Lerch Early actively represents non-profit organizations. In view of the many Internal Revenue Service rules governing non-profit organizations, these businesses face special legal challenges in conducting their business operations.
Our representation includes establishing or restructuring the organization, obtaining IRS recognition of the tax-exempt status, and advising as to how to preserve that status. We advise management on strategies limiting the unrelated business income tax liability and ensuring that organizations qualify as publicly supported charities that are exempt from the restrictive Private Foundation rules. We have assisted clients in structuring transactions and joint ventures with for-profit organizations without compromising their tax-exempt status.
The Church of Jesus Christ of Latter-day Saints faced an unexpected property tax assessment when the Maryland Tax Court ruled that a Montgomery County apartment complex where it housed religious workers no longer qualified for the property tax exemption it had held for nearly 30 years.
The Tax Court adopted the state’s narrow (and arguably discriminatory) definitional approach that excluded the purposes for which the client church’s properties were being used to deny the exemption. We demonstrated to the Montgomery County Circuit Court and then to the Maryland Court of Appeals that the apartment complex qualifies as a “convent,” because the church uses the properties exclusively to house a community of people who live together, follow strict religious vows, and devote themselves full-time to religious work, thus meeting the statutory definition and avoiding discrimination in favor of particular denominations allowing only “nuns” to live in properties called “convents” as a doctrinal matter.
The Maryland Court of Appeals upheld and reinstated our client’s tax exemption. This allowed the church to continue housing visiting religious workers who leave their homes and families to devote themselves to a two-year commitment to ministry in the temple.