PHOENIX - Religious organizations would qualify for new property tax exemptions under legislation being considered by the Arizona House of Representatives.
The measure would allow churches to avoid taxes on property used for activities other than religious worship.
The bill's sponsor, Republican Rep. Justin Olson, said the current religious-exemption law has resulted in many lawsuits because county property assessors don't have clear guidance on which organizations qualify for the exemptions.
Proponents say the proposed overhaul will allow churches to avoid property taxes on vacant lots that could eventually be turned into worship centers.
But critics say the proposed expansion could result in tax fraud because it would allow any religious organization to claim exemptions on property not used for worship.
The measure would remove worship as the central criteria for religious groups qualifying for property-tax exemptions. Under the expansion, religious associations or institutions would be protected from property taxes so long as the property isn't used for profit. Student dormitories, staff housing and shelters would be spared from taxation.
Critics say the measure would allow groups posing as religious organizations to expand their for-profit land holdings on the cheap. Under the measure, any group that calls itself religious could sit on undeveloped lots for years without paying taxes.
"It's opening it up for tax fraud," said Rep. Ruben Gallego, D-Phoenix. "It is not your local church. This is not St. Matthew's church or the local Episcopalian church. This is religious organizations, a very far-reaching category that could encompass anything."
The bill specifies that organizations must annually inform the local county assessor of their intent to retain the protected property for their religious mission. It says holding property to later sell for profit is not covered by the exemptions, but critics argue that proving the property owner's true motives would be difficult.
The powerful, conservative-leaning Center for Arizona Policy has thrown its support behind the bill, citing religious rights.
"It's a delicate issue when the government has to determine whether a church is a church," Olson said recently in a House committee meeting. "It's a situation that I don't think any county assessor wants to find themselves in when it's a tough call."
The bill would protect congregations like Christ Lutheran Vail near Tucson. The Rev. David Hook said his church bought roughly 40 acres when the housing market was upside-down in 2010 and has since had to pay property taxes on the lot - money that the church would prefer to use to construct a new home for its 200-member congregation. Hook said the church might use the large lot to also build a private Christian school, a park and an elderly home.
"We do intend to use this land for providing services for the Vail community," Hook said. "The plan at this point is not to sell it."
Other counties have allowed churches to avoid taxes on vacant lots, and the proposed law would encourage uniformity, Hook said.