Search begins in Albany for noncompliant nonprofits, tax exemptions

ALBANY — For tax attorney Jeremy Lynch, questions surrounding the high percentage of tax-exempt property in Albany and Dougherty County and the large number of nonprofit organizations in the city and county being granted tax-exempt status come down to a simple equation.

“You’ve got a 1930s law in a 2016 world,” Lynch said.

With almost two decades of tax law under his belt, Lynch knows a thing or two about the subject. And with rumblings growing in a county whose tax base stands by helplessly as some 34 percent of its parcels have been deemed tax-exempt, the Albany-based attorney has a bit of fuel to add to the fires of discontent.

“What we have in Dougherty County is a clear misinterpretation of state law,” Lynch said. “Our Board of Tax Assessors and our tax officials equate ‘nonprofit’ with ‘tax-exempt’ and generally grant all nonprofits tax-exempt status. But that is not what Georgia law says.”

Lynch offers a handout with highlighted sections that he says counter accepted wisdom among Albany and Dougherty County tax officials.

“You have all these sections that are pretty clear as to what is legitimately tax-exempt: public property, property used as state headquarters of a nonprofit organization organized for encouraging cooperation between parents and teachers — obviously thrown in there for the Georgia Association of Educators — property on Georgia’s college campuses used for student housing or parking, places of burial, places of religious worship …” Lynch says.

“But then you have these sections that say, ‘Property exempted pursuant to this paragraph shall not include property of a nonprofit hospital held primarily for investment purposes unrelated to providing patient care, providing health care services or providing training or education of health care personnel.’ And then, there’s this: ‘Property exempted shall not be used for the purpose of producing private or corporate profit and income distributable to shareholders …’ and ‘shall not apply to real estate or buildings which are rented, leased or otherwise used for the primary purpose of securing income thereon.’”

Lynch pauses to let understanding sink in before he continues.

“Georgia Code also says buildings owned by nonprofit organizations may be used to secure income so long as such income is used exclusively for the operation of that charitable institution,’” he says, his voice rising with the last part of the statement. “Now, can you think of a few places where that’s not being followed? I can, they’re all over the county.”

Albany City Commissioner B.J. Fletcher is one of dozens of citizens who said their eyes were opened by an Albany Herald article that outlined the number of nonprofits registered in Albany and Dougherty County and the hundreds of public- and privately-owned parcels of property that are listed as tax-exempt.

“That number — that $695 million number — just astounded people,” Fletcher said of the combined gross value of tax-exempt properties in the city and county. “It’s resonated with the community. And then they get the information (presented by City Manager Sharon Subadan at the Albany City Commission’s work meeting Tuesday) that only 21 percent of the city’s income comes from property taxes while 25 percent is from utilities.

“That’s opened some people’s eyes to how important it is for us to sell utilities outside the city. Our citizens are angry. They drive down these streets and see storefront churches and buildings operated by so-called nonprofits with no one in them. They hear of the properties bought by nonprofits that are just sitting there, taken off the tax rolls, and it upsets them.”

Both Chief Marshal Nathaniel Norman and Dougherty Tax Director Shonna Colley said in the recent Herald article on tax-exempt properties and nonprofit entities that they planned to conduct systemwide searches to determine if any were listed improperly. Both said last week their searches were in the early stages.

“We’re just closing out our business (license) renewals right now, and in the next 15 days we’ll start a complete check to determine if any of the (535) registered nonprofits fail to meet federal requirements,” Norman said. “We’ll go through our files to see if each nonprofit has a tax-exempt letter, and even for the ones that do we’ll follow up through the IRS database to make sure it’s current.

“The ones that are current, we’ll keep their paperwork on file so that we can maintain regular checks. The others, we’ll send them a courtesy warning letting them know they are not in compliance. If they don’t follow through within a certain period of time, they’ll be informed that they have to go through the process (with the IRS) from the beginning to maintain (tax-exempt) status.”

Colley and Chief County Appraiser George Anderson said Friday staff is in the initial stages of checking the status of tax-exempt properties in the city and county to determine if the property meets the requirements for exemption.

“We’re looking at ownership to make sure the person or group claiming tax exemption can legally do so,” Anderson said. “And we’re checking to make sure the property is being used for the intended purpose that gave it tax-exempt status. Our field inspector is making reports that will be forwarded to the Tax Assessors Board. They’ll determine if the property has a right to tax-exempt status.”

Anderson said a number of properties had already been flagged by the tax office, but neither he nor Colley had dollar figures to indicate the value of those properties.

“We’re really in the early stages of investigating these properties,” Colley said. “We’ll come up with numbers eventually, but frankly I don’t think there are that many out there. This office has always done a review, but now we have the manpower to focus more attention on the tax-exempt properties. We’ll be able to start the process of determining whether the properties are being used for the purposes that allow them to claim tax-exempt status.”

All of which, Fletcher says, city and county taxpayers are waiting to hear.

“I’m all in favor of hiring someone to follow up this paper trail,” the Ward III commissioner said. “I love legitimate nonprofits and think most of them do great things for our city. But we’ve got a lot of properties that should be on our tax rolls. We’ve got to increase that 21 percent (of income from property taxes), but not on the backs of the property owners who are paying their fair share.”

Norman said that’s one of the reasons his office is checking into the local nonprofits.

“If a property or a nonprofit is legitimately tax-exempt, we’re going to make sure they get the benefits they deserve,” the chief marshal said. “But we want to make sure there’s a level playing field.”