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Assessor's Manual, Volume 4, Exemption Administration

INSTRUCTIONS TO ASSESSORS

APPLICATION FOR REAL PROPERTY TAX EXEMPTION
FOR NONPROFIT ORGANIZATIONS

RP-420-a-Org
Form RP-420-b-Org
Schedule A (RP-420-a/b-Org)
RP-420-a/b-Use
RP-420-a/b-Vlg

NYS Seal

NEW YORK STATE DEPARTMENT OF TAXATION & FINANCE
Office of Real Property Tax Services

W.A. Harriman State Campus
Albany, NY 12227
January 2014

TABLE OF CONTENTS

  1. General Information
  2. Filing
  3. RP-420-a-Org and RP-420-b-Org
    1. The Nonprofit Test
    2. The Organization Test
    3. Verification
  4. RP-420-a/b-Use
    1. Property Use
    2. Verification

Appendix A - Schedule A, RP-420-a/b-Org

  1. Service Criteria
    1. Appropriateness of Services
    2. Administration of Services
  2. Financial Criteria

Appendix B - The Statutes Section 420-a Section 420-b

  1. GENERAL INFORMATION

    Sections 420-a and 420-b of the New York State Real Property Tax Law authorize exemption from real property taxes of real property owned by certain nonprofit organizations.1

    The requirements of section 420-a, the mandatory class of exempt purposes, may be summarized as follows:

    1. The real property must be owned by a nonprofit corporation or association organized or conducted exclusively for one or more of the purposes listed in section 420-a, i.e., religious, charitable, educational, hospital or moral or mental improvement of men, women or children.2
    2. The real property must be used exclusively for carrying out thereupon one or more of the purposes listed in section 420-a. Any portion of the property that is not so used is subject to taxation.
    3. No officer, member or employee of the organization may be entitled to receive any pecuniary profit from its operations, except reasonable compensation for services performed in furtherance of the corporate purposes.
    4. The owner of the property must file with the assessor either (a) an application form prescribed by the Office of Real Property Tax Services or (b) a comparable application form.
    5. No exemption may be granted if the organization is a guise or pretense for directly or indirectly making any other pecuniary profit for the organization or for any of its members or employees.

    The requirements of section 420-b, the permissive class of exempt purposes, may be summarized as follows:

    1. The real property must be owned by a nonprofit corporation or association organized exclusively for one or more of the purposes listed in section 420-b, i.e., bible, tract, benevolent, missionary, infirmary, public playground, scientific, literary, bar association, medical society, library, patriotic or historical purposes, for the development of good sportsmanship for persons under the age of 18 years through the conduct of supervised athletic games or for the enforcement of laws relating to children or animals.
    2. The real property must be used exclusively for carrying out thereupon one or more of the purposes listed in section 420-b. Any portion of the property that is not so used is subject to taxation.
    3. No officer, member or employee of the organization may be entitled to receive any pecuniary profit from its operations, except reasonable compensation for services performed in furtherance of the corporate purposes.
    4. No exemption may be granted if the organization is a guise or pretense for directly or indirectly making any other pecuniary profit for the organization or for any of its members or employees.
    5. Application forms for exemption, as prescribed by the Office of Real Property Tax Services, must be filed by the owner of the property with the assessor of the appropriate county, city, town or village on or before the appropriate taxable status date.

    The purpose of the RP-420-a and RP-420-b exemption application forms is to provide the assessor with the information needed to determine whether property owned by an organization seeking tax exempt status pursuant to either section 420-a or section 420-b is entitled to a tax exemption. The information requested in the forms is related to the statutory requirements summarized above, which must be satisfied before an exemption may be granted. However, while the forms are extensive, they are not meant to limit further inquiry by the assessor. Where he or she considers it necessary, the assessor SHOULD seek additional information from the applicant.

    The applicant must answer in sufficient detail all questions asked in Forms RP-420-a-Org or RP-420-b-Org and RP-420-a/b-Use, and, where applicable, the organization must answer all relevant questions in Schedule A, RP-420-a/b-Org (referred to below as Schedule A). All required attachments must be submitted with required forms. The assessor should return all incomplete forms to the applicant and request that the applicant supply the missing information.

    Note that organizations such as veterans organizations, volunteer fire companies in villages and fraternal organizations are not eligible for exemption under either section 420-a or section 420-b. The real property of veterans organizations is exempt under section 452 of the Real Property Tax Law; the real property of volunteer fire companies in villages is exempt under section 466 of the Real Property Tax Law; the real property of fraternal organization is exempt under section 428 of the Real Property Tax Law. The RP-420-a and RP-420-b application forms are used only for organizations seeking exemption under either section 420-a or section 420-b of the Real Property Tax Law.

    An explanation of the series of RP-420-a and RP-420-b forms is contained in the remaining sections of this booklet.

  2. FILING

    Before he or she may grant exemption under either section 420-a or 420-b, the assessor must have on file sufficient information to indicate that the property is entitled to exemption.

    In the case or organizations seeking exemption under section 420-a, the owner of the property must file either (a) a properly completed application form prescribed by the Office of Real Property Tax Services (ORPTS) or (b) any comparable application form. If neither type of form is filed, the assessor may nevertheless grant the exemption provided he or she personally inspects the property and certifies in writing that it satisfies all of the requirements for exemption. If the property is not granted exemption, the owner may seek judicial review pursuant to Article 7 of the Real Property Tax Law or Article 78 of the Civil Practice Law and Rules. See below about filing for exemption in New York City.

    As for organizations seeking exemption under section 420-b, all such organizations must file application forms prescribed by ORPTS.

    If such application forms are used to seek exemption under section 420-a or 420- b, the appropriate forms are:

    Initial application - Forms RP-420-a-Org or RP-420-b-Org (organization purpose), RP-420-a/b-Use (property use), and, if necessary, Schedule A, RP-420- a/b-Org (nonprofit status).

    Renewal application (annual) - Forms RP-420-a/b-Rnw-I (organization purpose), RP-420-a/b-Rnw-II (property use), and, if necessary, Schedule A, RP-420-a/b-Rnw-I (nonprofit status). Instructions for renewal applications have been issued separately.

    One copy of the organization purpose form (RP-420-a-Org or RP-420-b-Org) must be filed in each assessing unit in which an exemption is sought. One copy of the property use form (RP-420-a/b-Use) must be filed for each parcel for which an exemption is sought. In those villages which have opted to use the town or county assessment roll pursuant to section 1402(2) of the Real Property Tax Law, one copy of Form RP-420-a/b-Vlg may be submitted in lieu of Forms RP-420-a-Org, RP-420-b- Org, and RP-420-a/b-Use. The application should be completed and filed by someone authorized by the organization to do so.

    Section 420-b requires application forms to be filed with the assessor on or before the appropriate taxable status date except in New York City (see below). This is a mandatory requirement for the section 420-b exemption. If the applicant does not file the application forms by taxable status date, it cannot receive the section 420-b exemption for that year. Even though section 420-a does not contain this statutory requirement, organizations applying for exemption under section 420-a should also submit their completed application forms on or before taxable status date. If an organization applying for exemption under section 420-a fails to file the completed application forms by taxable status date, the assessor should enter the property as taxable on the tentative assessment roll. However, unlike organizations applying under section 420-b, organizations applying under section 420-a may file their completed application forms with the board of assessment review on grievance day. The board of assessment review may grant the exemption, provided, of course, that the organization satisfies the statutory requirements.

    In New York City property acquired by an organization exempt under either section 420-a or section 420-b may receive the exemption as of the date of the property's acquisition. Furthermore, applications for fiscal years as to which the applicable taxable status date has passed may be filed at any time after the transfer of title to the nonprofit organization. In all instances application is mandatory for receiving the section 420-b exemption. An application for a section 420-a or section 420-b exemption is deemed to be denied on the 90th day after submission of such application if the City Department of Finance has not made a determination on the application prior to that 90th day.

  3. RP-420-a-Org and RP-420-b-Org

    These forms are intended to provide the assessor with the information necessary to determine whether the applicant satisfies both the nonprofit and the organization tests of section 420-a and section 420-b. Those organizations seeking the mandatory exemption under section 420-a should complete RP-420-a-Org. Those organizations seeking the permissive exemption under section 420-b should complete RP-420-b-Org. The format of these two forms is identical.

    1. THE NONPROFIT TEST

      To qualify for a nonprofit exemption, the organization must be engaged in not for profit activities. The organization seeking the exemption may make a pecuniary profit, but it must not be formed or operated for profit-making purposes. A nonprofit organization may accrue revenues in excess of its expenditures in the course of carrying out its exempt activities. However, any such excess revenues must be used to support the lawful continuing activities of the organization. If excess revenues are not used for such activities, the organization will not satisfy the nonprofit tests of property tax exemption.

      The revenues received by the applicant organization must not inure or accrue in whole or in part to the benefit of private shareholders or individuals (see discussion of inurement in Appendix A). If they do, the property tax exemption must be denied.

      One of the main purposes of Forms RP-420-a-Org and RP-420-b-Org is to ascertain whether an organization is, in fact, a "not for profit" organization. This can be a very complex determination. Since nearly all of the types of organizations listed as exempt under section 420-a and section 420-b are included in the group of organizations listed as exempt under section 501 of the Internal Revenue Code, it is helpful to ascertain whether the organization has received an income tax exemption from the Internal Revenue Service (IRS). The assessor may assume that an organization listed in section 420-a or section 420-b which is also exempt from federal income taxes has satisfied the nonprofit test for exemption from real property taxes. However, if the assessor is not satisfied that the organization is nonprofit, he or she may use the IRS information as a basis and seek additional information.

      If the organization is not currently exempt from federal income taxes, the assessor should make the determination as to whether the applicant satisfies the nonprofit test on the basis of information provided in its application for federal income tax exemption or in Schedule A.

      To assist the assessor in reviewing and evaluating the information provided by the applicant, a question by question analysis of the application forms follows.

      Question 1 -- Organization Identification

      Questions 1a, 1b, and 1d ask for identifying information and are self-explanatory.

      Question 1c asks for the employer identification number assigned by the federal government. This is a nine-digit number separated by a hyphen, as follows: 00-000000000. Every organization required to submit a return, statement or other document to the Internal Revenue Service after 1961 must have an employer identification number, whether or not the organization has any employees. If the applicant does not supply a number in answer to Question 1c, the assessor should ask the person named in Question 1d why the number is missing. The assessor should also ask if the organization has applied for an employer identification number, and, if one has been applied for, request that the organization inform the assessor of the number when it has been assigned by the federal government.

      Question 2 -- Organization Purposes and Activities

      These are discussed in the section on organization purposes below (Part III B).

      Question 3 & 4 -- Federal Income Tax Exemption Status

      Most of the organizations exempt from property taxes under section 420-a and section 420-b of the Real Property Tax Law are exempt from federal income taxes under section 501 of the Internal Revenue Code. However, exempt status under the Internal Revenue Code is not conclusive with regard to exempt status under the Real Property Tax Law.

      Question 3a -- Current Status

      If the applicant is currently exempt from federal income taxes, it answers "Yes" to Question 3a. Questions 3b through 3e must also be answered and the appropriate documents attached to Form RP-420-a-Org or RP-420-b-Org.

      Question 3b -- Statutory Basis for Income Tax Exemption

      In response to Question 3b, the applicant should supply the section of law under which it is receiving its exemption from federal income taxes. The anticipated answer to this question is either section 501(c)(3) (for organizations other than bar associations and medical societies) or section 501(c)(6) (for bar associations and medical societies) of the Internal Revenue Code. Since all the exempt purposes listed in sections 420-a and 420-b for a real property tax exemption are included in either section 501(c)(3) or section 501(c)(6), any other subdivision or paragraph of section 501 of the Internal Revenue Code indicates that the applicant may not have as its main purpose any of the exempt purposes included in section 420-a or section 420-b. This should be considered by the assessor in determining the organization's purposes (see, Part III B).

      Question 3c(1) -- IRS Basis For Recognition of Income Tax Exemption

      Most organizations seeking recognition of exemption from federal income taxes must file an application on forms specifically prescribed by the Internal Revenue Service. These are: Form 1023 (for recognition of exemption under section 501(c)(3) of the Internal Revenue Code) and Form 1024 (for recognition under other subdivisions and paragraphs of section 501). These forms are discussed in questions 4a-4c. Income tax exemption may be recognized by a group exemption letter or a separate exemption letter (discussed in Question 3c(2) below).

      Some organizations are not required to file the prescribed IRS application forms. Such organizations include: (1) churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group; (2) any organization which is not a private foundation having annual gross receipts normally of not more than $5,000; and (3) any subordinate organization (other than a private foundation) covered by a group exemption letter. These organizations are automatically exempt from federal income taxes if they satisfy the requirements set forth by the IRS for those organizations required to file application forms for exemption. However, if the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it must file Form 1023. By establishing its exemption, potential contributors are assured by the IRS that their contributions to the organization are tax deductible.

      Question 3c(2) -- Group and Separate Exemptions

      Exemption from federal income taxes may be recognized by a group exemption letter if application is made by a central organization (for example, a church) with affiliated subordinates under its general supervision or control. If a central organization has been issued a group exemption letter covering a subordinate organization, the subordinate is not required to apply for recognition of exemption. If a group exemption letter has been issued, in answer to Question 3c(2) the applicant must give the name and address of the organization granted the group exemption and attach a copy of the exemption letter. If the organization applying for real property tax exemption has been issued a separate exemption letter by the Internal Revenue Service, the applicant must attach a copy of that letter.

      Question 3c(3) -- Advance Ruling

      The applicant must answer Question 3c(3) if it has been temporarily recognized as tax exempt under section 501(c)(3) of the Internal Revenue Code through either an advance ruling or an extended advance ruling. Such rulings are applied for by newly created organizations that have not had enough operational experience to obtain a determination of exempt status. Advance or extended advance rulings cover a period of two to six years. The applicant must attach a copy of the ruling letter received from the Internal Revenue Service. Obviously, the assessor should not place as much reliance on an advance ruling as he or she might on a final determination. Further inquiry into the nonprofit status of the applicant may be warranted.

      Question 3c(4) -- No IRS Recognition

      As mentioned above, some organizations are not required to apply for recognition of federal tax exemption. Question 3c(4) is directed at those organizations. The assessor may need additional information to determine whether an applicant which has not applied for recognition of federal tax exemption satisfies the nonprofit test for property tax exemption. If so, the assessor may require the applicant to complete Schedule A. The assessor may also require those organizations which are not currently exempt from federal income taxes to complete Schedule A. The use of Schedule A should not be widespread.

      Question 3d - IRS Annual Returns other than Form 990-T

      Some organizations are required to file annual income tax returns with the Internal Revenue Service even though they are exempt from federal income taxes. These returns are:

      Form 990 - Return of Organization Exempt from Income Tax

      Every organization exempt from federal income tax under sections 501(c)(3) or 501(c)(6) must file an annual information return except (a) a private foundation (which files Form 990-PF instead); (b) a church, an interchurch organization of local units of a church, a convention or association of churches, or an integrated auxiliary of a church (such as a men's or women's organization, religious school, mission society, or youth group); (c) an exclusively religious activity of any religious order; (d) an organization having gross receipts in each tax year that normally are not more than $10,000; and (e) a mission society sponsored by or affiliated with one or more churches or church denominations, more than one-half of the activities of which are conducted in, or directed at, persons in foreign countries.

      The chief significance of Form 990 is that it presents evidence that an organization previously recognized as exempt from federal income taxes has retained its exempt status - at least until the beginning of its fiscal year. This evidence can be very helpful in those cases where the applicant has submitted an expired determination or ruling letter.

      The assessor should also check Form 990 for (1) information indicating changes during the last fiscal year in the organization's purposes or activities and (2) information regarding disposition of assets during the year to see whether the organization has acted in such a way as to jeopardize its exempt status. If the assessor finds evidence of such action and the applicant has not supplied an IRS determination or ruling letter recognizing exemption for the year in question, the assessor should ask the applicant to supply a copy of the IRS response to Form 990 (either a letter recognizing exemption or a notice of revocation) as soon as it is received by the organization.

      Schedule A, Form 990 - Organizations Exempt under Section 501(c)(3)

      Schedule A, Form 990 is filed with Form 990 by organizations exempt under section 501(c)(3). The assessor should follow the procedures described above for Form 990.

      Form 990-PF - Return of Private Foundation Exempt from Income Tax

      Form 990-PF is filed by private foundations. From the point of view of the assessor, this form serves the same purpose in relation to private foundations as Form 990 serves in relation to other exempt organizations, and the assessor should follow the procedures described above for Form 990.

      Form 990-AR - Annual Report of Private Foundation

      Form 990-AR is filed with Form 990-PF by private foundations whose assets are $5,000 or more at any time during a taxable year. (The use of this form is optional; the organization may submit an annual report in some other format provided that the report contains all of the information required in Form 990-AR.) The assessor should follow the procedures described above for Form 990-PF.

      Question 3e - Form 990-T - Exempt Organization Business Income Tax Return

      Every organization exempt under section 501(c) of the Internal Revenue Code with a gross income of $1,000 or more for the year from an unrelated trade or business must file this form and pay any tax due. Form 990-T is significant because it shows the activities carried on by an organization which are unrelated to its exempt purpose or purposes and alerts the assessor to the possibility of the use of the property for nonexempt purposes.

      Questions 4a - 4c - Organization Without IRS Recognition of Exempt Status

      If an applicant answers No to Question 3a, the next question is whether it is seeking exempt status from the IRS. Organizations applying for exemption under Internal Revenue Code section 501(c)(3) file Form 1023. Organizations applying for exemption under section 501(c)(6) file Form 1024. These applications for exemption may be used by the assessor as an aid in determining whether the applicant satisfies the nonprofit test and as evidence of the organization's purposes.

      Form 1023 - Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code

      This form is used to apply for a IRS ruling or determination recognizing an organization's exempt status under section 401(c)(3), the section of the Internal Revenue Code that covers most of the organizations eligible for property tax exemption under sections 420-a and 420-b of the Real Property Tax Law. Form 1023 has been used in large part as the basis for developing Schedule A. Therefore, the assessor should use the same guidelines to review both Form 1023 and Schedule A. These guidelines are discussed in the instructions for Schedule A (see, Appendix A).

      Form 1024 - Application for Recognition of Exemption under Section 501(a)

      This form is relevant only to bar associations and medical societies exempt under section 420-b. The assessor should review the questions in Form 1024 that must be answered by all organizations, but should ignore all the schedules included in the form except those which apply to section 501(c)(6) organizations.

    2. THE ORGANIZATION TEST

      Section 420-a requires that the applicant be organized or conducted exclusively for exempt purposes, whereas section 420-b permits exemption only where the applicant is organized exclusively for exempt purposes. The distinction between the terms "organized" and "conducted" is the result of the Court of Appeals' ruling in Mohonk Trust v. Board of Assessors, 47 N.Y.2d 476 (1979). Prior to the amendment which added the term "conducted" to section 420 (L.1971, c.414), an organization qualified for exemption only if it was "organized" exclusively for exempt purposes. A determination of an organization's purposes was in large part limited to an examination of its organizational documents (e.g., its certificate or articles of incorporation and its by-laws). The Court interpreted the addition of the term "conducted" to mean that the determination of an organization's purposes may turn upon the extent to which the organization pursues the various purposes for which it was created. Therefore, for the mandatory class, this determination is no longer dependent solely upon the language of the applicant's organizational documents. The alternate conduct requirement, however, is not applicable for the permissive class.

      The courts have defined the term "exclusively" in the context of sections 420-a and 420-b to mean "principally" or "primarily." The terms "exclusively," "principally" and "primarily" are used interchangeably throughout this booklet. Forms RP-420-a-Org and RP-420- b-Org are designed to assist the assessor in determining the applicant's primary purposes.

      Initially, the assessor should examine the purposes stated in the applicant's certificate or articles of incorporation and in its by-laws to determine whether the applicant is organized exclusively for exempt purposes. These documents should limit the applicant's purposes to one or more of the exempt purposes included in either section 420-a or section 420-b. If the organization is applying for exemption under section 420-b and its stated purposes are not limited to those purposes included in section 420-b (i.e., the stated purposes are very broad or include nonexempt purposes), the exemption application should be denied.

      However, as discussed above, the determination of the primary purposes of an applicant for exemption under section 420-a may turn upon its conduct and the extent to which the organization pursues the various purposes for which it was created. This determination is not dependent solely upon the language of the section 420-a applicant's organizational documents and the assessor should examine the applicant's actual practices. The applicant's activities should be primarily aimed toward the achievement of any or all of the purposes included in section 420-a. The assessor may also wish to examine the other activities of the applicant, involving other properties, to determine if the applicant is conducted primarily for exempt purposes.

      The information obtained from the IRS forms should be of assistance to the assessor in determining whether the applicant is organized or conducted exclusively for exempt purposes. In addition, the assessor may want to use as a guide the questions suggested in Appendix A in relation to Schedule A.

      Question 2a - Organization Purpose

      The applicant must check one or more of the categories of organization purposes listed here. The purpose listed on Form RP-420-b-Org are permissively exempt purposes, that is, the exemption for corporations or associations organized exclusively for these purposes is subject to local option. Municipalities may adopt local laws, ordinances or resolutions denying tax exempt status to corporations or associations organized exclusively for one or more of these purposes. When reviewing a section 420-b application, the assessor should make sure that a local law, ordinance or resolution has not been adopted with regard to any of the categories of purposes checked by the applicant.

      Question 2b - Statement of Primary Purpose

      If the applicant has checked more than one of the exempt purposes listed in question 2a, it must state which is its primary purpose.

      Question 2c - Statement of Activities Related to Organization Purposes

      The applicant must describe in answer to this question specific organizational activities related to each purpose checked in Question 2a. Sections 420-a and 420-b of the Real Property Tax Law generally prescribe organizations purposes but do not specify which activities legitimately serve such purposes. Thus, it is not possible to provide the assessor with a list of activities supporting tax exempt purposes. If an assessor is unsure whether a particular organization fits within an exempt category, he or she should consult the County Director of Real Property Tax Services or the State Office of Real Property Tax Services.

      Questions 5a-5f - Form of Organization

      Sections 420-a and 420-b limit property tax exemptions to corporations and associations. The inclusion of the term "association" indicates that the applicant need not be incorporated. Associations include a wide assortment of differing organizational structures, including trusts. However, informal groups of individuals, without any organizational structure, would not qualify for exemption.

      Depending on the type of organization applying for property tax exemption, the applicant must attach its certificate of incorporation, its application for incorporation and the required consents, or its articles of organization.

      Question 5g - Application for Incorporation and Certificate of Incorporation

      An organization eligible for property tax exemption pursuant to either section 420-a or 420-b may be incorporated under any one of a variety of laws. In New York State, incorporation of such an organization occurs must commonly under the Not-for-Profit Corporation Law, the Religious Corporations Law, the Social Services Law, the Public Health Law, the Mental Hygiene Law, or the Education Law.

      The applicant's certificate or articles of incorporation (1) must limit the purposes of the organization to one or more of the exempt purposes specified in section 420-a or section 420-b of the Real Property Tax Law (although, as discussed previously, an applicant under section 420-a may be conducted exclusively for exempt purposes) and (2) must not expressly empower the organization to engage in activities that in themselves are not in furtherance of one or more of those purposes.

      Question 6 - Public Regulation of Nonprofit Organizations

      There are certain types of nonprofit organizations whose operations are subject to the approval or supervision or both of local and State government agencies.

      The Department of Social Services has regulatory power over the following nonprofit human services agencies and requires them to have a permit or operating certificate issued by the Department:

      • Day-care centers for children
      • Day services facilities
      • Residential facilities for children
      • Residential facilities for adults

      The Department of Health administers the regulatory program of the Public Health Council, whose approval is required for the establishment of medical facilities in the State. Each of the following types of medical facilities must have an operating certificate issued by the Department:

      • Hospitals
      • Nursing homes
      • Health-related facilities
      • Diagnostic and/or treatment centers

      The following facilities are regulated by one or more of the State agencies listed below. Each such facility is required to have an operating certificate issued by the regulating agency.

      Facility Regulating State Agency
      • Hospitals for the mentally ill
      Office of Mental Health
      • Psychiatric inpatient units of
        general hospitals
      Office of Mental Health
      • Schools for the mentally retarded
      Office of Mental Retardation
      and Developmental Disabilities
      • Outpatient facilities for the
        mentally disabled
      Office of Mental Health, Office of Mental Retardation
      and Development Disabilities, Division of Alcoholism
      and Alcohol Abuse, or Division of Substance
      Abuse Services, depending on clientele
      • Community residences

      Office of Mental Health, Office of
      Mental Retardation and Development
      Disabilities, or Division of Alcoholism
      and Alcohol Abuse, depending on clientele

      • Family care facilities

      Office of Mental Health or Office of
      Mental Retardation and Developmental
      Disabilities, depending on clientele

      • Alcoholism facilities
      Division of Alcoholism and Alcohol Abuse
      • Treatment facilities for
        drug-dependent persons
      Division of Substance Abuse Services
      (certificate of approval required)

      The Education Department administers the regulatory powers of the Board of Regents, which is responsible for all public and private colleges and universities, public and non-public schools, museums, libraries, educational television stations, and other related educational institutions and organizations in the State. Incorporation by the Board of Regents of colleges, universities, other post-secondary institutes of learning, schools offering instruction at levels from pre-kindergarten through secondary, and libraries, museums, and historical societies is evidenced by the issuance of a charter (either an absolute charter or a provisional charter). Incorporation of all other institutions and organizations having educational purposes approved by the Board of Regents is evidenced by the issuance of a certificate of incorporation.

      Any organization seeking property tax exemption and having as one of its activities the operation of a facility regulated by a state agency should submit an operating certificate or other official authorization of its operations. Such a certificate is evidence of the purpose of the organization. If the organization has no certificate, further inquiry by the assessor is warranted.

      In the case of facilities regulated by the Education Department, the action that the assessor should take is somewhat different. If the organization seeking property tax exemption is claiming exempt status as an educational organization and has been chartered by the Board of Regents, that is significant evidence of the organization's educational purpose and the assessor may rely upon it. If the organization has not been officially recognized as an educational organization by the State, the assessor will have to determine whether it is a bona fide educational organization from other information supplied by the applicant.

      The Attorney General, through the Charities Bureau, maintains a registry of (a) organizations administering charitable assets in the State and (b) organizations soliciting charitable funds in the State. Registration with the Charities Bureau is required of charitable organizations soliciting more than $25,000 annually. Registration is also required of charitable organizations receiving any property for charitable purposes. The registered charities are also required to file annual reports with the Charities Bureau. Exemptions from registration with the Charities Bureau are generally given to:

      • An organization operated, supervised, or controlled by or in connection with a religious organization.
      • An educational institution incorporated under the Education Department Law.
      • An educational institution that confines its solicitation of contributions to its student body, alumni, faculty, trustees and their facilities.
      • A library that files annual financial reports as required by the Education Department.
      • A fraternal, patriotic, social, or alumni organization and an historical society chartered by the Board of Regents.
      • An organization (a) which does not intend to solicit and does not actually receive contributions in excess of $25,000 a year and (b) which does not engage professionals to raise funds on its behalf.
      • An organization (a) that receives an allocation from a federated fund, incorporated community appeal or a united way provided that such fund, appeal or united way complies with the registration and annual reporting requirements of the Charities Bureau, (b) that does not receive, in addition to such allocation, contributions in excess of $25,000 a year, and (c) whose fund raising functions are carried out by persons unpaid for these services.
      • A local chapter or similarly designated affiliate of a bona fide veterans' organization that issues charters to such local elements throughout New York State, a bona fide organization of volunteer firemen, an organization providing volunteer ambulance service, or a bona fide auxiliary or affiliate of such an organization, provided that all fund-raising activities are carried out by the organization's members and these members receive no direct or indirect compensation for these activities.
    3. VERIFICATION

      This section must be completed and signed by an official representative of the applicant organization, and the representative's signature must be notarized.

  4. RP-420-a/b-Use
    1. PROPERTY USE

      This form is to be used by organizations seeking exemption under either section 420-a or section 420-b. It is intended to provide the assessor with the information necessary to determine whether a particular parcel for which exemption is sought is being exclusively used for exempt purposes. As stated previously, the term "exclusively" means "principally" or "primarily." The assessor is to complete the parcel location information and assessment roll description on the form before distributing it to the applicant.

      Question 1-3 - Organization Identification

      The applicant organization is to complete the identifying information in Question 1 and 2 and correct any errors in the parcel description in Question 3. The employer identification number requested in Question 1b is discussed above with reference to Question 1c on Forms RP-420-a-Org and RP-420-b-Org (see, Part III A).

      Question 4 - Ownership

      Question 4a is designed to assist the assessor in determining if all of the property receiving a section 420-a or section 420-b exemption on the prior assessment roll is still owned by the nonprofit organization. If the applicant answers yes to Questions 4b or 4c, the assessor should seek additional information regarding the use of the property. It is possible that property which is for sale or in the process of being sold may not be presently used for exempt purposes.

      Question 5 - Transfer

      If Question 5 is completed, the assessor should inquire into the transfer between the owning organization and its grantor. The statute requires that the property be owned by the organization seeking exemption. Sometimes, an organization will have changed its corporate name since it acquired the property in question. In this case, the assessor should seek proof that the present owner is the legal successor to the record owner of the parcel.

      Question 6 - Recent Acquisitions

      Question 6 is self-explanatory and needs to be completed only if title was obtained within the last three years. It also shows if title to the property was in the owning organization as of taxable status date.

      Questions 7 and 8 - Grantor-Grantee or Mortgagor-Mortgagee Relationship

      No exemption may be granted pursuant to either section 420-a or section 420-b if the organization seeking exemption is a guise or pretense for making a pecuniary profit for the organization, its members or employees. The purpose of Question 7 and 8 is to elicit information indicating whether the organization satisfies or violates this requirement. If the parcel in question was purchased from someone with an interest in the organization (Question 7) or such a person holds a mortgage on the parcel (Question 8), the assessor should make further inquiry. In some cases, this person may be making a pecuniary profit in excess of reasonable compensation because the financial transaction with the organization favors that person. A transaction of this type with an "insider" may show that the organization is a guise or pretense for making a pecuniary profit. Naturally, an arms-length transaction between the organization and the "insider" for a fair price would not present evidence necessitating the denial of the exemption.

      Question 9 - Reversionary Interest

      Question 9 should help the assessor determine whether the property may qualify for exemption pursuant to subdivision 3 of sections 420-a or 420-b. Subdivision 3 provides, in part, that unimproved and unused property from which no revenue is derived is exempt if the property is held by the applicant organization on the condition that title to the property will revert if a building not intended and suitable for one or more of the exempt purposes listed in section 420-a or section 420-b is erected. It is not expected that the assessor will often be confronted with this situation.

      Question 10 - Property Use

      Question 10 is most important since the property must be used primarily for one or more of the exempt purposes included in section 420-a or section 420-b and checked off by the applicant in Question 2 on Form RP-420-a-Org or RP-420-b-Org. The assessor should make further inquiry if not satisfied with the answer to Question 10.

      If only a portion of an applicant's property is used primarily for exempt purposes, only that portion is exempt, and the remainder is taxable. We suggest that the assessor separately assess the exempt and taxable portions, whenever possible. If the assessor is unable to separately assess, he or she should indicate the general location and character of the taxable and exempt portions of the property on the assessment roll. However, it is not necessary to determine the exact geographic location of the taxable and exempt portions. A precise metes and bounds description is not required. Rather, the assessor should distribute the assessed value of the property between the taxable and exempt portions. The parcel is placed on the taxable portion of the assessment roll and treated as a partially exempt parcel with the amount of the exemption listed in a separate column (Real Property Tax Law, 502(5)).

      Question 11 - Hospitals

      Question 11, relevant only to hospitals, is designed to show whether a portion of the property is being used by doctors for their private practices. Where a portion of the property is being so used, that portion is subject to taxation.

      Question 12 - Regular Use by Others

      Although the property must be used for exempt purposes, it need not be so used by the owning organization itself. The property may continue to receive the exemption if it is regularly used by an organization which would be exempt pursuant to either section 420-a or section 420-b if it owned the property. The exemption may also be granted if the property is regularly used for purposes exempt pursuant to sections: 406 (municipal corporations); 408 (school districts and BOCES); 416 (United Nations); 422 (not-for-profit housing companies); 424 (institutes of arts and sciences); 426 (opera houses); 428 (fraternal organizations); 430 (interdenominational centers); 450 (agricultural societies); for civil defense purposes pursuant to the New York State Defense Emergency Act (L.1951, c.784); or for purposes of a tax-free NY area where property owned by a private educational institution and exempt under section 420-a as of June 1, 2013 is used for purposes of the START-UP NY program (L. 2013, c.68).  However, the rental income received by the owning organization may not exceed the carrying, maintenance and depreciation charges of the rented portion of the property. Question 12 is designed to elicit this information.

      If a portion is leased to or used by a corporation or association which would not be entitled to any of these exemptions, that portion is taxable.

      Question 13 - Occasional Use by Others

      Question 13 is concerned with situations involving occasional use by persons or organizations other than the applicant. Occasional use for other than exempt purposes does not automatically require that the exemption be denied. Whether this occasional use is sufficient to defeat the applicant's claim that the property is used exclusively for exempt purposes is initially a question to be determined by the assessor, subject to possible administrative and judicial review.

      For example, a church-owned building which is regularly and primarily used for religious purposes and occasionally used by other persons or organizations for their use, may still be entitled to exemption, subject to the income limitation discussed above with respect to Question 12. On the other hand, where a building is only occasionally used by a church and is regularly used by others for nonexempt purposes, the property is taxable.

      Question 14 - Buildings and Other Improvements

      If there are buildings or other improvements on the property, the applicant should answer "yes" to Question 14a and skip Questions 14b through 14f.

      If there are no buildings or improvements on the property, the applicant is to describe in Question 14b the use of the property if not previously stated in answer to Question 10.

      Subdivisions 3 of sections 420-a and 420-b provide, in part, that an exemption is to be granted to property from which no revenue is derived where such property is not used because of the absence of suitable buildings or improvements, provided that the construction of such buildings or improvements is contemplated in good faith. Questions 14c through 14f are intended to provide the assessor with information regarding the applicant's good faith contemplation.

      For example, a resolution of the organization authorizing the construction of a building is some evidence of the organization's good faith (Question 14d). A building fund would also be some evidence of the organization's intent (Question 14e). Question 14f asks for an estimate of when construction is to begin. A date in the near future would be evidence of good faith contemplation.

      Question 15 - Description of Improvements

      Where there is a building or other improvement on the property, it is to be described in Question 15. In Question 15b the applicant is to approximate the amount of acreage not underlying the buildings or improvements. The use of this vacant land is described in Question 15c. Questions 15d through 15g provide the information with respect to the contemplated uses of a vacant portion of an improved parcel. This is similar to the information requested in Questions 14c through 14f, discussed above, with respect to an entirely vacant parcel.

      An organization may receive an exemption on vacant land or on a vacant portion or a parcel on which a building is located even where no improvements are contemplated. However, the organization must show that this land is exclusively used for exempt purposes. Where it cannot, the vacant parcel or the vacant portion of an improved parcel is taxable.

      Question 16 - Unoccupied Improvements

      This question is concerned with unoccupied building or other improvements on the property. Again, the burden is on the applicant to show that the property is intended to be used for exempt purposes. If the building is not "suitable" (see, discussion of Question 14 above), the organization should submit proof of the proposed renovation intended to render the building usable. Where the assessor is not satisfied that the unoccupied building is being used exclusively for exempt purposes or that it is not intended in good faith to be so used, he or she must enter the property on the taxable portion of the assessment roll.

    2. VERIFICATION

      The verification on Form RP-420-a/b-Use is the same as that on RP-420-a-Org and RP-420-b-Org discussed above.

APPENDIX A - Schedule A, RP-420-a/b-Org

The main purpose of Schedule A, RP-420-a/b-Org (referred to as Schedule A) is to provide the assessor with information regarding the applicant's nonprofit status. The assessor should require the applicant to complete Schedule A whenever the assessor needs further information (in addition to that contained in the RP-420-a-Org or RP-420-b-Org forms) to determine if the applicant is a nonprofit corporation or association.

In most instances, the applicant will be exempt from federal income taxes under section 501(c)(3) of the Internal Revenue Code (see discussion concerning Questions 3 and 4 of RP-420-a-Org and RP-420-b-Org, pp. 241.53-241.56 of this booklet). Since the IRS requires organizations to be nonprofit in order to be exempt from federal income taxes, the assessor may consider the applicant's federal exempt status to be proof that it satisfies the nonprofit requirement of sections 420-a and 420-b. The assessor should keep in mind, however, that some organizations, most notably religious organizations, are not required to receive formal recognition from the IRS in order to be exempt from federal income taxes. In those instances, the assessor should require the applicant to complete Schedule A only when its nonprofit status cannot be determined from the RP-420-a-Org and RP-420-b-Org forms.

Schedule A is based largely on IRS Form 1023 and on the information required of all organizations that file IRS Form 1024. However, the three forms are not identical. Therefore, the instructions that follow are written in terms of the basic concepts and purposes of the forms rather than in terms of the individual question contained in each form. Once the assessor understands how to deal with Schedule A, he or she will understand what should be done with the information provided in Forms 1023 and 1024.

Schedule A, like Forms 1023 and 1024, is of value to the assessor because it establishes whether an organization is nonprofit and whether it satisfies the organization test so as to entitle the applicant's real property to a property tax exemption. The assessor should examine: (1) the services provided by the organization to its members or the general public in furtherance of its exempt purposes and (2) the organization's financial practices in support of the services provided. Because these two are interdependent, many of the questions asked in Schedule A and Forms 1023 and 1024 necessarily address both. However, there are specific criteria that can be applied by the assessor to simplify the evaluation of information supplied by the applicant.

  1. Service Criteria

    These are (a) appropriateness of services to organization purpose and (b) administration of services provided.

    1. Appropriateness of Services

      For each organization purpose stated by the applicant in Question 2a of Form RP-420-a-Org or RP-420-b-Org, the assessor should check Schedule A, Form 1023 or Form 1024 to verify that the services provided and the activities engaged in by the organization are appropriate to its stated purposes.

      Appropriateness of service depends not only on the type of service or activity but also on the proportion or amount of such service in relation to the total services or activities of the organization. The services provided by the applicant must be primarily in furtherance of the applicant's exempt purposes.

      For guidance in ascertaining the proportion of services and activities that are appropriate to the organization's purposes, the assessor should examine the organization's statements of receipt and expenditures given in Part C of Schedule A or in Form 1023 or 1024. The amount of income and expenditures directly related to exempt purposes as opposed to other purposes (such as income from unrelated business activities and disbursements for the compensation of officers, directors, and trustees) should help the assessor determine the proportion of appropriate activity.

      The questions in Parts E through I of Schedule A should assist the assessor in deciding if a particular organization is organized primarily for its stated purpose(s). Part E of Schedule A should be completed by applicants claiming to be religious organizations; Part F should be completed by those claiming to be charitable organizations; Part G should be completed by hospitals; Part H should be completed by those claiming to be educational organizations; and Part I should be completed by homes for the aged.

    2. Administration of Services

      Administration of services concerns the people who control the organization and the conditions governing the provision of services by the organization. In order to be considered as operating in furtherance of exempt purposes, an organization (1) must be controlled by persons who are competent to manage the organization and who have no personal financial interest in it and (2) must make its services available to an entire community (in some cases, to the general public and, in other cases, to the organization's membership) rather than to specific individuals.

      There are a number of questions in Schedule A and Forms 1023 and 1024 that are directed toward establishing the propriety of an organization's administration of its services and activities. For example, the following information is asked for regarding persons in control of the organization:

      • Specialized knowledge, training, expertise or particular qualifications of members of the organization's governing body (Schedule A, Part B, Questions 2a and 2b; Form 1023).
      • Improper financial connections and dealings between members of the organization's governing body and other organizations and individuals (Schedule A, Part B, Questions 2c-2g, 4a and 4b; questions on "disqualified persons" and on dealings with other organizations and individuals in Form 1023).

        Information asked for regarding the equitable provision of services includes:

      • Conditions under which the organization charges for services (Schedule A, Part B, Question 5b; Form 1023; Form 1024).
      • Limitation of services to specific classes of individuals (Schedule A, Part B, Questions 5c and 6a-6c; Form 1023; Form 1024).
      • Conditions under which the organization provides insurance, pension and similar benefits to its members, their dependents or others (Schedule A, Part C, Question 3b; Form 1023; Form 1024).
      • Selection of recipients of scholarship and similar awards (Schedule A, Part D, Questions 4a-4d; Schedule A, Part F, Questions 3a-3d; Form 1023).

      The following example relating to hospitals illustrates the standards that should be applied by the assessor in evaluating the appropriateness and administration of services provided by an organization applying for property tax exemption. Factors indicating that a hospital is operated for exempt purposes, that is, for the benefit of the public and not the private interest of those in control of the hospital are: (1) the control of the hospital rests in a board of trustees composed of civic leaders who have no direct economic interest in the hospital; (2) the hospital maintains a medical staff with privileges available to all qualified physicians consistent with the size and nature of the facilities; (3) any member of the medical staff has the privilege of renting office space, if available; (4) the hospital operates an active emergency room and/or outpatient department accessible to the general public; (5) the hospital is engaged in medical training, research and education; and (6) the hospital is involved in various projects and programs to improve the health of the community.

      It is important for the assessor to remember that the rules applicable to foundations and trusts, as far as their connection with other organizations is concerned, are different from the rules that apply to other types of organizations. The reason for this difference is that the basis for exemption from taxation of foundations and trusts is their complete dedication to the support or benefit of one of more publicly supported organizations; foundations and trusts need not themselves engage in activities directly benefiting the public. Therefore, while foundations and trusts may not be connected with or engaged in dealings with "disqualified persons" (as referred to in Form 1023 and defined in Schedule A, Part B, Questions 2c-2g, and Part D, Questions 1b and 1c), they must be operated, supervised and controlled by and in connection with the organizations they support.

      A foundation or trust is "operated, supervised or controlled by" a supporting organization if there is a substantial degree of direction over the policies, programs and activities of the foundation or trust by one or more publicly supported organizations. The relationship required is comparable to that of a parent organization and its subsidiary, where the subsidiary is under the direction of and accountable to the parent organization. This relationship is established by the fact that a majority of the officers, directors, or trustees of the foundation or trust are appointed or elected by the governing body, members of the governing body, officers acting in their official capacity or the membership of one or more publicly supported organizations. The governing body, however, of the foundation or trust does not have to be composed of the representatives of the publicly supported organizations specified in the governing instrument of the foundation or trust as the organizations for whose benefit the foundation or trust is operated. The required relationship is established between the foundation or trust and publicly supported organizations specified in its governing instrument if the foundation or trust is operated for the benefit of different publicly supported organizations and the foundation or trust can demonstrate that the purposes of the former organization are carried out by benefiting the latter organizations.

      A foundation or trust is "operated, supervised or controlled in connection with" one or more publicly supported organizations if there is common supervision or control by the persons supervising or controlling both the foundation or trust and the publicly supported organizations to ensure that the foundation or trust will be responsive to the needs and requirements of the publicly supported organizations. Therefore, the control or management of the foundation or trust must be vested in the same persons that control or manage the publicly supported organizations. This requirement is not satisfied if a foundation or trust merely makes payments (mandatory or discretionary) to one or more named publicly supported organizations, even if the obligation to make payments to the named beneficiaries is enforceable under state law by such beneficiaries. Such arrangements do not provide a sufficient connection between the payor organization and the needs and requirements of the publicly supported organizations to constitute supervision or control in connection with such organization.

  2. Financial Criteria

    As previously stated, an organization satisfies the nonprofit requirement if its net income does not inure to the benefit of private shareholders or individuals but rather is used in furtherance of corporate purposes. The assessor should examine all relevant financial data given in Schedule A, Form 1023 and Form 1024 for evidence of such inurement. If this evidence is present, the assessor must deny the application for property tax exemption.

    The following are examples of inurement to the benefit of private shareholders or individuals:

    • Unreasonable compensation of officers, directors or trustees.
    • Unreasonable compensation of employees or non employees paid by the organization for professional services.
    • Unreasonable rental charges.
    • Deferred or retained interests in the organization's assets (for example, where the officers of a school lease property to the school and cause it to erect expensive improvements that will benefit them individually when the lease expires).
    • Dealings between an organization and its founder or with those persons in controlling positions, such as the making of unsecured loans or the conduct of sales and purchases for an unfair price.
    • Transfer by an individual of his business assets to a controlled nonprofit organization of which he becomes an employee for the purpose of avoiding taxes. (For example, the organization is formed and controlled by a doctor engaged in the practice of medicine who at the outset transfers assets including his medical practice to the organization. The doctor is then "hired" to conduct "research programs" that consist of the examination and treatment of patients. The organization charges the patients the prevailing fees for services rendered. In return for his services, the doctor receives a salary and other benefits.)
    • Benefits to outsiders for a private purpose, for example: (1) personal and family gifts, such as a scholarship to the child of a trustee of the organization, (2) business benefits, such as grants to writers who produce book manuscripts that the organization publishes where both the organization and the authors receive substantial royalties from publication of the books, and (3) employee benefits, such as employee benefit funds where benefits are awarded in the event of death, illness, or disability without regard to financial distress. (This makes the organization a kind of mutual benefit association, not a charity).

    The problems with private benefit and inurement are most acute where property and other assets have been transferred from private ownership to a nonprofit organization. The assessor should be especially careful in reviewing financial information supplied by applicant organizations which are outgrowths or continuations of predecessor organizations.

APPENDIX B - The Statutes

420-a. Nonprofit organizations; mandatory class.

    1. Real property owned by a corporation or association organized or conducted exclusively for religious, charitable, hospital, educational, or moral or mental improvement of men, women or children purposes, or for two or more such purposes, and used exclusively for carrying out thereupon one or more of such purposes either by the owning corporation or association or by another such corporation or association as hereinafter provided shall be exempt from taxation as provided in this section.
       
    2. Real property such as specified in paragraph (a) of this subdivision shall not be exempt if any officer, member or employee of the owning corporation or association shall receive or may be lawfully entitled to receive any pecuniary profit from the operations thereof, except reasonable compensation for services in effecting one or more of such purposes, or as proper beneficiaries of its strictly charitable purposes; or if the organization thereof for any such avowed purposes be a guise or pretense for directly or indirectly making any other pecuniary profit for such corporation or association or for any of its members or employees; or if it be not in good faith organized or conducted exclusively for one or more of such purposes.
       
  1. If any portion of such real property is not so used exclusively to carry out thereupon one or more of such purposes but is leased or otherwise used for other purposes, such portion shall be subject to taxation and the remaining portion only shall be exempt; provided, however, that such real property shall be fully exempt from taxation although it or a portion thereof is used (a) for purposes which are exempt pursuant to this section or sections four hundred twenty-b, four hundred twenty-two, four hundred twenty-four, four hundred twenty-six, four hundred twenty-eight, four hundred thirty or four hundred fifty of this chapter by another corporation which owns real property exempt from taxation pursuant to such sections or whose real property if it owned any would be exempt from taxation pursuant to such sections, (b) for purposes which are exempt pursuant to section four hundred eight of this chapter by a corporation which owns real property exempt from taxation pursuant to such section, (c) for purposes which are exempt pursuant to section four hundred sixteen of this chapter by an organization which owns real property exempt from taxation pursuant to such section or whose real property if it owned any would be exempt from taxation pursuant to such section or (d) for purposes relating to civil defense pursuant to the New York state defense emergency act, including but not limited to activities in preparation for anticipated attack, during attack, or following attack or false warning thereof, or in connection with drill or test ordered or directed by civil defense authorities; and provided further that such real property shall be exempt from taxation only so long as it or a portion thereof, as the case may be, is devoted to such exempt purposes and so long as any moneys paid for such use do not exceed the amount of the carrying, maintenance and depreciation charges of the property or portion thereof, as the case may be.
     
  2. Such real property from which no revenue is derived shall be exempt though not in actual use therefor by reason of the absence of suitable buildings or improvements thereon if (a) the construction of such buildings or improvements is in progress or is in good faith contemplated by such corporation or association or (b) such real property is held by such corporation or association upon condition that the title thereto shall revert in case any building not intended and suitable for one or more such purposes shall be erected upon such premises or some part thereof.
     
  3. Such real property shall be so exempt although it is used as a polling place upon days of registration.
     
  4. Such real property owned and actually used for hospital purposes by a free public hospital which depends for maintenance and support upon voluntary charity, shall be so exempt from taxation although a portion thereof is leased or otherwise used for the purposes of income, if such income is necessary for and is actually applied to the maintenance and support of such hospital.
     
  5. Such real property outside a city owned by a free public library or held in trust by an educational corporation for free library purposes shall be so exempt from taxation although a portion thereof is leased or otherwise used for purposes of income, if such income is necessary for and is actually applied to the maintenance and support of such library.
     
  6. Real property which was, on the first day of January, nineteen hundred eighty-three, owned for more than one hundred years by a corporation organized exclusively for purposes specified in subdivision one of this section under grant or devise and a special charter granted by the legislature of the state of New York subject to conditions which raise doubt as to the power of such corporation to convey fee title to the property shall, if the property is used exclusively for educational purposes by an educational corporation which owns real property exempt from taxation, or whose real property if it owned any would be exempt from taxation, as lessee for a term of not less than twenty-five years and if such lease were in effect on the first day of January, nineteen hundred eighty-three and requires the lessee to pay all taxes levied against the property, be exempt from taxation to the same extent and subject to the same conditions and exceptions as property owned and used for educational purposes by a corporation organized exclusively for education purposes, regardless of whether the moneys paid to the lessor by the lessee are limited to the amount of the carrying, maintenance and depreciation charges of the property.
     
  7. Real property exempt from taxation pursuant to this section shall also be exempt from special ad valorem levies and special assessments to the extent provided in section four hundred ninety of this chapter.
     
  8. In addition to the exemption provided in this section, any stadium facility owned by a corporation organized exclusively for educational purposes which is constructed in whole or substantial part with state funds shall be exempt from taxation notwithstanding its use by the state, by a municipal corporation for a public use, or by or for not-for-profit organizations.
     
  9. Real property, which on the first day of January, nineteen hundred ninety was exempt from real property taxation pursuant to this section by reason of the ownership and use of such property by a corporation organized exclusively for educational purposes, and which the fee title to such property is conveyed prior to June thirtieth, nineteen hundred ninety-one to a governmental entity, shall be exempt from taxation; provided that (a) as a condition of such conveyance such property is leased, for a term or terms exceeding one hundred years, to an educational corporation whose real property, when used for educational purposes, is exempt four hundred fifty of this article by another corporation which owns real property exempt from taxation pursuant to such sections or whose real property if it owned any would be exempt from taxation pursuant to such sections, (b) for purposes which are exempt pursuant to section four from taxation, and (b) such property shall continue to be used by such corporation exclusively for educational purposes subject to the same conditions and exceptions as property owned and used for educational purposes by a corporation organized exclusively for such purposes.

420-b. Nonprofit organizations; permissive class.

    1. Real property owned by a corporation or association which is organized exclusively for bible, tract, benevolent, missionary, infirmary, public playground, scientific, literary, bar association, medical society, library, patriotic or historical purposes, for the development of good sportsmanship for persons under the age of eighteen years through the conduct of supervised athletic games, for the enforcement of laws relating to children or animals or for two or more such purposes, and used exclusively for carrying out thereupon one or more of such purposes either by the owning corporation or association, or by another such corporation or association as hereinafter provided, shall be exempt from taxation; provided, however, that such property shall be taxable by any municipal corporation within which it is located if the governing board of such municipal corporation after public hearing, adopts a local law, ordinance or resolution so providing. None of the following subdivisions of this section providing that certain properties shall be exempt under circumstances or conditions set forth in such subdivisions shall exempt such property from taxation by a municipal corporation whose governing board has adopted a local law, ordinance, or resolution providing that such property shall be taxable pursuant to this subdivision.
       
    2. No local law, ordinance or resolution adopted pursuant to this subdivision shall provide for the taxation of any particular property or owner. Any such local law, ordinance or resolution shall apply alike to all property owned by any corporation or association organized for one or more of the purposes specified in such local law, ordinance or resolution and used for carrying out thereupon one or more of such purposes. Any purpose so specified in the local law, ordinance or resolution must be one of the purposes listed in paragraph (a) of this subdivision, but the purposes so specified in the local law, ordinance or resolution need not include all the purposes listed in said paragraph. Any local law, ordinance or resolution adopted pursuant to this subdivision may be amended or repealed.
       
    3. Real property such as specified in paragraph (a) of this subdivision shall not be exempt if any officer, member or employee of the owning corporation or association shall receive any pecuniary profit from the operations thereof, except reasonable compensation for services in effecting one or more of such purposes, or as proper beneficiaries of its strictly charitable purposes; or if the organization thereof for any such avowed purposes be a guise or pretense for directly or indirectly making any other pecuniary profit for such corporation or association or for any of its members or employees; or if it be not in good faith organized exclusively for one or more of such purposes.
       
  1. If any portion of such real property is not used exclusively to carry out thereupon one or more of the purposes listed in subdivision one of this section, but is (a) leased or (b) otherwise used for other purposes, such portion shall be subject to taxation and the remaining portion only shall be exempt; provided, however, that such real property shall be fully exempt from taxation although it or a portion thereof is used (a) for purposes which are exempt pursuant to this section or sections four hundred twenty-a, four hundred twenty-two, four hundred twenty-four, four hundred twenty-six, four hundred twenty-eight, four hundred thirty or hundred eight of this chapter by a corporation which owns real property exempt from taxation pursuant to such section, (c) for purposes which are exempt pursuant to section four hundred sixteen of this chapter by an organization which owns real property exempt from taxation pursuant to such section or whose real property if it owned any would be exempt from taxation pursuant to such section or (d) for purposes relating to civil defense pursuant to the New York state defense emergency act, including but not limited to activities in preparation for anticipated attack, during attack, or following attack or false warning thereof, or in connection with drill or test ordered or directed by civil defense authorities; and provided further that such real property shall be exempt from taxation only so long as it or a portion thereof, as the case may be, is devoted to such exempt purposes and so long as any moneys paid for such use do not exceed the amount of carrying, maintenance and depreciation charges of the property or portion thereof, as the case may be.
     
  2. Such real property from which no revenue is derived shall be exempt though not in actual use therefor by reason of the absence of suitable buildings or improvements thereon if (a) the construction of such buildings of improvements is in progress or is in good faith contemplated by such corporation or association or (b) such real property is held by such corporation or association upon condition that the title thereto shall revert in case any building not intended and suitable for one or more of such purposes shall be erected upon such premises or some part thereof.
     
  3. Such real property shall be so exempt although it is used as a polling place upon days of registration and election.
     
  4. Such real property outside a city owned by a free public library or held in trust by an educational corporation for free library purposes shall be so exempt from taxation although a portion thereof is leased or otherwise used for purposes of income, if such income is necessary for and is actually applied to the maintenance and support of such library.
     
  5. Real property exempt pursuant to this section from taxation by all municipal corporations within which it is located shall also be exempt from special ad valorem levies and special assessments to the extent provided in section four hundred ninety of this chapter. Real property which is taxable by one or more, but not all, of the municipal corporations within which it is located, pursuant to subdivision one of this section shall also be exempt from such levies and assessments to the same extent except that:

    such real property taxable by a town shall be subject to any such levies and assessments which are imposed to defray the cost of improvements or services furnished by the town or by a special district established pursuant to the town law;

    such real property taxable by a county shall be subject to any such levies and assessments which are imposed to defray the cost of improvements or services furnished by the county or by a special district established pursuant to the county law; and

    such real property taxable by a city shall be subject to any such levies and assessments which are imposed to defray the cost of improvements or service furnished by the city.

  6. An exemption may be granted pursuant to this section only upon application made by the owner of the property on a form prescribed by ORPTS. The application shall be filed with the assessor of the appropriate county, city, town or village on or before the taxable status date of such county, city, town or village.

1 Chapter 919 of the Laws of 1981 repealed section 420 and enacted two new sections. Those categories of exempt purposes previously included in paragraph a of subdivision one of section 420 are now contained in section 420-a, entitled "Nonprofit organizations; mandatory class." Those categories of exempt purposes previously included in paragraph b of subdivision one of section 420 are now contained in section 420-b, entitled "Nonprofit organizations; permissive class."

Chapter 920 of the Laws of 1981 deleted cemetery purposes from section 420. The cemetery exemption is now found exclusively in section 446 of the Real Property Tax Law.

2 The taxable status of property owned by a religious organization while used by the officiating clergyman of that organization for residential purposes is governed by section 462 of the Real Property Tax Law, not by section 420-a. Initial application for exemption of such property must be made by means of Form RP-462 and RP-420-a-Org. Renewal of exemption should be applied for by using Forms RP-462 and RP-420-a/b-Rnw I. For guidance in processing Form RP-462, see Instructions to Assessors, Application for Real Property Tax Exemption, Property Used as Residence of Officiating Clergyman of Religious Organization.

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