WHAT PROPERTY QUALIFIES FOR PROPERTY TAX EXEMPTION?
The general rule is that all property in Wisconsin is taxable unless it is specifically exempt from tax by the state legislature. The legislature enacted state statute section 70.11 which lists about 40 categories of specific exemptions.
Statutes granting exemption are, according to the legislature and the courts, strictly construed against exemption and in favor of taxation. The property owner has the burden to prove entitlement to exemption and that it fits clearly within a precise statutory exemption category.
Typically, under the categories in state statute section 70.11, exemption is based on ownership of the property, use of the property or a combination of ownership and use.
Besides the exemption categories listed in state statute section 70.11, other exemption possibilities exist. For example, separate and additional categories of exempt personal property are listed in state statute section 70.111; and, under state statute section 70.112, property (such as property of a utility company) subject to a different form of tax, is typically exempt from property tax.
IF WE ARE A TAX EXEMPT ORGANIZATION FOR FEDERAL
INCOME TAX PURPOSES (SUCH AS A 501(c)(3) CORPORATION), DO WE AUTOMATICALLY QUALIFY FOR
PROPERTY TAX EXEMPTION?
No. Federal income tax exemption (such as 501(c)(3) status) does not guarantee property tax exemption. Income tax exemption is governed by federal law and Internal Revenue Code requirements. Property tax exemption is governed by separate state law concepts and requirements.
CAN PROPERTY BE PARTIALLY EXEMPT?
Yes, under the right circumstances. Property used in part for exempt purposes and in part for an unrelated trade or business for which the owner is subject to income tax under the Internal Revenue Code may be partially taxed on that portion which is attributable to the unrelated trade or business. State statute section 70.1105 contains requirements for partial exemption. Besides the section 70.1105 requirements, owners seeking partial exemption must be aware of the leasing and rent restrictions in section 70.11s preamble.
IF I THINK MY PROPERTY QUALIFIES FOR PROPERTY TAX
EXEMPTION WHAT DO I DO?
A Wisconsin Department of Revenue application form must be filed with the assessor for the locality in which the property is located. The application form may be obtained from the local assessor.
The form must be filed for any property that was taxed in the previous year but, because of a change in the use, occupancy or ownership, it may now qualify for exemption.
The application must be filed by March 1st of the year for which exemption is sought. Remember that the presumption is that property is taxable, and the owner seeking exemption has the burden to show that the property clearly qualifies for exemption.
The application must be completed in its entirety so that necessary information is provided to the assessor to allow for an informed decision. In certain cases, the assessor may require additional information. Insufficient information may result in denial of the application.
No application needs to be filed for certain property, such as municipal property, property of the state, and manufacturing machinery and equipment. You should check section 70.11 to see if an application is necessary for your organization and your property.
IF MY ORGANIZATION
PURCHASES PROPERTY THAT IS
EXEMPT, DO WE NEED TO APPLY FOR AN EXEMPTION?
If a currently exempt property changes ownership the new owner needs to apply for exemption even if the owner has qualified in the past for exemption or the new owner thinks the property is exempt. The new owner needs to apply because the property is not automatically exempt even though it was exempt the previous year.
IF MY ORGANIZATION CURRENTLY OWNS PROPERTY THAT IS
EXEMPT, DOES ADDITIONAL PROPERTY ACQUIRED BY MY ORGANIZATION AUTOMATICALLY QUALIFY FOR
No. An organization acquiring additional property must apply with the local assessor by the March 1st deadline for exemption on that new property.
Exemption determinations are made annually. When use or ownership change so that property may qualify for exemption, an exemption application must be timely filed. Be aware that newly acquired property may cause an owner to exceed statutory acreage limitations on exemption.
IF MY ORGANIZATION DOES NOT OWN REAL ESTATE, MUST
IT FILE AN EXEMPTION APPLICATION FOR ITS PERSONAL PROPERTY?
Yes. The requirements of state statute section 70.11 apply to both real and personal property.
IS THERE A FILING DEADLINE?
Yes. Applications for exemption must be filed with the local assessor on or before March 1st of the year for which exemption is sought.
WHAT IF I MISS THE DEADLINE?
March 1st is a statutory deadline that must be met to obtain the benefit of property tax exemption. If the deadline is missed, no exemption can be granted for that year.
ARE THERE ANY OTHER IMPORTANT DATES?
Yes. Besides the March 1 exemption application deadline, January 1, March 15, and March 31 are important dates.
In Wisconsin, a propertys status (taxable or exempt) is determined as of January 1 of each year. Ownership and use as of that date is critical since there is no pro-ration of the tax if property is acquired or sold later in the year. For example, if an entity that would otherwise qualify for property tax exemption acquires its parcel on February 1, the first year it could possibly qualify for exemption under a section 70.11 category would be January 1 of the following year.
January 1 is also important because, even if an exemption has been granted for a given year, the assessor may review and even deny the exemption for the following year. The status of the property as of each new January 1 governs whether the property is entitled to exemption for that year.
As explained below, March 15 and March 31 are important dates because they are deadlines for owners of already-exempt property to file certain reports.
WHO MAKES THE EXEMPTION DETERMINATION?
While the state legislature created the state statutes creating the exemption categories, the local assessor determines, on a case-by-case basis, whether an owner proved that its property fits within a category and whether the property is thus exempt.
IS THE ASSESSOR REQUIRED TO NOTIFY ME OF THE
In most cases, the assessor will notify the organization seeking exemption of the determination, but the assessor is not required to do so.
WHAT IF I DISAGREE WITH THE ASSESSORS
The owner must follow the exclusive procedure set forth in state statute section 74.35. The local board of review does not have any authority regarding exemption issues.
IF THE EXEMPTION IS GRANTED, DO I HAVE FURTHER
Yes. Annually, by March 15th, any organization that owns property that is exempt under section 70.11 (except property of the state or municipality), and that was used in a trade or business for which the owner was subject to tax under sections 511 to 515 of the Internal Revenue Code, must file a report with the clerk of the taxation district detailing the activities and a description of the property used in the trade or business (section 70.339). The report form is prescribed by the Department of Revenue and available from the local municipality.
By March 31st of each even-numbered year, owners of property exempt under section 70.11, must file a report with the clerk of the taxation district describing the property, giving the owners estimate of its fair market value, and indicating if the property was leased in the preceding two years (section 70.337). This report form is also prescribed by the Department of Revenue and available from the local municipality.
STILL HAVE QUESTIONS?
Contact your local assessor.
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Wisconsin Association of Assessing Officers