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Tax Exempt Status of "Public Charities"
In a Minnesota Supreme Court Decision of Dec. 6, 2007 (Under the Rainbow Child Care vs. Goodhue County), the court changed the definition of a public charity by elevating the importance of one of the six basic Northstar criteria normally accepted as defining a charity. This, in effect, would limit the number of organizations that would qualify as a public charity and therefore be exempt from property and sales taxes.
This decision could have far-reaching implications for nonprofit service providers throughout the state. During the 2008 legislative session, the tax legislation provided for a moratorium on changing current practices or policies in assessing the property of purely public charities and a moratorium on changing the taxable status of a purely public charity. This moratorium is in effect for the 2008 assessment, taxes paid in 2009.
Legislative Direction:
- Ensure that property and sales tax exemptions continue to apply to non-profit
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