ST. ANDREW ORTHODOX CHURCH INC. V. THOMPSON
REVENUE AND TAXATION: CHARITABLE ORGANIZATIONS
2006-CA-000305
PUBLISHED: REVERSING IN PART AS TO APPEAL, REVERSING AS TO CROSS APPEAL
PANEL: WINE PRESIDING; COMBS AN NICKELL CONCUR
COUNTY: JESSAMINE
DATE RENDERED: 8/10/2007
Both sides appealed TC’s affirming part of the KBTA’s (KY Board of Tax Appeals) denial of tax exempt status to a portion of property owned by the Church and remanding the matter to the KBTA for additional factual findings. The Church was organized as a non-stock non-profit corporation and had purchased two 5-acre lots that each had a residential home on it in Jessamine Co. with plans to build a new, larger church covering both tracts. The Church leased both homes to non-member individuals to help pay the mortgage, but had carved out a portion of one lot for outdoor church gatherings and a portion of the other lot for a meditation area for use by its members. The Church sought a tax exemption under Section 170 of the KY Constitution, which was denied by the Jessamine Co Bd of Assessment Appeals. The KBTA later upheld the non-exempt status finding. On appeal, the TC held that the portions of both lots used for church functions was tax exempt while the remaining portions with the leased homes was not.
The COA began by noting that it may not substitute its own judgment for that of the KBTA on any question of fact. The COA analyzed the 1990 amendment to Section 170 of the Constitution, and determined that it broadens the class of properties that may beheld by a religious institution and not be subject to an ad valorem tax. The COA ruled that the KBTA and TC’s narrow interpretation of the amended Section thwarted the intent behind the amendment, and attempting to construct different degrees of occupancy would create a "Gordian knot." Due to the lack of evidence that the Church intended to use the property for investment or to construct anything other than a church, the COA concluded that the entirety of both lots was exempt from taxation.
By Chad Kessinger
