Tax Exemption of Boarding School Dormitories

The Arkansas Supreme Court recently ruled on this issue.

Church Law and Tax 1991-09-01 Recent Developments

Taxation – Church Property

The Arkansas Supreme Court ruled that dwellings located on the grounds of a church-operated boarding school were not exempt from state property taxes. The Arkansas Conference of the Seventh Day Adventists operates a boarding school consisting of grades 9 through 12. Most of the students are members of the Seventh Day Adventist Church. The campus consists of a boys’ dormitory, a girls’ dormitory, a gymnasium, a maintenance building, a box factory, a duplex, and 12 single family dwellings that are rented to faculty and staff. A county tax commission determined that the 12 dwellings were not exempt from property taxation, and the Conference appealed. The Conference noted that state law exempts from taxation “school buildings and apparatus” and “grounds used exclusively for school purposes.” The Conference claimed that the 12 dwellings qualified for exemption under these provisions since they were located on school property, and were used for counseling and spiritual guidance of the students in addition to serving as the residences of faculty members. The Conference contended that one of the school’s goals is to provide “mental and spiritual guidance” to the students, and that this purpose was directly fulfilled by having the dwellings on campus and readily accessible to the students. Therefore, the Conference argued that the dwellings should be treated like the dormitories, which are exempt from taxation. The tax commission maintained that the dwellings rented to faculty and staff are in direct competition with other owners of rental properties and therefore the dwellings should be taxed. A trial court agreed with the tax commission that the dwellings were not exempt, and the case was appealed to the state supreme court. The supreme court agreed that the dwellings were taxable. The court observed that the exemption of school properties applies only to those properties that are used exclusively for school purposes, and that even this exemption is to be interpreted narrowly. The court conceded that the dwellings were used for counseling of students, and occasional student parties. However, the court observed that “no residences are used for conducting classes” and the counseling activities are not “regularly scheduled obligations.” Accordingly, the court could not agree that the dwellings were used exclusively for exempt purposes. The court added that “another factor to consider is that the residential dwellings compete with other property owners in the area,” whose properties are not exempt. Based on these considerations, the court concluded that “the primary use of the dwellings is for residential purposes and the incidental use is for school purposes.” Arkansas Conference Association of Seventh Day Adventists, Inc. v. Board of Equalization, 800 S.W.2d 426 (Ark. 1990).

Property Taxes

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay
caret-downclosefacebook-squarehamburgerinstagram-squarelinkedin-squarepauseplaytwitter-square