A friend who is an attorney once told me "There's law, and then there's tax law." She was referring to the mind-boggling complexities and unusual inconsistencies that make up our federal, state and local tax laws, and I was reminded of her statement when I read about what happened last year to the Newspace Center for Photography, located in Portland, Oregon.
“There's law, and then there's tax law.”
The Newspace Center is a registered 501(c)(3) charity recognized by the IRS and by the State of Oregon. Its bylaws state that it is "organized exclusively for charitable and educational purpose," and that its primary purpose is "to offer fine art photography education, support the arts community, and enhance public awareness of fine art photography through gallery exhibits, receptions, lectures, projects with other arts organizations, artists-in-residence, events for patrons, facilities used by students and renters, and programs for youth and the community.”
Under Oregon law any qualified charity is allowed to request an exemption from local property taxes. The Newspace Center leases about 5,200 square feet in a building for its classes and gallery space, and in late 2013 they requested an exemption in Multnomah County where they are located. The County Assessor denied their request, stating that Newspace "does not perform in a manner that furthers its charitable object, and lacks the requisite gift or giving." The Assessor also also said that "the subject property is not exclusively used for charitable purposes."
The Newspace Center appealed the Assessor's decision, and on July 15, 2014 the Oregon Tax Court issued a final decision denying their appeal. As of this date the Court's decision still stands.
It's important to note that Oregon law is very specific in what conditions an organization must meet in order to qualify for a property tax exemption. Without getting into the aforementioned complexities of the law, essentially there is a three-part test that an organization must pass. A failure to pass any one of the parts is a failure overall. In addition, Oregon courts have ruled that exemption provisions “should be strictly construed in favor of the state and against the taxpayer,” so the deck is stacked in favor of the state from the beginning.
The court struck at the heart of the matter by finding that while activities at Newspace "are, indeed, worthwhile and beneficial... they do not strike the court as 'charitable' as that term is commonly understood." Also among the worrisome language in the court's decision were these words: "Photography education and public awareness are culturally enriching, but not necessarily charitable." This is a troubling rationale, and it's one that should concern photography institutions and other nonprofits anywhere in the country.
I'm not a lawyer nor am I a cultural philosopher, but it seems to me that there is a dual problem here of an unforgiving legal construction in the Oregon statutes and an equally unforgiving interpretation of the word "charity" by the courts. A previous and unrelated decision in Oregon said that "the term ‘charitable’ must be applied in its narrow and traditional sense of relieving pain, alleviating disease or removing constraints." I added the italics at the end of that sentence to emphasize how narrow that definition is. However, this decision, made in 1986, relied upon a previous decision made in 1943, when there was a far different understanding of what charities do or what needs charities should meet.
I can imagine that there's no shortage of tax and nonpofit law attorneys both in Oregon and elsewhere who have studied this case and its implications. The Newspace Center for Photography did not respond to requests for any update to their case, and if anyone knows about what, if anything, has happened since the court ruling please let me know.
Tim Greyhavens
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