Here the Petitioner contends its property is 100% exempt because it is owned, occupied and used for religious purposes. The property is comprised of two parcels: a lot located at 1116 Violet Road improved with a church building and a house; and a vacant lot located at 1433 Baldwin Street. There is no dispute that the church building is used for religious purposes. Therefore, the Board must determine if the house on the 1116 Violet Road parcel and the vacant lot located at 1403 Baldwin Street are also used for exempt purposes.
The
Board first examines whether the house located at 1116 Violet Road should be
exempt. Indiana Code § 6-1.1-10-21 states that a “a building that is used as a
parsonage” and the “tract of land, not exceeding fifteen (15) acres, upon which
a building that is used as a parsonage is situated” is exempt from property
taxation if it is owned by, or held in trust for the use of, a church or
religious society. Ind. Code § 6-1.1-10-21(b). To obtain an exemption for a
parsonage, however, a church or religious society must provide the county
assessor with an affidavit signed under oath by the church’s or religious
society’s head rabbi, priest, preacher, minister or pastor at the time it
applies for the exemption. Ind. Code § 6-1.1-10-21(c). The affidavit must state
the parsonage is being used to house the church’s priest, preacher, ministers
or pastors and that none of the parsonage is used to make a profit. Id.
According
to the Petitioner’s Form 132 Petition, “31% of the property was used as a
parsonage til [sic] 4/1/2011.”2 Similarly, the Petitioner’s Form 136 application
for exemption states “Pastor lives in the Parsonage.” Both forms were signed
under the penalties of perjury by the Petitioner’s representative. The
Respondent’s representative argues that the house should not be entitled to an
exemption because it is rented out to make a profit. And Pastor Kamwenji
admitted that the house is currently rented out to provide income to support
the ministry of Rise Up and Walk; however, he testified that the house was used
as a parsonage by the pastor of Rise Up and Walk on March 1, 2011. Thus the
Board finds that, as of the 2011 assessment date, the house located on 1116
Violet Road was used as a parsonage.
But
it is not enough for a house to simply be used as a parsonage to receive an
exemption. Indiana Code § 6-1.1-10-21(c) is clear that the church or religious
society “must provide the county assessor with an affidavit at the time the
church or religious society applies for the exemptions.” And this, the
Petitioner failed to do. If a petitioner fails to comply with the statutory
procedures for obtaining an exemption, the exemption is waived. See, e.g.,
Gulf Stream Coach v. State Bd. of Tax Comm’rs, 519 N.E.2d 238, 242 (Ind.
Tax Ct. 1988).
The
Board’s analysis, however, does not end there. Even if the Petitioner did not
meet the requirements for an exemption under Indiana Code § 6-1.1-10-21(c), the
building may still be exempt under Indiana Code § 6-1.1-10-16(a). For example,
in State Board of Tax Comm'rs v. Wright, 215 N.E.2d 57 (Ind. Ct. App.
1966), the Court of Appeals held that personal living quarters are exempt from
taxation if "incidental and necessary" for the effective welfare of
the exempt religious institution. Id. at 62. In that case, cabins used
for temporary housing for clergy and lay persons were exempt because the only
purpose and use of the cabins was shown to be religious.
Here,
the Petitioner’s representative testified that the pastor of Rise Up and Walk
was living in the house as of March 1, 2011. Thus, the house was being used for
a religious purpose. As such, the Board finds that the house was owned,
occupied and used for religious purposes in 2011 and therefore the Board finds
this building 100% exempt as well.
The
Board now turns its attention to the vacant parcel, which is identified as
Parcel No. 02-33-329-002-027. Although this parcel has an address of 1403
Baldwin Street, it is land bordering the church and the house located at 1116
Violet Road. The Petitioner stated on its Form 132 that the parcel was
purchased along with the church for a “future additional church building,” but
the application also states that “100% of the parcel is dedicated for religious
purposes.”
Indiana
Code § 6-1.1-10-16(d) provides that a “tract of land is exempt from property
taxation if: it is purchased for the purpose of erecting a building that is to
be owned, occupied, and used in such a manner that the building will be exempt
under [Ind. Code § 6-1.1-10-16(a) or (b)]; and not more than four (4) years
after the property is purchased, and for each year after the four (4) year
period, the owner demonstrates substantial progress and active pursuit towards
the erection of the intended building and use of the tract for the exempt
purpose…” Thus, if the only reason the land was purchased and held by the
Petitioner was for future construction, the Petitioner would have had to
demonstrate “substantial progress and active pursuit” of the building. However,
the evidence suggests that the Petitioner holds revivals and “outside crusades”
on the property. Thus, while the property may have been purchased with some
intent to expand the church building or construct additional buildings, the
property is being used for religious purposes separate from any future plans to
build.
Moreover,
the Petitioner’s representative testified that even though the two parcels have
different addresses “the whole property is just one.” And, in fact, the map
attached to the Petitioner’s Petition on the 1403 Baldwin Street property makes
clear that the vacant lot is the “backyard” of the church property – despite
the church’s 1116 Violet Road address. See Board Exhibit A. Thus, the
fact that the vacant parcel and the adjacent parcel containing the church and
parsonage are separate parcels with distinct parcel numbers does not alter the
intended use of the property, nor does it diminish Rise Up and Walk’s religious
purpose. See Cedar Lake Conference Assoc. v. Lake Cty. Property Tax
Assessment Bd. of Appeals, 887 N.E.2d 205, 208-209 (Ind. Tax Ct. 1008)
(“the fact that the RV Park and the Conference Center are delimited (i.e., they
are separate parcels with distinct key numbers) neither alters the manner in
which CLCA used those properties nor diminishes CLCA’s religious purpose.”) Cf.
Ind. Code Ann. § 6-1.1-1-8.5 (West 2000) (indicating that a “key number” is
merely a tool used by assessing officials to distinguish properties from one
another for various administrative purposes); see also Lesea Broad Corp. v.
State Board of Tax Commissioners, 525 N.E.2d 637, 639 (Ind. Tax Ct. 1988)
(stating that “innocent collateral activities and buildings essential to the
furtherance of the true purposes of the corporation should not blind the court
to the genuineness of the those purposes nor to the sincerity of their actual
accomplishment.”) Because the vacant parcel is merely an extension of the
church, the Board finds that the vacant parcel should be granted a 100%
exemption as well.
Finally,
although the Petitioner failed to raise the matter in hearing, in a letter
attached to its Petition on the 1116 Violet Road property, the Petitioner
stated that there was a misunderstanding as to the necessity of filing an
exemption application because the previous owner informed the Petitioner that
the property would automatically be tax exempt. The Petitioner therefore
requested that the Elkhart County PTABOA” back date” the exemption to the date
of purchase and refund the taxes paid.
Under
Indiana Code § 6-1.1-11-4(d), an exemption application is not required if “the
exempt property is tangible property used for religious purposes described in
IC 6-1.1-10-21;… the exemption application referred to in section 3 or 3.5 of
this chapter was filed properly at least once for a religious use; and the
property continues to meet the requirements for an exemption under IC
6-1.1-10-16, IC 6-1.1-10-21, or IC 6-1.1-10-24.” Ind. Code § 6-1.1-11-4(d).
“However, if title to any of the real property subject to the exemption changes
or any of the tangible property subject to the exemption is used for a
nonexempt purpose after the date of the last properly filed exemption
application, the person that obtained the exemption or the current owner or the
property shall notify the county assessor…” Id. Thus, when the
Petitioner purchased the subject properties, title to the real estate changed
and the Petitioner was required to properly apply for the exemption. The
Petitioner’s representative admitted that Rise Up and Walk did not file an
application prior to the 2011 assessment year.
An
exemption is a privilege that may be waived by a person who would otherwise
qualify for it. Ind. Code § 6-1.1-11-1. “If the exemption is waived, the
property is subject to taxation.” Id. See Kentron, Inc. v. State Bd. of Tax
Comm’rs, 572 N.E.2d 1366 (Ind. Tax Ct. 1991) (“Kentron was required to
comply with the statutory procedures set forth in IC 6-1.1-10-31 and IC
6-1.1-11-1 to receive the exemption provided under IC 6-1.1-10-30(b). Failing
to comply, Kentron has waived the exemption privilege as a matter of law.”)
Thus, while there is no dispute that the Petitioner’s property was used for religious
purposes, there is no authority that would allow the Board to simply ignore the
statutory requirements cited in Indiana Code § 6-1.1-11-1 and retroactively
apply an exemption to the property or refund taxes paid. Thus, the Board can
only address the properties’ exempt status for the 2011 assessment year.
http://www.in.gov/ibtr/files/Rise_Up_and_Walk_Christian_Ministry_20-027-11-2-8-00001.pdf
