Tennessee § 67-5-212 - Religious, charitable, scientific, educational institutions — Assessment Act.

§ 67-5-212. Religious, charitable, scientific, educational institutions — Assessment Act.

There shall be exempt from property taxation the real and personal property, or any part of the real and personal property, owned by any religious, charitable, scientific, or nonprofit educational institution that is occupied and actually used by the institution or its officers purely and exclusively for carrying out one (1) or more of the exempt purposes for which the institution was created or exists. There shall further be exempt from property taxation the real and personal property, or any part of the real and personal property, owned by an exempt institution, but occupied and actually used by: Another religious, charitable, scientific, or nonprofit educational institution or its officers purely and exclusively for carrying out one (1) or more of the exempt purposes for which the occupying institution was created or exists; An exempt institution that originated as part of a single exempt institution and that continues to use the property for the same religious, charitable, scientific, or nonprofit educational purposes, whether by charter, contract, or other agreement or arrangement; or The United States government, the state of Tennessee, or any agency or political subdivision thereof. In determining the exemption applicable to a post-secondary educational institution, there shall be a presumption that the entire original campus of an institution chartered before 1930 is an historical and integral entity, and is exempt so long as no particular portion of such campus is used for nonexempt purposes. The property of such institution shall not be exempt, if: The owner, or any stockholder, officer, member, or employee of such institution shall receive or may be lawfully entitled to receive any pecuniary profit from the operations of that property in competition with like property owned by others that is not exempt, except reasonable compensation for services in effecting one (1) or more of such purposes, or as proper beneficiaries of its strictly religious, charitable, scientific, or educational purposes; or The organization thereof for any such avowed purpose be a guise or pretense for directly or indirectly making any other pecuniary profit for such institution, or for any of its members or employees, or if it be not in good faith organized or conducted exclusively for one (1) or more of these purposes. The real property of any such institution not so used exclusively for carrying out thereupon one (1) or more of such purposes, but leased or otherwise used for other purposes, whether the income received therefrom be used for one (1) or more of such purposes or not, shall not be exempt; but, if a portion only of any lot or building of any such institution is used purely and exclusively for carrying out thereupon one (1) or more of such purposes of such institution, then such lot or building shall be so exempt only to the extent of the value of the portion so used, and the remaining or other portion shall be subject to taxation. No church shall be granted an exemption on more than one (1) parsonage, and an exempt parsonage may not include within the exemption more than three (3) acres. For property owned by a corporation organized for the exclusive purpose of holding title to property for use by any organization that itself qualifies for exemption under this section, only such property of the corporation, or such parts thereof, as would be entitled to an exemption under this section if owned directly by such organization shall be exempt from property taxation. Any owner of real or personal property claiming exemption under this section or § 67-5-207, § 67-5-213, § 67-5-219, or as otherwise required by law, shall file an application for the exemption with the state board of equalization on a form prescribed by the board and supply such further information as the board may require to determine whether the property qualifies for exemption. No property that is subject to these application requirements shall be exempted from property taxes unless the application has been approved in writing by the board. An application shall be deemed filed on the date it is received by the board or, if mailed, on the postmark date. The applicant shall provide a copy of the application with any supporting materials to the assessor of property of the county in which the property is located. An application for exemption pursuant to this section or any other section referring to these procedures shall be treated as an appeal for purposes of § 67-5-1512. The board shall make an initial determination granting or denying exemption through its staff designee, who shall send written notice of the initial determination to the applicant and the assessor of property. Written notice includes notification by electronic means and notice may be preserved in digital or electronic format. Either the assessor of property or the applicant may appeal the initial determination to the board and shall be entitled to a hearing prior to any final determination of exemption. The assessor shall retain copies of any approved exemptions in paper, electronic, or digital format. Upon approval of exemption, it is not necessary that the applicant reapply each year, but the exemption shall not be transferable or assignable and the applicant shall promptly report to the assessor any change in the use or ownership of the property that might affect its exempt status. The board may by rule impose a filing fee for processing applications for exemption. Such filing fee shall not exceed one hundred twenty dollars ($120) and shall be proportionate to the value of the property at issue. For purposes of this section, “filing” means one (1) submission that may include multiple parcels, including real and personal property, with a clear nexus to one (1) exemption determination. Any institution claiming an exemption under this section that has not previously filed an application for and been granted an exemption for a parcel must file an application for exemption with the state board of equalization by May 20 of the year for which exemption is sought. If the application is approved, the exemption will be effective as of January 1 of the year of application or as of the date the exempt use of such parcel began, whichever is later. If application is made after May 20 of the year for which exemption is sought, but prior to the end of the year, the application may be approved but will be effective for only a portion of the year determined as follows: If application is filed within thirty (30) days after the exempt use of the property began, exemption will be effective as of the date the exempt use began; or If application is filed more than thirty (30) days after the exempt use began, the exemption will be effective as of the date of application. If a religious institution acquires property that was duly exempt at the time of transfer from a transferor who had previously been approved for a religious use exemption of the property, or if a religious institution acquires property to replace its own exempt property, then the effective date of exemption shall be three (3) years prior to the date of application, or the date the acquiring institution began to use the property for religious purposes, whichever is later. The purpose of this subdivision (b)(3) is to provide continuity of exempt status for property transferred from one exempt religious institution to another in the specified circumstances. For purposes of this subdivision (b)(3), property transferred by a lender following foreclosure shall be deemed to have been transferred by the foreclosed debtor, whether or not the property was assessed in the name of the lender during the lender's possession. In any county having a metropolitan form of government and a population in excess of five hundred thousand (500,000), according to the 2010 federal census or any subsequent federal census, if a nonprofit educational institution which is a medical college acquires one (1) or more parcels of land or portions thereof for the purpose of carrying out one (1) or more of the exempt purposes for which the institution was created or exists, the institution may claim and file an application for exemption under this section or § 67-5-213, and the effective date of such exemption shall be up to three (3) years prior to the date of application, or the date the institution began to use the property for exempt purposes, whichever is later. This subdivision (b)(3)(C) shall apply to properties acquired before May 25, 2017, so that such properties are not subject to taxation under this chapter while owned by the exempt educational institution and used for one (1) or more of the exempt purposes for which the institution was created or exists; provided, however, that nothing in this subdivision (b)(3)(C) requires a county to refund any taxes that were collected prior to May 25, 2017. In any county with a population of not less than four hundred thirty-two thousand two hundred (432,200) nor more than four-hundred thirty-two thousand three hundred (432,300), according to the 2010 federal census or any subsequent federal census, or within a municipality located within such county, if a nonprofit children's hospital changes the use of one (1) or more parcels of land or portions thereof for the purpose of carrying out one (1) or more of the exempt purposes for which the institution was created or exists, the institution may claim and file an application for exemption under this section or § 67-5-213, and the effective date of such exemption shall be up to three (3) years prior to the date of application, or the date the institution began to use the property for exempt purposes, whichever is later. In determining the date that a qualifying institution begins using property for an exempt purpose, subsection (g) applies to the full extent of both improvements and underlying real property so that the entire property, to the extent that the full value of underlying land and any improvements thereon, is considered to be occupied and used by the qualifying institution or its officers purely and exclusively for the institution's purposes from and after the commencement of construction of improvements. This subdivision (b)(3)(D) applies to properties acquired before May 15, 2018, so that such properties are not subject to taxation under this chapter while owned by the qualifying institution and used for one (1) or more of the exempt purposes for which the institution was created or exists, and any property taxes paid on such property that were collected prior to May 15, 2018, shall be refunded. All questions of exemption under this section shall be subject to review and final determination by the board; provided, that any determination by the board is subject to judicial review by petition of certiorari to the appropriate chancery court. All other provisions of law notwithstanding, no property shall be entitled to judicial review of its status under this statute, except as provided by the Uniform Administrative Procedures Act, compiled in title 4, chapter 5, and only after the exhaustion of administrative remedies as provided in this section. The state board of equalization may revoke any exemption approved under this section, either in whole or in part, if it determines that the exemption was approved on the basis of fraud, misrepresentation, or erroneous information, that the current owner of the property does not qualify for exemption, or that the property is not actually being used for an exempt purpose. Property is not actually being used for an exempt purpose if the property is not currently in use, has been abandoned, is not suitable for human habitation, or is being used for a nonexempt purpose. The executive secretary of the board may initiate proceedings for revocation on the executive secretary's own motion or upon the written complaint of any person upon a determination of probable cause. Revocation shall not be retroactive, unless the order of revocation incorporates a finding of fraud or misrepresentation on the part of the applicant or failure of the applicant to give notice of a change in the use or ownership of the property as required by this section. As used in this section, “charitable institution” includes any nonprofit organization or association devoting its efforts and property, or any portion thereof, exclusively to the improvement of human rights and/or conditions in the community. The property, or any part thereof, owned by any religious, charitable, scientific or educational membership nonprofit organization chartered by the United States congress shall not be denied exemption because administrative, social or recreational activities of such organization are conducted thereon, where the activities are: Agencies for the advancement and enlargement of the purposes for which the organizations exist; In furtherance of the general purposes of such organization; or To promote the interest of its membership in such organizations. When property is owned by corporations organized for the exclusive purpose of holding title to property for use of any organization that itself qualifies for such exemption from taxation under this subsection (d), only such property of the corporation, or such parts thereof, as would be entitled to an exemption under this subsection (d) if owned directly by such organization shall not be denied exemptions. The exemption of property or parts thereof under this subsection (d) shall be applicable only to such part of the property on which such organization conducts administrative, social or recreational activities, if it is less than the entire property. There shall be exempt from property taxation the property of labor organizations exempted from the payment of federal income taxes by the United States Internal Revenue Code (26 U.S.C. § 501(c)(5)), when such property is not used for revenue producing profit, but is used by such organization for charitable or educational meetings; but, if part of the property is used for revenue producing profit, then the part so used shall not be exempt from property taxation; provided, that the real property on which the building is situated shall be exempt from property taxation. No such organization that discriminates against any person based upon race, sex, religious beliefs or national origin shall be eligible for the property tax exemption authorized by subdivision (e)(1). [Deleted by 2019 amendment.] In the case of property that is owned by any religious, charitable, scientific, or educational institution and on which such institution constructs improvements to be occupied and used by such institution or its officers purely and exclusively for carrying out thereupon one (1) or more of the purposes for which the institution was created or exists, the property may be exempt as follows: If construction of the improvements is completed within twelve (12) months of its commencement, the property, to the extent of the value of the land and the value of the improvements constructed thereon, shall be considered to be occupied and used by the institution or its officers purely and exclusively for the institution's purposes from and after, but not before, the commencement of construction of the improvements. Land shall be considered occupied and used by the institution to the extent it is reasonably necessary to support structures or site improvements associated with structures; If construction of the improvements is completed more than twelve (12) months after commencement, the property, to the extent of the value of the improvements constructed thereon for these purposes, shall be considered to be occupied and used by the institution or its officers purely and exclusively for the institution's purposes from and after, but not before, the commencement of construction of the improvements and to the extent of such value shall be exempt from taxation; If the improvements upon completion are not so occupied and used, then no part of the value of the property shall be exempt from taxation during the construction of the improvements; If upon completion of the improvements a portion thereof is not so used and occupied, such portion shall not be exempt from taxation during construction of the improvements; and If the improvements upon completion are not occupied and used by such institution or its officers for a period of ten (10) years, purely and exclusively for carrying out thereupon one (1) or more of the purposes for which such institution was created or exists, the institution shall be liable for the full amount of property taxes that would otherwise have been due and payable during the period of construction, plus penalties and interest as provided in this title. There shall be exempt from property taxation the property or any part thereof of fraternal organizations exempted from the payment of federal income taxes by the United States Internal Revenue Code (26 U.S.C. § 501(c)), to the extent that such property is used not for revenue-producing profit, but directly, physically and exclusively for religious, charitable, scientific and educational activities. There shall be exempt from property taxation the property, or any part thereof, of nonprofit county fair associations. There shall be exempt from property taxation the property or any portion thereof containing one (1) residential dwelling located in a community park that is open to entry by the general public, if such dwelling is owned by a nonprofit religious, charitable, educational or scientific organization that does not receive income from the resident thereof, if such resident does not occupy the dwelling in lieu of a salary, and if such resident, by such resident's presence, would discourage or prohibit damage or destruction by vandalism of the organization's property. There shall be exempt from property taxation any property upon which a caretaker's dwelling is located, if: The dwelling is located upon land owned by a nonprofit member organization chartered by the United States congress; The land immediately surrounding the dwelling is used by such organization for nonprofit religious, charitable, educational or scientific purposes; and The caretaker's presence is required for the physical security of the users of the property as well as to discourage or prohibit damage or destruction of the organization's property by vandalism. The general assembly finds that public radio broadcasting serves a valid educational purpose so long as the broadcaster holds an educational broadcast license issued by the federal communications commission; and, therefore, that property, or any part thereof, owned by a public radio station that is an affiliate member of the public broadcasting network, and that is organized as a nonprofit charitable or educational institution, shall be exempt from property taxation to the extent the property is used in a manner consistent with the license. The general assembly finds that public television broadcasting serves a valid educational purpose so long as the broadcaster holds a noncommercial educational broadcast license issued by the federal communications commission. Therefore, that property, or any part thereof, owned by a public television station that is an affiliate member of the public broadcasting network, and that is organized as a nonprofit charitable or educational institution, shall be exempt from property taxation to the extent the property is used in a manner consistent with the license. There shall be exempt from property taxation the real and personal property, or any part thereof, that is owned by a religious or charitable institution and that is occupied and used by such institution for a thrift shop; provided, that: The institution is exempt from payment of federal income taxes under Section 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501(c)(3)); The thrift shop is operated as a training venue for persons in need of occupational rehabilitation; or The thrift shop is operated primarily by volunteers; The inventory of the thrift shop is obtained by donation to the institution that owns and operates the shop; Goods are priced at levels generally ascribed to used property; Goods are given to persons whose financial situations preclude payment; and The net proceeds of the thrift shop are used solely for the charitable purposes of the institution that owns and operates the shop. Land not necessary to support exempt structures or site improvements associated with exempt structures, including land used for recreation, retreats or sanctuaries, shall not be eligible for exemption beyond a maximum of one hundred (100) acres per county for each religious, charitable, scientific or nonprofit educational institution qualified for exemption pursuant to this section. For purposes of applying this limit, land owned by an exempt institution shall be aggregated with land owned by related exempt institutions having common ownership or control. Qualifying land in excess of the limit shall be classified as forest land upon application submitted pursuant to § 67-5-1006, or as open space land upon application submitted pursuant to § 67-5-1007, and the effective date of the classification shall be the date the property might otherwise have qualified for exemption. Acts 1973, ch. 226, § 5; 1974, ch. 771, §§ 5-7; 1974, ch. 774, §§ 1, 2; 1975, ch. 322, § 1; 1976, ch. 670, §§ 1, 2; 1976, ch. 849, § 1; 1977, ch. 255, §§ 1, 2; 1977, ch. 421, §§ 1-5; 1979, ch. 22, § 1; 1981, ch. 96, § 1; 1981, ch. 218, § 1; 1981, ch. 306, §§ 1, 2; 1982, ch. 713, § 1; 1983, ch. 460, § 1; T.C.A., § 67-513; Acts 1984, ch. 507, § 1; 1984, ch. 651, § 1; 1984, ch. 749, § 1; 1984, ch. 766, § 1; 1984, ch. 809, § 1; 1984, ch. 832, § 4; 1985, ch. 68, § 1; 1994, ch. 541, §§ 2-8; 1997, ch. 467, § 1; 2000, ch. 628, § 1; 2000, ch. 793, § 1; 2000, ch. 938, § 2; 2000, ch. 993, § 2; 2002, ch. 687, §§ 1, 2; 2003, ch. 251, § 1; 2004, ch. 531, § 2; 2004, ch. 635, § 1; 2004, ch. 732, §§ 1, 2; 2005, ch. 500, § 12(a); 2006, ch. 740, § 1; 2006, ch. 861, § 1; 2007, ch. 292, § 2; 2008, ch. 1104, §§ 2-4; 2010, ch. 1036, § 2; 2010, ch. 1074, § 1; 2011, ch. 415, § 1; 2013, ch. 209, § 5; 2017, ch. 155, § 1; 2017, ch. 409, § 1; 2017, ch. 465, § 1; 2018, ch. 527, § 1; 2018, ch. 957, § 1; 2019, ch. 355, §§ 2-5. Compiler's Notes. Acts 1994, ch. 541, § 10 provided that the amendment by that act shall not be construed to terminate the tax-exempt status of any parcel of property on January 1, 1995. Acts 1997, ch. 467, § 2 provided that that act, which added the last paragraph in (b)(3), shall apply both to applications filed after June 13, 1997, and to applications for exemption which are pending our under appeal to the state board of equalization on that date. Acts 2000, ch. 628, § 2 provided that the amendments by that act shall apply to applications for exemption pending or under appeal to the State Board of Equalization on April 5, 2000, but shall expire and be void and of no effect July 1, 2000. From April 12, 2000, to July 1, 2000, the following two sentences were in effect at the end of (b)(3): “Notwithstanding the date of application, the exemption shall take effect up to eighteen (18) months earlier than the date of application, where the application was submitted due to relocation by the applicant of a use previously approved for exemption. In no event may the exemption in such cases date back earlier than the date the property subject to the application began to be used for exempt purposes.” Acts 2000, ch. 793, § 2 provided that the amendment, in addition to prospective application, shall apply to applications for exemption pending or under appeal at the State Board of Equalization on March 23, 2000. Acts 2000, ch. 938, § 3, provided that the act, which amended this section and added § 67-5-224 , shall take effect June 21, 2000, the public welfare requiring it, and shall apply to applications or appeals pending before the state board of equalization on June 21, 2000. Any application or appeal pending on June 21, 2000, seeking exemption of property used for the purposes hereinabove described may be amended to reflect a change in ownership of the property if such amendment is filed with the State Board of Equalization within ninety (90) days from June 21, 2000. Any organization which has an application or appeal pending before the State Board of Equalization on June 21, 2000, has ninety (90) days from June 21, 2000, to provide evidence of compliance with the terms of the act. The executive secretary of the state board may extend this ninety (90) day period for an additional ninety (90) days. Acts 2000, ch. 993, § 3 provided that the act shall apply to all matters pending before the board of equalization on June 28, 2000. Acts 2002, ch. 687, § 3 provided that subsection (m) of this section, in addition to prospective application, shall apply to applications pending or under appeal to the state board of equalization on May 1, 2002. Acts 2004, ch. 531, § 4 provided that the act shall apply to claims pending on April 14, 2004. Acts 2004, ch. 635, § 2 provided that the act shall apply retroactively to the calendar year beginning January 1, 1998. Acts 2004, ch. 732, § 3 provided that in addition to prospective applications, the act shall apply to applications pending or under appeal to the state board of equalization on May 24, 2004. Acts 2005, ch. 500, § 12(b) provided that, notwithstanding any provision of the act or any other law to the contrary, the provisions of ch. 500, § 12(a) shall apply to claims pending on or after June 22, 2005. Acts 2006, ch. 861, § 3 provided that the act, in addition to prospective applications, shall apply to applications pending before or under appeal to the state board of equalization, applications for which the executive secretary or state board designee has made a determination but the period in which to appeal under § 67-5-1501(c) has not run, or applications for which an appeal has been filed in court. Acts 2008, ch. 1104, § 5 provided that nothing in this act, which rewrote subdivision (a)(1), added subdivision (a)(4), and rewrote subdivision (b)(3)(B), shall be construed as affecting a prior final determination of the exempt status of any property in this state. Acts 2010, ch. 1036, § 5, provided that the act, which amended subdivision (b)(3)(B), shall apply to exemption applications filed after June 11, 2010, and also to applications pending or under appeal before the state board of equalization, as of June 11, 2010. Acts 2011, ch. 415, § 3 provided that the act, which amended subsections (l ) and (m), shall apply to applications pending on June 6, 2011, as well as applications received thereafter. Acts 2017, ch. 409, § 2 provided that the act, which amended this section, shall apply to all property with respect to which a leasehold interest was acquired on or after April 29, 2016. Nothing in the act entitles a religious, charitable, scientific, or nonprofit educational institution to a refund for taxes paid on property with respect to which a leasehold interest was acquired on or after April 29, 2016, and for which such taxes became due and owing before May 18, 2017. Amendments. The 2018 amendment by ch. 527, in (b)(1), substituted “§ 67-5-213 , § 67-5-219 , or as otherwise required by law,” for “§ 67-5-213 or § 67-5-219 ” in the first sentence; inserted “that is subject to these application requirements” and deleted “under these sections,” following “property taxes” in the second sentence; and deleted the former third sentence, which read: “A separate application shall be filed for each parcel of property for which exemption is claimed.” The 2018 amendment by ch. 957 added (b)(3)(D). The 2019 amendment, in (a)(1), inserted “real and personal” preceding “property” twice, substituted “, but” for “that is” preceding “occupied and”, and deleted “another exempt institution for one (1) or more of the exempt purposes for which it was created or exists under an arrangement” at the end; rewrote (a)(1)(A), which read: “In which the owning institution receives no more rent than a reasonably allocated share of the cost of use, excluding the cost of capital improvements, debt service, depreciation, and interest, as determined by the state board of equalization; or”; in (a)(1)(B), substituted “An exempt institution” for “Which is solely between exempt institutions”, and substituted “continues” for “continue”; and added (a)(1)(C) and (a)(5); in (b)(2), substituted “exemptions” for “applications”, inserted “filing” preceding “fee” twice, and rewrote the last sentence, which read: “For purposes of this section, ‘filing’ means one (1) submission that may include multiple parcels, including real and personal property, with a clear nexus to one (1) exemption determination.”; in (b)(3)(A)(i), deleted “or May 20, whichever is later” following “use began”; in (b)(3)(D), substituted “subsection (g)” for “§ 67-5-212(g) ”; in (b)(5), inserted “either in whole or in part,” preceding “if it determines”, substituted “that the current owner” for “or that the current owner or use”, and inserted “, or that the property is not actually being used for an exempt purpose. Property is not actually being used for an exempt purpose if the property is not currently in use, has been abandoned, is not suitable for human habitation, or is being used for a nonexempt purpose” following “qualify for exemption”; deleted (f), which read: “There shall be exempt from property taxation the property or any part thereof of nonprofit artificial breeding associations chartered under the Tennessee Nonprofit Corporation Act, compiled in title 48, chapters 51-69.”; in (g), deleted the designation for (g)(1) from the first paragraph and added “may be exempt as follows:” at the end; added (g)(1); added the designations for (g)(2) and (3); in (g)(2), added “If construction of the improvements is completed more than twelve (12) months after commencement, the property” at the beginning, deleted “the” preceding “construction of”, and deleted “provided, that, if” at the end; in (g)(3), inserted “If” at the beginning, and substituted the semicolon at the end for a period; deleted former (g)(4), which read: “Construction begun, and having the effect of activating this subsection (g), shall be completed within five (5) years or the effect of this subsection (g) shall be null and void.”; redesignated former (g)(2) and (3) as (g)(4) and (5), respectively; and in (g)(4), substituted “of the improvements; and” for a period at the end. Effective Dates. Acts 2018, ch. 527, § 3. March 7, 2018. Acts 2018, ch. 957, § 2. May 15, 2018. Acts 2019, ch. 355, § 6. May 10, 2019. Cross-References. Income tax exemptions, § 67-2-104 . Property tax exemption for property used for religious, charitable, scientific, literary or educational purposes, Tenn. Const., art. II, § 28. Textbooks. Tennessee Jurisprudence, 3 Tenn. Juris., Arson, § 3; 23 Tenn. Juris., Taxation, § 25. Attorney General Opinions. Constitutionality of Williamson County Executive's (now county mayor's) line-item veto over county budget, OAG 97-047 (4/14/97).