In Montana, property owned for the use of a non-profit cemetery is exempt from property taxation.[1] In Resurrection Cemetery Association, Inc. v. Montana Department of Revenue,[2] the Montana Tax Appeal Board was confronted by a scenario where the cemetery had leased a portion of its land to a hotel and a retail storage unit, which were then build on cemetery land. Before one conjures up in his or her mind images of Poltergeistian hauntings at the hotel and storage unit, the improvements were reportedly built on vacant cemetery land and the improvements themselves were admittedly subject to property tax.
The cemetery used the funds from the land leases to support cemetery operations. However, the Montana Tax Appeal Board determined that the land under the hotel and storage unit where not exempt from Montana property tax. The Board ruled that “It boggles credulity to posit that a cemetery or a cemetery association which has allowed a for-profit storage unit business to be constructed, maintained and operated on its real property, is entitled to a tax exemption on that real properly.”[3] The Board ruled that the storage unit “has nothing to do” with a cemetery, and therefore is not subject to the cemetery’s property tax exemption.[4] The taxpayer conceded the property tax exemption for the hotel at oral argument, perhaps sixth sensing that the Board was burying that argument.
I have also litigated a property tax exemption before the Montana Tax Appeal Board. Like the Board in Resurrection Cemetery Association, the Board Members hearing my argument that a chamber of commerce should be considered a tax exempt museum gave my argument little consideration. The Board appears to require a strong connection between the property and the statutory exemption with little room for creative argument.
Jared M. Le Fevre is a Partner in the Tax, Trusts and Estates Practice Group of Crowley Fleck PLLP. Mr. Le Fevre represents taxpayers before the IRS, IRS Independent Office of Appeals, Tax Court, Federal District Court and state tax agencies throughout Montana, Wyoming, North Dakota, Idaho, and Utah. Mr. Le Fevre is involved in federal and state and local tax audits, appeals, and tax resolution throughout these western states. Mr. Le Fevre also advises clients on the tax effects of business and real estate transactions.
[1] Mont. Code Ann. § 15-6-201(1)(h).
[2] Montana Tax Appeal Board, Case No. SPT-2018-37, 2020 WL 3484039 (Mont.Tax.App.Bd. 2020).
[3] Resurrection Cemetery Association, 2020 WL 3484039, at *7
[4] Id.