Laws, Regulations & Annotations

W

880.0000 WELFARE EXEMPTION

(a) IN GENERAL

Annotation 880.0099.005

880.0099.005 Exclusive Use. If property is used primarily for exempt purposes, the term "used exclusively" does not preclude activity which is merely incidental to the charitable purpose and not in competition with commercial enterprise. The issue of whether a revenue generating activity is a disqualifying commercial activity, as opposed to an activity that is incidental to and reasonably necessary for its exempt purpose, must be decided on a case by case basis, taking into account all the facts of the situation. A number of factors an assessor may consider to determine whether an art institution's activities are in competition with commercial enterprises may include whether there are future plans for growth in sales for the purpose of increasing profits, whether the prices/fees are fixed with the intention of yielding a surplus over and above operating expenses, whether expenses, including salaries, are not excessive, and the reasonableness of the organization's financial reserves. The assessor may also note the extent to which the organization solicits and receives charitable donations as well as volunteer work, especially in comparison to the amount of fees it earns and the number of paid staff members. Additionally, the assessor may consider whether advertising is performed in a commercial manner, such as whether it focuses on purchasing art or on educating the general public. Another factor to consider is the extent and degree of below cost services provided, including the educational programs, competitions, and special events, as well as consideration of the amount of time the art is available for sale, as opposed to being simply viewed. Furthermore, the assessor may consider whether the artwork on display is selected based on its ability to be sold, or on its educational value, such as its representation of modern or historical trends. C 4/3/2015.