Request By:
Gayle B. Robbins
County Attorney of Graves County
Courthouse
Mayfield, Kentucky 42066Dewey M. Dick
Leamon Blalock, Moderators
Graves County Association of Baptists
Route 1, Box 17-5
Mayfield, Kentucky 42066
Opinion
Opinion By: David L. Armstrong, Attorney General; By: Alex W. Rose, Assistant Attorney General
You have requested an opinion of this office concerning the application of property taxes to church-owned vehicles. Specifically, you ask:
(1) Is taxation of church property unconstitutional?
(2) Are motor vehicles owned by a church exempt from property taxation if the vehicles are regularly used for educational purposes five days a week transporting children to and from a church-operated school?
(3) Are motor vehicles owned by a church and used strictly for church purposes exempt from property taxation?
(4) If there is no exemption, can the county judge/executive exonerate the tax on church vehicles?
The short answer to all of the above-phrased questions is that, in Kentucky, all church-owned vehicles are subject to the levy of property taxes.
"Notwithstanding . . . the immeasurable benefit of religion to the structure of society, even in the temporal way, there is no inherent immunity in the church from liability for the support of the government. Indeed, that obligation finds sanction in the biblical injunction that every citizen should, 'Render unto Caesar the things that are Caesar's'. The statement has special reference to the payment of taxes. Immunity or exemption must come from an express waiver of the sovereign." Mordecal F. Ham Evangelistic Association v. Matthews, Ky., 189 S.W.2d 524, 526 (1945).
See also, 71 Am.Jur.2d, State and Local Taxation, Section 381; 55 A.L.R.3d 356, 362.
The only exemptions from property taxation in Kentucky are contained in Section 170 of our Constitution. With respect to church property, it states in pertinent part:
"There shall be exempt from taxation . . . places actually used for religious worship, with the grounds attached thereto and used and appurtenant to the house of worship, not exceeding one-half acre in cities or towns, and not exceeding two acres in the country;. . . all parsonages or residences owned by any religious society, and occupied as a home, and for no other purpose, by the minister of any religion, with not exceeding one-half acre of ground in towns and cities and two acres of ground in the country appurtenant thereto. . . ."
Basically then, the property tax exemption for churches is limited to the church building and its pastor's residence. Like most exemptions from taxation, this exemption should be narrowly construed and all doubts and implications resolved against the exemption. Mordecai F. Ham Evangelistic Association v. Matthews, supra, at p. 526. This is because, "equality under law is one of our cherished principles. Duties and rights are reciprocal. It is the duty of every citizen, corporate or natural, to bear his share of the cost of government for the protection and benefits which he receives from it." Id., quoting from Kesselring v. Bonnycastle Club, Ky., 186 S.W.2d 402 (1945).
In the Ham case, the court took note of the fact that there was considerable support at the constitutional convention for the proposition that all church property should be taxed and, apparently, the exemption for ministers' homes was adopted by the margin of one vote as an amendment to the original proposed version of Section 170. Id., p. 526.
The facts of the Ham case bear out the principle enunciated therein that the exemption should be narrowly construed. The issue in that case was whether the residence of Reverend Ham and which was owned by the Mordecai F. Ham Evangelistic Association was entitled to exemption. The court held that although Reverend Ham was a minister of religion, the owner (the Association) was not a "religious society. " Id., p. 528. Based on this distinction, the court disallowed the Association's claim for exemption.
Of like import is the case of City of Ashland v. Calvary Protestant Episcopal Church, Ky., 278 S.W.2d 708 (1955). That case involved a church-owned, two-story building which was partly used for religious activities and was partly rented to a merchant. The court held that since the property was not being used exclusively as a place of worship, it was not entitled to exemption.
From the foregoing discussion we have established at least three principles. First, the property of religious institutions is not intrinsically or inherently exempt from taxation. Second, the exemption is limited to places of worship and parsonages. Third, the exemption from taxation which is granted by our Constitution is to be strictly and narrowly construed. To those principles we may add a fourth, and that is, the exemption seems to be directed solely at real property. We reach this conclusion because in the case of both the place of worship exemption and the parsonage exemption reference is made to the land immediately surrounding the chief object of the exemption. Since motor vehicles are personal property, it is arguable then that a church-owned vehicle can never be exempt from property taxes even if it is used as a place of worship or as a parsonage. In any event, in the vast majority of cases one may safely assume that the vehicles are used for transportation purposes rather than as residences or church buildings. We conclude, therefore, that neither the place of worship nor the parsonage exemption applies to church-owned motor vehicles.
The question remains, however, whether church-owned vehicles used to transport children to and from school are exempt. Section 170 of our Constitution also exempts the property of "institutions of education not used or employed for gain by any person or corporation, and the income from which is devoted solely to the cause of education." For purposes of the following discussion it will be assumed that the schools involved here are those of an exempt character (for discussion of the nature and extent of the educational exemption see Kesselring v. Bonnycastle Club, Inc., Ky., 186 S.W.2d 402 (1945)). Even assuming that the institution in question is an exempt one, it is our opinion that the vehicles would not be exempt from property tax. This is because ownership, and, thus, tax liability is not lodged in the institution of education. It is the owner of the piece of property who is obliged to list it with the property valuation administrator and to pay the property tax upon it. See KRS 132.220. If an educational institution which is allowed the use of motor vehicles for transporting its students has neither legal nor beneficial ownership of those vehicles, it has no legal obligation to pay any property taxes upon those vehicles, and, therefore, it has no need for a tax exemption to be applied to those vehicles. To allow a church to received the benefit of an educational institution's property tax exemption simply because the church loans the allegedly exempt property to the educational institution, would be tantamount to saying that any person, natural or corporate, can be relieved of the duty to pay taxes on any particular piece of property by allowing some exempt institution to have the use of that property for a period of time. Such a ruling has no clear basis in law and would certainly be calculated to introduce much confusion into the administration of our property tax system. Though ownership by the exempt institution does not, in itself, always establish entitlement to exempt status for a particular piece of property, still it is one of the necessary indicia to establish the entitlement of that piece of property to exempt status. We do not perceive this portion of our opinion as having any significant negative impact on the educational institution exemption since any vehicles registered to the institutions would be entitled to exemption.
The final issue to be disposed of concerns the county judge/executive's authority to exonerate the tax on church vehicles. The county judge's authority to issue what is commonly termed an "exoneration" is extremely limited. Only mere clerical errors in the assessment may be corrected by the use of an exoneration. See KRS 133.110. The county judge has no legal authority to exempt anyone's property from taxation. The Kentucky Constitution specifically requires that all property shall be taxed except that which is exempted under the Constitution. See § 172, Kentucky Constitution. Clearly, the county judge/executive has no authority to issue exonerations for church vehicles.
To summarize, churches enjoy no exemptions from taxation other than those expressly granted them by law. In Kentucky the church property tax exemption is limited to places of worship and the residences of ministers owned by religious societies. Church vehicles fall outside of these narrow exemptions. Mere use of a church-owned vehicle by an educational institution does not exempt that property from taxation. The educational institution must own the property in order for the property to enjoy the benefit of the educational institution's exemption from taxation. And, finally, the county judge/executive has no authority to exonerate the tax bills on church owned vehicles.