Rescue Mission’s Parsonage Tax Exempt

New Jersey court’s decision overturns state tax court’s earlier ruling.

Church Law and Tax 1996-05-01

Taxation—Church Property

Key point. In some states a church—owned parsonage is exempt from property tax.

A New Jersey court ruled that a parsonage owned by a rescue mission qualified for exemption from property tax. New Jersey law exempts from property tax buildings, not exceeding two, actually occupied as a parsonage by the officiating clergyman of any religious corporation of this State. A state tax court ruled that a parsonage owned by a rescue mission was not exempt since the director of the mission who occupied the parsonage was not an officiating clergyman and the mission was not a religious corporation. The court stressed that needy persons who were served by the mission and who participated in its religious services were not members. The mission appealed, and a state appeals court ruled that the parsonage was entitled to the exemption. The court noted that the mission’s charter and bylaws clearly stated a religious purpose that included the scheduling of religious services. It further noted that religious services and Bible studies in fact were conducted several times each day at the mission in addition to various charitable activities. The court concluded that the mission qualified as a religious corporation:

EXT Over forty years ago we defined “congregation” as an assemblage or union of persons in society to worship their God publicly in such manner as they deem most acceptable to Him, at some stated place and at regular intervals. St. Matthew’s Lutheran Church for the Deaf v. Division of Tax Appeals, 87 A.2d 732 (N.J. App. 1952). An institution that conducts religious services several times a week in one location and trains people in its religious tenets as followers of Jesus Christ must be considered a religious congregation, i.e., an assemblage … of persons … to worship their God publicly in such manner as they deem most acceptable to Him, at some state place and at regular intervals.” [The mission] qualifies as a religious congregation. There are public religious services conducted at a fixed place at regular intervals. [Its] status as such a congregation is not foreclosed by its massive commitment to the assistance of the poor and other needy individuals. That is a praiseworthy form of religious expression accepted by congregations of all denominations.

The court also emphasized that a congregation need not be associated with a particular national religious corporation in order to have a parsonage, and the tax exemption law does not require that a minister and his family attend services at the place of worship where he or she is a spiritual leader. Finally, the court responded to the state tax court’s observation that the parsonage was not exempt since the mission director was not an officiating clergyman by noting that [g]overnmental inquiry into how a minister allocates the performance of his or her religious duties is an improper incursion into the activities of a religious organization, an intrusion uncalled for by the [exemption] statute and proscribed by constitutional protection. This will be a useful quotation for ministers to use when their status as a minister is questioned by the IRS on the basis of an analysis of the duties they perform. Goodwill Home and Mission, Inc. v. Garwood Borough, 658 A.2d 1330 (N.J. App. 1995). [ Tax Legislation for Churches, State Property Taxes]

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