PROPERTY TAX
EXEMPTION MANUAL
Approved by the
State Board of Equalization
•
October 2023
State Board of equalization ProPerty tax exemPtion manual
Contents
i
I. Introduction ....................................................................................................................1
II. WhatQualiesforExemption? ..................................................................................2
a. Basicl Requirements .......................................................................................................2
b. PropertyofReligious,Charitable,Scientic,orNon-ProtEducationalInstitutions ....2
i. Owner,OccupancyandUse ......................................................................................2
ii. ChurchesorReligiousInstitutions ...........................................................................3
iii.CharitableInstitutions ............................................................................................. 4
iv.MedicalFacilitiesandNursingHomes .....................................................................5
v. ScienticandNon-ProtEducationalInstitutions ................................................. 6
vi.MiscellaneousExemptions....................................................................................... 6
c. Government Property.....................................................................................................7
d.PropertyofHousingAuthorities ................................................................................... 8
e. HousingProjectsConstructedwithHOMEorHousingTrustFunds ......................... 8
f. LowCostHousingforLow-IncomeDisabledandElderly .......................................... 9
g. PropertyOwnedbyCharitableInstitutionsforConstructionofResidential
HousingforLow-IncomeFamilies .............................................................................10
h.RecyclingorWasteDisposalFacilities ........................................................................ 11
i. PrivateActHospitals .................................................................................................... 11
j. BurialPlacesandCemeteries ....................................................................................... 11
k. Crops,Livestock,andPoultry ......................................................................................12
l. PropertyPassingThroughTennessee ..........................................................................12
m.ImprovementorRestorationofHistoricProperties ...................................................12
n.Public-UseAirportRunways ........................................................................................14
o. CommunityandPerformingArtsCenters ...................................................................14
p.FamilyWellnessCenters .............................................................................................. 15
q. Museums ......................................................................................................................16
III.ApplyingforExemption ................................................................................................16
a. NewPropertyUnderConstruction ............................................................................. 20
b.PartialExemptions ....................................................................................................... 21
c. EectiveDateofExemption ....................................................................................... 22
IV. TheAppealProcess .................................................................................................... 24
V. LeasedorRentedProperty........................................................................................25
VI. RevocationofExemption ...........................................................................................25
VII. ChangestoPropertyAfterInitialExemption ...................................................... 26
a. ChangeinUseofProperty .......................................................................................... 26
b.NewConstructionLandRenovationofExemptProperty .......................................... 26
c. NameChangesofExemptInstitution......................................................................... 26
d.CombiningParcels .......................................................................................................27
e. TransferofExemptProperty .......................................................................................27
VIII.ShouldIPayMyTaxesWhileMyApplicationorAppealisPending? ...........27
IX. FAQ ................................................................................................................................ 28
I
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State Board of equalization ProPerty tax exemPtion manual
ThepurposeofthismanualistoeducatethereaderaboutpropertytaxexemptionsinTennessee
andinformtaxpayersandgovernmentocialsabouthowexemptiondecisionsaremade.
TheTennesseeStateConstitutionrequiresthatallrealandpersonalpropertybetaxed,except
“thedirectproductofthesoil”whenownedbytheproducerortherstbuyer,moneydeposited
inanindividualorfamily’scheckingaccount,andarticlesmanufacturedfromTennesseeraw
materials.
1
TheConstitutiongrantstothelegislaturetheauthoritytoexemptothercategoriesof
propertyifthepropertyisownedbystateorlocalgovernments,orifitisownedbyaqualifying
organizationandusedforpurelyreligious,charitable,scientic,literaryoreducationalpurposes.
PropertytaxexemptionsareaddressedinTitle67,Chapter5,oftheTennesseeCode.Thecode
denesthetypesofpropertythatmayqualifyfortaxexemptionandestablishestherequirements
for obtaining an exemption. This manual will discuss the categories of exempt property, the
processofapplyingforapropertytaxexemption,andhowpreviouslyapprovedpropertythat
nolongermeetstherequirementsmaybeaddedbacktothecounty’staxrolls.Unlessasection
saysotherwise,thismanualappliestobothrealandpersonalproperty.Propertiesapprovedfor
exemptionareremovedfromacounty’staxrole(i.e.,theownersdonotpaypropertytaxes).
The State Board of Equalization (the “State Board”) reviews all property tax exemption
applications.TheStateBoardwillassignan“ExemptionDesignee”toreview theapplication.
An Exemption Designee is an attorney working for the State Board. He or she is a neutral
partyresponsibleforreviewinganapplicationanddeterminingifthepropertymeetsthelaws’
requirements.AftertheExemptionDesigneehasreviewedtheapplication,heorshewillissuean
“InitialDetermination”totheapplicantandappropriatecountyocialsidentifyingwhetherthe
propertyqualiesfortaxexemptionand,ifapproved,whenthatexemptionbegins.Inadditionto
thetopicspreviouslyidentied,thismanualwilldiscusshowtoappealanInitialDetermination
andaddresssomefrequentlyreceivedquestionsbyouroce.Shouldyouhavespecicquestions
outsideofthosediscussed,pleasecontactusattheinformationbelow.
HowtoContacttheStateBoard
ByPhone:  (615)401-7883
ByEmail: [email protected]
ByFax: (615)253-4847
ByMail:  TennesseeComptrolleroftheTreasury
StateBoardofEqualization
CordellHullBuilding
425Rep.JohnLewisWayN.
Nashville,TN37243
FileanApplicationorAppeal: www.comptroller.tn.gov/boards/state-board-of-equalization.html
PurPose of the exemPtion manual
introduCtion
1
Tenn.Const.Art.II§§28,30.
2
State Board of equalization ProPerty tax exemPtion manual
Tennesseelawholdsthatallproperty,realandpersonal,mustbeassessedfortaxationunless
itis exempt. Thereare three broadcategories ofexemptproperty: productsofthe Stateof
Tennessee; government-owned property; and religious, charitable, scientic, or non-prot
educationalproperty.
TheTennesseeCodesetsforthspecicrequirementsforeachoftheabovecategories.Withinthe
broadcategoryofreligious,charitable,scientic,ornon-proteducationalproperties,thereisone
broad,generalstatute,andseveralmorespecicstatutes.Ifapropertymeetstherequirements
ofoneormorestatutes,itwillbeexempted.Ifapropertydoesnotmeettherequirementsofone
sectionbutdoesmeettherequirementsofanother,thepropertywillstillbeexempted.Unlessthe
categorythepropertyisapprovedunderimposesspecicrequirements,theoutcomewillbethe
same.Thedierentcategoriesandtheirspecicrequirementsandlimitationsarediscussedbelow.
BasicRequirements
Therearesomebasicrequirementstoqualifyforexemptioninanycategory.Inalmosteverycase,
theentityseekinganexemptionmustapplytotheStateBoard.Iftheapplicantisnotrequiredto
applyduetothetypeofpropertyorexemptionsoughtitwillbenotedinthecorrespondingsection
ofthismanual.Thesecondbasicrequirementisthattheentitymustownthepropertyinquestion.
ExceptionsHappen
Thereareafewexemptionsavailableonlyunderspeciccircumstances.Thesespeciccategories
andexceptionsarenotdiscussedhere,butrestassured–theStateBoardwillreviewallexemption
applicationsinallcategories,eventheoddones.
IndividualPersonalProperty
Alltangible personalpropertythat isowned by individualsor familiesiseither exemptfrom
taxationorconsideredtohavenovalueforpropertytaxpurposes.Additionally,theentirevalue
ofanindividual’sorafamily’spersonalcheckingandsavingsaccountsisexempt.Thissection
doesnotapplytocommercialorindustrialproperty.
Tennesseelawexemptsthepropertyofreligious,charitable,scientic,andnon-proteducational
institutions.Thereareseveralgeneralprovisionswhichapplytoeachofthesecategories.
Ownership,Occupancy,andUse
Propertymustbeowned,occupied,andactuallyusedbyaqualifyinginstitutiontobeexempted.
An“exemptinstitution”isareligious,charitable,scientic,ornon-proteducationalinstitution.
Theentityapplyingforexemptionmustowntheproperty,inwholeorinpart.Partialownership
maybeacceptableinsomecasesandisdiscussedininmoredetailunderthe“PartialExemption”
section on page 21.
What Qualifies for ProPerty tax exemPtion?
ProPerty of religious, Charitable, sCientifiC or nonProfit eduCational institutions
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State Board of equalization ProPerty tax exemPtion manual
Thepropertymustalsobeoccupiedtobeapproved.Therearenopredeterminedstandardsof
usetoconsiderapropertyoccupied.Propertythatisownedforapurposebutisneverusedis
insucient – in this case, the property is not occupied or used. Likewise, the property must
beused,andnotheldforuseinthefuture.Adeterminationthatapropertyisnotsuciently
usedoroccupiedisfact-dependent,andmadeaftertheExemptionDesigneehasobtainedthe
relevantinformationfromtheapplicantandcountyassessor.TheStateBoardwillpresumethat
therstveacresofapropertyareinuseunlesstoldorotherwisediscoveredthroughreasonable
investigation.
2
Thepropertymustbeusedforanexemptpurposeoftheinstitution.Thisrequirementisread
broadly.Itincludesusesdirectlyincidentaltoorreasonablynecessaryfortheexemptpurpose
oftheinstitution;forexample,achurchdoesnotexisttoprovideparking,butprovidingparking
toworshippersisreasonablynecessaryfortheuseofthechurch.Achurchmayuseitsbuilding
forworshipservicesbutusingabuildingforstoringchurchpropertyorformeetingsofchurch
smallgroupsmayalsobeconsideredanexemptuseoftheproperty.Likewise,propertyusedby
acharitableinstitutionforadministrativedutiesorstatrainingmaybeconsideredusedforan
exemptpurpose.Despitethebroadreadingofthisrequirement,therearelimitations.
3
Thepropertyofaqualifyinginstitutionmaynotbeexemptwheretheuseofthepropertyonly
generallypromotestheinstitution’spurpose.Itistheuseoftheproperty,andnotthecharitable
natureofitsowner,whichdeterminesitsexemptstatus.Thiscaveatisparticularlyapplicable
where the suspect use of the property generates revenue.
4
Itistheuseoftheproperty,andnot
thecharitablenatureofits owner,whichdetermines itsexemptstatus.Acharitable property
withanattachedbar,orareligiouspropertywithanattachedcoeeshop,willnotqualifyeven
whentherevenueearnedsupportstheinstitutionasawhole.
Finally,acharitableinstitutiondoesnothavetoberegisteredwiththeInternalRevenueService
asa§501(c)(3)organizationtobeexempted.Likewise,thepropertyofaregistered§501(c)(3)is
notautomaticallyexempted.
Propertyownedbyaqualifyinginstitutionthatisleased,rented,orotherwiseusedbyanotherexempt
institutionmayalsobeexempt.See“LeasedorRentedProperty”onpage25formoreinformation.
Theprimarychurch,temple,orotherhouseofworshipofareligiousinstitutioncanbeexempted,
butotherpropertiesownedbyareligiousinstitutionmayqualifyforexemptionaswell.Other
propertiesqualifyingcouldbeaseparatefacilityusedforstorage,lotsforoverowparking,or
buildingsusedtocollectanddistributefoodandclothestoneedymembersofthecommunity.
Ofcourse,therearelimitationsonwhatreligious propertywillqualify.Asinterpretedbythe
TennesseeCourtofAppeals,theuseofthepropertymustbe“directlyincidentalto”or“anintegral
partof”theinstitution’sexemptpurpose.Forexample,achurchmaysupportmissionarywork,
butaresidenceformissionariestostayinwhentheyareintheareawillnotqualifyforexemption.
2
Tenn.Comp.R.&Regs.0600-08-.02(2)(b).
3
See First Presbyterian Church of Chattanooga v. Tennessee Bd. of Equalization,127S.W.3d742(Tenn.Ct.App.2003).
4
Christ Church Pentecostal v. Tennessee State Bd. of Equalization,428S.W.3d800,813(Tenn.Ct.App.2013).
ChurChes or religious institutions
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State Board of equalization ProPerty tax exemPtion manual
Inthiscase,thepropertyisnot“directlyincidental”tothechurch’sreligiouspurpose.
5
Property
ownedbyachurchbutnotusedisalsonotexempt.Achurchmaypurchaseapropertywiththe
intenttodemolishthestructuresandputinaparkinglot,butifthatpropertyisnotcurrently
beinguseditisnotexempt.
Aspartoftheirapplication,theStateBoardwillrequestreligiousinstitutionstoprovidetheir
charter, articles of incorporation, or other governing documents (e.g., bylaws or operating
agreements),inadditiontorecentnancialdocumentssuchasataxreturn,budget,orincome
andexpensestatement.Ifareligiousinstitutionisunincorporatedandwithoutanygoverning
documentsitmustprovideabriefwrittenexplanationofhowdecisionsaremade.Afterreceiving
thewrittenexplanation,theExemptionDesigneewilldetermineifitissucientandwillrequest
anyadditionaldocumentationasneeded.
Religious institutions may benet from an additional provision regarding the date their
exemptionbegins.See“SpecialEectiveDateProvisionforReligiousInstitutions”onpage22
for more information.
Parsonage
Areligiousinstitutionmayalsoobtainanexemptionforoneparsonage.Asdened,a“parsonage”
is a residence owned by a religious institution where a full-time regular minister resides.
6
A
religiousinstitutionmayonlyhaveoneexemptparsonage,andmaynotincludemorethanthree
acresofland.
Propertyownedbyacharitableinstitutionandusedforanexemptpurpose,orforausedirectly
incidentalthereto,maybeexempted.
For exemption purposes, a “charitable institution” includes “any nonprot organization
or association devoting its eorts and property, or any portion thereof, exclusively to the
improvementofhumanrightsand/orconditionsinthecommunity.”
7
Whether an institution is
consideredcharitablewilloftendependonwhattheinstitutiondoes,andwhatitdoeswiththe
property in question.
Anexemptpurposeoruseofacharitablepropertyisonethatsupportstheinstitution’scharitable
mission.Thecharitablemissionofaninstitutioncanrangebroadly.Forexample,distributing
clothingorfoodtothepoorisconsideredcharitable,butsoisasanctuaryforat-riskelephants
andagolfcoursepurposebuilttoteachyouthshowtoplaygolf.
Whether a property is depends on the circumstances. No two properties are identical and,
depending on the application, additional information may be needed to make a proper
determination.Ajudgeupheldthepurpose-builtgolfcourseaboveascharitablebecausetheholes
5
Missionary housing-First Presbyterian Church of Chattanooga v. Tennessee State Bd. of Equalization,127S.W.3d742
(Tenn.Ct.App.2003).
6
Tenn.Comp.R.&Regs.0600-08-.02(6); See also Blackwood Bros. Evangelistic Ass’n v. State Bd. of Equalization, 614S.W.2d
364(Tenn.Ct.App.1980).
7
Tenn.CodeAnn.§67-5-212(c).
Charitable institutions
5
State Board of equalization ProPerty tax exemPtion manual
wereshortertoaccommodateyoungpeople,theownermadeeortstoencourageparticipation
byminorities,low-income,anddisabledindividuals,andtheinstitution’sfeeswerewaivedfor
thoseunabletopay.Ultimately,theinstitutionapplyingfortheexemptionisinthebestposition
toshow itsworkis charitableand shouldsupplywhatever informationwill demonstratethis
to the Exemption Designee. The institution may provide a list of the services or programs it
provides,whoitstargetaudienceis,adescriptionofitsfeestructureand/orfeewaivers,etc.
AllofthesemayfactorintotheExemptionDesignee’sdecisionastowhethertheinstitutionis
charitableundertheapplicableexemptionlaws.
Apropertymaybeheldasnon-charitable(andnon-exempt)wheretheprimaryuseisnotcharitable
innature.TheTennesseeSupremeCourthasheldthatwhereaclubwasoverwhelminglydevoted
toathleticsandsocialevents,aminimalamountofcharitableworkwasinsucienttoexempt
thepropertybased onthose minimal charitableuses.
8
Similar reasoning hasbeen applied to
ChambersofCommerceand,morerecently,VanderbiltUniversity’sfraternityhouses.
9
Medicalfacilitiesandnursinghomesmaybeexemptedascharitableinstitutions.Ofcourse,this
determinationdependsonthefactsatissue.Aninitialconsiderationiswhethertheinstitutionis
for-protornot-forprot.For-protmedicalfacilitiesarenoteligibleforpropertytaxexemption.
Anotherimportantdistinctionisdrawnbetweena“clinic,”andahospitalorotherlicensedhealthcare
facilitythatprovides medical care. Clinicswillbe discussed below. Licensednon-prothospitals,
nursinghomes,dialysisclinics,andothersimilarlyregulatedfacilitieswillalmostalwaysqualifyfor
exemption.Thereisageneralpresumptionthatlicensedorcertiedmedicalandnursingfacilities
areexempt.
10
Otherfactorsthatshowthefacilityisorisnotcharitablewillalsobeconsidered.
Forexemptionpurposes,a“clinic”isanyfacilityotherthanahospitalorotherlicensedhealthcare
facilitythatprovidesprimarymedicalcare.Tenn.Comp.R.&Regs.0600-08-.03(1).Specialty
facilitiessuchascardiovascularorsurgicalclinicsareconsidered“clinics”forthispurpose.For
aclinictoqualifyforexemptionitmust:
1. Beownedbyacharitableinstitution;
2. Belocatedinamedicallyunderservedareaorserveamedicallyunderserved
population.Thedeterminationthatanareaorpopulationismedicallyunderserved
ismadebytheU.S.DepartmentofHealthandHumanServicesortheStateof
Tennessee;
3. Provideserviceswithoutregardfortheabilitytopay.Iftheclinicacceptsany
insuranceitmustalsoacceptTennCare,Medicare,anduninsuredpatients;
4. Eithernotchargeforitsservices,oritsfeesmustbeadjustedforhouseholdincome
andfamilysize;and,
5. Notpayanyemployeemorethanwhatisreasonable,comparedtoothersimilarly
qualiedandexperiencedstaatotherinstitutionsprovidingthesameservices.
8
State v. Rowan, 171Tenn.612,106S.W.2d861(Tenn.1937).
9
Memphis Chamber of Commerce v. City of Memphis,232S.W.73,73(Tenn.1921);SeealsoVanderbilt Univ. v. Tennessee State
Bd. of Equalization,No.M201401386COAR3CV,2015WL1870194,at*9(Tenn.Ct.App.Apr.22,2015).
10
See Baptist Hosp. v. City of Nashville,3S.W.2d1059(Tenn.1928);Downtown Hosp. Ass’n v. Tennessee State Bd. of
Equalization,760S.W.2d954,957(Tenn.Ct.App.1988);Christian Home For The Aged, Inc. v. Tenn. Assessment Appeals
Comm’n, 790S.W.2d288(Tenn.Ct.App.1990)(armingtheexemptionofanursinghomewithlittlediscussionaboutitexcept
thefactualrecitation).
mediCal faCilities and nursing homes
6
State Board of equalization ProPerty tax exemPtion manual
The property of a scientic or non-prot educational institution may be exempt if it meets the
generalownership,occupancy,anduserequirementsdescribedabove.Thiscanincludeusesdirectly
incidentaltotheeducationalorscienticusesoftheproperty–auniversitymayneedlargeparking
areasforitsstudents,orwalkwaystofacilitatestudentsgettingfromoneareaofcampustoanother.
Thereareseveralinstitutionsandpropertyusesthatarespecicallyidentiedunderthesection
generallyexemptingreligious,charitable,scientic,ornon-proteducationalproperties.These
arelistedandbrieydescribedbelow.
FraternalOrganizationsExemptedfromFederalIncomeTaxes
11
The property of fraternal organizations (Shriners International, Veterans of Foreign Wars,
etc.)recognizedasa§501(c)organizationbytheIRSmaybeexemptedtotheextentthatthe
propertyis useddirectly andexclusively forreligious, charitable,scientic andeducational
activities.Areasusedasabar,kitchen,orothermeansofgeneratingrevenueareconsidered
commercialusesandwillnotqualify.
Non-ProtCountyFairAssociations
12
Thepropertyofanon-protcountyfairassociationisexemptfrompropertytaxes.
Caretaker’sResidenceinaPark
13
Acommunityparkthatisopentothegeneralpublicmaybeexemptedforoneoccupiedresidence
locatedinthepark.Theresidencemustbeownedbyanon-protreligious,charitable,scientic
oreducationalinstitution.Thepurposeoftheresidence,andcaretaker,mustbetodiscourage
vandalismoftheproperty.Theinstitutionmustnotchargethecaretaker,andthecaretakermust
not live there in lieu of receiving a salary.
Additionally, a caretaker’s residence on property owned by a non-prot institution that is
charteredbytheUnitedStatesCongressmaybeexemptifthecaretaker’spresenceisrequired
forthesecurityofusersoftheproperty,andtodiscouragevandalism.Ofcourse,thisexemption
onlyappliesifthelandisusedforreligious,charitable,educational,orscienticpurposes.
PublicBroadcastRadioandTelevision
14
Thepropertyofapublicradiobroadcasterholdinganeducationalbroadcastlicenseissuedby
theFederalCommunicationsCommission(the“FCC”)isexemptfrompropertytaxation,tothe
extentthepropertyisusedconsistentlywiththelicense.
misCellaneous exemPtions
sCientifiC and non-Profit eduCational institutions
11
Tenn.CodeAnn.§67-5-212(g).
12
Tenn.CodeAnn.§67-5-212(h).
13
Tenn.CodeAnn.§67-5-212(i).
14
Tenn.CodeAnn.§67-5-212(k).
7
State Board of equalization ProPerty tax exemPtion manual
Thepropertyofapublictelevisionbroadcasterthathasanoncommercialeducationalbroadcast
license issued by the FCC is exempt, if the broadcaster is an aliate member of the public
broadcastingnetworkandisorganizedasanonprotcharitableoreducationalinstitution.
ReligiousandCharitableThriftShops
15
Thepropertyofareligious orcharitableinstitutionusedas athriftshopmaybe exemptifit
meets the following requirements:
1) TheinstitutionisexemptedbytheIRSunder§501(c)(3)oftheInternalRevenue
Code;
2) Thethriftshopisoperatedprimarilybyvolunteers,orasatrainingvenueforthose
needingoccupationalrehabilitation;
3) Theinventoryofthethriftshopisdonatedtotheinstitutionthatownsandoperatesit;
4) Goodsarepricedatusedvalues;
5) Goodsaregiventoindividualswhoarenanciallyunabletopay;and,
6) Thenetproceedsareusedsolelyforthecharitablepurpose(s)oftheinstitution.
LaborOrganizations
Thepropertyoflabororganizationsrecognizedas§501(c)(5)organizationsbytheIRSisexempt
whenitisusedforcharitableoreducationalpurposes.Partialexemptionsunderthischaptermay
begrantedifpartofthepropertyisusedforrevenue-producingactivities.Theimprovementsused
fornon-exemptpurposesarenotexempt,but,inthissectiononly,theunderlyinglandisexempt.
Propertyownedbyfederal,state,orlocalgovernmentsisexemptfromtaxationsolongasitis
usedforpublicpurposes.
17
Governmentpropertyincludesthepropertyofaschooloruniversity
owned by the state or operated by the state as a trustee. Likewise, any roads, alleys, streets,
orpromenadesthatarededicatedtoandavailableforpublicusefreeofchargeareexempt.
18
Finally,state,county,andmunicipalbondsarenotsubjecttotaxation.
19
Anexemptionapplicationdoesnotneedto besubmittedforpropertyunder thesestatutes –
rather,thecountyassessorwherethepropertyislocatedmayexempttheseproperties.Ifitis
questionablewhetherpropertyisexempt,thetaxpayermaycontacttheStateBoardforassistance
ormaychoosetoapplytopreservetheearliestpossibleeectivedate.
SplitOwnership
Propertyinwhichthegovernmenthasapartialownershipinterestwillbeexempttotheextent
ofthegovernment’sinterest.
15
Tenn.CodeAnn.§67-5-212(m).
16
SeeTenn.CodeAnn.§67-5-203forpropertyusedexclusivelyforgovernmentalpurposes;Tenn.CodeAnn.§67-5-204for
dedicatedrights-of-way;and,Tenn.CodeAnn.§67-5-205forState,County,andMunicipalbonds.
17
Tenn.CodeAnn.§67-5-203specicallyprovides“thatrealpropertypurchasedforinvestmentpurposesbytheTennessee
consolidatedretirementsystemshallbesubjecttopropertytaxation.”
18
Tenn.CodeAnn.§67-5-204.
19
Tenn.CodeAnn.§67-5-205(a)(1)speciesthatstateorstateagencybondsaresubjecttoinheritance,transfer,andestatetaxes.
government ProPerty
16
8
State Board of equalization ProPerty tax exemPtion manual
Propertyownedbyhousingauthoritiesmaybeexemptifthehousingauthorityagreestomake
apaymentinlieuoftaxes(a“PILOT”)totheappropriategovernmentorpoliticalsubdivision
for“services, improvements,orfacilities” providedby thatsubdivision forthebenet ofthat
housing authority.
20
“Services”doesnotmeangeneralserviceslikeaccesstoroads,thecourtsystem,orprotection
by law enforcement, but more specic services such as utilities.
21
If services are provided by
multiplepoliticalsubdivisions.
Exemptionunderthissubsectionisimplementedbythecountyassessorwherethepropertyis
located–theinstitutiondoesnotneedtoapplytotheStateBoard.
Propertiesthatprovidelow-incomehousingforelderly
23
ordisabled
24
individualsthatarefunded
byoneoftwospecicsourcesmaybeexempted.Thepropertiesmustbefundedbyeitherthe
HOMEInvestmentPartnershipsProgram,
25
orbyahousingtrustfundcreatedunderTenn.Code
Ann.§§7-8-101et.seq.or13-23-501et.seq.
The property must also be owned by a non-prot institution registered with the Tennessee
SecretaryofState.TheIRSmustrecognizetheinstitutionasexemptfromfederalincometaxes,
eitherasanexemptcharitableinstitutionoranexemptsocialwelfareinstitution.Inaddition,the
institution must have the following charter provisions:
1) Directorsandocersservewithoutcompensation;
2) Thecorporationisdedicatedtoandoperatedexclusivelyfornon-protpurposes;
3) Theincomeorassetsofthecorporationwillnotbedistributedtobenetanyindividual;
4) Ifthecorporationisdissolved,itspropertywillnotbeconveyedtoanyindividualfor
lessthanfairmarketvalue;and
5) Whenthecorporationdissolves,allremainingassetswillbedistributedonlytonon-
protorganizationswithasimilarpurpose.
20
Tenn.CodeAnn.§67-5-206.Propertyofhousingauthorities.
21
Tenn.Op.Att’yGen.No.96-097(July29,1996).
22
Tenn.CodeAnn.§67-5-207(d).
23
Asdened,ahouseholdwillqualifyas“elderly”ifitiscomposedofoneormorepersonsatleastoneofwhomis62yearsofage
ormoreatthetimeofinitialoccupancy.24C.F.R.891.205.
24
Asdened,ahouseholdwillqualifyas“disabled”ifitisahouseholdwithatleastonedisabledindividualwhoisaged18or
older,acaretakeriftheindividualneedsone,asdeterminedbytheDepartmentofHousingandUrbanDevelopment,orthe
survivinghouseholdmembersifthedisabledindividualisdeceased.24C.F.R.891.305.
25
42U.S.C.§12701etseq.
housing ProjeCts ConstruCted With home or housing trust funds
22
ProPerty of housing authorities
9
State Board of equalization ProPerty tax exemPtion manual
Property providing permanent housing for low-income disabled individuals or low-income
elderlyindividualsmaybeexemptifcertainspecicrequirementsaremet.Theserequirements
canbecomplex.
First,thepropertymustbeownedbyaregisterednon-protinstitution.TheIRSmustrecognize
thenon-protinstitutionasexemptfromfederalincometaxes,eitherasanexemptcharitable
institution or an exempt social welfare institution. In addition, the institution’s charter or
governingdocumentsmusthavethefollowingprovisions:
1) Directorsandocersservewithoutcompensation;
2) Thecorporationisdedicatedtoandoperatedexclusivelyfornon-protpurposes;
3) Theincomeorassetsofthecorporationwillnotbedistributedtobenetanyindividual;
4) Ifthecorporationisdissolved,itspropertywillnotbeconveyedtoanyindividualfor
lessthanfairmarketvalue;and
5) Upondissolution,allremainingassetswillbedistributedonlytonon-prot
organizations with a similar purpose.
Second,thepropertymustbeusedtoprovidebelow-costhousingtohouseholdsqualifyingas
either“low-incomeelderly”or“low-incomedisabled”undertheappropriateregulations.Below-
cost housing and “low-income” housing may be addressed in the loan or grant agreements
nancingtheproperty.Generally,below-costhousingwillnotexceed30%ofthehousehold’s
monthlyoryearlyincome,andlow-incomewillgenerallyrefertospeciedincomethresholds
denedby the Departmentof Housing andUrban Development(“HUD”).
27,28
A household is
considered“elderly”ifoneormorepeopleinthehouseholdare62yearsofageorolderwhen
initial occupancy begins.
29
Under the applicable federal regulations, a household will qualify
as“disabled”ifitcontains:atleastoneadult(18yearsorolder)withadisability;twoormore
persons with disabilities living together, or one or more of such persons living with another
whoisdetermined by HUD,basedon the certicationofan appropriate professional(e.g., a
rehabilitativecounselor,socialworker,orlicensedphysician)tobeimportanttotheircareor
wellbeing;or,thesurvivingmemberormembersofanyhouseholdpreviouslyhousingadisabled
adultwhoisnowdeceased,providedtheywerelivingwiththedisabledadultatthetimeofhis
orherdeath.
30
Third,thepropertymustbenancedbyoneofthefollowingfederalprograms:
- Agrantunder§211or§811oftheNationalAordableHousingAct(42U.S.C.§§
12741and8013)
- AgrantundertheMcKinney-VentoHomelessAssistanceAct(42U.S.C.§11301etseq.)
- Financedorrenancedbyaloanmade,insured,orguaranteedbyabranchofthe
federalgovernmentunderoneofthefollowinglaws:
1) §515(b)or§521oftheHousingActof1949(42U.S.C.§§1485(b)and1490(a)respectively);
2)§202oftheHousingActof1959(12U.S.C.§1701q,§221,§223,§231);
26
Tenn.CodeAnn.§67-5-207.
27
Thisinformationcanbefoundbynavigatingtoyourcountyfrom:https://www.huduser.gov/portal/datasets/il.html
28
24C.F.R.§92.252.
29
24C.F.R.891.205.
30
24C.F.R.891.305.
loW Cost housing for loW-inCome disabled and elderly
26
10
State Board of equalization ProPerty tax exemPtion manual
3)§236oftheNationalHousingAct(12U.S.C.§§1715l,1715n,1715vand1715z-1,
respectively);or,
4)§8oftheUnitedStatesHousingActof1937(42U.S.C.§1437f).
Aloanisconsideredtobe“guaranteed”ifthefederalhousingagencyconsentedtotheassignment
of a housing assistance program contract as security for the loan.
Theoriginalfundingmustcomefromoneoftheaboveprograms,butthatfundingwillalmost
always be administered by a state agency through a state program. An applicant wishing to
qualifyunderthissectionmustprovidedocumentationregardingthenancingofthehousing
projecttoshowtheoriginalsourceofthefunding.Theapplicationcannotbeapprovedifthe
StateBoardisunabletoidentifytheoriginalsourceoffunding.
Apropertyexemptedunderthissectionandnancedbyaqualifyingloanremainsexemptwhile
thereisanunpaidbalanceontheloan.Whentheloanispaidinfull,thepropertyremainsexempt
aslongasthepropertyisonlyusedforhousingelderlyordisabledindividuals.
Propertynancedbyagrantremainsexemptaslongasitisusedasbelow-costhousingforelderly
ordisabledindividualswithahouseholdincomeatorbelowthelimitestablishedbyHUD.Ifthe
programprovidingthegrantdidnotprovideincomeguidelines,thepropertymaybeexemptif
atleast50%oftheresidentshaveincomesunderHUDguidelinesforanyoftheaboveprograms.
Inthiscase,thepropertyisgrantedapartialexemption.Thepercentageoftheexemptionisthe
percentage of units occupied by low-income elderly or disabled households. This percentage
mustbeestablishedbytheentityseekingtheexemption.Informationsupportingthepercentage
oftheexemptionmustbeprovidedtothecountyassessorbyApril20,andthatpercentageis
appliedbeginningJanuary1ofthatyear.
PILOTAgreementRequired
Ifahousingprojectunderthissectionhasmorethan12units,theownersmustenter,orattempt
toenter,intoaPILOTagreementwiththetaxjurisdiction(s)wheretheprojectislocated.These
paymentsshouldbenegotiatedtocoverthecostsofservices,improvements,orfacilitiesprovided
bythejurisdiction(s).IfnoPILOTagreementisenteredinto,thepaymentsmustbeatleast25%
oftheamountofpropertytaxesthatwouldbecollectediftheprojectwasnotexempt.
Subjecttothegeneralrequirementsof§212,propertyownedbycharitableinstitutionssuchas
HabitatforHumanitymaybeexemptedduringtheperiodofownershiptothedatetheproperty
isconveyedtoaqualifyinglow-incomehousehold.Asdenedforpurposesofthissection,a“low
incomehousehold”isanindividualorfamilyunitwhoseincomedoesnotexceedeightypercent
(80%)oftheareaorstatemedianincome,whicheverisgreater,adjustedforfamilysize.
32
31
Tenn.CodeAnn.§67-5-221.
32
Tenn.CodeAnn.§13-23-103(12).
ProPerty oWned by Charitable institutions for ConstruCtion
of
residential housing for loW-inCome families
31
11
State Board of equalization ProPerty tax exemPtion manual
Thepropertymustbeownedbyacharitableinstitutionandheldforthepurposeofconstructing
one or more single-family dwellings that will be conveyed to a low-income household. If a
property meets these requirements and is a single lot for the construction of a single family
home,itcanbeexemptedforupto18-monthsfrominitialownership.Ifitisalargerparcelthat
willbesubdividedintomorethanonelot,itmaybeexemptedfor18monthsplusanadditional
6-monthsforeachhomepasttherst.
Anexemptionapprovedunderthissectionendswhenthepropertyisconveyedtoaqualifying
household.Iftheproperty,oranyportionoftheproperty,isnotdevelopedandtransferredto
alow-incomehouseholdwithintheexemptionperiodestablishedabovealltaxesthatwould
otherwisehavebeenduefortheproperty,plusanydelinquencypenaltiesandinterest,accrued
fromthedateownershipbegan.
Propertyownedbyanon-protcorporationthatisusedtorecycleordisposeofwasteproductsto
produceheatingorcoolingofpublicfacilitiesmaybeexempt,providedthestateoranypolitical
subdivisionownsthereversionaryinterestintheproperty.Thepropertymaybeexemptevenif
by-productsoftherecyclingordisposalareprovidedtoprivateentities.Exemptionunderthis
sectiondoesnotrequireanapplicationtotheStateBoard.
ThepropertyofaprivateacthospitalestablishedunderTitle7,Chapter57,Part6oftheTennessee
Codemaybeexempted.
Allpropertywithintheboundariesofthepoliticalsubdivisionswhichcreatedorparticipatedinthe
creationofthehospitalisexempt,withouttheneedforanapplicationtotheStateBoard,aprivate
acthospitalmayenterintoaPILOTagreementwiththecreatingorparticipatingjurisdiction.
The hospital must apply to the State Board for exemption of properties that are outside the
boundariesoftheircreatingorparticipatingjurisdictions.TheStateBoardwillevaluatethese
propertiesasthoughtheywerecharitablehospitalsunderTenn.CodeAnn.§ 67-5-212.See“Medical
FacilitiesandNursingHomes”page5formoreinformation.
Non-protcemeteriesandotherplacesofburialareexemptfrompropertytaxes.Iftheowners
ofsuchpropertydonotchargetouseburialplots,theownersdonotneedtoapplyforexemption
totheStateBoard–instead,theassessorofthecountyinwhichtheburialplaceislocatedwill
exempttheproperties.Ifthereisachargetobeburiedontheproperty,thepropertymaystillbe
exempt,butthepropertyownermustapplytotheStateBoard.
33
Tenn.CodeAnn.§67-5-208.
34
Tenn.CodeAnn.§67-5-209.
35
Tenn.CodeAnn.§67-5-214.
reCyCling or Waste disPosal faCilities
33
Private aCt hosPitals
34
burial PlaCes and Cemeteries
35
12
State Board of equalization ProPerty tax exemPtion manual
Therealpropertyofafor-protcemeterymaybeexempt,ifthepropertywaslandscapedand
preparedtobeusedasacemetery,andthesizeofthepropertyisnotbeyondthereasonable
needsofthepublic.Afor-protcemeterymustapplyforexemptionwiththeStateBoard.
Allgrowingcrops,includingtimber,productsinanursery,andornamentaltrees,areexempt
frompropertytaxeswhileownedandheldbytheproducerortheindividualbuyingdirectly
fromtheproducer.
Agedwhiskeybarrels,whileownedorleasedbyapersonthatproducesormanufactureswhiskey
inthosebarrels,areconsideredarticlesmanufacturedinthestate.
37
TangiblepersonalpropertytravelingthroughTennesseemaybeexemptedundertwosectionsof
theTennesseeCode.
PropertyinInterstateCommerce
38
TangiblepersonalpropertymovingthroughTennessee,butdestinedtolandoutsidethestate,
is exempt from property taxes. This section covers property that is housed temporarily in a
warehouse for storage.
This section also exempts property transported to a plant or warehouse in Tennessee from
outsidethestateforstorageorrepackagingbutdestinedforeventualsaleoutsidethestate.Ifa
portionofthepropertyexemptedunderthissubsectionissoldwithinthestate,theexemption
onlyappliestothepropertysoldoutofthestate.
NotethatpropertyintransitdoesnotneedaspecicdestinationwhenitisstoredinTennessee,
solongasitwillbesoldormovedoutsidethestate.
ImportedPropertyinaForeignTradeZone
39
Tangible personal property which is imported from outside the United States and held in a
foreigntradezoneorsubzoneforthepurposeofsale,processing,assembly,grading,cleaning,
mixing,ordisplayisexemptedwhileintheforeigntradezone,solongasitistobetransported
outsideofTennessee.
Propertiesthatare on theTennesseeRegister of HistoricPlaces,or other structuresthatare
certiedbyacounty’shistoricpropertiesreviewboard,maybeeligibleforapartialtaxexemption
36
Tenn.CodeAnn.§67-5-216.
37
Tenn.CodeAnn.§67-5-216(c).
38
Tenn.CodeAnn.§67-5-217.
39
Tenn.CodeAnn.§67-5-220.
40
Tenn.CodeAnn.§67-5-218.
CroPs, livestoCk, and Poultry
36
ProPerty Passing through tennessee
imProvement or restoration of historiC ProPerties
40
13
State Board of equalization ProPerty tax exemPtion manual
whenperformingrestorationsorrenovations.Exemptionunderthissectionisonlyavailablein
countieswithapopulationof200,000orhigheraccordingthe1970oranysubsequentfederal
censusandonlyincountieswherethegoverningbodyhaselectedtograntexemptionsunderthis
section.Anexemptiongrantedunderthissectiondoesnotfullyexemptthelandorstructures
ontheland.Instead,thissectionexemptsthevalueofimprovementstoorrestorationsofthe
structure,iftheimprovementsarenecessaryunder:
1) Acomprehensiveplanfortheredevelopmentofadistrictorzone;
2) ThepreservationplanofthestateofTennessee;
3) Anyotherfederalorstateplanthatincludespreservationorrestorationofstructures
coveredunderthissection;or,
4) Byagreementoftheownertorestorethepropertyunderguidelinessetoutbya
historicpropertiesreviewboard.Theserequirementswillincluderestrictionson
signicantlyalteringordemolishingthestructure.
Propertiesthatare175yearsoldorolderarepresumed,byvirtueofage,tomeettherequirements
of a county’s historic properties review board, and therefore may qualify under this section.
Properties125yearsoldbutlessthan175yearsoldarepresumedtomeettherequirements,but
thispresumptioncanbechallengedbyanyinterestedparty.Properties75yearsoldbutlessthan
125yearsmustbereviewedindividually.
Exemption under this section only applies to the value of improvements, restoration, or
renovations.Theexemptionisalsotimelimited.Theexemptionwillapplyfortenyearsifthe
restorationislimited oronlyanexteriorrestoration.Itmay last15years ifitisconsidereda
totalrestoration.Thehistoricpropertiesreviewboardwillmakethisdetermination.Whenthe
exemptionends,thestructurewillbeassessedandtaxedatitsfullmarketvalue.
Inadditiontothehistoricstructure,thisexemptionmayalsoapplytostructuresorresidences
necessary to manage or care for the historic structure.
Ifthehistoricpropertiesreviewboarddeterminesthatthehistoricstructureisdemolishedor
signicantlyalteredtheexemptionwillendimmediately.
Finally,unlikemostexemptions,thisexemptionwillcontinueforthespeciedperiodoftime
even if ownership of the property changes.
Exemptionsunderthissectionaregrantedbycountyauthorities,ratherthantheStateBoard.
HistoricPropertiesOwnedbyCharitableInstitutions
41
PropertythatisontheNationalRegisterofHistoricPlacesownedbyacharitable institution
for10yearsormoremaybefullyexempt (asopposedtothepartialexemptionsabove)from
propertytaxes.Thisexemptionisonlyavailableincountiesormunicipalitieswhichhaveelected
tograntsuchexemptions.Ifthecountyormunicipalityhaschosentogranttheseexemptions
thereareadditionalrequirements.
41
Tenn.CodeAnn.§67-5-222.
14
State Board of equalization ProPerty tax exemPtion manual
First,thepropertymustnotberentedoutmorethan180daysperyear,andrentalsmaynot
lastmorethantwodaysperevent.Theproceedsfromrentalsmustbeusedsolelytodefraythe
maintenancecostsandupkeepoftheproperty.
Second,theinstitutionmustsubmitacomprehensivepreservationandmaintenanceplanforthe
propertytothecounty’shistoricalpropertyreviewboarddemonstratinghowthepropertytax
savingswillbeusedtopreserveandmaintaintheproperty.Thehistoricalpropertyreviewboard
mayhaveadditionalguidelinesfortheseplans.
Exemptionsunderthissectionaregrantedfortenyears.Attheconclusionofthetenyearperiod,
theinstitutionmaysubmitanotherapplicationwithanupdatedpreservationandmaintenance
plan.ApplicationsunderthissectionaremadetotheStateBoard.
Airportrunwaysandapronsbelongingtoprivatepublic-useairportsareexemptfromproperty
taxes.
Propertyownedbynon-protcommunityandperformingartsinstitutionsmaybeexemptfrom
propertytaxes,totheextentthatthepropertyisusedbyanon-protorcharitableinstitution
forcharitableoreducationalpurposes.Forthissection,useofthepropertyforperformingarts,
publicmuseums,artgalleries,ortheatersisanexemptibleuse,asareanyusesdirectlyincidental
tothisuse(e.g.,parkingoradministrativespace).
First,thisexemptionisonlyavailableincountiesthatapprovethisexemptionbya2/3voteof
thecounty’sgoverningbody.Thecounty’sgoverningbodymayrequireanypropertiesexempted
under this section to be periodically reviewed by local authorities, or that the exemption be
renewed.
Second,theinstitutionwhichownsthepropertymustmeetcertaininstitutionalrequirements:
- Theinstitutionmustbeapublicbenetnon-protinstitution,eitherestablishedas
anon-protcorporationoranunincorporatedentityoperatingaseitheran
associationoperatingforthepublicbenet,oratrustorfoundationoperatingunder
writtenarticlesofgovernancerequiringthatitbeoperatedforthepublicbenet.
- Theinstitution’sgoverningbodymustmeetthefollowingrequirements:
o Nomorethanthreemembersofthegoverningbodyoftheinstitution
(includingtheboardofdirectorsandanyotherocers)maybeemployedby
theorganization;
o Nomemberofthegoverningbodymaybecompensatedunlessthememberis
anemployee;
o Nomemberofthegoverningbodymayprovideservicestotheinstitutionin
returnformonetarypayment,eitherdirectlyorindirectly;
o Nomemberofthegoverningbodymaylendmoneytotheinstitutionifsuch
42
Tenn.CodeAnn.§67-5-219.
43
Tenn.CodeAnn.§67-5-223.
PubliC-use airPort runWays
42
Community and Performing arts Centers
43
15
State Board of equalization ProPerty tax exemPtion manual
loanissecuredbytheinstitution’sproperty;and,
o Nomemberofthegoverningbodymayprotfromanyoftheshows,exhibits,
etc.,forwhichthepropertyisused,unlessthiscompensationisnormalpayas
an employee.
Finally,ifanyexemptpropertyoftheinstitutionistobesold,theinstitutionmustprovide
noticetotheTennesseeAttorneyGeneralandReporteroftheintentiontosell.Thisnotice
mustbeprovidedatleast21-daysbeforethedateofthesale,butnomorethan60-daysbefore
thedateofthesale.
Each of the above requirements must be incorporated into the articles of governance of any
unincorporatedinstitution.
Theinstitutionmustsubmitacopyofitsarticlesofgovernancetothecountyassessorofthe
county where the exempt property is located, in addition to ling these documents with any
otherrequiredentities(i.e.,theSecretaryofState’sOce).Theinstitutionmustsendanannual
reporttothecountyassessorwithareportlistingtheactivitiesandusesoftheexemptproperty,
currentnancialstatements,andanyotherinformationthecountyassessorrequires.Finally,
thecountyassessormustmaintainanestimateofthemarketvalueofthepropertyasofthedate
ofthelastcounty-widereappraisal.
A family wellness center is the property of a charitable institution used to provide physical
exerciseopportunitiesforchildrenandadults,suchasaYMCA.Afamilywellnesscentermaybe
exemptifitmeetsthefollowingrequirements:
- Theinstitution’shistoricpurposemustbetopromoteholisticphysical,mental,and
spiritual health.
- Theinstitutionmustprovideatleast5ofthefollowing8-services:
o Daycareprogramsforpreschoolandschool-agedchildren;
o Teamsportsopportunitiesforyouthandteens;
o Leadershipdevelopmentforyouth,teens,andadults;
o Servicesforat-riskyouthandteams;
o Summerprogramsforat-riskyouthandteens;
o Outreachandexerciseprogramsforseniors;
o Aquaticprogramsforallagesandskilllevels;and,
o Servicesfordisabledchildrenandadults.
- Theinstitutionmustchargeforservicesbasedonasliding-scalefeestructureto
accommodateindividualswithlimitedmeans.Thisfeestructurewilltypically
accountforfamilysizeandhouseholdincome.
- Theinstitutionmustbeaexemptedasaqualifying§501(c)(3)undertheInternal
RevenueCode.
44
Tenn.CodeAnn.§67-5-225.
family Wellness Centers
44
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State Board of equalization ProPerty tax exemPtion manual
- Theinstitutionmustalsoincludethefollowingprovisionsinitsgoverningdocuments:
o Thedirectorsandocersshallservewithoutcompensationbeyond
reasonablecompensationforservicesperformed;
o Thecorporationisdedicatedtoandoperatedexclusivelyfornonprotpurposes;
o Nopartoftheincomeortheassetsofthecorporationshallbedistributedto
inuretothebenetofanyindividual;and,
o Uponliquidationordissolution,allassetsremainingafterpaymentofthe
corporation’sdebtsshallbeconveyedordistributedonlyinaccordancewith
therequirementsapplicabletoa§501(c)(3)organization.
TheinstitutionmustapplytotheStateBoardtobeapprovedunderthissection.
Propertyusedasamuseummaybeexemptfrompropertytaxes.Therstrequirementisthat
the property must be located within an incorporated municipality. If the property is located
withinan incorporated municipality,the propertymaybe exemptedifit meetsthefollowing
requirements:
1) Theinstitutionseekingexemptionmustbeanon-protcorporationrecognizedasa
§501(c)(3)bytheIRS;
2) Theinstitutionmustowntheproperty;
3) Theinstitutionseekingexemptionmustoperatethemuseum;
4) Themuseummustdisplaylocal,regional,andstatecrafts,and/oritemsofhistorical
interest;and,
5) Theinstitution’sboardofdirectorsorgoverningocialsmustnotreceive
compensation for their services.
Alsoexemptunderthissectionisthepropertyofamuseumthatislocatedonlandownedby
stateorlocalgovernments.Tobeexemptunderthissection,themuseummust:
1) Displayitemsofhistoricsignicanceandinstruction;
2) BedesignatedbytheStateofTennesseeasanocialstaterepositoryandarchive;
3) Theinstitutionseekingexemptionmustbeexemptedasa§501(c)(3);
4) Theinstitution’sboardofdirectorsorothergoverningbodyorocersmustreceive
nocompensationfortheirservice;and,
5) Theinstitutionmustmanageandstathemuseum.
PropertyqualifyingunderthissectionisfullyexemptbutmustapplywiththeStateBoard.
InitialApplication
Exceptaspreviouslyidentied,anapplicationmustbeledwiththeStateBoardforapropertyto
receiveanexemption.AnexemptionapplicationmaybeledonlinebygoingtotheStateBoard’s
https://www.comptroller.tn.gov/boards/state-board-of-equalization/property-tax-exemptions.html.
Aseparateapplicationmustbeledforeachparcelforwhichexemptionissought.
45
Tenn.CodeAnn.§67-5-226.
46
Tenn.CodeAnn.§67-5-212;Tenn.Comp.R.&Regs.0600-08-.01.
aPPlying for ProPerty tax exemPtion
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museums
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Therearetwobasicitemsthatwillberequiredwitheveryapplication:proofofownershipofthe
subjectproperty(i.e.,aquitclaimorwarrantydeed),andpaymentofthelingfee.Pleasenote
thatadeedoftrustisnotsucientproofofownershipforexemptionpurposes.Withoutthese
twoitems,anapplicationisdeemedincompleteandwillnotbeprocessed.Anapplicantmust
alsosubmittheirinstitution’scharterandbylawsorothergoverningdocuments.
Thelingfeeforanapplicationisbasedonthevalueofthesubjectpropertyuptoamaximumof
$120.00.Ifmultipleapplicationsaresubmittedformultipleparcelsatthesametime,thefeeis
basedontheaggregatevalueofalltheproperties.
AggregateValueoftheProperty: ApplicationFee:
Less than $100,000 $30
$100,000-$250,000 $42
$250,000-$400,000 $60
$400,000 or more $120
Paymentissubmittedthroughtheonlineportalafterllingouttheapplicationanduploading
allrequireddocumentation.Ifanapplicantisunabletopaythelingfee,theymaycontactthe
StateBoard.
In addition to evidence of ownership and the ling fee, the applicant should provide the
organization’s articles of governance (e.g., the organization’s charter and bylaws) and recent
nancialdocumentation(e.g.,incomestatement,taxreturn,orotherreliabledocumentation).
Althoughanapplicationwillbeacceptedwithonlyproofofownershipandpaymentoftheling
fee,itwillnotbeapprovedwithouttheseadditionaldocuments.
ApplicationsareprocessedbyExemptionDesigneeswiththeStateBoard.ExemptionDesignees
areahighlytrainedandfriendlycadreofattorneysemployedbytheStateBoard.Theassigned
Exemption Designee will review the application, request additional information if necessary,
andultimatelymakeanInitialDeterminationeitherapprovingordenyingtheexemption.The
InitialDetermination maybeappealed, ortheapplicant mayask theExemptionDesignee to
reconsiderthedeterminationandmakeadierentdecision.Anapplicantonlyhas90daysfrom
thedateanInitialDeterminationisissuedtoleanappeal,regardlessofwhethertheapplicant
isincontactwiththeExemptionDesignee.
Whetherapropertyqualiesforexemptiondependsonthefactsofeachcase.Thedecisionmay
turn on small but important facts such as the phrasing of a fee structure or whether a property
isinsideoroutsideanincorporatedmunicipality.Inmanycases,theExemptionDesigneewill
needtorequestadditionalinformationtorenderanaccuratedetermination.
Arequest foradditionalinformationwillbe sentto thee-mail listedontheapplicationor,if
oneisnotprovided,totheapplicant’saddress.TheExemptionDesigneemaywishtodiscuss
the request for information by telephone to ensure the applicant knows what information is
ProCessing aPPliCations at a glanCe
reQuests for additional information
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State Board of equalization ProPerty tax exemPtion manual
neededandhowtoprovideit.Forallofthesereasons,anapplicantmustkeephisorhercontact
informationuptodatewiththeStateBoard.
ArequestforadditionalinformationwillincludetheExemptionRecordnumber(“ER#”),and
parcelidenticationnumber.Itwillspecifywhatinformationisneeded,howthatinformation
maybeprovided,andthattheinformationmustbeprovidedwithin30daysoftherequest.If
sucientinformationisnotprovidedwithinthetimeprovidedtheapplicationmaybedenied.
47
AttheExemptionDesignee’sdiscretion,additionaleortsmaybemadetogatheranynecessary
information. This could include sending additional requests, requesting the county assessor
reviewapropertyor,ifappropriate,theexemptiondesigneepersonallyreviewingtheproperty.
AftertheExemptionDesigneehasgatheredthenecessaryinformationandisabletomakean
accuratedecision,heorshewillissueanInitialDetermination.AnInitialDeterminationisissued
intheformofaletternotifyinganapplicantandtherelevantcountyocials(typicallyonlythe
countyassessorandcountytrustee)severalimportantthings.
First,theInitialDeterminationwillidentifytheapplicationsitappliestobyreferringtotheER#.
TheInitialDeterminationwillalsolisttheparcelidenticationnumberstoidentifytheproperty
orpropertiesthedeterminationappliesto.
TheInitialDeterminationwilladvisetherecipientswhethertheapplication(s)isapprovedor
deniedandwillbrieystatewhy.Iftheapplicationisapprovedinpartthedeterminationwill
explainwhy, andwhat portionofthe propertyis exempt.The InitialDeterminationwillalso
specifythedatetheexemptionbecomeseective(thisisknownasthe“eectivedate”andwill
beexplainedinmoredetailonpage22).
Finally,theInitialDeterminationwilladvisethatboththeapplicantandthecountytaxassessor
mayappealthedetermination,howtoletheappeal,andthatitmustbeappealedwithin90
daysofthedatethenoticeisissued.
TheExemptionDesigneemayreconsiderhisorherdeterminationiftheapplicantcanidentifywhy
thedeterminationisincorrect.ReconsiderationisatthediscretionoftheExemptionDesignee
andisseparatefromtheappealprocess.The90dayperiodtoleanappealbeginsonthedateof
theInitialDeterminationandisnotsuspendedbyconversationswiththeExemptionDesignee
aboutareconsideration.IfasubsequentInitialDeterminationisrendered,thisisconsidereda
separateaction,andanew90dayperiodtoappealbeginstorun.
initial determinations
reConsideration
47
“Anyownerofrealorpersonalpropertyclaimingexemption...shallleanapplicationfortheexemption...andsupplysuchfurther
informationastheboardmayrequiretodeterminewhetherthepropertyqualiesforexemption.”Tenn.CodeAnn.§67-5-212(b)(1).
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InitialDeterminationIssuedto
ApplicantandCountyOcials
ExemptionDesignee
forInitialReview
ExemptionDesignee
RequestsAnyOtherInformationNeeded
ExemptionDesignee
WillApproveorDenyApplication
AppealtoChanceryCourt
Reconsiderationwith
ExemptionDesignee
on Request
AppealtoanAdministrativeJudge
(MustAppealWithin90Days
ofInitialDeterminationIssued)
CycleofanExemptionApplication
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Propertyunderconstructionorextremerenovationmaybeconsidered“inuse”iftheconstruction
iscompletedwithin12months.Inthiscase,thefullproperty,boththelandandtheimprovements,
canbeexemptedasthoughitwasinuseasofthedateoftheapplication,andnormaleective
daterulesapply.
Ifconstructionisnotcompletedwithin12months,theunderlyinglandwillremaintaxableduring
theconstructionperiod,butthevalueofanyconstructedimprovementsmaybeexempted.The
landmaybeexemptedwhenconstructioniscompletedandthepropertyisbeingusedforan
exemptpurpose.
TheinstitutionmustapplyforapropertytaxexemptionwiththeStateBoard.Theinstitution
shouldstatewhenconstructiondidorwillbeginandwhentheinstitutionbelievesconstruction
willbecomplete.Ifconstructionhasnotbegunwhentheapplicationisprocessed,theapplication
maybedenied–prospectiveuseisnotenough.Ifnecessary,theExemptionDesigneewillrequest
proofthatconstructionhasbegun,orproofofwhenitwillbegin.Thismaytaketheformofa
buildingpermitorasignedcontractwithabuilder.Otherproofmaybeacceptable.
AftertheExemptionDesigneehasreviewedthecase,heorshewillsendaletteradvisingthe
applicantofthestatusoftheirapplication.ThismaytaketheformofanInitialDeterminationor
anoticethattheapplicationisbeingplacedinanadministrativehold.
Applications for property undergoing construction will be placed in an administrative hold
and heldbytheStateBoard for twelve (12) months pending the completion of construction.
If construction is completed during the administrative hold period, the Applicant or County
AssessormaycontacttheStateBoardtoadvisethatconstructionhasbeencompletedandan
InitialDeterminationmaybeissued.Ifconstructionisnotcompletedduringtheadministrative
holdperiodtheExemptionDesigneemayissueanInitialDeterminationidentifyingtheproperty
ispartiallyexempt,buttheunderlyinglandistoremaintaxable.Onceconstructionhasbeen
completedthepropertyownermayneedtoapplyforexemptionontheunderlyingland.
Applicationsplacedinanadministrativeholdarenotdenied.Anadministrativeholdmeansthe
applicationisbeinghelduntiltheinstitutionnotiestheExemptionDesigneethatconstruction
is complete. The institution must contact the State Board to let them know construction is
complete. The institution must also send in proof that the property is being used. This may
beacerticateofoccupancy,achurchbulletinormuseumprogram,orotherproof.Then,the
ExemptionDesigneewillissueanInitialDetermination.TheInitialDeterminationwilladvise
iftheapplicationisapprovedordenied.Iftheapplicationisapproved,theletterwillstatethe
datesthatthevalueofimprovementsareexempt,andthedatethatthepropertyisfullyexempt.
Ifaninstitutionisusingpropertywhileconstructionorrenovationisongoing,thepropertymay
befullyexemptdespitetheconstruction.Forinstance,achurchorcharitymightstilluseanewly
acquiredfacility,iftherenovationswillnotinterferewiththeinstitution’suseoftheproperty.
TheExemptionDesigneemustdeterminehowmuchofthepropertyisbeingusedandmayfully
exemptthepropertywithoutdelay.
neW ProPerty under ConstruCtion
21
State Board of equalization ProPerty tax exemPtion manual
A property may be partially exempt when only a part of the property meets the exemption
requirements:a church mayrent spacetoa for-protdaycare, a museummay operateagift
shopandrestaurant,oracharitymaynotuseaportionofthelanditowns.Inanyofthesecases,
theStateBoardwillexempttheportionqualifyingforexemption.TheExemptionDesigneewill
specifythepartsofthepropertythatareexemptandthepartsthatarenot.
There are several methods to determine the extent of an exemption. First, the Exemption
Designeemayspecifyastructureoraportionofapropertythatisnotexempt.Inthecaseofthe
for-protdaycare,theExemptionDesigneemayspecifythatanumberofsquarefeetequaling
thatusedbythedaycareisnolongerexempt.
48
Ifapropertyisusedbymorethanoneinstitutiontheexemptionmaybedividedbasedonthe
useofthe property.Forinstance, ifacharitable institutionoperatesa members-onlygymin
thesamebuildingasotherexemptuses,theexemptionforthegymspacemaybebasedonthe
percentage of gym members that work for the charity.
49
Insomesituations,itmaybemoreappropriatetodeterminetheportionofexemptionbasedon
thetimeofexemptuse.Thismethodmaybeappropriatewherethewholepropertyisusedfor
bothexemptandnon-exemptusesatdierenttimes;forinstance,whereanon-prottheater
rentsitsspacetootherinstitutionsforfor-protproductions,thepercentageofexemptionmay
bedeterminedbymeasuringthetimethetheaterisusedforexempt(non-prot)productions,
andthetimerentedoutforfor-protproductions.
50
Anotherwaytodeterminetheportionofanexemptionisbycomparingexemptandnon-exempt
income.Thismethodmaybeappropriatewhenthewholepropertyisusedforbothexemptand
non-exemptuseatthesametime,orwheredivisionbytimeisnotfeasible.
51
Analwayexemptionmaybedeterminedistosimplyexemptlandunderlyinganyimprovements,
but not exempt certain structures. For example, where a non-prot school is using a lot for
parking, but not using another structure on the property.
Inadditiontoexemptingonlyaportionofthefullproperty,itmaybeappropriatetoexempta
percentageof dierentsections ofthe property.This willbe seenmorefrequentlyinmulti-use
properties,likeabuildingownedbyacharitableinstitution,wherethecharityalsooperatesagym.
How a partial exemption will be determined and what information will be needed is fact-
dependent.Ultimately,theExemptionDesigneewillusethemethodthatmostaccuratelyreects
thedivideduseoftheproperty.
48
City of Nashville v. State Bd. of Equalization,360S.W.2d458,468-69(Tenn.1962).
49
Christ Church Pentecostal v. Tennessee State Bd. of Equalization,428S.W.3d800,808(Tenn.Ct.App.2013).
50
Memphis Dev’t Foundation v. State Board of Equalization,653S.W.2d266(Tenn.Ct.ofAppeals1983).
51
Book Agents of Methodist Episcopal Church, S. v. State Bd. of Equalization,513S.W.2d514,524(Tenn.1974).
Partial exemPtion
22
State Board of equalization ProPerty tax exemPtion manual
The eective date of an exemption is the date the exemption begins. The Tennessee Code
specieshowtheeectivedateofanexemptionisdeterminedandtheExemptionDesigneedoes
nothavetheauthoritytograntadierentdate.Ifapropertyisnotexemptforthefullyearthen
propertytaxesmaybeleviedagainsttheproperty,butthetaxeswillbeproratedtotheportionof
theyearthepropertywasnotexempt.
Ifanexemptionapplicationisreceivedby,orpostmarkedto,theStateBoardonorbeforeMay
20,theexemptioncanbeginonJanuary1oftheyearapplied.
IftheapplicationisreceivedorpostmarkedafterMay20,theExemptionDesigneewilllookat
thedatethepropertywasrstusedforanexemptpurpose.Ifthepropertywasrstusedfor
anexemptpurposewithin30daysofthedatetheapplicationwasreceivedorpostmarked,the
exemptionwillbegrantedasofthedatethepropertywasrstusedforthatpurpose.Iftheuse
ofthepropertybeganmorethan30daysbeforetheapplicationwasreceivedorpostmarked,the
eectivedateoftheexemptionwillbethedatetheapplicationwasreceivedorstamped.
Ifapropertyisnotbeingusedforanexemptpurposewhentheapplicationisreceivedbutisby
the time the application is processed, the Exemption Designee may approve the application;
however,theeectivedatewillbethedatethepropertywasrstusedforanexemptpurpose,
notthedateoftheapplication.
Religious institutions may benet from one additional provision. If a religious institution
purchases a property from another religious institution, and the property was exempt at the
time oftransfer,the exemption for the purchasing institution may bebackdated,or“thrown
back,”upto3yearspriortothedateofapplication,potentiallyclosinganygapintheexemption.
Thepropertymusthavebeenexemptundertheownershipofthepreviousreligiousinstitution,
andthepurchasinginstitutionmustsubmitanewapplication.Theeectivedatemayalsobe
“thrown back” in this way when a religious institution acquires property to replace its own
exempt property, or if the institution purchases property previously approved for a religious
exemptionfromalenderfollowingforeclosure.
52
Tenn.CodeAnn.§67-5-212(b)(3).
53
Tenn.CodeAnn.§67-5-212(b)(3)(B).
effeCtive date
52
sPeCial effeCtive date Provision for religious institutions
53
23
State Board of equalization ProPerty tax exemPtion manual
On or Before May 20?
January 1 or whenever the
propertywasownedandused
forexemptpurposes,
whichever is later.
Wasthepropertyownedand
usedforexemptpurposes
within30dayspriortothe
application?
Datethepropertywasrst
usedforexemptpurposes.
Dateofapplication.
AfterMay20?
YES NO
WhenwouldmyExemptionbeeective?
WhendidtheStateBoardreceiveyourapplication?
24
State Board of equalization ProPerty tax exemPtion manual
WhatCanbeAppealed?
MostactionstakenbytheStateBoardregardinganexemptionapplicationcanbeappealed.This
commonlyincludes:
1) Thedenialofanexemption;
2) Theeectivedateofanapprovedexemption;
3) Thatonlyapartialexemptionwasgranted,ratherthanafullexemption;
4) Theextentofapartialexemption;or,
5) Thendingofprobablecausetorevokeanexemption,inwholeorinpart.
Thisisdiscussedinmoredetailinthe“RevocationofExemption”sectiononpage25.
AnypartyaectedbyanInitialDeterminationcanappeal.Inmostcases,thiswillbeeitherthe
applicant or county assessor.
An appeal must be led with the State Board within 90 days of the Initial Determination or
otherappealableaction.Onceanappealhasbeenproperlyled,thenextstepistogobeforean
AdministrativeJudge.
Hearings are held in person, virtually, or telephonically. The State Board will send a notice
ofhearingatleast30daysbeforethehearingadvisingwhenandwherethehearingwilltake
place.Boththetaxpayerandcountyassessorwillhaveanopportunitytopresenttheircaseto
thejudgeandmaypresenttestimony,documents,andwitnessestothejudge.Theindividual
whorequestedtheappealhastheburdenofprooftoshowthattheStateBoardmadethewrong
decision.Thejudgewillissueanorderwithhisorherdecisionwithin90daysofthehearing.
Itisimportantthat,atthishearing,thetaxpayerandcountyassessorputontheirbestcase.If
eitherpartyis dissatised withthe Administrative Judge’sorder,they canhavesome, all, or
none,oftheissuesreviewedbytheappointedmembersoftheStateBoardofEqualization.Such
membersmaychooseordeclinetoaccepttheappeal.Ifthemembersdecidetoexercisereview,
a hearing may be scheduled before nal action is taken and you will be provided additional
instructions at that time.
the aPPeal ProCess
Who Can aPPeal?
hoW does an aPPeal Work?
25
State Board of equalization ProPerty tax exemPtion manual
Generally,propertymustbeusedforanexemptpurposeoftheowninginstitutiontobeexempt.
Thepropertyofanexemptinstitutionmayalsobeexemptwhenitisusedbyanotherqualifying
institutionforanexemptpurpose.Forexample,ifachurchownsanddoesnotuseabuildingbut
allowsalocalcharitableinstitutiontousethebuilding,thispropertymaybeexempt.Similarly,
spacethatacharityleasestoanothercharitymayalsobeexempt.
Inthesesituations,theExemptionDesigneemustverifythatboththeowninginstitutionandleasing
institutionareexemptandmustknowwhattheleasinginstitutionusesthepropertyfor.
Ifpropertyisleasedoutafterthe StateBoardhasdeterminedthat itis exempt,thetaxpayer
shouldnotifytheStateBoardortheircountyassessor.TheStateBoardwillneedtoverifythat
thelesseeanduseofthepropertystillcomplywiththerulesandlawsregardingexemptions.
ExemptionspreviouslygrantedbytheStateBoardmaylosetheirexemptstatus,eitherinwholeor
inpart,forseveralreasons.Examplesincludeexemptionsbasedonfraudormisrepresentation,
wherethecurrentownernolongerqualies,andwhenthepropertyisnolongerbeingusedfor
anexemptpurpose(e.g.,propertyusedforrevenue-generatingpurposes,propertyrentedtoa
for-protinstitution,abandonedproperty,andpropertydeclareduntforhumanhabitation).
Apropertywillloseitsexemptstatusthrougharevocationproceedingbeginningwithaprobable
causereviewinitiateduponthewrittencomplaintofanypersonorbytheStateBoarditself.An
Exemption Designee will start the review by investigating the property’s use and ownership.
TheDesigneewilltypicallycontactthepropertyownertoaskquestionsandrequestadditional
information. Depending on the specic circumstances, the time required to complete the
investigation can range from a few weeks to multiple months.
Aftertheappropriate investigationtakesplace theExemptionDesignee willeitherdetermine
thatinsucientprobablecauseexiststorevokeor,withspecicndingsforoneormoreofthe
reasonsabove,thatthepropertynolongerqualiesforexemption.Ifprobablecauseisfound,
the Exemption Designee will issue written notice to the property owner, county assessor of
property,andcountytrusteeprovidingthebasisforrevocationandthedateitbecomeseective.
Revocationsarenot retroactive unlesstheExemption Designee providesaspecic nding of
fraudormisrepresentationonbehalfoftheapplicant,orafailureoftheapplicanttogiveproper
noticeofthechangeintheuseand/orownershipofthepropertyasrequiredbylaw.Seethe
“ChangestoPropertyAfterInitialExemption”sectiononpage26formoredetailedinformation.
Should the property owner or county assessor disagree with the revocation notice, they may
leanappealwiththeStateBoardwithin90daysofreceipt.Arevocationappealistreatedthe
sameasan appeal of anInitialDetermination of a property exemptionandwill be heard by
anAdministrativeLawJudgeassignedtothecasebytheAdministrativeProceduresDivision
oftheSecretaryofState’sOce.Pleaseseethe“AppealsProcess”sectiononpage24formore
information.Ifnoappealisled,after90daystherevocationbecomesnal.
leased or rented ProPerty, or use of ProPerty by other institutions
revoCation of exemPtion
26
State Board of equalization ProPerty tax exemPtion manual
Shouldthecountyassessorandpropertyowneragreethatallorpartofanexemptionshouldbe
revokedtheExemption Designee canexpedite the revocationprocess by memorializingtheir
agreementandsendingittotheparties.
ChangeinUseofProperty
Aspreviouslystated, if anexempt property is usedby another institution orused for anon-
exemptpurpose,thischangeshouldbereportedtotheStateBoard.AnExemptionDesigneewill
reviewthesituation,requestanynecessaryinformationordocumentation,anddecideiffurther
actionshouldbetaken.
Achangeintheuseofpropertymayoccurifaninstitutionbeginstorentspacetoanotherentity,
oriftheuseofthebuildingchanges.
Generally,ifanexemptinstitutionrenovatespropertythatisalreadyexempt,thepropertywill
remainexemptduringtheperiodofconstructionorrenovation.
Whethernewstructuresareexemptorwillrequireanewapplicationdependsonthespecic
situation.YoumaycontacttheStateBoardifyouhavequestions,andtaxpayersmaychooseto
leanewapplicationforexemptiontopreservetheearliestpossibleeectivedate.
Generally,whenownershipofpropertychanges,anyexistingexemptionendsandtheproperty
isreturnedtothetaxroll.However,thisisnotthecasewhenthechangeisinnameonly.For
instance,ifachurchbuildingownedbythetrusteesofachurchistransferredtothecorporate
formofthechurch,butthecongregationandchurchbodydonotchange,theexemptionmay
continue.
Inthesecircumstances,theExemptionDesigneewillneedtoreviewthedeedtransferringthe
property,andanyotherdocumentssupportingthatthechangeisinnameonly.Ifitisclearthat
actualownershipdoesnotchange,thepropertywillremainexemptandtheExemptionDesignee
willsendthetaxpayerandcountyassessoraletterconrmingthis.
If the available evidence shows that ownership of the property has changed, the Exemption
Designeewillinformthecountyassessor,whowillreturnthepropertytothetaxroll.Inthis
case,thepropertyownermustsubmitanewapplicationforexemption,andthenormalrules
regardingwhentheexemptioncouldbeginwillapply.
Changes to ProPerty after initial exemPtion
neW ConstruCtion and renovation of exemPt ProPerties
Change in the name of an exemPt institution
27
State Board of equalization ProPerty tax exemPtion manual
Realpropertyistypicallyidentiedandrecordedbyparcelidenticationnumber.Anexemption
ofrealpropertyapplieseveniftheexemptparceliscombinedwithanotherparcel.Ifanexempt
parceliscombinedwithanon-exemptparcel,theexemptionwillcontinuefortheexemptparcel
andthenon-exemptportionwillremaintaxable.Inotherwords,anon-exemptparceldoesnot
becomeexemptsimplybecauseitiscombinedwith anexemptone. Ofcourse,if twoexempt
parcelsarecombinedtheentirepropertyisexempt.
Whenanexemptpropertyistransferredtoanotherindividualorinstitution,thepropertytypically
losesitsexemptstatus.
54
Propertytaxexemptionscannotbetransferredorassigned.Thenew
ownerisnotautomaticallyexemptunlessthenewownerandnewuseofthelandfallunderone
oftheveryfewexceptionsthatdonotrequireapropertyownertosubmitanapplication,(e.g.,
federal,state,orlocalgovernments).Thenewownermayimmediatelysubmitanewapplication
forpropertytaxexemption.Ifthenewownerapplieswithin30daysofthetransferandbegins
usingthepropertyimmediately,thenewownercanavoidagapintheexemptstatus.
Aspreviouslyidentied,religiousinstitutionscanbenetfromthespecialeectivedateprovision
containedinTenn.CodeAnn.§67-5-212(b)(3)(B).Seethe“SpecialEectiveDateProvisionfor
ReligiousInstitutions”sectiononpage22formoreinformation.
Thisisajudgmentcallthatmustbemadebythetaxpayer.Thelawstates:
Taxesrelatedtoaproperlyappealedassessmentbeforethecountyandstateboardsof
equalization,shallnotbedeemeddelinquentifthetaxpayerhaspaidatleast
theundisputedportionoftaxwhiletheappealispending.Delinquencypenaltyand
interestpostponedunderthissectionshallbegintoaccruethirty(30)daysafter
issuanceofthenalassessmentcerticateofthestateboardofequalization
anduntilthetaxispaid.
55
Thetaxpayermaychoosenottopaytaxesiftheybelievethepropertywillbeexempt.Ifthe
applicationorappealisnotsuccessful,thetaxpayermayhavetopaydelinquencypenaltiesand
interestfor theunpaidamount.Thetaxpayer maychoose topaytheirtaxesunder protestto
avoidtheseextrafees,andthencollectarefundiftheirapplicationorappealissuccessful.
Thelawstatesthatthetaxpayerwillnotbesubjecttofeesandpenaltiesiftheyhavepaidthe
undisputed portion of the property taxes due. There may not be an undisputed portion of
propertytaxes,ifthetaxpayerbelievestheentirepropertyshouldbeexempt.Theremaybea
disputedportionifthetaxpayerbelievesonlyaportionofthepropertyshouldbeexempt.
Combining ParCels
transfer of exemPt ProPerty
should i Pay my taxes While my aPPliCation or aPPeal is Pending?
54
ThelanguageofTenn.CodeAnn.§67-5-201isambiguous;however,whenreadinconjunctionwith§67-5-212,anapplicationis
required.See Senter Sch. Found., Inc. v. Nobles,No.C.A.900,1990WL3983,at*2(Tenn.Ct.App.Jan.24,1990).
55
Tenn.CodeAnn.§67-5-1512(b).
28
State Board of equalization ProPerty tax exemPtion manual
WhatdoIdoifmypropertyisbeinguseddierentlynow?
Ifthereisachangeintheuseofyourexemptpropertyyoushouldreportittoyourcounty’stax
assessorandtheStateBoard.
Isoldmyproperty.DoIneedtoletsomeoneknow?
Forthepurposesoftheproperty’stax-exemptstatus,no.Exemptionsgenerallydonottransfer
betweenowners,so thepropertywill be addedback to thetaxroll withoutyouhaving to let
anyone know.
Whenwillmyexemptionbegin?
Todeterminewhenyourtaxexemptionwillbegin,reviewthesectiontitled“EffectiveDate”
on page 22.
Willmyorganizationbeexempt?
Thisanswerdependsonawidevarietyoffacts.Thebestansweristoconsulttherelevantsections
ofthismanual,therelevantstatutes,and/oranattorney.
Howlongbeforeadecisionismade?
Thiswillvarygreatlydependingonthetimeoftheyear,howmanyotherapplicationsarepending
beforetheExemptionDesignee,andthecomplexityofyourcase.Yourapplicationwillgenerally
beprocessedwithin6monthsunlessyourcaseisexceptionallycomplexortheapplicationis
placedonhold.
DoIhavetoleaseparateapplicationforeachparcel?
Yes–youmustleaseparateapplicationforeachparcel,includingany“SpecialInterest”parcels
thecountyassessormayhavecreatedforyourproperty.
Whatistheapplicationfee?
Thelingfeeforaninstitutionisbasedonthecombinedvalueofallthepropertiesforwhichan
applicationissubmitted.
AggregateValueofProperty: ApplicationFee:
Less than $100,000 $30
$100,000-$250,000 $42
$250,000-$400,000 $60
$400,000 or more $120
freQuently asked Questions
29
State Board of equalization ProPerty tax exemPtion manual
Paymentmaybesubmittedthroughtheonlineportal,orbycheckformailedorfaxedapplications.
Ifanapplicantisunabletopaythelingfee,pleasecontacttheStateBoard.
Willtheexemptionberetroactive?
No,unlesstheorganizationqualiesforthelimitedthrow-backprovisioncontainedinTenn.
CodeAnn.§67-5-212(b)(3)(B).
DoIhavetoreapplyeachyear?
No,butyou mustnotifythe StateBoardand yourassessorof any changein ownership, use,
lease, etc.
Whatismycasenumber?
Ifwerefertoacasenumber,wearereferringtotheExemptionRecordnumber,orER#,that
shouldbefoundonanycorrespondencewehavesentyou.
WhydoIowepropertytaxesifmypropertyisexempt?
Youmayowepropertytaxesfrombeforeyourpropertywasexempt,orbeforetheeectivedate
of the property’s tax-exempt status. Your property also may not be fully exempt. The Initial
Determinationwilltellyouifyourpropertyisfullyexemptorpartiallyexempt,andwhy.
Yourcounty’staxassessorortrusteecantellyouhowtopayyourtaxes,andmaybeabletowork
outapaymentplan.TheStateBoardhasnocontroloverthat.TheStateBoardonlydetermines
whether your property is exempt and when that exemption starts. If you owe taxes for your
propertyyoushouldcontactyourcountytaxassessorortrusteeforhelp.
MyappealispendingbeforetheAdministrativeJudge.Canwesettlethiswithout
ahearing?
AnExemptionDesigneemayreviewyourappealbeforeitisforwardedtoanAdministrativeLaw
Judgeandreviewanyneworadditionalinformation.
IfachangetotheInitialDeterminationiswarrantedtheExemptionDesigneemayissueanAmended
InitialDetermination.IfyouaresatisedwiththeAmendedInitialDeterminationyoumaywithdraw
yourappealwithoutahearing.IfyouareunsatisedwiththeAmendedInitialDeterminationyou
maycontinuewithyourappealviaahearingbeforeanAdministrativeLawJudge.
Remember,theStateBoardonlyhastheauthoritytocorrectorchangeyourtaxassessment,not
theamountoftaxesyouowe.Ifyourissueiswithyourabilitytopayyoushouldcontactyour
trustee’socetoseewhatoptionsareavailabletoyourorganization.
S C Nashville, Tennessee 37243 615.741.2501 www.comptroller.tn.gov