San Francisco archdiocese wins tax battle in court

The Archdiocese of San Francisco won a three-year legal fight Nov. 18, after a Superior Court judge moved to throw out charges against the archdiocese for a multimillion-dollar “delinquent” tax bill.

“The Archdiocese of San Francisco is delighted that the Superior Court has vindicated the position the archdiocese has taken all along,” George Wesolek, director of communications, said in a Nov. 18 statement.

Judge Richard A. Kramer issued a 43-page “Tentative Statement of Decision” in favor of the archdiocese after a grueling legal battle with San Francisco assessor-recorder Phil Ting.

Ting attempted to impose a transfer tax of $14.4 million on more than 200 parish and school properties  when San Francisco Archbishop George Niederauer initiated a corporate restructuring of the archdiocese in 2007.

Ting argued that the tax was fair and equitable and said his office examined various exemptions that could have applied to the archdiocese but found that none did.

Taxes in the state are typically collected when properties are sold or transferred to a separate and distinct legal entity.

“The land and buildings involved are all used to serve the nearly half-million families and children in the archdiocese’s parishes and schools and countless others,” Wesolek said, adding that the tax would have had “had a crippling effect” on the parishes and schools.

In court arguments, the archdiocese maintained that the city’s transfer tax ordinance applies only to property “sold” in San Francisco and specifically exempts internal reorganizations of this kind.

The Church also argued that state and federal law have long recognized that internal reorganizations such as what took place in the archdiocese are not transfers and are not subject to such taxes.

Wesolek said that Ting “underestimated the resolve of the church,” in this situation, but also lamented how the ongoing case drained time and resources.

“It is unfortunate that the miscalculation forced the archdiocese to spend more than three years and hundreds of thousands of dollars in attorneys’ fees to defeat this illegal action,” he said, “but the archdiocese is hopeful that the Assessor/Recorder’s office will now be dissuaded from taking similar measures in the future.”

Judge Kramer has scheduled a case management conference for Jan. 9, 2012.