Church can keep tax exemption despite receiving money from use of parking lot, court rules
A church in Wisconsin can legally maintain its tax exempt status even though it also receives donations from the use of its parking lot, a state appeals court panel has ruled.
Central United Methodist Church of Milwaukee had been allowing patrons of The Rave/Eagles Club to park at its lot in return for donations to the church.
This prompted the city of Milwaukee to change the designation of the parking lot in 2017 from exempted to “local mercantile,” thus removing the lot’s tax exemption.
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In a decision released Tuesday, a three-judge panel of the Wisconsin Court of Appeals overturned a circuit court ruling upholding the removal of the tax exemption.
Appeals Court Judge Joseph Donald authored the panel's opinion, arguing that the donations collected by the church through concert attendee parking was “incidental” and therefore the church was “entitled to a property tax exemption.”
“Central United does not own a for-profit corporation to isolate any for-profit activities, nor does Central United lease out the parking lot to hold for-profit activities,” wrote Donald.
“Central United organized unpaid volunteers to collect donations on concert nights. Volunteers held up signs with a suggested donation amount, however, concert-goers were not required to make donations to use the parking spots.”
Donald went on to compare the money brought in through the concert parking to “donations brought in from other sources, such as individual donations, bake sales, or car washes.”
“All donations support the functioning of the church and its many activities, ranging from community support groups, to food pantries and mission trips, to children’s activities, to Bible school,” continued the judge.
“Therefore, while the amount brought in by the parking lot use may not necessarily be inconsequential, as the circuit court found, it certainly is incidental.”
The panel decision overturned an earlier ruling by Circuit Judge Paul Van Grunsven, who had concluded that the church parking lot was not being used for tax exempt purposes.
“This use of the property does not accrue benefits to mankind directly nor does it relieve the state from expenses, as providing free flu shots to the poor would,” wrote Van Grunsven, as reported by the Milwaukee Journal Sentinel.
“[Central United] has not met its burden of establishing it exclusively uses its parking lot for exempt purposes, as required by the statute, the lot is taxable for the time period at issue.”
