Sunday, September 24, 2017

Mosque's Property Tax Challenge Barred By Tax Injunction Act

In Islamic Center of Nashville v. Sate of Tennessee, (6th Cir., Sept. 20, 2017), the U.S. 6th Circuit court of Appeals held that the federal Tax Injunction Act (TIA) bars suit in federal court challenging Tennessee's application of its property tax exemption rules to property of an Islamic Center.  To finance construction of a new school, the Islamic Center entered a 5-year ijara agreement-- an Islamic financing method that relies on a temporary sale and lease-back arrangement with a bank to avoid borrowing at interest.  The county removed the property's tax exemption for the period that title was technically held in the bank's name.  The court held that because state law provides a plain, speedy, and efficient
alternative to federal court review of the county's assessment of taxes on the Islamic Center, that is the route that plaintiff must take. There is no special exception to the TIA for First Amendment claims.