For five years, Princeton and the town have been engaged in a bitter battle. The issue they’re arguing over is the university’s tax exempt status.
Princeton suffered a setback in the appeals court when the judge agreed with the ruling made earlier by a tax court judge that it’s up to the university to provide documentation proving why they should maintain a tax exempt status, something the tax court felt they failed to do. Without this tax exempt status, Princeton will be required to pay property taxes on all Princeton University land.
The issue about whether or not Princeton was deserving of tax exempt status was raised by residents of the town who are led by attorney, Bruce Afran. Mr. Afran believes that the university earns more than enough money through a variety of ventures for them to be declared a for-profit business, and not the non-profit the school is currently classified as. If Princeton loses its tax exempt status, the town would wouldn’t have to pick up the burden of the school’s property taxes, resulting in lower property taxes for each resident.
Princeton has put up a good fight. In the five years that the battle about the universities status has been going on, Princeton’s lawyers have filed 7 different motions, all but one has failed. The final motion will be heard in court this February. All of their appeals have been denied or not overturned by the appeals court.
Although they’re ready for the matter to be resolved once and for all, the lawyer representing the residents, Bruce Afran, is encouraged. “All these motions really help the taxpayers.” He also had some strong words to say regarding the local government has handled the situation. “Local government is refusing to take action.”
Princeton Town Administrator, Marc Dashield had this to say about the situation. “One of the big issues that the town had to deal with was the issue of the burden of proof… that could have an impact on the position of the town. We’re looking at the much bigger picture in terms of ensuring that we’re doing the right thing when it comes to the community.”
The case against Princeton University is interesting because of what it could mean to non-profit organizations all over the country. There are more than 1.5 million nonprofit organizations all over the United States that could find themselves in tax court trying to defend their status just so they can continue to do good deeds. It’s not wise to assume that just because you manage a local dog shelter as opposed to a large university, that no one will ever challenge your tax exempt status.
It also underlies the importance of making sure all the paper work connected to the non-profit has been properly files, including the tax returns. This is something a tax attorney will be able to help you with. The best time to start working with a tax attorney is right when you first start to establish your non-profit organization. If you manage a non-profit organization and need to know more about how a tax attorney can help you, contact a tax attorney today.