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Volume 4 - Opinions of Counsel SBEA No. 90

Opinions of Counsel index

Nonprofit organizations exemption (miscellaneous) (Little League) - Real Property Tax Law, § 421:

Real property belonging to a Little League organized in part for social and recreational activities is not exempt pursuant to section 421 because the organization is not exclusively organized for the exempt purposes listed in such section.

Our opinion has been requested concerning the taxable status of property owned by an incorporated Little League. Funds to support this Little League are derived from donations, proceeds of concession stands and various other fund raising activities, and that none of the adults participating (e.g., coaches and managers) receive remuneration of any kind in return for their services.

In New York State an exemption from taxation on real property owned by certain nonprofit corporations and associations is provided for in section 421 (i.e., 420) of the Real Property Tax Law. In order to be entitled to this exemption the real property must be owned by a corporation or association organized exclusively for one or more of the exempt purposes specified in the statute, and the real property must be used exclusively for one or more such purposes, with any portion of the property not so used being subject to taxation. In addition, no officer, member or employee of the organization may be entitled to receive any pecuniary profit from its operation, except reasonable compensation for services performed in furtherance of corporate purposes.

We assume that the Little League satisfies the initial requirement of this statute, i.e., that it owns the property in question. The next requirement of section 421 is that the association or corporation be “organized exclusively” for one or more of the exempt purposes enumerated therein. This is determined by examining the purposes and objects in the certificate of incorporation or charter, if any (Great Neck Section, etc. v. Board of Assessors, 21 Misc.2d 142, 182 N.Y.S.2d 623; Goodwill Club of Amsterdam, New York, v. City of Amsterdam, 31 Misc.2d 1096, 222 N.Y.S.2d 896; American-Russian Aid Association, v. City of Glen Cove, 41 Misc.2d 622, 246 N.Y.S.2d 123) . The purposes for which this particular corporation was organized are found in paragraph 2 of its certificate of incorporation which states:

2. The purposes for which said corporation is to be formed are as follows:
To implant firmly in the boys of the community the ideals of good sportsmanship, loyalty, courage and reverence, so that they may be finer, stronger, and happier boys and will grow to be good, clean, healthy men. The objectives will be achieved by providing supervised, competitive athletic games. The supervisors shall bear in mind that the attainment of exceptional athletic skill or the winning of games is secondary and the molding of future men of prime importance.

The purposes enumerated in section 421 of the Real Property Tax Law must be adhered to exclusively in order for the exemption to be granted. If additional purposes other than those included in the statutory provisions are set forth in the certificate of incorporation, the exemption must be denied. While it might be claimed that the Little League is formed in part for the “moral or mental improvement of . . . children”; it has been our opinion that this category should be limited to the Y.M.C.A. and analogous organizations.

A predecessor statute of section 421 was amended to include this purpose subsequent to a decision holding the Y.M.C.A. to be outside the scope of such predecessor statute (Y.M.C.A. v. City of New York, 113 N.Y. 187, 21 N.E. 86) . The term “moral or mental improvement of men and women” was taken directly from the Y.M.C.A. purpose clause, and it was clearly the intent of the Legislature to include that organization within the exemption statute. We believe that organizations such as the Y.M.C.A. are distinguished by their combination of benevolent, religious and charitable aspects. It is this type of organization to which the term “moral or mental improvement of men and women” was meant to apply, and the term should not be extended to include every organization which purports to accomplish “moral or mental improvement of men and women”, as a nebulous long range objective.

In any event it appears obvious that the Little League is also organized in part for social and recreational activities, and we have previously concluded that organization for recreational and social activities is not included within the provisions of section 421 and that a corporation organized in part for these purposes is not organized exclusively for exempt purposes. Accordingly, it is our opinion that property owned by the Little League is not entitled to an exemption pursuant to section 421 since the Little League is not organized exclusively for one or more of the exempt purposes enumerated in that statute.

It has been the policy of the judiciary and those charged with the administration of our tax laws to carefully examine any corporation which purports to be organized for purposes which can only be exempt under these categories (see, e.g., Pace College v. Boyland, 4 N.Y.2d 528, 151 N.E.2d 900, 176 N.Y.S.2d 356) . In other words, the right to the exemption must be clearly established according to the statutory provision, and if a doubt exists, then the doubt should be resolved in favor of taxation. An assessor may not legally grant an exemption in cases where the statutory conditions have not been fully satisfied and, as noted above, it is our opinion that the conditions of section 421 have not been met in this instance.

February 27, 1975

NOTE:  Construes law prior to L.1980, c.904; superseded by Opinion 10-115.