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When churches cross the tax line

Ashley Milne-Tyte Jun 27, 2008
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When churches cross the tax line

Ashley Milne-Tyte Jun 27, 2008
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Scott Jagow: Churches usually don’t have to pay property taxes. The IRS consider a house of worship a nonprofit cause. But some congregations don’t meet in church buildings these days. So, guess what? The IRS is reexamining this. Ashley Milne-Tyte reports.


Beth White: My name is Beth and it’s a privilege to welcome you to Christ Chapel this evening. Our senior pastor is preaching a revival this week in Tallapoosa . . .

Ashley Milne-Tyte: Beth White is associate pastor of Christ Chapel, a church in Macon, Georgia. Each Sunday around 800 people pack an auditorium in the sprawling sports center the church calls home.

White: More and more churches are seeing more results, more payout for their investment, by using spaces that can be used to reach students and families and adults all throughout the week.

White says the church moved in here in part because of the local Arena minor-league football team, figuring being close to the team would give the church a shot at attracting more kids to the fold. The church let the team keep an office in the building. The team let the church do a little marketing at home games. The congregation grew. But so did interest from the local tax board.

White: The whole complication was that the football team was using our building, and they were a for-profit business.

Christ Chapel got a property tax bill for $17,000. That eventually dropped to $3,600. But some so-called mega-churches have been hit with bills of more than $100,000.

The Reverend Jerry Keucher is chief of finance and operations for the Episcopal Diocese of New York. He says some of these churches meet in former malls and rent the remaining space to stores, restaurants, and gyms.

Jerry Keucher: You might say of course the body is the temple of the Holy Spirit, as Saint Paul sayeth, but it’s not immediately obvious that running a gym is part of the church’s exempt purpose.

If a church runs a commercial business, Keucher says, or leases its space to one, it has to act like one.

Keucher: You’re involved in a private sector activity, so you should be paying property taxes like commercial landlords do.

Beth White of Christ Chapel says more churches are likely to wrestle with property tax issues for one reason:

White: There’s more and more vacant commercial real estate out there.

America’s growing churches are taking advantage of the situation and buying the space up. And that’s turning many of them into landlords.

I’m Ashley Milne-Tyte for Marketplace.

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