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ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
REVISED
veterans' organizations; leased property; classification
Purpose
Classifies property, buildings and fixtures that are leased to a veterans' organization as class 9 property and exempts property owned by or leased to a veterans' organization that is primarily used for veterans' organization operations from property tax. Prescribes requirements for property tax classification affidavits.
Background
Property is
classified for assessment purposes into nine classes for the common treatment
of the property. Class 9 property includes property, buildings and fixtures
that are leased to nonprofit charter schools, residential treatment and
education centers, churches and religious assemblies or institutions. The
assessed valuation of class 9 property is one percent of its full cash value or
limited valuation, as applicable. The Arizona Constitution allows the property
of
non-profit charitable associations or institutions to be exempt from property
tax, subject to the limitations prescribed by statute (A.R.S. §§ 42-11132;
42-11132.01;
42-12009;
42-12010;
and 42-15009;
Ariz.
Const. art. 9 § 2).
A veterans'
organization exempt under Section 501(c)(19) of the U.S. Internal Revenue Code
(U.S. IRC) must be either: 1) a post or organization of which at least 75
percent of the members are past or present members of the U.S. Armed Forces; or
2) an auxiliary unit or society of a post or organization. A veteran's organization
exempt under Section 501(c)(3) of the U.S. IRC must be organized and operated
exclusively for outlined purposes, including charitable purposes, and the
earnings of the organization may not benefit any private shareholder or
individual
(26
U.S.C. § 501).
The Joint Legislative Budget Committee (JLBC) fiscal note states that JLBC has not been able to obtain data needed to determine the fiscal impact. According to the Maricopa County Assessor's Office, H.B. 2320 is expected to have a minimal impact on the tax base. Based on this information, JLBC anticipates that the state General Fund impact would be minimal (JLBC fiscal note).
Provisions
1. Exempts, from property tax, property, buildings and fixtures that are owned by or leased to a veterans' organization and that are primarily used for veterans' organizations operations.
2. Classifies, as class 9 property, real property and improvements, including buildings, furniture, equipment and fixtures, regardless of ownership, that are leased to, and used exclusively by, a veterans' organization's post on the premises.
3. Stipulates that if only part of the parcel or improvements to real property is leased to a veterans' organization and primarily used or held for veterans' organization operations, only the leased portion qualifies as class 9 property.
4. Requires, for leased property to qualify for the class 9 classification, a veterans' organization to annually file an affidavit with the county assessor that the organization:
a) continues to use or hold the property primarily for the veterans' organization operations; and
b) is the sole economic beneficiary of the class 9 property classification.
5. Requires a property owner that leases property to a veterans' organization to file an affidavit with the county assessor stating that the veterans' organization is the sole beneficiary of the change in property tax classification and that the charged lease rate is consistent with the lease rates charged to other tenants of the property or a fair market rate.
6. Exempts a veterans' organization that owns the property, if the veterans' organization files with the county assessor evidence of the organizations' tax-exempt status and an affidavit that the property is primarily used or held for veterans' organization operations, from filing subsequent affidavits until all or part of the property is conveyed to a new owner or is no longer primarily used or held by the veterans' organization.
7. Requires a veterans' organization that owns the property to notify the county assessor in writing, if the property is conveyed to a new owner or is no longer primarily used or held by the veterans' organization.
8. Defines veterans' organization as a U.S. veterans' organization that qualifies as a charitable organization and is recognized under section 501(c)(3) or 501 (c)(19) of the U.S. IRC.
9. Makes technical and conforming changes.
10. Becomes effective on the general effective date.
Revisions
· Updates the fiscal impact statement.
House Action
WM 2/2/22 DP 6-0-4-0
MAPS 2/14/22 DP 15-0-0-0
3rd Read 2/24/22 59-0-1
Prepared by Senate Research
June 1, 2022
MG/AN/slp