Nonprofits don't pay property taxes but, as The NonProfit Times explained, they often end up paying money to the government anyway. This come in the form of payments in lieu of taxes (PILOTs).
Newsmax reported today on one such PILOT that is being debated in an Oregon court. Some cities are starting to charge nonprofits and churches double for their water bills. This is the case in Canyonville, Ore., where a city ordinance states that nonprofits, churches, and schools will be charged this amount in lieu of taxes. The city of Canyonville boasts that its residents pay less for water than neighboring towns.
Canyonville Christian Academy (CCA), established in 1924, told Newsmax that the extra charges for water date back nearly 30 years, totaling about $200,000. The law is written to cover all nonprofits that use water, but CCA believes that the regulations targeted 10 churches and four Christian schools. CCA informed the school of what they considered to be improper billing in June, but they said nothing was done to solve the problem. The school offered to resolved the issue on Oct. 19, 2011 by taking a small amount of the surcharges of the last six years in the form of credits on future bills. That offer was rejected.
Believing the law to be unconstitutional, CCA appealed to the Douglas County Circuit Court in Roseburg, Ore. to give a ruling on the matter. If the court rules in the school's favor, it could potentially trigger similar lawsuits in the future.
You can read the full story in Newsmax.