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Scheme opens door to tax the tax-exempt

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Court case being watched by churches, nonprofits

While the federal government and the Catholic church wrestle over healthcare-required contraception and abortions, city and county governments may have found a unique method of backdoor taxation on nonprofits.

They simply double the water bill for churches and schools.

That’s the focus of a court case that is being carefully watched by churches and nonprofits across the nation. Soon, an Oregon judge will decide whether to allow the practice.

One of the 600-plus ordinances for the city of Canyonville, Ore., states that “churches, schools, and non-profits like our local YMCA and a non-profit senior residence will be charged double the normal water rates and substantially elevated sewage fees.”

One of the current ordinances explains that the surcharges are to be paid “in lieu of taxes.”

Meanwhile, a sign posted in city hall, tells Canyonville residents that they pay less on their water bills than neighboring towns. The non-profits, who are paying double, say that their surcharge is the reason.

Among those affected is Canyonville Christian Academy, founded in 1924. Officials there stumbled onto the double billing, finding that the extra surcharges date back three decades and may total close to $200,000, according to school officials.

Said the school headmaster, Cathy Lovato, “We offered to settle this for a very modest amount last Christmas but the city said ‘no.’

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