An Illinois state appeals court ruled that a Salvation Army thrift store was not exempt from state property taxation under a state law exempting property used exclusively for religious or charitable purposes.
The court observed that "whether the thrift store is exempt depends solely upon whether the property is primarily used for charitable purposes." It concluded that the thrift store was not exempt, since the primary purpose of the store (according to the testimony of Salvation Army officers) was to generate income to fund adult rehabilitation activities. The fact that income "is ultimately put to charitable uses … does not entitle the property to a charitable use exemption, as it has long been held that the use to which property is devoted is decisive rather than the use to which the income derived from the property is employed."
The court distinguished an earlier Illinois appeals court decision upholding the tax-exempt status of a Catholic thrift store, on the ground that the primary purpose of the Catholic facility was "to provide means for persons to donate goods for the needy, and to allow for a networking or centralization of these activities. No profit was generated as a result of the thrift store's activities, and thus, generating income was not the primary goal of the thrift store."
Salvation Army v. Department of Revenue, 524 N.E.2d 628 (Ill. App. 2nd Dist. 1988)
