Louisiana ~ Property Tax: Limited Liability Company’s Immovable Property Subject to Tax

A limited liability company (LLC) that owned immovable property and that was a wholly-owned affiliate of a Delaware nonprofit corporation qualified to do and doing business in Louisiana and income tax-exempt under 26 U.S.C.A. §501 was not exempt from paying property taxes on that immovable property. The taxpayer claimed that properties titled in the names of the LLCs in the case at hand were property tax-exempt under La. Const. art. VII, §21, because they were 26 U.S.C.A. §501(c)(3) nonprofit corporations exempt from paying federal and state income taxes. The court did not find from the verbatim transcripts of the Louisiana Constitutional Convention of 1973 that an income tax-exempt entity other than a corporation or association that owns immovable property titled in the name of another entity such as an LLC would be exempt from property taxes. Only if the immovable property was undeveloped and held by the tax-exempt corporation in its own name as an investment would the immovable property be exempt from property tax. It was acknowledged that, statutorily, the taxpayer was exempt from both state and federal income tax. Further, the Internal Revenue Service regulations allowed the taxpayer to file a consolidated income tax return for itself and its wholly-owned LLCs. That did not, however, make the separately organized LLCs exempt from all taxes and especially property taxes. Accordingly, the LLCs are not exempt from property taxes on the immovable property that they own in their own name even though the property would be utilized for the charitable purposes of the LLC’s parent corporation’s income tax-exempt purpose.

Gulf Coast Housing Partnership, Inc. v. Bureau of the Treasury of the City of New Orleans, Court of Appeal of Louisiana, Fourth Circuit, No. 2013-CA-0556, November 27, 2013, ¶202-551

 

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