Attorney General Opinions

Commissioner of the Revenue for Franklin County

The small parcel has been used for family burial since at least 1921. The trustees acquired the large parcel in 1973. The court orders have held that both parcels have constituted a "cemetery" since the acquisition of the large parcel in 1973. Both court orders deem the large parcel to be an enlargement of the small parcel burial site, effective retroactively as of the date of acquisition in 1973. The Franklin Circuit Court has approved the bylaw provision adopted by the family cemetery association that the caretakers’ lodge erected on the cemetery grounds shall never be used for monetary gain or profit.² In addition, the court has authorized the association to cut and sell annually only the timber from the large parcel as is necessary to maintain the cemetery.³

You relate that there has been no formal dedication restricting the future use of the large parcel for cemetery purposes, other than the court orders described above. The large parcel remains in its natural state at this time.

• • • • A. Pursuant to the authority granted in Article 10, § 6 (a) (6) of the Constitution of Virginia to exempt property from taxation by classification, the following classes of real and personal property shall be exempt from taxation:

        ….

        3. Nonprofit private or public burying grounds or cemeteries.

A "burying ground" or "cemetery" is "a place set apart for the interment of the dead."⁷ "A cemetery … includes not only lots for depositing the bodies of the dead, but also such avenues, walks and grounds as may be necessary for its use or for shrubbery and ornamental purposes."⁸ Under Virginia law, "‘[t]here is no particular form or ceremony necessary in dedicat[ing land] to public use [as a cemetery].’"⁹ The intent of the owner and the fact that the land is being used for cemetery purposes are all that is required.¹⁰ Should there be any uncertainty in the reservation of the land for cemetery usage, the grantor may act within a reasonable period to cure it.¹¹ Moreover, it is equally clear that § 57-25 authorizes "enlargement" of a "cemetery already established."¹²

Notwithstanding this conclusion, in order to be entitled to property tax exemption, the cemetery must still be operated on a "nonprofit" basis. It is not the equivalent of "charitable."¹³ Two circuit court opinions have considered the meaning of "nonprofit" in this context. In 1987, the Circuit Court of Henrico County ruled that income generated from a cemetery owned by an organization exempt from federal income tax must be used for cemetery purposes, in order for the land not being used for burial purposes to be exempt from property taxation:

• • • • It does not follow, however, that the [corporation owning the cemetery] is exempt from real estate taxes simply because it is exempt from income taxes. It is undisputed that real estate used for cemetery purposes is not subject to County real estate taxes. The question here is whether or not the real estate which is not being used for cemetery purposes is exempt from real estate taxes simply because it is owned by a cemetery corporation. The fact that the corporation is organized as a nonprofit cemetery corporation does not in and of itself exempt the corporation from the payment of real estate taxes where it is quite clear that the corporation is distributing money in the form of dividends to its stockholders and where the real estate held by the corporation is not being used as burial ground.^[14]

• • • • Whether a cemetery is operated for profit or not depends in a large measure on how the money derived from sales is used. The cases are clear that the mere fact of a profit, standing alone, does not equate with "operated for a profit." The key is what does the cemetery do with the money? If it is used for cemetery purposes, then no violation of the Constitutional conditions occur. If, however, it is used for the benefit of private parties, particularly stockholders, then "profit" or "gain" has been realized and the exemption is jeopardized. In San Gabriel Cemetery Assn. v. Los Angeles County, 122 P.2d 330 (1942), the word profit was construed to mean "net earnings the benefit of which accrue directly or indirectly to the stockholders or members of the Association."^[15]

You further inquire whether there is a limitation on the amount of land that may be dedicated for a family cemetery. § 57-26(2) authorizes a conveyance of no more than 300 acres of land for use as a cemetery.

¹You enclose with your request, copies of the orders pertaining to the family cemetery.

²The October 21, 2003, court order states that the trustees use the caretakers’ lodge in carrying out their duties, such as taking care of the cemetery, and for receiving guests at funerals.

³The propriety of a circuit court’s action on the same question presented in an official opinion request is not subject to review by this Office. See 1987-1988 Op. Va. Att’y Gen. 352, 352.

⁴For purposes of this opinion, "profit" means gain in the pecuniary sense.

⁵1984-1985 Op. Va. Att’y Gen. 336, 337 n.2.

⁶For purposes of this opinion, I assume that you do not inquire whether the enlargement of the family cemetery, the small parcel of which was in existence prior to the July 1, 1971, Constitution, is "grandfathered" under the rule that exemptions be liberally construed; rather, I apply the prospective rule of strict construction of property tax exemptions. See Manassas Lodge No. 1380 v. County of Prince William, 218 Va. 220, 223, 237 S.E.2d 102, 105 (1977) (concluding that Article X, § 6(f) prescribes rule of strict construction to apply prospectively to exemptions established or authorized by 1971 Constitution).

⁷1984-1985 Op. Va. Att’y Gen. 322, 322 (citing Black’s Law Dictionary 179 (5th ed. 1979)).

⁸3B Michie’s Jur. Cemeteries § 1, at 218 (1996).

⁹Colbert v. Shepherd, 89 Va. 401, 404, 16 S.E. 246, 247 (1892) (citation omitted).

¹⁰Id.

¹¹See id. at 406, 16 S.E. at 247-48 (noting that deed conveying land expressly stipulated and agreed that family burying ground and monument included within its limits are excluded from grant)

¹²Section 57-25 authorizes the condemnation of land, in the manner prescribed in the statute, "to establish a cemetery for the use of a city, town, county or magisterial district, or to enlarge any such cemetery already established, [when] the title to land needed cannot be otherwise acquired." See Temple v. City of Petersburg, 182 Va. 418, 29 S.E.2d 357 (1944) (noting distinction between meanings of terms "establish" and "enlarge," as used in § 53, predecessor to § 57-25).

¹³Westminster-Canterbury v. City of Va. Beach, 238 Va. 493, 501, 385 S.E.2d 561, 565 (1989) (holding that Westminster, owned by nonstock, nonprofit corporation, was not entitled to tax exemption under classification statute, as it was not clear that it was organization conducted exclusively as charity or that its property was used exclusively for charitable purposes); see also 1998 Op. Va. Att’y Gen. 125 (defining what constitutes "charitable," "charitable purpose," and "charity").

¹⁴Westhampton Mem’l Park, Inc. v. County of Henrico, 9 Va. Cir. 231, 233, 1987 Va. Cir. LEXIS 47, at *5 (1987) (emphasis added).

¹⁵Columbia Mem’l Park, Inc. v. County Bd., 9 Va. Cir. 548, 549, 1984 Va. Cir. LEXIS 59, at *2 (1984) (emphasis added).

¹⁶See 2002 Op. Va. Att’y Gen. 64 (question whether church property, used for certain church-related activities while being developed for its intended use, may be tax exempt is reserved for local commissioner of revenue or other appropriate taxing official). The Attorney General refrains from issuing opinions on questions of fact rather than questions of law. See id. at 96, 99, and opinions cited at 101 n.27.