Colorado § 39-3-106 - Property - religious purposes - exemption - legislative declaration.

§ 39-3-106. Property - religious purposes - exemption - legislative declaration.

(1) Property, real and personal, which is owned and used solely and exclusively for religious purposes and not for private gain or corporate profit shall be exempt from the levy and collection of property tax.

(2) In order to guide members of the public and public officials alike in the making of their day-to-day decisions, to provide for a consistent application of the laws, and to assist in the avoidance of litigation, the general assembly hereby finds and declares that religious worship has different meanings to different religious organizations; that the constitutional guarantees regarding establishment of religion and the free exercise of religion prevent public officials from inquiring as to whether particular activities of religious organizations constitute religious worship; that many activities of religious organizations are in the furtherance of the religious purposes of such organizations; that such religious activities are an integral part of the religious worship of religious organizations; and that activities of religious organizations which are in furtherance of their religious purposes constitute religious worship for purposes of section 5 of article X of the Colorado constitution. This legislative finding and declaration shall be entitled to great weight in any and every court.

(3) For the purpose of claiming an exemption pursuant to this section, property that is owned and used by a charitable trust that is exempt from taxation under section 501 (c)(3) of the federal "Internal Revenue Code of 1986", as amended, shall be treated the same as property that is owned and used by any other type of nonprofit organization.

Source: L. 89: Entire article R&RE, p. 1471, § 1, effective April 23; entire section R&RE, p. 1485, § 1, effective June 7. L. 2004: (3) added, p. 506, § 3, effective August 4.

Editor's note: This section is similar to former § 39-3-101 (1)(e) as it existed prior to 1989.

Cross references: For the constitutional provision regarding exemptions for property used for religious worship, schools, or charitable purposes, see § 5 of article X of the state constitution.

ANNOTATION

Annotator's note. Since § 39-3-106 is similar to § 39-3-101 (1)(e) as it existed prior to the 1989 repeal and reenactment of this article, relevant cases construing that provision have been included in the annotations to this section.

Exemption not perpetual. The exemption provided by article X, § 5 of the state constitution is not perpetual and does not run with the land but is dependent upon the use to which the property is put. St. Mark Coptic Orthodox Church v. State Bd. of Assessment Appeals, 762 P.2d 775 (Colo. App. 1988).

Distinction must be made between charitable and religious exemptions. A religious group does not have as a fundamental purpose the providing of services which the state would otherwise have to provide since the state is constitutionally prohibited from such religious involvement. General Conference of Church of God—7th Day v. Carper, 192 Colo. 178, 557 P.2d 832 (1976).

Constitutionality of tax exemptions for religious organizations. Tax exemptions for religious organizations, in and of themselves, do not violate the establishment clause of the federal constitution. General Conference of Church of God—7th Day v. Carper, 192 Colo. 178, 557 P.2d 832 (1976).

But tax incentives that inure only to the benefit of religious organizations solely by virtue of their religious nature do violate the establishment clause. Catholic Health Initiatives Colo. v. City of Pueblo, 207 P.3d 812 (Colo. 2009).

Subsection (2) is not unconstitutional on the grounds that it violates the separation of powers doctrine because it permits the general assembly to interpret and apply the state's constitution. Although the final authority to construe the constitution is vested in the judiciary, the general assembly may pass legislation clarifying constitutional provisions. Subsection (2) merely codifies and clarifies the principles of religious neutrality and nonentanglement mandated by the federal and state constitutions and controlling case law. Section 5 of article X of the state constitution exempts from taxation property used for religious worship "unless otherwise provided by general law", thus leaving it absolutely within the power of the legislature to limit, modify, or abolish the exemptions provided by the constitution. Grand County Bd. of Comm'rs v. Prop. Tax Adm'r, 2016 COA 2, 401 P.3d 561.

One seeking an exemption must comply with the statutory prerequisites for qualification. St. Mark Coptic Orthodox Church v. State Bd. of Assessment Appeals, 762 P.2d 775 (Colo. App. 1988).

The test for determining whether the exemption for property used for religious worship applies depends upon the character of the use to which the property is put. St. Mark Coptic Orthodox Church v. State Bd. of Assessment Appeals, 762 P.2d 775 (Colo. App. 1988); Maurer v. Young Life, 779 P.2d 1317 (Colo. 1989); Pilgrim Rest Baptist Church, Inc. v. Property Tax Adm'r, 971 P.2d 270 (Colo. App. 1998).

The inquiry for exemption purposes is whether a property is used for activities that further an organization's religious purposes. The use of the property must be considered in light of the property owner's religious mission and purposes. Grand County Bd. of Comm'rs v. Prop. Tax Adm'r, 2016 COA 2, 401 P.3d 561.

If the answer is yes, the property is used for religious worship and is exempt from taxation. Grand County Bd. of Comm'rs v. Prop. Tax Adm'r, 2016 COA 2, 401 P.3d 561.

Property tax exemptions based on religious use should not be narrowly construed, and each claim for tax exemption must be resolved on the basis of its own facts under the applicable legal standards. Maurer v. Young Life, 779 P.2d 1317 (Colo. 1989); Bd. of Assessment Appeals v. AM/FM Int'l, 940 P.2d 338 (Colo. 1997); Pilgrim Rest Baptist Church, Inc. v. Property Tax Adm'r, 971 P.2d 270 (Colo. App. 1998).

Implicit within the property tax scheme is a requirement that in order for the property to qualify for tax exemption for that tax year, there must be at least some actual use of the property for tax exempt purposes in that tax year. Pilgrim Rest Baptist Church, Inc. v. Property Tax Adm'r, 971 P.2d 270 (Colo. App. 1998).

Court declines to hold, as a matter of law, that any particular frequency or quantity of use religious in character is required to satisfy the constitutional and statutory standards for an exemption based on religious use. Pilgrim Rest Baptist Church, Inc. v. Property Tax Adm'r, 971 P.2d 270 (Colo. App. 1998).

Church failed to sustain its burden of establishing its right to a tax exemption for maintenance building and property on which it was located. First Christian Church v. Bd. of Assmt. Appeals, 711 P.2d 721 (Colo. App. 1985).

Although board must examine the use to which property is put and not the character of the owner, board permissibly considered the character of the property owner in concluding that properties were used for religious worship and reflection. Maurer v. Young Life, 779 P.2d 1317 (Colo. 1989).

Board is permitted and properly concluded that any nonreligious aspects of the activities conducted on properties were incidental to the religious worship and reflection purposes for which the owner claimed such properties were used. Maurer v. Young Life, 779 P.2d 1317 (Colo. 1989).

Thus, social benefit analysis inapplicable to religious groups. While a social benefit analysis may have validity in the determination of charitable exemptions, it has no place in the state's evaluation of its treatment of bona fide religious groups. General Conference of Church of God—7th Day v. Carper, 192 Colo. 178, 557 P.2d 832 (1976).

For broad interpretation of charitable and religious tax exemptions, see General Conference of Church of God—7th Day v. Carper, 192 Colo. 178, 557 P.2d 832 (1976).

Religious group entitled to presumption of use consistent with exemption. Where a church organization has no objectives other than religious, charitable, and educational, it is entitled to the benefit of the presumption that when its building is completed, it will be used exclusively for religious purposes. McGlone v. First Baptist Church, 97 Colo. 427, 50 P.2d 547 (1935).

In finding that property owner is not entitled to a religious purposes exemption, except for chapels and religious activity center on its property, board did not apply proper legal standards and therefore erred as a matter of law. In its analysis, the board did not address property owner's declaration of religious purposes contained in its application, the effect of the declaration's presumed validity, or whether the presumption had been overcome. Because such declarations are presumptive with regard to the religious purposes for which property is used under § 39-2-117 (1)(b)(II), the board erred as a matter of law. Larimer County Bd. v. Prop. Tax Adm'r, 2013 COA 49M, 316 P.3d 60.

The correct inquiry is set forth in this section and § 39-2-117. The tax administrator and then the board must review the property owner's application and evidence to determine whether the owner's use of the property is for a religious purpose, consistent with the owner's declaration of religious mission and purpose. Larimer County Bd. v. Prop. Tax Adm'r, 2013 COA 49M, 316 P.3d 60.