, 000 in Pulaski County, she said. Requests these days are scrutinized, Ward said.
“I remember one that was like a mission church, and they made an application,” she said. “They gave us the address, and I went out there. They were sitting on the porch drinking beer with a beat-up car in the front yard. We said, ‘Where are you having church ?’ And they didn’t know anything about it.”
Searcy County Assessor Niagle Ratchford has an exemption request that skips church and school issues and goes right to the top.
Jerry F. Kirk, who lives in a rural area northeast of Witts Springs, deeded 82 acres and his home to God on Dec. 12. He gave a copy of the deed to Ratchford.
Ratchford said Kirk must pay. Last year, Kirk paid $ 594. 01.
“I called the state’s attorney to see if I should show the owner as the Father in heaven and his only begotten son, the Christ, because that’s who he says he gave it to,” Ratchford said. “He told me no. The grantor has to be able to show delivery, and he can’t show that. That’s what I’ve been told.”
Kirk, a former Florida homebuilder, said his own “arrogance and ignorance” made him think he owned the land. He doesn’t intend to pay the taxes this year.
“I’m not authorized to pay something for the Father in heaven,” Kirk said. “I think the county is going to have some very difficult problems, and I don’t want to see that happen. You can’t pay taxes for somebody else.”
In Benton County, Assessor Bill Moutray is fretting about how to deal with Crystal Bridges Museum of American Art, which is under construction in Bentonville. He expects some museum property to be exempt and other parts to be taxed.
Moutray saw his denial of tax exemptions challenged last year in Benton County Court by the Rogers Elks Lodge, the Bentonville Masonic Temple and the Pea Ridge Masonic Lodge. The Elks Lodge later agreed to pay, but the Masons won. Assessor’s decisions can be appealed to a county court, presided over by the county judge.
“There’s nothing set in stone for the assessors,” Moutray said. “We’re hanging on a limb. The [Arkansas Assessment Coordination Department ] is our guide, but that’s as far as they go.” CHAMBERS OF COMMERCE
Kizzar, the Washington County assessor, was certain before last week that the Fayetteville and Springdale chambers of commerce were on equal footing.
She rarely hears from Fayetteville’s chamber, but the Springdale chamber periodically asks for vehicles to be exempted.
The assessor’s office last month denied a request from Springdale Chamber of Commerce President Perry Webb to make its new $ 51, 000 GMC Yukon Denali exempt. The tax bill will be $ 519.
“It’s not public property or used exclusively for public charity,” Cypert said.
Details of how the chamber’s 4, 182-square-foot building became tax exempt aren’t clear. Sue Phillips, county assessor in 1997, doesn’t remember much about it.
“It probably went to the Equalization Board because I refused to exempt it,” Phillips said. “They have a right to appeal to the Equalization Board. If they requested it, I probably denied it.”
Minutes of the Sept. 9, 1997, Equalization Board meeting show that Webb and two other chamber officials made the request. They noted that the chamber’s previous building was exempt and that the new site on Emma Avenue was being taxed.
“It lasted a total of about 30 seconds,” Webb said. “It was just boom, boom, boom.”
Kizzar wants to think about her next move, saying her “gut feeling” is that the Springdale chamber should be paying taxes just like the Fayetteville chamber.
“I’ve got until July to make that decision,” Kizzar said. “I’m going to think about it. I try not to jump to any conclusions.”
The Springdale chamber will pay future taxes if Kizzar says it must, Webb said.
“We’re going to do what we’re supposed to do,” he said.
Most chambers of commerce aren’t exempt. Those that pay property taxes know better than to complain, because it will draw attention to those that don’t, Webb said.
“I didn’t know Fayetteville was paying,” Webb said. “It’s been a conscious decision that you just don’t bring it up.”
Ward, the Pulaski County assessor, said the Greater Little Rock Regional Chamber of Commerce isn’t exempt.
Moutray, the Benton County assessor, said the Bentonville / Bella Vista Chamber of Commerce and the Rogers / Lowell Area Chamber of Commerce have paid property taxes since 2005.
Martin, the Pope County assessor, said the Russellville Chamber of Commerce was exempt when she took over, but she changed it in 2004. The chamber now pays about $ 3, 600 a year, she said.
“I try my hardest to go by what the letter of the law is,” Martin said.
STATE’S HELP Martin predicts the Arkansas Legislature won’t be interested in having a state agency take over tax exemption requests. The working group isn’t even sure which state agency should take on the responsibility. Asbury, of the Assessment Coordination Department, doesn’t want the task. The working group’s members have talked about the state treasurer’s office, the secretary of state’s office or the state Department of Finance and Administration handling it. “It would be a big job that nobody wants,” Martin said. Ratchford, who’s going to send a tax bill to Kirk even though his land northeast of Witts Springs has been deeded to God, believes the state might be able to help. “You’d have consistency,” Ratchford said.
State Sen. Sue Madison, DFayetteville, believes the assessors should keep the task.
“Sometimes, people have to make decisions,” she said. “It’s an assessor’s job. If the assessor is wrong, they can watch themselves end up in court.”