The Veterans Hall Tax Exemption

(from Maine Townsman, February 2008)
Geoff Herman, Director of State & Federal Relations, MMA

In 2006, the Legislature expanded the property tax exemption that applies to the real estate and personal property of veterans’ organizations. The law was PL 2005, chapter 645, and the change became effective from the point of view of the municipal assessing function on April 1, 2007.

Prior to the expansion of this property tax exemption, the only property belonging to the veterans’ organization that was eligible for the exemption was the property that was used solely by those organizations for their meetings, ceremonials or instruction. The banquet hall that was rented out for wedding receptions or other functions and the adjacent field that was used by ball teams for practice or play were not eligible for the property tax exemption. In short, the property was split for assessing purposes into the exempt portion and the non-exempt portion.

In addition (and as is the case with exemption law generally) the property subject to the exemption had to be owned, occupied and used solely by the veterans’ organization for its purposes. Property that was shared in ownership and use by the veterans’ organization and another organization did not qualify for the exemption.

As changed by the Legislature in 2006, and made effective as of April 1, 2007, the property of veterans’ organizations is now eligible for exemption if it is being used for the traditional purposes (meetings, ceremonials or instruction) or if it is being used in any other way to “further the charitable activities of the organization”. Furthermore, the veterans’ organization no longer has to own, occupy and use the entire property in order to obtain an exemption. The amended law now provides that if the veterans’ organization is not the sole occupant of the property, the exemption only applies to the portion of the property that the organization does own, occupy and use for its own purposes.

By this expansion, a veterans’ organization may claim that all the real estate it owns is subject to the exemption if it believes all its activities are either ceremonial, instructive or “charitable” in nature or purpose.

Maine’s boards of selectmen and city councilors should be aware that because of a section of Maine’s Constitution, any affected town or city is due a reimbursement from the state for 50% of the property tax loss associated with this expanded exemption.

It is sometimes the case that the elements of municipal government that operate the assessing function and the finance function and the overall administrative function are not all fully aware of the need to file a claim for these property tax exemption reimbursements, or no one is quite sure who is responsible to file.

It is also sometimes the case that there is a disconnect between a town’s board of selectmen and the town’s private-sector “assessing agent” with respect to which entity, the town or the agent, should be filing these claims for reimbursement. Nearly half of the towns in Maine use private sector assessing agents.

In any case, if a veterans’ organization is located in your community, the municipal officers should inquire as to the extent that organization’s property is exempt from taxation. To the extent the level of exemption exceeds the “meetings, ceremonials and instruction” standard, your community should file for its exemption reimbursement with Maine Revenue Services. The reimbursement is provided for the benefit of the property taxpayers.

The person to contact at Maine Revenue Services for information about filing for this reimbursement is Linda Lucas at 287-2013.