Schenectady nonprofits to see removal of liens

Cuomo approves retroactive measure

Tuesday, October 22, 2013
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— Schenectady nonprofit groups with tax liens owned by a private company will likely avoid foreclosure after Gov. Andrew Cuomo approved a bill on Tuesday that retroactively applies tax-exempt status to the organizations.

Tax liens sold in Schenectady between 2004 and 2009 included some placed on formerly tax-exempt churches and other nonprofit groups, which hadn’t reapplied for tax-exempt status and ended up owing taxes that they didn’t pay. The city worked with the state Legislature to rectify the liens facing some organizations, but not all of the problems were fixed and at least 10 small churches and other groups still had the threat of foreclosure looming, according to the bill memorandum.

The fix approved by the state Legislature in June will back-date the tax-exempt status for the organizations that are facing liens, which would negate the liens. State Sen. Hugh Farley, R-Niskayuna, a sponsor of the proposal, said previously that American Tax Funding, the private company that bought the liens in question, would probably have its costs refunded by the city.

Following the governor’s decision to approve the bill, Farley said he hopes this will allow the affected churches and organizations to focus on serving their community. “We will be working with the city and the affected parties to ensure this is implemented to the benefit of all parties involved,” he said.

The Assembly’s lead sponsor was Phil Steck, D-Colonie.

Schenectady Mayor Gary McCarthy noted that some of the liens are the subject of litigation with ATF. He said there were slightly more than 500 properties involved in the litigation.

“We’re glad this is another step forward to resolving some of these issues,” he said.

Because the legislation makes it impossible for tax liens to be imposed and then sold on these properties, McCarthy said the city will be forced to repay ATF the cost of the liens it purchased. “We will owe them some money because of this legislation,” he said.

ATF’s regional manager did not return a call for comment on Tuesday.

According to the bill memorandum, the First Unitarian Society of Schenectady, Consecration Temple Church of God in Christ and Calvary Baptist Church are just some of the groups that will benefit.

Prior to Cuomo approving the new law, ATF had threatened to foreclose on the churches if it couldn’t reach a satisfactory resolution with the city. The issue has raised concerns for members of the different religious organizations, who have lived for years with the possibility that their organizations might disappear because many of them owe more in taxes and interest than they could afford.

The new law takes effect immediately.

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October 24, 2013
7:52 a.m.
jackorgel says...

By Federal Tax code, not all non for profits are tax exempt. Code 503c3 is, 503c8 is not. The later applies to groups that are not charitable, such as Fraternal Groups and most clubs. Their federal Tax classification should be checked before giving property tax relief.

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