Your nonprofit is “charitable”…right?

Here’s what we already know: In order for your nonprofit to obtain 501(c)(3) tax-exempt status from the IRS, it must be organized for charitable purposes.

What we may not realize: That some Michigan cities and townships are closely scrutinizing organizations’ “charitable purposes” and as a result, there has been a growing number of nonprofits facing property tax bills!

The Michigan Supreme Court recently took up a case that involved a faith-based nonprofit with 501(c)(3) status that operates 23 assisted-living, independent-living and memory-care facilities for seniors across the state. The tax tribunal in one Michigan township denied the organization’s request for exemption because it did not meet its burden of proof to demonstrate that it is charitable.

How could that be? The Organization has 501(c)(3) status! While this may be true, in 2006, the Michigan Supreme Court laid out 6 factors for assessing a nonprofit as charitable. Various local tax assessing units have interpreted that decision differently. This recent Michigan Supreme Court case is said to provide the necessary clarity. Take a look at the Crain’s piece on the state Supreme Court’s June decision by clicking HERE !

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