According to Fort Wayne radio talk show host Pat White, of WOWO 1190 AM (www.thepatwhiteshow.com,www.WOWO.com), Indiana has recently redefined the rules for not-for-profit organizations.

Typically, or until recently, non-profit organizations were exempt from taxes. Those groups that own property were not required to pay state property taxes either. However, like many states, Indiana has fallen on revenue short comings that have resulted in a severe budget crisis both locally and on the state level. In an effort to recoup some of the revenue losses and armed with a state Supreme Court ruling, legislators have redefined what constitutes a not-for-profit organization and how the exemptions will be handled.

The new arrangement requires that non-profit organizations that own property show that the property is used at least fifty-one percent of the time for charitable functions to qualify for the exemption. What's more, some groups that fall short of this burden of proof may be required to pay taxes on the property equal to the percentage of non-charitable use of the property on the assessed value of the property. Further complicating the existance of the group as a charitable entity, many previously allowed activities may become taxable under the new guidelines. Churches that relied heavily on bingo as a source of income, for example, may in fact be required to pay taxes on the property or that revenue.

This redefining of what a non-profit organization is by its actions could spell the death knell for some groups. Rail preservation groups must operate at least fifty-one percent of the time on their property as a charitable group. It is unclear if membership donation of time will qualify as appropriate use, but this issue must be explored. Many groups may not be financially secure enough to afford the extended burden of property tax on the rather large tracts of land required to house railroad equipment.

However, it may be possible for these rail groups to redefine the organizational purpose of the group to better define their purpose and solidify the reason for the tax-exempt status in the eyes of the state. Indeed, the idea of restating the whos, whys, and whats of the organization may clarify what is the charitable role of the group and make it easier to attain the requirements for continued tax exempt status. After all, if church bingo is under scrutiny, many preservationist group activities may also be looked at. Possibly, fund raising may also be considered as a profit garnering act and become subject to taxes.

So what activities are acceptable use? Perhaps more public days will have to be hosted. Maybe more community outreach; yet, the property must somehow be involved. A thorough analysis of the new requirements is in order to fully understand the ins and outs of the law. But it is clear that the state intends to find new sources of revenue even if it spells the end for some charitable organizations. Rather, the state purse strings need to be cinched and laws revamped.

For those that do not know, Indiana has had an inventory tax that taxed the on hand inventory of most businesses once a year. While a nice chunck of change for the state, many companies abandoned the state and very few new companies came in. I believe, however, that this tax is coming to an end finally.

So, while driving out and away business investment, the state now seems intent on demolishing non-profit organizations as well. When a group depends on the charitable donations of the community, how can the state hold out its hand and grab for more? Clearly this issue has left a bad taste in my mouth, but I'd like to hear from those that are more in the know. Email responses to: TRKneller.