Church Says No To City’s $20 Million Tax Bill

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February 9, 2011; Source: | San Francisco and the Catholic Church are squaring off in court over a $20 million bill the city says it is owed from the local archdiocese's transfer of 232 properties in 2008 to a new owner. According to, the San Francisco Archdiocese was originally assessed $14.4 million in taxes from the transfer of mission properties, churches, schools, commercial and residential buildings, and parking lots from two of its nonprofit corporations to a third.

The church has argued it is exempt from taxes, saying the deal was only an internal restructuring. The city's assessors claim that the transfer is taxable and has been backed by the San Francisco Transfer Tax Board, which says the church must pay up. With penalties and interest, the church could be on the hook for as much as $21 million. In opening arguments this week in Superior Court, Jeffrey Vesely, an attorney representing the church, described the city's claims as “unlawful and unprecedented.”

Undoubtedly church officials are praying that the judge sides with them in the first part of the case that will determine if the city can tax the transfer. Only if the answer is yes, will the amount of the final bill be determined in a case the also describes as a "classic battle of church vs. state."—Bruce Trachtenberg