NASHVILLE (AP) — The Tennessee Court of Appeals is considering whether facilities that operate like businesses within a tax-exempted church should be subject to property taxes.
Advocates for a Nashville church argued in the state appeals court that a gym, a bookstore and a café on its property “fit the spiritual needs of a congregation,” and shouldn’t be taxed.
The dispute involving Christ Church on Old Hickory Boulevard started in 2007 and made its way to the appeals court this month, where a court ruling is pending.
A lower court has ruled in favor of the Tennessee State Board of Equalization, the state’s tax exemption authority, which is asking the church to pay $425,000 in taxes on the facilities on the 40-acre church property.
The estimated annual property tax bill for the three facilities totals $80,000, but the state is asking the church to pay the sum for the past five years.
During a hearing on the case held on Nov. 14, the church’s attorney, Eric Stanley of the Alliance Defense Fund, said if the church had to pay the annual tax bill, they would have to shut down part of their ministry.
“Churches pay back a lot more to society than they pay in taxes,” he said.
He said those facilities are important to the church’s mission of “evangelizing and building up its members.” He also noted that state law exempts college bookstores and hospital gift shops from paying property taxes.
Attorney Lora Fox, who represents Metro Nashville government, said not paying property taxes gives the church an uneven market advantage over similar businesses that do pay taxes.
“It’s not fair to other entities that are paying taxes,” she said.
While the church’s cafe may appear to be a business, it is run by a pastor and serves as a gathering place for the congregation, Stanley argued.
“If a Sam’s Club were run by a pastor, would it qualify?” asked Judge Holly Kirby.
Stanley said that would not be a good comparison because the proceeds from the cafe go back to the church to further its mission.
While the appeal is considered, Christ Church has closed its cafe and bookstore and opened a smaller bookstore selling only Christian books, Bibles and religious gifts. It also transferred its gym to a YMCA.