January 11, 2007 | Read Time: 2 minutes
TAX WATCHBy Elizabeth Schwinn
Facing the loss of its exemption from state taxes, a New Hampshire artists’ colony has gone to court to argue that it qualifies as a charity and should not be required to pay more than $150,000 in annual property taxes to the town where it is located.
Representatives of the MacDowell Colony — a residential program for artists founded in Peterborough, N.H., in 1907 — told Hillsborough Superior Court Judge John M. Lewis last month that the colony deserves its exemption because it provides a place for writers, musicians, and others to work, and contributes to the region by attracting artists and art lovers to the area.
The judge is expected to decide within the next two months whether the colony qualifies for a state tax exemption. His decision will not affect the group’s federal status; the IRS recognizes MacDowell as a charitable organization under Section 501(c)(3) of the Internal Revenue Code.
Among those who have developed works while staying at the colony are the composer Aaron Copeland, the novelist Alice Sebold, and the playwright Thornton Wilder.
MacDowell’s state tax status was questioned in 2005 when the town of Peterborough decided to review the tax status of the nonprofit groups within its borders.
As part of that review, members of the town council declared that MacDowell did not qualify as a charity because it had restrictions on who could stay there. MacDowell accepts about 15 percent of the artists who apply for residential fellowships, which last as long as two months.
Under state law, charitable organizations are exempt from paying property taxes as long as they “perform some service of public good or welfare advancing the spiritual, physical, intellectual, social, or economic well-being of the general public or a substantial and indefinite segment of the general public.”
Because MacDowell limits its admissions, the council members said the colony was not serving a “substantial segment” of the public.
As a result of the decision, the town said that MacDowell should pay $156,000 in property taxes for the year — but it offered to let MacDowell make a $50,000 payment in lieu of that year’s tax payment. However, the organization declined to do so, deciding to contest the decision in court instead.
