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Attorneys

Are California Non-Profits Property Tax Exempt?

January 26 2017

The Internal Revenue Service declared that January 23rd is the official start date of the 2017 Tax Season. Taxes can get messy for individuals and organizations, including non-profits. In 2016, Shareholder David Gabor prevailed in a bench trial and on appeal in an action representing our client, the Jewish Community Center in a case that altered established California non-profit law and directly took on the “regulatory state.” The issue was that the local tax assessors were following guidance from the State Board of Equalization (SBE) that required both owners and operators of charitable properties (in this case a community center) to submit certain bureaucratic forms at the risk of losing tax exemptions. The reality was that the SBE promulgated, without oversight, a regulation that was contrary to the language of a statute that made clear that, as long as the property at issue had a bona fide charitable use, only the owner needed to submit the form, not the operator.

After a trial defense that attempted to justify forcing our client to pay a six-figure tax bill that should not have been paid, and testimony from tax assessor’s office personnel who admitted that they had not read the statute that they were supposedly enforcing, judgment was entered in our client’s favor. The City appealed and the 2nd circuit, in a published opinion [https://www.boe.ca.gov/proptaxes/pdf/lta16028.pdf], unanimously ruled that the statute is clear and non-negotiable.

The result of this case is that numerous other entities (clients and non-clients alike) are seeking reimbursement of taxes that were never due in the first place.  For questions regarding this outcome, please contact David Gabor at 310.860.3340 or dgabor@weintraub.com.