The February 15, 2017 deadline for nonprofit organizations in California seeking to initially obtain or renew exemption from property taxes is quickly approaching, and there are changes to the reporting requirements if your organization allows third parties to use your property.
An increased concern amongst many tax-exempt organizations is how to report use of their property by private persons or non-exempt organizations.
In the past, if the owner and operator of a property were different, both had to apply separately for the Organizational Clearance Certificate (OCC) from the Board of Equalization (BOE) and then submit a Form BOE-267 or 267-A claim form to the county assessor. However, in a 2016 court case, Jewish Community Centers Development Corp. v. County of Los Angeles, 243 Cal.App.4th 700, the court held that only the owner of the property is required to file. Consequently, the BOE developed Form BOE-267-O. This form is required to be filed by an owner of property when any other organization or person uses the property, along with the additional documentation as specified below, depending on the nature and frequency of the operator’s use (Note that certain items noted below are not required if they were submitted with a previous filing).
If the property is used by an operator once per week or less, the owner must file:
- BOE 267 or 267A;
- BOE 267-O;
- Copy of the operator’s IRS and/or FTB tax exempt letter; and
- Copy of the written agreement.
If the property is used by an operator more than once per week, the owner must file:
- BOE 267 or 267A;
- BOE 267-O;
- Copy of operator’s IRS and/or FTB tax exempt letter;
- Copy of the written agreement;
- Copy of operator’s Articles of Incorporation or Bylaws; and
- Copy of operator’s operating statement and balance sheet for the calendar or fiscal year preceding the claim year.
An increased concern amongst many tax-exempt organizations is how to report use of their property by private persons or non-exempt organizations. The tax-exempt owner of the property will need to report all parties using the property with their Form 267 or 267-A by completing Form BOE 267-O. BOE 267-O requests the same information from both exempt and non-exempt operators. Where the operator is not tax-exempt, the filing organization will need to provide a description of the operator’s use of the property and demonstrate that each use is in furtherance of the filing organization’s permissible charitable purposes to obtain property tax exemption for that specific use of the property.
Another related deadline is also around the corner. If your nonprofit organization has business personal property, remember to file Form 571-L Business Property Statements by April 1st and be sure to submit and check the appropriate box on the BOE Form 267-A to request exemption of business personal property, which is any tangible property owned, claimed, used, possessed, managed or controlled in the conduct of your nonprofit’s activities (e.g. machinery, fixtures, office furniture and equipment). The BOE Form 267-A for your business personal property should be filed separately from any other BOE Form 267-A you submit for exemption of real property or a possessory interest in property; at least one county (San Francisco) has taken the position that a single BOE Form 267-A cannot be filed for all property interests.
Please contact Jeff Bernstein at jbernstein@coblentzlaw.com, Julie Treppa at jtreppa@coblentzlaw.com, or Alyssa Snyder at asnyder@coblentzlaw.com if you have questions concerning your organization’s claim for the Welfare Exemption.