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Assessor's Manual, Volume 4, Exemption Administration

Exemption Administration Manual - Part 2
Private Community Service and Social Organizations

Section 4.05 - RPTL Section 420-b

Nonprofit Organizations (Permissive Class)

Exemption Code(s): 2530 Year Originally Enacted: 17991

Related Statutes: RPTL § §302(5), 490, 494-a

SUMMARY: Unless disallowed by local option, real property that (1) is owned by a nonprofit corporation or association organized exclusively for one or more specific purposes (bible, tract, benevolent, missionary, infirmary, public playground, scientific, literary, bar association, medical society, library, patriotic, historical, development of good sportsmanship for persons under age 18 through the conduct of supervised athletic games, or enforcement of laws relating to children or animals) and (2) is used exclusively for carrying out one or more of these purposes is wholly exempt from taxation and is exempt, for certain purposes, from special ad valorem levies and special assessments.

  1. ELIGIBILITY REQUIREMENTS:
    1. Ownership Requirements: Owner must be a corporation or association organized exclusively for one or more of the purposes listed in Property Use Requirements below.

      No officer, member, or employee of the owning organization may receive or be entitled to receive any pecuniary profit from the operations of the organization, except reasonable compensation for services in carrying out one or more of the purposes of the organization.

    2. Property Location Requirements: None.
       
    3. Property Use Requirements: Property must be used exclusively for one or more of the following purposes:
       
      a. bible j. medical society
      b. tract (religious or
      political literature)
      k. library
      l. patriotic
      c. benevolent m. historical
      d. missionary
      e. infirmary
      f. public playground
      n. development of good sportsmanship
      for persons under age 18 through
      conduct of supervised athletic games
      g. scientific
      h. literary
      o. enforcement of laws relating to
      children or animals
      i. bar association

      Lease or Use of Property for Other Purposes: If any portion of the property is leased or otherwise used for the above purposes, for civil defense purposes, or for the purposes exempt under certain other statutes, the exemption still applies.

      These statutes are:

      1. RPTL §406 (municipal corporations)
        RPTL §408 (school district or BOCES, but only if the property user is a corporation that owns real property exempt under §408)
      2. RPTL §416 (United Nations)
      3. RPTL §420-a (nonprofit organization - mandatory class)
      4. RPTL §422 (not-for-profit housing company)
      5. RPTL §424 (institute of arts and sciences)
      6. RPTL §426 (opera house)
      7. RPTL §428 (fraternal organization)
      8. RPTL §430 (interdenominational center)
      9. RPTL §450 (agricultural society)

      However, if the payments made for the privilege of such use exceed the carrying, maintenance, and depreciation charges of the portion of the property used, that portion is taxable for all purposes.

      If any portion of the property is leased or otherwise used for any other purpose, that portion is wholly taxable, except as provided below.

      Unimproved, Unused Property: Unimproved and unused property from which no revenue is derived is exempt if (1) the property is unused because of the absence of suitable buildings or other improvements, provided that the construction of such improvements is contemplated in good faith or (2) the property is held by the owner on the condition that title to the property will revert to the previous owner if a building not intended or suitable for one or more of the exempt purposes specified in RPTL §420-b is erected.

      Library Purposes: Property owned outside a city by a free public library or held in trust by an educational corporation for free public library purposes is exempt even if a portion of the property is leased or otherwise used for income-producing purposes, provided that such income is necessary for and is actually applied to the maintenance and support of that library.

    4. Certification by State or Local Government: None required.
       
    5. Required Construction Start Date or Other Time Requirement: None
        .
  2. LOCAL OPTION: Yes - Each county, city, town, village, and school district in which the property is located may choose whether or not to allow the exemption for one or more of the eligible classes of property owner described above (for example, it may allow the exemption for benevolent organizations but not for patriotic organizations). The option to tax must be exercised through adoption of a local law, ordinance, or resolution (after a public hearing).
     
  3. LIMITATION ON EXEMPTION:
       General
    Municipal
    Taxes
    School
    District
    Taxes
    Special
    Ad Valorem
    Levies
    Special
    Assessments
    1. Amount No
    limit
    No
    limit
    No
    limit
    No
    limit
    2. Duration No
    limit
    No
    limit
    No
    limit
    No
    limit
    3. Taxing Jurisdiction
    a. County or County
    Special Districts
    Ex* NA L** L**
    b. City Ex* NA NA Tax
    c. Town or Town
    Special District
    Ex* NA L** L**
    d. Village Ex* NA NA Tax
    e. School District NA Ex* NA NA
      Ex-Exempt    Tax-Taxable   NA-Not Applicable
      L - Liable only for (1) county and town charges for capital costs of sewer systems, water supply systems, waterways and drainage improvements, and streets and highways, plus (2) special assessments for indebtedness contracted before 7/1/53.

    *Unless exemption disallowed by local option.

    ** Only if exemption from general municipal taxes is allowed by taxing jurisdiction. If exemption from taxes is disallowed, property is liable for all special ad valorem levies and special assessments imposed by or on behalf of the taxing jurisdiction.

  4. PAYMENTS IN LIEU OF TAXES: None required.
     
  5. CALCULATION OF EXEMPTION:

    1.General Municipal and School District Taxes: 100% of assessed value.

    2. Special Ad Valorem Levies and Special Assessments: 100% of assessed value or other basis of assessment.

    If exemption is allowed by both the county and the town in which the property is located, the exemption applies to all levies and assessments imposed by the county, any county special district, the town, and any town district except (1) charges levied to pay for the capital costs of sewer systems, water supply systems, waterways and drainage improvements, and streets and highways, and (2) special assessments for indebtedness contracted before 7/1/53.

    If, on the other hand, tax exemption is disallowed by the county, the property is liable for all levies and assessments imposed by the county or any county special district. Likewise, if tax exemption is disallowed by the town, the property is liable for all levies and assessments imposed by the town or any town special district.

    The exemption does not apply to special assessments imposed by cities or villages.

  6. CODING OF EXEMPTION ON ASSESSMENT ROLL:
    Code Description of Alternative Codes Possible
    2530_        

    Assessment Roll Section(s): Exempt (RPS Section 8).

    NOTE: This code should not be used to identify property owned by nonprofit organizations that is exempt under RPTL §420-a or to identify property that is exempt under any of the statutes listed under Similar Exemptions below. For coding of such property, see the Exemption Profile for the statute that applies.

  7. FILING REQUIREMENTS (Owner or Occupant of Property):

    Outside New York City --

    1. Form(s) - Initial Application:

    Number Title or Subject
    RP-420-b-Org Organization purpose
    Schedule A,
    RP-420-a/b-Org
    (only if required)
    Supplemental information
    on organization purpose
    RP-420-a/b-Use Property use
    or, instead of above forms:  
    RP-420-a/b-Vlg Application in villages using town
    or county assessment roll per
    RPTL §1402 (2)
     
    2. Form(s) - Renewal Application (Annual):
    Number Title or Subject
    RP-420-a/b-Rnw-I Organization purpose
    Schedule A,
    RP-420-a/b-Rnw-I (1/95)
    (only if required)
    Supplemental information
    on organization purpose
    RP-420-a/b-Rnw-II (9/08) Property use
    or, instead of above forms:      
    RP-420-a/b-Vlg (1/95) Application in villages using
    town or county assessment roll
    per RPTL §1402 (2)

    In New York City -- See NYC Department of Finance

  8. REPORTING REQUIREMENTS (Assessor): None.
     
  9. SIMILAR EXEMPTIONS:
    Subject Statute
    Agricultural societies RPTL §450
    Cultural Resources Trust, NYS Art-Cult L §20
    Dental societies RPTL §474
    Health maintenance organizations RPTL §486-a
    Historical societies RPTL §444 & NPCL §1408
    Interdenominational centers RPTL §430
    Libraries RPTL §438
    Music academies RPTL §434
    Nonprofit organizations (mandatory class) RPTL §420-a
    Nursing homes - limited profit Pub Hel L §2864
    Nursing homes - nonprofit RPTL §422
    Opera houses RPTL §426
    Performing arts buildings RPTL §427
    Pharmaceutical societies RPTL §472
    Playgrounds RPTL §438
    Soldiers monuments or memorials RPTL §442 & NPCL §1405
    Special Legislative Acts - prior to 1912  
    Theatrical corporations RPTL §432
    Veterans organizations RPTL §452

    Exemption Application Forms: Available at Property Tax Exemption Forms website.

1 1799 - Law applied to library purposes only.
  1896 - Provisions added for following purposes: bible, tract, benevolent, missionary, infirmary, scientific, liteary, patriotic, historical, enforcement of laws relating   to children or animals.
1927 - Provision added for bar associations.
1929 - Provision added for public playgrounds.
1965 - Provision added for medical societies.
1981 - Provision added for purpose of developing good sportsmanship for persons under age 18.

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