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Monday, April 25, 2011

Tax Exempt Organizations Pay Taxes Anyway

We just posted an article about how many tax-exempt organizations end up paying fees and taxes to their local governments.  Here is a bit of the article:

Some 63 percent of nonprofits reported paying various types of fee and taxes to local and state governments during 2010. Of these types of assessments, 17 percent reported paying field-specific taxes, 36 percent paid “other payments,” 9 percent paid PILOT (payments in lieu of taxes) and 42 percent of nonprofits paid user fees.


These are among the results of surveying by the Johns Hopkins University Center for Civil Society Studies and published in a report, “Taxing the Tax-Exempt Sector -- A Growing Danger for Nonprofit Organizations,” written by Lester M. Salamon, Stephanie L. Geller and S. Wojciech Sokolowski.


The study illustrated that although nonprofits have generally enjoyed the benefits of a tax-exempt organization, for the past five years a majority of nonprofits have been paying charges accrued to local and state governments.


Salamon, director of the Baltimore, Md., located Johns Hopkins Center for Civil Society Services, described this tactic as self-defeating. “What these governments are essentially doing is driving more need to the government side, by taxing these nonprofits, programs need to be eliminated. It’s really cutting off its nose despite its face.”


The types of fees encumbered by nonprofits have varied in their scope and application to their size. PILOTs have been generally applied to larger nonprofits. This is a type of fee that is negotiated by local governments and nonprofits.


Of the responding organizations, 9 percent paid a fee like this with the largest share of payments coming from elderly housing & service organizations (26.4 percent).


The average amount paid in PILOTS by survey respondents was $422,095. Again, PILOT payments are generally reserved for larger organizations thus the explanation for such a large sum of money.

Read the full article about this subject at The NonProfit Times website.

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