February 27, 2015; Philadelphia Inquirer
Philadelphia’s plan to generate revenue by requiring nonprofits to justify their tax-exempt status is being vociferously challenged, according to the Philadelphia Inquirer.
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When the city sent out letters in February detailing the requirements, a large number of churches called their City Council members to complain, and the Philadelphia Black Clergy threatened a lawsuit. Now, two councilmembers have introduced bills to relieve the burden.
The new reporting is required under a law signed by Mayor Michael Nutter in 2013 to address concerns that some properties with tax exemptions are not being entirely used for charitable purposes. It’s part of a larger effort by municipalities, especially in Pennsylvania and other states in the Northeast, to impose taxes on historically exempt charities. Pittsburgh, PA, is the birthplace of PILOTs, payments in lieu of taxes, designed to extract revenue from nonprofits with 501(c)(3) status.
First, the city sent letters to each of Philadelphia’s 6,500 lots registered to nonprofits. They were asked to provide documents such as articles of incorporation, fundraising statements, and copies of deeds by March 31st. One councilmember has now introduced a bill to push the deadline to June 1st while another has introduced a bill that would eliminate the requirement. The mayor’s office defended the requirement, saying that it “should not be onerous, as many of the documents are the ones required to receive 501(c)(3) nonprofit status from the federal government.”
The president of the Philadelphia Black Clergy told the Inquirer that the new requirements were “intrusive,” and that his group was prepared to sue if the city doesn’t make changes, adding, “You will have a revolt in Philly.”—Larry Kaplan