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Volume 4 - Opinions of Counsel SBEA No. 106

Opinions of Counsel index

Nonprofit organizations exemption (miscellaneous) (Salvation Army) (thrift shop) - Real Property Tax Law, § 421:

Salvation Army property used as a sales outlet for items donated to it, where the proceeds therefrom are used exclusively for exempt purposes pursuant to its special charter, is entitled to an exemption pursuant to section 421 of the Real Property Tax Law.

We have received an inquiry concerning the taxable status of a real property parcel owned by the Salvation Army and used as a Salvation Army thrift store, a sales outlet for items donated to the organization. Apparently, the proceeds of the sales are used exclusively for the furtherance of the religious and charitable work of the organization.

Pursuant to a special act of the New York State Legislature (L. 1899, c. 468, § 11) Salvation Army property used exclusively “. . . for places for religious meetings, homes for the training of its officers, homes for the rescue of fallen women, shelters for the poor, hospitals, places of rest and recuperation for the sick and convalescent, children’s homes and homes for the aged poor of its membership or congregation of the public generally” are specifically exempt from taxation. Any other Salvation Army property must meet the requirements of section 421 (i.e., § 420) of the Real Property Tax Law in order to be exempt from real property taxation in this State. (See, 1 Op.Counsel SBEA No. 21.)

These specifically exempted types of properties enumerated in the special act cited above, do not appear to include the type which is the subject of this inquiry (i.e., a sales outlet for items donated to the. Salvation Army). Therefore, the right to exemption for such property depends on whether that property is of the type entitled to the exemption provided by section 421.

Any doubt as to the taxable status of such property appears to have been resolved in People ex rel. Salvation Army v. Feitner, 33 Misc. 712, 68 N.Y.S. 338, aff’d, 68 App. Div. 639, 74 N.Y.S. 1142, where the court at special term concluded that the ground floor of a building owned by the Salvation Army and used by it as a salesroom for the sale of books, dry goods, uniforms and for other similar purposes (the proceeds from which were devoted to the various nonprofit purposes of the organization) was exempt from real property taxation, since such use of the property was a use stated in its corporate charter. (Section 8 of chapter 468 of the Laws of 1889, included among the powers of the Salvation Army the right to “. . . manufacture, buy or sell any of the articles, goods and appliances required by [it]”.)

In Feitner, the court noted, at p. 339:

The state, in the exercise of its discretion, determined that the property of the Salvation Army should be exempt from taxation, and at the same time that it might engage in a business incidental to its religious works; the proceeds to be donated to its religious, charitable, educational, and missionary purposes. It is a legitimate inference that the legislative intent was to exempt from taxation the property used for such authorized incidental business of the relator. (emphasis added)

The court then distinguished the case of People ex rel. Young Men’s Association for Mutual Improvement in the City of Albany v. Sayles, 32 App. Div. 197, 53 N.Y.S. 67, aff’d, 157 N.Y. 677, 51 N.E. 1092. There, a corporation organized exclusively for charitable and benevolent purposes devoted a portion of its building to its corporate purposes and sublet the remainder, using the net income from its leasing arrangement for its corporate purposes, and it was held that the portion of the property leased to others was not entitled to exemption even though the proceeds were used for exempt purposes. The Feitner court distinguished the Sayles decision, by pointing out that in the latter case, the property was used for a purpose foreign to stated corporate purposes, while in Feltner the property was used exclusively in the manner and to the extent authorized by the act incorporating the Salvation Army.

Based on the foregoing it is our conclusion that Salvation Army property used as a sales outlet for items donated to it, where the proceeds therefrom are used exclusively for exempt purposes pursuant to its special charter, is entitled to an exemption from real property taxation pursuant to section 421.

March 25, 1975

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