Rule Change Could Make it Easier for Counties to Tax Property at Churches

A proposed rule-change at the Arkansas Assessment Coordination Division could make it easier for county assessors to collect taxes on property that churches, charities, and other nonprofits own.

Currently, the Arkansas Constitution makes it clear that churches and charities are tax-exempt, and churches and charities generally don’t pay taxes on property they own unless they make some sort of profit from it.

The proposed rules would require churches and charities to file forms and paperwork with the county assessor that prove their property is exempt from taxation “beyond a reasonable doubt under Arkansas law.”

That’s a very high standard — and it gives county assessors tremendous leeway.

The forms also require churches and charities to give the county information that many people would consider private — like information about their staff’s salaries, bonuses, and other compensation. It isn’t clear why the county would need to know that kind of information.

If a county assessor decided to reject the nonprofit’s application for a tax exemption, the county could force the organization to pay taxes on anything it owns — land, buildings, vehicles, electronic equipment, machinery, and other property — as if it were a business.

The new rule could hurt many different nonprofits in Arkansas, including:

  • Churches
  • Charities like the Salvation Army or Union Rescue Mission
  • Christian summer camps
  • Private schools and private colleges and universities
  • Food ministries
  • Nonprofit hospitals and medical clinics
  • Homeless shelters

Charities and churches contribute millions of dollars to the economy each year by serving their communities. That’s part of the reason the Arkansas Legislature voted to designate religious organizations and charities as essential earlier this year. Making it easier for counties to tax property at churches and charities hurts everybody.

Please contact the Arkansas Department of Finance and Administration today, and ask them to opposed Rule 6.01 – 6.04, the Property Tax Exemption rule that affects nonprofits, charities, and churches.

Email your comments against the rules to All comments are due by Monday, May 31.

You can read the proposed rules here. You can read some of the paperwork churches and charities would have to file here.

Senator Says Task Force Not Interested in Taxing Churches

Yesterday we wrote about a proposal at the Arkansas Legislature to tax passive income of churches. The proposal was among those up for consideration at the legislature’s Tax Reform and Relief Legislative Task Force.

Under Arkansas law, income churches receive from things like interest earned on savings accounts or from the sale or rental of church property is not subject to the state income tax. The proposal before the task force would eliminate this exemption.

Sen. Jim Hendren (R — Gravette) is the senate chairman of the task force. I spoke with Sen. Hendren this morning, and he has assured me the task force has no interest in eliminating churches’ passive income tax exemption.

I am deeply grateful to everyone who contacted their state legislators yesterday to express their concern about this proposal, and I hope our elected officials will continue working to ensure taxes are not increased on churches and charities.

AR Lawmakers Looking at Proposal to Tax Churches

This morning the Arkansas Tax Reform and Relief Task Force met at the Capitol in Little Rock.

Among the items on the task force’s agenda is a proposal to tax investments, passive income, and sales by churches.

Under current law, Arkansas does not impose a state tax on interest churches earn investing money in savings accounts or on the sale or rental of church property.

This tax break has been on the books for more than 30 years, but now some lawmakers want to discuss doing away with it.

Charities and churches contribute at least $378 billion to the U.S. economy each year — and possibly much more than that, according to some estimates.

Many churches operate on budgets that are so tight they likely would have to shut their doors if they were taxed at the same rate as for-profit corporations. Our state needs to think twice before increasing the tax burden churches and charities carry.

This isn’t the first tax increase the task force has looked at this year. A few weeks ago the task force voted to move forward with discussions about increasing the state sales tax on groceries and ending Arkansas’ annual back-to-school tax holiday.

Family Council supported efforts to eliminate the grocery tax and worked very hard to help pass legislation creating the tax holiday in 2011.

If you are concerned about the Tax Reform Task Force’s proposal to raise taxes on churches, I encourage you to contact your state representative and state senator. If you need help contacting them, call our office at (501) 375-7000.