McNees Wallace & Nurick LLC: Religious Camp Exemptions Continue Under Attack

by James L. Fritz

In our May newsletter, we discussed the Pennsylvania Supreme Court's decision upholding denial of real estate exemption to a religious camp.  Mesivtah Eitz Chaim of Bobov, Inc. v. Pike County Board of Assessment Appeals, ___ Pa. ___, 44 A.3d 3 (2012) [enhanced version available to lexis.com subscribers].  While the lower courts had applied some surprising interpretations to the court-developed "HUP Test" (see discussion of test in "Contribution to Construction Cost ..." article), the Supreme Court limited its review to the question of whether statutory charitable exemption tests in Act 55 of 1997, the "Purely Public Charity Act," trumped the court's HUP Test.  Not surprisingly, the court held that its own, constitutionally-based test prevailed over the statute.  Immediately after the Mesivtah decision, the Commonwealth Court issued another decision denying exemption to another church-related camp.  Camp Hachshara Moshava of New York v. Wayne County Board for the Assessment and Revision of Taxes, 47 A.3d 1271 (Pa. Cmwlth. 2012) [enhanced version available to lexis.com subscribers].

In Moshava, the Commonwealth Court affirmed a county court ruling sustaining the assessment board's denial of charitable exemption to a camp providing social, recreational and educational activities for special needs children.

Surprisingly, the court cited to its own unpublished panel decision in the Mesivtah case which was affirmed by the Pennsylvania Supreme Court.  Such unpublished decisions are not binding precedent.  Although they may be cited for persuasive value, it is unusual to do so.  Among the points cited was the remarkable assertion that the camp did not relieve a governmental burden because its facilities were used by the campers and children of staff and not by the local community at large.  By this standard, most colleges and institutions for the sick and infirm would fail the relief of government burden test because the institutions primarily serve persons from outside the local community.

With respect to Camp Moshava, the court further held that no governmental burden was relieved because the camp failed to show that its services relieve any specific burden imposed by the MH/MR Act.  The court also stated:

Camp Moshava has failed to demonstrate that the government is obligated to provide social, recreational or educational activities for special needs children at summer camp ....

It seems an unbelievably narrow position to say that an organization may qualify for charitable exemption only if it can show that it provides services that are very narrowly and specifically provided for in a state statute.

As the courts in this case addressed only one element of the HUP Test, it may be that this camp would have failed to qualify for exemption in any event.  However, the analysis applied in this and other recent cases makes it seem that the Commonwealth Court, if not others, is going out of its way to apply unusually stringent criteria in charitable exemption cases.  Organizations seeking exemption anew or defending their existing exempt status should consult carefully with counsel and make every effort to anticipate and prepare to meet the tight tests which they may face in the courts.


© 2012 McNees Wallace & Nurick LLC

PA TAX LAW NEWS is presented with the understanding that the publisher does not render specific legal, accounting or other professional service to the reader. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using this material must always research original sources of authority and update this information to ensure accuracy and applicability to specific legal matters. In no event will the authors, the reviewers or the publisher be liable for any damage, whether direct, indirect or consequential, claimed to result from the use of this material.

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