Amendment 6 would give tax break to veterans' organizations
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Amendment 6 would give tax break to veterans' organizations

Date: October 25, 2006
By: Kathryn Buschman
State Capitol Bureau
Links: SJR 26

JEFFERSON CITY - Amendment 6 would add four words to Missouri's Constitution: "or for veterans' organizations." The proposed amendment would categorize veteran's organization as charitable, and exempt them from paying real and some personal property taxes.

"Of all the issues that are on the Missouri ballot this is probably the least controversial and easiest yes votes for the people of the state of Missouri to clarify that we don't want any more taxes on our veterans organizations," said Sen. Luann Ridgeway, who sponsored the resolution in the Senate.

The Missouri Constitution exempts "purely charitable" organizations from paying property taxes.  But in the late 1990s, the State Tax Commission ruled certain aspects of veterans' organizations are not purely charitable. "The part of the property that they used for charitable purposes are exempt and the rest of it is taxable," said Randy Turley, chief counsel for the commission.

According to Turley, activities that qualify as charitable are those that benefit society, like soup kitchens and housing for the poor. 

"But other activities like a restaurant and a bar, the typical ones for veterans' organizations, under the current law would not be a charitable activity," Turley said.  "The court cases even say even if the profits from it go to charitable purposes that doesn't qualify it [as charitable]."

Rich Heigert, chairman of the Missouri Association of Veterans Organizations said it doesn't make sense not qualify veterans' organizations as charitable. "We are the primary activists for veteran's rights that they are guaranteed when they raise their hand and say I do to fight, Heigert said. "We are their advocates." 

Ridgeway said veterans' organization would struggle if forced to pay property taxes. "Many of theses buildings are older buildings that are in commercial areas now and if forced to pay taxes at the rated would be assessed against the commercial organization I think they would have a hard time staying in business," she said.

Ridgeway said that, so far, only two taxing jurisdictions in the state, Jackson County and St. Charles County, tax veterans' organizations.  But Ridgeway argues, that's just the start.  "It will be like dominoes falling, " Ridgeway said. "If two are taxing them sooner or later all the taxing organizations are going to be under pressure to tax these organizations and that can be a make or break propositions for many of the veterans organizations."

St. Charles County has been taxing veterans' organizations for more than a decade. The county began taxing St. Paul Knights of Columbus in 1989. "To my knowledge they ran a bar out of it, which a good majority of them do," said Matt Brown, special assessments manager for St. Charles County assessors office.

"You're competing with the gentleman down the road that is paying his full amount of taxes and you're not paying any-this doesn't seem right," Brown said. "You may be able to charge less for your product than the gentleman down the road because you don't have real or state or personal property tax."

The state tax commission agreed with the county's decision to tax the veteran organization. St. Paul Knights of Columbus appealed the decision to the Circuit Court.

"The Circuit Court determined that social activities are not deemed charitable and therefore are taxable," Brown said. "They're not saying partially or a little, but they are saying 100 percent taxable."

The county does offers partial exemptions for veterans' organizations. "We try to measure their charitable work and then offer them a partial exemption."

Brown said veteran's organizations in the county have increased the amount of charitable work they do, which in turn increases their exempt portion
.

Dewey Riehn, a member of the VFW Post 218 in Columbia said he is grateful the organization doesn't have to pay property taxes. "The post is located in a very desirable area and we speculate by looking at the property around us that if we ever have to pay property tax it would be $50,000-$60,000 a year," Riehn said. "That would be about well over half of what we are able to put in the community now and our community scholarships and projects would be hurt tremendously.

Riehn continue to say smaller posts in the state would be forced to close their doors if they had to pay property taxes.