SF 2053 (LSB 5043XS (3) 90)

SENATE FILE 2053

BY  SALMON

A BILL FOR

An Act relating to the tax exemption of religious institution or society property being used for educational purposes by a third party, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 427.1, subsection 8, paragraph a, Code 2024, is amended to read as follows:
   a.  All grounds and buildings used or under construction by literary, scientific, charitable, benevolent, agricultural, and religious institutions and societies solely for their appropriate objects, not exceeding three hundred twenty acres in extent and not leased or otherwise used or under construction with a view to pecuniary profit. However, an organization mentioned in this subsection whose primary objective is to preserve land in its natural state may own or lease land not exceeding three hundred twenty acres in each county for its appropriate objects. For assessment years beginning on or after January 1, 2016, the The exemption granted by this subsection shall also apply to grounds any of the following:
   (1)  Grounds owned by a religious institution or society, not exceeding a total of fifty acres, if all monetary and in-kind profits of the religious institution or society resulting from use or lease of the grounds are used exclusively by the religious institution or society for the appropriate objects of the institution or society.
   (2)  Grounds owned by a religious institution or society used by a person or entity, regardless of whether the religious institution or society has a lease agreement with the person or entity, if all of the following apply:
   (a)  The grounds are being used by the person or entity for the primary purpose of providing educational instruction to children.
   (b)  The person or entity’s educational instruction includes religious instruction consistent with the doctrines of the religious institution or society that owns the grounds.
   (c)  (i)  The person or entity using the grounds is not required to make rental payments to the religious institution or society that owns the grounds.
   (ii)  For the purposes of this subparagraph division, a payment from the person or entity using the grounds to the religious institution or society that owns the grounds as reimbursement for janitorial services, utilities, or other similar reimbursement payments shall not be considered a rental payment.
    Sec. 2.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 3.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to assessment years beginning on or after January 1, 2024.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the tax exemption of religious institution or society property being used for educational purposes by a third party.
   The bill allows grounds owned by a religious institution or society and used by a person or entity, regardless of whether the religious institution or society has a lease agreement with the person or entity, to retain tax-exempt status if the grounds are being used by the person or entity for the primary purpose of providing educational instruction to children, the person or entity providing educational services includes in its instruction religious instruction consistent with the doctrines of the religious institution or society, and the person or entity using the grounds is not required to make rental payments to the religious institution or society.
   For the purposes of determining the tax-exempt status of a property belonging to a religious institution or society, a payment from the person or entity using the grounds to the religious institution or society that owns the grounds as reimbursement for janitorial services, utilities, or other similar reimbursement will not be considered a rental payment.
   The bill is effective upon enactment and retroactively applies to assessment years beginning on or after January 1, 2024.