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Exemptions

If you feel you meet the qualifications for exempt status on your property, please call the office at 479.784.1516 or contact us by email to have an application sent, or come by our office.

 

  1. Who makes the decision as to whether a property is exempt or not?
    The assessor and the assessor alone has the full and sole authority to make the decision, but the decision is subject to appeal, Hilger v. Harding College, 231 Ark. 685, 331 S.W.2d 851 (1960).
  2. What property in Arkansas is exempt from taxation?
    (1) public property used exclusively for public purposes; (2) churches used as such; (3) cemeteries used exclusively as such; (4) school buildings and apparatus; (5) libraries and grounds used exclusively for school purposes; and (6) buildings and grounds and material used exclusively for charity, Ark. Constitution Art. 16 Sec. 5. (7) All capital invested in a textile mill for the manufacture of cotton and fiber goods in any manner is exempt for seven years from the date of the location of said mill, Arkansas Constitution Amd. 12. (8) Intangible personal property may be designated as one or more classes of personal property and such class or classes may be exempted by the legislature, Arkansas Constitution Amd. 57. All intangible personal property has been exempted by the legislature, ACA 26-3-302. Household furniture and furnishings, clothing, appliances, and other personal property within the home, if not held for sale, rental, or other commercial or professional use, are exempt, Arkansas Constitution Amd. 71.
  3. Are there any uses of property not contained in the constitution that are exempt?
    No, all laws exempting property from taxation, other than as provided in the constitution, shall be void, Arkansas Constitution Art.16 Sec. 6. This section is a limitation upon the legislature to exempt property, Brodie v. Fitzgerald, 57 Ark. 445, 22 S.W. 29 (1893), Wayland v. Snapp, 232 Ark 57, 334 S.W.2d 633 (1960).
  4. Is the property of disabled veterans exempt from property tax.?
    Probably not, as such exemption is not one listed in the constitution as is required by law, Arkansas Constitution Art. 16, Sec.6. There is no case law addressing the subject at this time but at some point the exemption may be challenged. There is a statutory provision providing that such property is exempt, ACA 26-3-306.
  5. If part of the property is utilized for a proper exempt use and part is utilized for a non-exempt use, can the property be divided into two parcels for tax purposes, one exempt and one taxable?
    Yes, Burgess v. Four States Memorial Hosp., 250 Ark. 485, 465 S.W.2d 693 (1971).
  6. How much proof does the taxpayer have to present in order obtain an exemption for his property?
    He must establish entitlement “beyond a reasonable doubt” and there is a strong presumption in favor of the taxing power, Pledger v. C.B. Form Co., 316 Ark. 22, 871 S.W.2d 333 (1994).
  7. What is the most pertinent question with regard to a property’s taxable status?
    The primary and predominant use to which the property is put, Arkansas Conference Assn. of Seventh Day Adventist, Inc. v. Benton County Bd. Of Equalization, 304 Ark. 95, 800 S.W.2d 426 (1990).
  8. If any property is held or used with a “view toward profit” are there any circumstances whereby it could be exempt?
    No, it is not necessary to the rule that the organization make a profit but just that it uses the property with a view toward profit, Ponder v. Richardson, 213 Ark. 238, 210 S.W.2d 316 (1948); Miller County v Opportunities, Inc. 334 Ark. 88, 971 S.W.2d 781 (1998).
  9. If a nonprofit charitable organization has a thrift shop and uses the income to pay disabled workers and/or uses the income to operate and expand the charity and further its goals is its property exempt?
    Yes, the property must be used primarily and predominantly for charitable purposes, and owner must be a “charitable organization” and the business must not be operated with a view toward profit, Burgess vs. Four States Memorial Hospital, 250 Ark. 485, 465 SW2d 693, 1971.
  10. Are lands exempt that were purchased by an otherwise exempt organization and held solely for sale or rent for the sake of profit?
    No, School District of Fort Smith v. Howe, 62 Ark. 481, 37 S.W. 717 (1896).
  11. Where lots are held by an improvement district for sale only to recoup delinquent improvement district taxes owed to the district, may the lots be exempt?
    Yes, the district is using the lots for a public purpose and not for a proprietary purpose, Pulaski County v. Carriage Creek , 319 Ark. 12, 888 S.W.2d 652 (1994).
  12. May private schools be exempt?
    Yes, but they cannot be operated with a view toward profit, Sebastian County v. Educare Centers of Arkansas, Inc., 296 Ark. 538, 758 S.W.2d 413 (1988).
  13. Where property that might otherwise be exempt is leased out at market rate, may the property be exempt?
    No, the primary use of the property is for business and that is not authorized by the constitution. This is true even if the lessee uses the property for a normally exempt purpose. It is the primary use that is determinative, Arkansas Conference Assn. of Seventh Day Adventist, Inc. v. Benton County Bd. Of Equalization, 304 Ark. 95, 800 S.W.2d 426 (1990).
  14. Where property that might otherwise be exempt is leased out at a nominal rate and the lessee and the use of the property would ordinarily be exempt, may the property, in fact, be exempt?
    Yes, Arkansas Conference Assn. of Seventh Day Adventist, Inc. v. Benton County Bd. Of Equalization, 304 Ark. 95, 800 S.W.2d 426 (1990).
  15. Does the word “exclusively” as it is used in Article 16 Section 5 of the Arkansas Constitution, mean that the property absolutely cannot be used for any other purpose?
    No, there can be some nonconforming incidental use, as long as the property is used primarily and predominantly for one of the listed exempt purposes, City of Little Rock v. McIntosh, 319 Ark. 423, 892 S.W.2d 462 (1995).
  16. If a producing mineral interest is owned by an entity such as a county, the State of Arkansas, a church, school, or charity, whose property is ordinarily exempt, is the mineral interest also exempt?
    No, Arkansas Constitution Article 16 Section 5, and Section 6. To qualify, the mineral interest would have to be used directly and exclusively for the same exempt purpose as that of the entity. In this case the primary use is for business. Even if the income is used to support the exempt entity, it is not exempt because the exempt use of the entity would be secondary. The secondary use, no matter how meritorious, is irrelevant, Hilger v. Harding College, Inc., 231 Ark. 685, 331 S.W. 2d 851 (1960). However, the State of Arkansas is immune from suit in state courts to collect any delinquent tax, Arkansas Constitution Article 5 Sec. 20. If the state refuses to pay the tax on the producing mineral interest the only remedy the county may have is to pursue a claim before the Arkansas Claims Commission. The lien does remain on the property and if the state transfers ownership to someone who does not have sovereign immunity the lien may be enforced as against any other delinquent property, AG Opinion No. 2008-023.
  17. Is property owned by an instrumentality of the federal government exempt?
    No, however, it is immune from state and local taxation, U.S. Const. Article VI Clause 2 (the “Supremacy Clause”). The result is about the same except there is no requirement that the property be used for a public purpose.
  18. Is property owned by the Federal Land Bank immune?
    Yes, but the U.S. Congress has waived immunity for the banks real property. However, its personal property remains immune, 12 U.S.C. Sec. 2098.
  19. Is real property owned by HUD exempt?
    No, and this includes any homes or other properties acquired by HUD through foreclosure, 12 USCA 1714; Byram Holding Co. v. Bogren, 2 N.J. Super. 331, 63 A.2d 822 (1949). However, personal property owned by HUD is exempt, United States v. County of San Diego, 249 F. Supp. 321 (S.D. Ca. 1966).
  20. What is required for a public use exemption?
    The property must be owned by a public (governmental) entity and used exclusively for a public purpose, City of Little Rock v. McIntosh, 319 Ark. 423, 892 S.W.2d 462 (1995).
  21. If a governmental entity, church, charity, school, library, or cemetery becomes the owner of any property, after January 1, and uses it for an exempt purpose, does the exemption take effect immediately upon acquisition?
    No, the status of the property is established as of the January 1 and does not change until January 1 of the following year. ACA 26-34-101, AG Opinion No. 2008-023.
  22. If, after January 1, a governmental entity acquires any real or personal property and uses it for a public purpose and claims an exemption, can the county collect from the governmental entity the taxes that had accrued as of January 1 of that year?
    No, a governmental entity it is immune and cannot be sued for delinquent taxes. The county may pursue their claim before the state claims commission, AG Opinion No. 2008-023.
  23. If a qualified Disabled American Veteran becomes the owner of real property on or after January 1 and uses it as his homestead does the DAV exemption take effect immediately upon acquisition?
    No, the status of the property is established as of January 1 and does not change until January 1 the following year, ACA 26-34-101. No one has the power to waive the tax and the lien thereof stays with the property, AG Opinion No. 2008-023. However, if the DAV bought the property from a person who had a DAV exemption on the property at the time of sale there would be no interruption of the exemption, ACA 26-3-306.
  24. Is a widow/widower of a Disabled American Veteran entitled to the exemption status provided to their spouse?
    Arkansas Code 26-3-306 states that "The surviving spouse shall be entitled to the exemption provided for in this section so long as the surviving spouse remains unmarried".  Download form.
  25. Is property financed, purchased or constructed with Act 9 bond funds exempt from property tax?
    Yes, ACA 14-164-701. However, it must be used exclusively for a public purpose as provided in the constitution and the property must be public property, that is, it must be owned by a governmental entity or an arm of that entity. An example is the property owned by the Arkansas Development Finance Authority that issues bonds under Act 9, Wayland v. Snapp, 232 Ark. 57, 334 S.W.2d 633 (1960).
  26. Does maturity and payment in full of Act 9 Bonds independently trigger the end of the public purpose and the end of the exemption of the property from ad valorem taxation?
    No, a determination has to be made, and where the governmental entity under which the bonds were issued adopts an ordinance to the effect that the public purpose continues in effect because of jobs and other benefits to the community, the exemption continues in effect, Pulaski County v. Jacuzzi Bros. Div., 332 Ark 91, 964 S.W.2d 788 (1998).
  27. Does it matter who owns a school in order for it to be exempt?
    No, ownership is not an issue. It is the use of the property that determines the exemption question, Sebastian County v. Educare Centers of Arkansas, Inc., 296 Ark. 538, 758 S.W.2d 413 (1988).
  28. How do you determine whether a particular property is used as a school and therefore qualifies for an exemption?
    Factors to be considered are whether classes are being taught on the property and whether certified teachers are provided. Using these criteria a day care facility will not qualify. See Hilger v. Harding College, 231 Ark. 685, 331 S.W.2d 851, (1960).
  29. Are all libraries, not operated with a view toward profit, exempt?
    No, only those that are used exclusively for school purposes, Arkansas Constitution Art. 16, Sec. 5.
  30. What is required for a property to qualify for the charitable exemption?
    The purpose of the organization must be for charity and property must be used exclusively for charitable purposes. It must be open to the general public. No one may be refused benefits because of inability to pay. Any funds that are generated must be used for operation, maintenance and capital improvement. If the owner is not the charity the rent must be only nominal Burgess v. Four States Hospital, 250 Ark 485, 465 S.W.2d 693 (1971).
  31. What is required for property to qualify for a church exemption?
    The property, including parsonages, automobiles, etc., must be used primarily and predominantly for church purposes, AG Opinion No. 91-265.
  32. What is meant by the term “church purposes”?
    The use must be reasonably related to public worship, AG Opinion No. 91-265.
  33. Must property used primarily and predominantly for church purposes be owned by the church in order to be exempt?
    No, ownership by the church is not a condition for tax-exempt status under the constitution; use is the determining factor, Phillips v. Mission Fellowship Bible Church, 59 Ark. App. 242, 955 S.W.2d 917 (1997).
  34. Is real or personal property owned by a church and held for, or used for, commercial, business, rental, or investment purposes exempt?
    No, the provision in ACA 26-3-301 relating to the exemption of property used “partially for church purposes and partially for investment or other commercial business purposes” is contrary to Article 16 Sec. 5 of the constitution, AG Opinion No. 91-265.
  35. Between the first Monday in January and May 31 of each year, must a church list all property held or used for commercial, business, rental, or investment purposes with the assessor?
    Yes, ACA 26-26-1113.

 

 

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