Is an Arkansas church property tax exempt if part of the building is used as a retail coffee shop?

Plain-English summary

South City Church in Pulaski County bought the former P.F. Chang's restaurant on South Shackleford and turned it into a place for worship, a community gathering spot, and a retail coffee shop. The county assessor denied the church's request for a property tax exemption. State Representative Howard M. Beaty, Jr. asked the Attorney General whether the church should be exempt under Arkansas Code § 26-3-301(12), whether the coffee shop hurts the exemption, and whether a mixed church-and-commercial use keeps the whole parcel exempt.

Attorney General Tim Griffin declined to answer. The questions turn on the burden of proof and the standard for construing tax exemptions, and those exact issues are the subject of pending litigation now before the Arkansas Supreme Court. Under the office's longstanding policy, the AG does not opine on matters awaiting court resolution. The opinion notes that the burden of proof can determine the outcome of a case, so the AG could not say whether the assessor's decision was consistent with the law.

What this means for you

The Attorney General did not resolve whether the church's property is tax exempt, and this page does not either. The opinion explains that the answer depends on an unsettled legal question, which burden of proof applies to a claimed tax exemption, and that the question is in active litigation.

• Churches and nonprofits seeking an exemption: the opinion signals that the governing standard is genuinely unsettled. Arkansas courts long required a taxpayer to prove entitlement to an exemption "beyond a reasonable doubt," but the General Assembly changed the statutory burden to "clear and convincing evidence" in 2009 and then to a "preponderance of the evidence" in 2015. Which standard controls, and whether courts still strictly construe exemptions, is what the pending case will decide.
• County assessors: the opinion does not endorse or reject the assessor's denial. It expressly says the AG "cannot determine whether the assessor's decision in this instance is consistent with the law."
• Anyone following this issue: the outcome will be shaped by Baptist Memorial Hospital–Jonesboro, Inc. v. Towell, which the Arkansas Court of Appeals decided against the exemption but without resolving the burden-of-proof question. In April 2026 the appellants petitioned the Arkansas Supreme Court for review.

Common questions

Q: Did the Attorney General say the church is or isn't tax exempt?
A: No. The AG declined to opine because the controlling legal issue is in active litigation.

Q: Why won't the AG answer?
A: It is the office's longstanding policy, as part of the executive branch, not to opine on matters pending before the courts for resolution.

Q: What is the unresolved legal question?
A: Which burden of proof applies to a claimed property tax exemption (beyond a reasonable doubt, clear and convincing evidence, or preponderance of the evidence) and whether courts should strictly construe exemptions. A case raising these questions is before the Arkansas Supreme Court on a petition for review.

Background and statutory framework

Arkansas Code § 26-3-301(12) governs property tax exemptions for church property. The dispute the opinion describes centers on the standard a taxpayer must meet to establish an exemption. As the opinion recounts, the Arkansas Supreme Court "has long held that a taxpayer seeking a tax exemption must prove entitlement 'beyond a reasonable doubt,'" but in 2009 the General Assembly required proof by "clear and convincing evidence," and in 2015 it amended the statute to require a "preponderance of the evidence" (A.C.A. § 26-18-313). The pending litigation raises which burden applies and whether the relaxed standards in A.C.A. § 26-18-313(e) and (f)(1) displace strict construction of exemptions.

In the pending case, a circuit court held the taxpayer failed under either the preponderance or beyond-a-reasonable-doubt standard, and the Arkansas Court of Appeals affirmed that certain hospital-owned property was not exempt while declining to resolve the burden-of-proof issue (Baptist Memorial Hospital–Jonesboro, Inc. v. Towell, 2026 Ark. App. 209). The appellants filed a petition for review with the Arkansas Supreme Court in April 2026.

Citations and references

Statutes:
- A.C.A. § 26-3-301(12) (property tax exemption for church property)
- A.C.A. § 26-18-313(e), (f)(1) (burden of proof / standard of construction for tax exemptions)

Cases:
- Baptist Memorial Hospital–Jonesboro, Inc. v. Towell, 2026 Ark. App. 209 (petition for review filed)
- Ark. Teacher Ret. Sys. v. Short, 2011 Ark. 263, 381 S.W.3d 834

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

BOB R. BROOKS JR. JUSTICE BUILDING
101 WEST CAPITOL AVENUE
LITTLE ROCK, ARKANSAS 72201
Opinion No. 2026-040
July 9, 2026
The Honorable Howard M. Beaty, Jr.
State Representative
1001 Elm Street
Crossett, Arkansas 71635
Dear Representative Beaty:
I am writing in response to your request for my opinion on whether a church is tax exempt “for
property tax purposes” under A.C.A. § 26-3-301(12).
You report that South City Church, a church in Pulaski County, “purchased the former P.F.
Chang’s commercial restaurant property and converted it into a location for worship, a gathering
place for the community, and a retail coffee shop.” The County Assessor denied the church’s tax
exemption request. You also note that the Assessor “utilized and applied old statutes and case
law.”
Against this background, you ask the following questions:
1. Pursuant to Arkansas Code § 26-3-301(12)(A) and (B), should South City Church be
declared and granted a tax exemption from property taxes for its location at the former P.F.
Chang’s restaurant, more specifically, 317 South Shackleford?
2. Is the church’s usage of the property for worship, community gathering, and incidental
retail sale of coffee purposes consistent with the exemption for “dedicated church property”
consistent with Arkansas Code § 26-3-301(12)(A)?
3. Does the partial usage of the location as a retail coffee shop negatively affect its potential
to be declared tax-exempt?
4. If a property is used partially for church purposes and partially for commercial purposes,
does Arkansas Code § 26-3-301(12)(B) preserve the exemption for the entire parcel?
TIM GRIFFIN
ATTORNEY GENERAL

The Honorable Howard M. Beaty, Jr.
State Representative
Opinion No. 2026-040
Page 2
RESPONSE
Your questions implicate issues that are currently the subject of pending litigation, including the
applicable burden of proof and standard of construction for tax exemptions.1 The Arkansas
Supreme Court has long held that a taxpayer seeking a tax exemption must prove entitlement
“beyond a reasonable doubt.”
2 But in 2009, the General Assembly enacted a statute requiring proof
by “clear and convincing evidence,” and in 2015, it amended the statute to require proof by a
“preponderance of the evidence.”3 The pending litigation raises questions regarding which burden
of proof applies and whether courts should strictly construe tax exemptions or instead apply the
more relaxed standards under A.C.A. § 26-18-313(e) and (f)(1).
In the pending litigation, a circuit court held that the taxpayer failed to carry its burden of proof
under either the “preponderance of the evidence” or “beyond a reasonable doubt” standard,
concluding that the outcome would be the same regardless of which burden applied. The Arkansas
Court of Appeals affirmed the circuit court’s decision that certain hospital-owned property was
not exempt from ad valorem taxation but declined to resolve the burden-of-proof issue.
4 The
appellate court also strictly construed the constitutional and statutory language concerning an
exemption. In April 2026, the appellants filed a petition for review with the Arkansas Supreme
Court.
It is the longstanding policy of the Office of the Attorney General, as a member of the executive
branch, to decline to opine on matters that are pending before the courts for resolution.5 Thus, I
must refrain from opining on the applicable burden of proof here. But I note that the burden of
proof can, and often does, determine the outcome of a case. The governing standards of review are
likewise critical when interpreting the applicable constitutional and statutory provisions.
Consequently, I cannot determine whether the assessor’s decision in this instance is consistent
with the law.
Assistant Attorney General William R. Olson prepared this opinion, which I hereby approve.
Sincerely,
TIM GRIFFIN
Attorney General
1 Baptist Mem’l Hosp.–Jonesboro, Inc. v. Towell, 2026 Ark. App. 209, Case No. CV-23-771 (petition for review filed).
2 See, e.g., Ark. Teacher Ret. Sys. v. Short, 2011 Ark. 263, at 6, 381 S.W.3d 834, 838.
3 Act 755 of 2009, § 1 (codified at A.C.A. § 26-18-313); Act 896 of 2015, § 3 (amending A.C.A. § 26-18-313).
4 See Towell, 2026 Ark. App. at 10–11, 22.
5 E.g., Ark. Att’y Gen. Ops. 2026-003, 2025-043, 2016-027, 2010-047.