HF 872

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:42am

A bill for an act
relating to taxation; providing clarification for eligibility for property tax
exemption for institutions of public charity; amending Minnesota Statutes 2008,
section 272.02, subdivision 7.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2008, section 272.02, subdivision 7, is amended to read:

Subd. 7.

Institutions of public charity.

new text begin (a) new text end Institutions of purely public charity new text begin that
are exempt from federal income taxation under section 501(c)(3) of the Internal Revenue
Code new text end are exempt deleted text begin . deleted text end new text begin if they meet the requirements of this subdivision. In determining
whether real property is exempt under this subdivision, the following factors must be
considered:
new text end

new text begin (1) whether the stated purpose of the undertaking is to be helpful to others without
immediate expectation of material reward;
new text end

new text begin (2) whether the institution of public charity is supported by material donations, gifts,
or government grants for services to the public in whole or in part;
new text end

new text begin (3) whether a material number of the recipients of the charity receive benefits or
services at reduced or no cost, or whether the organization provides services to the public
that alleviate burdens or responsibilities that would otherwise be borne by the government;
new text end

new text begin (4) whether the income received, including material gifts and donations, produces a
profit to the charitable institution that is distributed to private interests;
new text end

new text begin (5) whether the beneficiaries of the charity are restricted or unrestricted, and, if
restricted, whether the class of persons to whom the charity is made available is one
having a reasonable relationship to the charitable objectives; and
new text end

new text begin (6) whether dividends, in form or substance, or assets upon dissolution, are available
to private interests.
new text end

new text begin A charitable organization must satisfy the factors in clauses (1) to (6) for its property
to be exempt under this subdivision, unless there is a reasonable justification for missing
the factors in clause (2), (3), or (5). If there is reasonable justification for failing to meet
the factors in clause (2), (3), or (5), an organization is a purely public charity under this
subdivision without meeting those factors. After an exemption is properly granted under
this subdivision, it will remain in effect unless there is a material change in facts.
new text end

new text begin (b) For purposes of this subdivision, a grant is a written instrument or electronic
document defining a legal relationship between a granting agency and a grantee when
the principal purpose of the relationship is to transfer cash or something of value to the
grantee to support a public purpose authorized by law in a general manner instead of
acquiring by professional or technical contract, purchase, lease, or barter property or
services for the direct benefit or use of the granting agency.
new text end

new text begin (c) new text end In determining whether rental housing property qualifies for exemption under
this subdivision, the following are not gifts or donations to the owner of the rental housing:

(1) rent assistance provided by the government to or on behalf of tenants; and

(2) financing assistance or tax credits provided by the government to the owner on
condition that specific units or a specific quantity of units be set aside for persons or
families with certain income characteristics.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxes payable in 2010 and
thereafter.
new text end

Sec. 2. new text begin PURPOSE.
new text end

new text begin The purpose of section 1 is not to contract or expand the definition of "institutions
of purely public charity" but to provide clear standards that can be applied uniformly to
determine eligibility for exemption from property taxations.
new text end