As state budget cuts have left cash-strapped towns and cities looking for ways to recoup revenue, several nonprofit organizations have been denied their tax-exempt status.
Assessors in multiple towns and cities are scrutinizing applications from nonprofits requesting tax exemptions. In Norwich, dozens of organizations -- previously tax-exempt -- have been denied that status for various reasons, including failing to file the proper paperwork.
Gian-Carl Casa, president and CEO of the Connecticut Community Nonprofit Alliance, said it’s a sign that towns and cities are desperate for revenue. And they think it’s a coordinated effort by assessors, in various parts of the state, to just begin assessing taxes on financially hard-pressed nonprofits. Casa said it’s disappointing and counterproductive.
“Eliminating the exemption from taxes just diverts funds from programs that go to people who may have developmental disabilities, people who are struggling with substance abuse, victims of domestic violence, arts and cultural programs,” Casa said. “The people served by nonprofits are the people who are going to end up losing because of this taxation effort.”
But Kevin Maloney, from the Connecticut Conference of Municipalities, said there may be a misconception that just because an organization is considered a nonprofit and tax-exempt from the IRS, that doesn’t mean it’s automatically exempt from local property taxes. He said the local assessor has a responsibility to scrutinize every application requesting tax-exempt status since it takes revenue off the local tax rolls, and it shouldn’t be misconstrued that assessors are trying to punish nonprofits.
“In many of these cases with nonprofits, either part of their working space or other properties they own could be used for profit-making ventures, which then makes it taxable,” Maloney said. “For example, a Catholic church, if it was to purchase an apartment building that would be taxable as just one example.”
Maloney said there’s also an overreliance on property taxes that just exacerbates the problem.
Both organizations, the CCM and the Nonprofit Alliance, are seeking legislation that would clarify certain guidelines and requirements.