Hi! I am a director of a for-profit classical homeschool program in Illinois. Our church is asking us to leave as they believe hosting us threatens their tax exempt status. Other churches who have heard this claim do not want to accept us. Any advice? -Kimberly in IL
I’m very sorry to hear about your problems with finding a church host.
The church is probably worried about their property tax exemption in Illinois since your classical homeschool program is a business and not a religious or educational nonprofit.
Property tax exemption is different from federal income tax exemption granted by the IRS. The IRS grants churches automatic status as 501(c)(3) religious organizations. That’s not what is being threatened here.
Property tax exemptions are determined by the state and sometimes the county laws. That’s what has the church worried. If they lose property tax exemption, it will be very expensive for them to pay property tax.
I did a little digging and found some information about church property tax exemption in Illinois. Illinois may deny property tax exemption to the church if an organization using the church’s property has a “view to profit.” Illinois says that having a “view to profit” is incompatible with property tax exemption.
Unfortunately, as currently structured, your homeschool program has a “view to profit” and the church doesn’t want to offer your group space to meet and risk losing its property tax exemption.
The only advice I have is to ask the church if they would offer space to your program if it were a nonprofit organization with a religious and/or educational purpose. Illinois does grant property tax exemption to some educational organizations.
If you wish to re-form as a nonprofit organization, I can help you understand the pros and cons.
Carol Topp, CPA