On March 2, 2017, Administrative Judge Brook Thompson issued an “Initial Decision and Order” denying a property tax exemption to the Tennessee Beef Industry Council, Inc (the “Beef Council”) for a 0.53 acre tract of land improved with a 5,916 square foot office building located in Murfreesboro, Tennessee. The link below shows a picture of the property via Google Earth:
The Beef Council asserted that the property qualified for a property tax exemption under Tenn. Code Ann. §67-5-212(a)(1). Tenn. Code Ann. §67-5-212(a)(1) provides a property tax exemption for property which is used by religious, charitable, scientific or nonprofit education institutions purely and exclusively for carrying out one of more of the exempt purposes for which the institution was created or exists.
The Beef Council is a 501(c)(6) nonprofit organization. A 501(c)(6) organization is a business league organized for the purpose of promoting the common interests of its members.
The Beef Council argued that the property was used for educational activities and thus should qualify for the property tax exemption. Witnesses for the Beef Council testified that the purpose of the Beef Council was to help the public and consumers understand the beef industry. The Beef Council provides dozens of pamphlets and brochures designed to inform the public on nutritional education and also prepares educational handouts. The Beef Council stated that it spends roughly 83% of its budget on education and outreach. However, the Judge noted that the 83% figure also includes expenses for dues to national organizations, advertising, and public relations.
The Board of Equalization argued that while the Beef Council may be engaged in some educational activities, its primary function is to promote business and commercial interests of the beef industry, and thus this is not a qualifying exempt use of the property.
The Court found that the vast majority of the evidence provided at the hearing stressed that the Beef Council’s focus is to promote the beef industry. In support of this position, the Court referred to a statement of purpose in the Beef Council’s Mission Statement:
To effectively maintain and build demand for beef in Tennessee, nationally and internationally by supporting and extending state and national market development programs and to assist U.S. beef industry participants to prosper amid growing global competition by solidifying beef’s position as the world’s most preferred protein.
The Judge upheld the Board of Equalization’s denial of the property tax exemption, stating that “while there is an education component to what the Council does, the staff attorney’s conclusion that the “primary function is to promote business and commercial interest of the beef industry” is well founded.”
Source: In Re: Tennessee Beef Industry Council – Claim of Exemption