In light of the Pennsylvania Supreme Court decision regarding stormwater runoff fees being taxes from which nonprofits are exempt (See Nonprofit Issues®, “University Exempt From Paying Stormwater Runoff Charge.”), what actions should a nonprofit organization consider? —From the Website.
This is a good question that may apply in many states beyond Pennsylvania. Nonprofits that are exempt from paying real estate or other state taxes because they are charities should look to see if they are paying other public charges that might be “taxes” from which they could be exempt. The Pennsylvania Supreme Court is not particularly clear on its definition of a tax and whatever the definition is was not agreed to by all of the justices. But the opinions do give some points to consider whether the charge is for the general public good and therefore possibly a tax or is a charge for specific use of certain services that is based at least in part by the user’s consumption and therefore a service fee and not a tax.
If you think you are improperly being charged a tax, consult a lawyer who understands the system to see if you should challenge the charge and how you might go about doing it.
Remember, however, that charities are not as well respected as they once were. There is a strong public perception among some that they shouldn’t be exempt at all. To the extent that charities don’t pay taxes, they pass the costs on to others, leaving the others having to pay their own portion of the costs, plus the costs of the charities. Think carefully about whether it is worth the cost of sticking your head out and provoking a backlash that could cost you more in other ways.
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