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Mineral Rights Questions Answered by Atty General Opinions

04/29/2012 3:02 PM | Anonymous

[ ed comments]

 

ISSUE 1 - MINERAL TAXATION ON CHURCH OR CEMETERY PROPERTY

http://ag.arkansas.gov/opinions/docs/2012-010.pdf

1. Are churches and cemeteries exempt from ad valorem taxes on

their mineral rights?

2. If these mineral interests are not exempt from ad valorem

taxation, is this a severance tax?

3. If their minerals are still in the ground, are they part of the fee

simple estate, which would make the mineral rights exempt?

4. If we tax the mineral interests still in the ground, are we denying

churches and cemeteries their exemption?

 

The answer was NO to each question.  It means that a church or cemetery mineral production is subject to taxation.  The surface dedicated to the church or cemetery is not subject to taxation. Production is subject to taxation. [The company will send the church or cemetery association a 1099 income statement.  A TAX RETURN MUST BE FILED WITH THE IRS.  Further few people realize that the IRS requires cemetery groups to FILE with them and REGISTER with the state secretary of state.  It's been the law since 2006 or so, but it is understood that hundreds of thousands of small non-profits like family cemetery groups are in violation of the law so you have lots of company.  If you get a 1099 for minerals by all means file it. appropriately.]

 

ISSUE 2 - MINERAL QUIT CLAIM DEEDS

 

http://ag.arkansas.gov/opinions/docs/2011-117.pdf

 

estions:

1. Is a current surface owner entitled to a quitclaim deed from the

Commissioner of State Lands (“Commissioner”), even if

minerals have been reserved by a previous owner subsequent to

the passage of Act 266 of 1945 (codified as 22-6-502)?

ONLY IF mineral rights were passed to a private prarty by operationf of Act 94 of 1949... further recommends the legislature clear the matter up.

NO - [and the answers below hinge upon the special circumstances within the acts involved.]

 

2. Is it an absolute right of the current surface owner or does the

Commissioner have the right to deny issuing a quit claim deed? COMMISSIONER MAY HAVE A DUTY TO DO SO... (NeedS legislative clarity)

 

3. If a previous Commissioner has not issued a quitclaim deed in

the past, should the current Commissioner ignore conveyances of

mineral rights in the chain of title and issue a deed restoring the

rights to the current surface owner, even if it appears that they

would not have an interest in those rights if based upon the

conveyances in the abstract?

NO - again needs clarity

 

4. Finally, the act references “present owners.” Does the ordinary

reading of this term as used in the statute mean “present owners”

at the time of the passage [of the act] or does it mean “present

owners” at the time of the application for a quitclaim deed?

Tax-forfeited property "shall immediately pass to the present owners of the fee title to the lands"

 

[All the interpretations above appear to hinge on the words of Act 94 of 1943 and on the (failed?) attempt at clarity in Act 266 of 1949 and both are outgrowths of Acc 331 of 1939.]