Church battles for property lost to bake sale tax dispute

Chicago's Englewood neighborhood

The city of Chicago has been handed another defeat in its effort to take over a church's property in order to use in it a redevelopment project, according to officials with the Alliance Defense Fund.

Government officials took title to the property after they first claimed the organization had failed to pay sales taxes on fundraising bake sales, even though such activities are exempt from sales tax requirements, and then sending notifications of the taxes due as well as the tax lien sale to the wrong address.

Officials with Beth-El All Nations Church now have gone to court to regain title to their facility, and yesterday a judge rejected an effort by city officials to have the action thrown out.

"The government should not demonstrate hostility toward religion by penalizing churches when there's clearly no reason to do so," said ADF Senior Counsel Joe Infranco.

"To put a lien on a church's property for the invented reason that the church somehow engaged in some undefined 'resale activity' and didn't collect and pay sales tax is simply ludicrous," said ADF-allied attorney and lead counsel Andy Norman of the Chicago law firm Mauck & Baker. "The court was right to allow the church's case against the city to proceed."

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The long-running dispute dates back to shortly after the church acquired its property in the Chicago neighborhood of Englewood in 1976 and rehabilitated the location to begin worship services.

While there were no complications at first, about 1986 Cook County officials decided that the church no longer was exempt, and started assessing property taxes, totaling more than $100,000 between the period 1986 to 1995.

The law firm said the issue was that county officials had decided the church was engaging in an unspecified "resale activity," but church officials said the only such event that could be described that way – even remotely – would be its fundraising bake sales, which in Illinois are not subject to sales taxes.

Then because of "numerous procedural errors" by government officials, the church never was informed of the taxes, or the government's later decision to put a lien on the property, or the eventual tax sale through which the county obtained a title to the church. The county later re-assigned that to the city of Chicago.

According to documents in the case, among other mistakes that happened, was a notice to the church about its right to redeem its property.

"An employee of the city of Chicago mistakenly addressed a notice to Beth-El All Nations Church at 1534 East 63rd Street, instead of Beth-El's true address, 1534 West 63rd Street," court records note. "The notice was pretty important: it advised the church of its right to redeem title to the 63rd Street property after the parcel was sold for delinquent taxes."

Similar mistakes had happened with earlier tax notifications, the court documents confirmed.

"Despite the misaddressed notice, the city acquired a tax deed to the 63rd Street property in 1998. … The city sought to oust Beth-El from the property in 2006," but a federal complaint was filed to correct the government employees' mistakes.

According to the ADF, the site long has been desired by government officials to be used in a redevelopment project there.

The documents in the case reveal that the not only did the city use the wrong address, it then represented to the court "that all required notices had been served."

The church said the 1998 proceedings should be set aside because "the tax deed had been procured by fraud or deception."

Bishop Edgar Jackson, the pastor since 1995, testified the church never was located at 1534 East 63rd Street, and that he hadn't been told of any disputes over what he assumed was the church's tax-exempt status.

A state court ruling sided with the city, concluding the city's mistake should be overlooked and it could take over the property, but in federal court, the church alleged violations of the Fourth Amendment for "unreasonable search and seizure" and other violations.

A judge in the case, U.S. District Judge Samuel Der-Yeghiayan, at one point scolded the city for its actions. Ordering the church to shut down, he said, could cause "severe harm" and result in "losses to the community that could not be quantified in dollars and cents … In fact, it is entirely unclear why the city would desire such an asset to the community to cease its operations…"

 

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