Here,
the Petitioner failed to support its claim that the Petitioner’s property
qualified for an exemption based on charitable use. As previously stated, a
charitable purpose will generally be found to exist if: (1) there is evidence
of relief of human want manifested by obviously charitable acts different from
the everyday purposes and activities of man in general; and (2) there is an
expectation that a benefit will inure to the general public sufficient to
justify the loss of tax revenue. College Corner, L.P. v. Dep’t of Local
Gov’t Fin., 840 N.E.2d 905, 908 (Ind. Tax Ct. 2006). Ms. Kaough testified
about the several committees within the union. While some of the community
services provided involve individuals outside the Local 871 UAW, almost all of
the activities conducted by these committees pertain to Petitioner’s members
only. Petitioner, however, failed to establish how often the other groups use
the property. While some of the events did benefit more than just the union
members themselves, charitable services in no way could be said to be the
“predominant use” of the subject property. Because these activities do not meet
the requirements of Ind. Code §6-1.1-10-16, the Petitioner failed to prove that
its property was predominantly used for charitable purposes.
Petitioner
also contends that the Petitioner’s property qualified for an educational
exemption in 2010. Mr. Hicks presented no meeting agendas and no training
materials. Based on all of the examples that Ms. Kaough and Ms. Sturgill gave,
the majority, if not all, of the Petitioner’s educational use is related to
union business. This falls far short of the evidence necessary to show that the
facility was used for educational purposes. Therefore, the testimony of
Petitioner’s witnesses fails to sufficiently prove that the Petitioner’s
property is entitled to an exemption for any educational use.
Even
if the small amount of charitable and educational uses that might be occurring
is considered, Ms. Kaough admitted that the primary functions of Local 871 UAW
are to negotiate contracts for union members, educate them on different labor
laws, obtain better benefits for members, and make their jobs better overall.
This testimony alone demonstrates that the subject property was not predominately
used to inure a benefit to the general public. While Ms. Kaough testified
that approximately 70-75% of the events that take place at the subject property
involve some form of community service, Petitioner failed to prove this was an
accurate statement.
The
Petitioner also argued for an exemption based on Ind. Code §6-1.1-10-23(a).
That statute provides that “tangible property is exempt from property taxation
if it is owned by a fraternal beneficiary association which is incorporated,
organized, or licensed under the laws of this state.” Ind. Code
§6-1.1-10-23(a). As Ms. Brown correctly pointed out, the fraternal benefit
association exemption “does not apply to real property unless it is actually
occupied and exclusively used by the association in carrying out the purpose
for which it was incorporated, organized, or licensed.” Ind. Code
§6-1.1-10-23(b). Similarly, Ind. Code §27-11-7-4 states “Every society organized
or licensed under this article is declared to be a charitable and benevolent
institution, and all of its funds shall be exempt from all and every state,
county, district, municipal, and school tax other than taxes on real estate not
occupied by a society in carrying on its business.” Ind. Code §27-11-7-4.
While
Ind. Code §6-1.1-10-23 does not define the term “fraternal beneficiary
association,” at least one case has defined the term in interpreting the
predecessor statute to Ind. Code §6-1.1-10-23. See State Bd. of Tax Comm’rs
v. Fort Wayne Sports Club, Inc., 258 N.E.2d 874, 880 (Ind. Ct. App. 1970).
In Fort Wayne Sports Club, the court explained that the term “fraternal beneficiary
association” has a “very limited and definitive meaning.” Id. The court
applied the meaning set forth in Ind. Statutes Annotated §39-4401(b), which was
part of a larger statute governing the regulation of fraternal beneficiary
associations under Indiana’s insurance laws. See Id. Ind. Statutes
Annotated §39-4401(b) provided, in relevant part:
The
term ‘fraternal benefit society’ or ‘fraternal beneficiary association’ shall mean
any corporation, society, order or voluntary association, without capital stock,
organized and carried on solely for the mutual benefit of its members and their
beneficiaries, and not for profit and having a lodge system and representative
form of government, and which shall make provision for the payment of [death]
benefits in accordance with this act.
Fort
Wayne Sports Club, 258
N.E.2d at 880 (quoting Ind. Stat. Anno. §39-4401(b)).
In
many ways, the definition of “fraternal beneficiary association” set forth in
Ind. Statutes Annotated §39-4401(b) mirrors the language currently found in its
successor statute, Ind. Code §27-11-1-1, which provides “This article applies
to any incorporated society, order, or supreme lodge without capital stock,
whether incorporated or not, conducted solely for the benefit of its members
and their beneficiaries and not-for-profit, operated on a lodge system with
ritualistic form of work, having a representative form of government, and that
provides benefits in accordance with this article.” Although Ind. Code §27-11
now refers to those organizations as “fraternal benefit societies,” the
legislative intent behind Ind. Code §6-1.1-10-23 appears to have been to
provide an exemption to fraternal organizations covered by the Indiana
insurance laws. That remains true despite the slight difference in terminology between
Ind. Code §27-11 and its predecessor statutes.
Thus,
in order to demonstrate it is entitled to an exemption under Ind. Code
§6-1.1-10-23, a taxpayer must prove (1) that it is an organization described in
Ind. Code §27-11-1-1, and (2) that it occupies and uses the property sought to
be exempted exclusively for the purposes for which the taxpayer was
organized or incorporated. The requirements for a “fraternal benefit association”
are specific. A society has a “representative form of government,” if it meets
all of the following conditions:
(1)
It has a supreme governing body constituted in one (1) of the following ways:
(A)
The supreme governing body is an assembly composed of delegates elected
directly by the members or at intermediate assemblies or conventions of members
or their representatives, together with other delegates as may be prescribed in
the society's laws. A society may provide for election of delegates by mail.
The elected delegates shall constitute a majority in number and shall not have
less than a majority of the votes and not less than the number of votes
required to amend the society's laws. The assembly shall meet at least once
every four (4) years and shall elect a board of directors to conduct the
business of the society between meetings of the assembly. Vacancies on the
board of directors between elections may be filled in the manner prescribed by
the society's laws.
(B)
The supreme governing body is a board composed of persons elected by the
members, either directly or by their representatives in intermediate
assemblies, and any other persons prescribed in the society's laws. A society
may provide for election of the board by mail. Each term of a board member may
not exceed four (4) years. Vacancies on the board between elections may be
filled in the manner prescribed by the society's laws. Those persons elected to
the board constitute a majority in number and not less than the number of votes
required to amend the society's laws. A person filling the unexpired term of an
elected board member is considered to be an elected member. The board shall
meet at least quarterly to conduct the business of the society.
(2)
The officers of the society are elected either by the supreme governing body or
by the board of directors.
(3)
Only benefit members are eligible for election to the supreme governing body,
the board of directors, or any intermediate assembly.
(4)
Each voting member shall have one (1) vote and no vote may be cast by proxy.
Ind.
Code §27-11-2-2.
Here,
Petitioner’s witness, Ms. Kaough, merely testified that the Articles of
Incorporation and Bylaws outline the voting rights that members of Local 871
UAW have with respect to the union. Under Ind. Code §27-11-2-2(2) either the
supreme governing body or the board of directors must elect its officers.
Petitioner provided no evidence as to how its officers were elected. Moreover,
the Petitioner provided no evidence that it was “operated on a lodge system
with ritualistic form of work.” Ind. Code §27-11-1-1.
Further,
the Local 871 UAW bears the burden of showing that it pays benefits in
accordance with Ind. Code §27-11. Thus, Petitioner was required to demonstrate
that it acted as an insurer regulated by the Indiana Department of Insurance.
If this were true, Petitioner easily could have done so by presenting a copy of
a certificate of authority authorizing it to transact business under Ind. Code
§27-11. Such a certificate would have constituted prima facie evidence of the
existence of the Petitioner as a fraternal beneficiary association as of the
date of that certificate. See Ind. Code §27-11-4-6 (“Upon presentation
of satisfactory evidence that the society has complied with all the provisions
of the law, the commissioner shall issue to the society a certificate of
authority authorizing the society to transact business under this article. The
certificate of authority is prima facie evidence of the existence of the
society at the date of the certificate.”). But the Petitioner failed to do so.
Ms. Kaough merely testified that the Petitioner negotiates benefits for its
members through collective bargaining agreements. Petitioner failed to meet its
burden of proving that it is a fraternal beneficiary association within the
meaning of Ind. Code §6-1.1-10-23 or Ind. Code §27-11-7-4.
Petitioner
also argued that the property has been found to be tax exempt for several years
prior to the 2010 assessment year. In original tax appeals, however, each
assessment and each tax year stand alone. See Thousand Trails Inc. v. State
Bd. of Tax Comm’rs, 747 N.E.2d 1072, 1077 (Ind. Tax Ct. 2001). Thus,
evidence that Petitioner’s property was exempt in the past does not raise a
prima facie case that the property is exempt in a different tax year. Id.
Similarly,
Petitioner argues that a long history of cases granting or ordering property
tax exemptions for union property precludes the Board from denying an exemption
in this case.
First,
Petitioner requested that the Board take judicial notice of several injunctions
issued by the Marion County Superior Court in the 1970‟s and also requested the
Board to follow the decision in Union Building Corporation v. State Bd. of
Tax Comm’rs, et al., Marion County Superior Court, No. 23570 (1973). These
decisions are not controlling. “In an effort to channel tax disputes to a
specialized tribunal, the Indiana Legislature created the Tax Court in 1986.”
In Marion County Auditor v. Revival Temple of Apostolic Church, 898
N.E.2d 437 (Ind. Ct. App. 2008), the Indiana Court of Appeals stated: “The
General Assembly created the Indiana Tax Court for the purpose of consolidating
tax-related litigation in one court of expertise. The two general prerequisites
to the Tax Court acquiring exclusive subject matter jurisdiction over a case
are that the case must arise under the tax laws of Indiana and that there is a
final determination made by a relevant agency.” 898 N.E.2d at 445.1 The Indiana
Tax Court has exclusive jurisdiction over any case that arises under the tax
laws of Indiana. Petitioner failed to explain how decisions from a court with
no jurisdiction over property tax matters could be binding on the Respondent,
the LaGrange County PTABOA or the Indiana Board of Tax Review.
Furthermore,
in the majority of the cases cited by the Petitioner, the court either entered
a default judgment against the defendants or the defendants agreed to the
injunction by stipulation. While collateral estoppel “bars the subsequent
litigation of a fact or issue which was necessarily adjudicated in a former
lawsuit if the same fact or issue is presented in the subsequent lawsuit….the
former adjudication will only be conclusive as to those issues which are actually
litigated and determined therein.” Bartle v. Health Quest Realty VII,
768 N.E.2d 912, 917 (Ind. Ct. App. 2002) (emphasis added). The Petitioner
failed to establish how cases issued by the Marion County Superior Court that
were the result of a default judgment or a stipulated entry could be or should
be binding on the Indiana Board of Tax Review almost forty years later.
Similarly,
Petitioner requested that the Board follow the decision in Union Building Corporation
v. Wayne County PTABOA, Indiana Board of Tax Review, Petition No.
89-011-02-2-8-00016 (February 4, 2005). While the final determination in Union
Building Corporation v. Wayne County PTABOA was issued by the Indiana Board
of Tax Review, that decision specifically found that “retirees, widows of union
members, and the ladies auxiliary use it for educational purposes, such as
aerobic classes and computer orientation classes… The Red Cross has monthly
meetings there and the Girl Scouts have weekly meetings there. The Red Cross
and the Girl Scouts are allowed to use the building at no cost.” Id. Thus,
the Board found that the petitioner in that case made a prima facie showing
that its property was predominantly used for educational and charitable
purposes. Here, Petitioner made no such showing. And it has been decided in
many cases that these are fact sensitive determinations.
To
the extent that the Petitioner argues the prior cases issued by the State Board
of Tax Commissioners or the Indiana Board of Tax Review can be read as finding
property is exempt simply because it is used for union purposes, the Indiana
Tax Court has since clarified that is not the case. In 6787 Steel Workers
Hall, Inc. v. John R. Scott, Assessor of Porter County, 933 N.E.2d 591
(Ind. Tax Ct. 2010), the Tax Court upheld the Board’s determination that a
banquet hall owned and operated by a union was not exempt. According to the Tax
Court, “First, as the Indiana Board recognized, Local 6787 provided no citation
to Indiana statutes, case law, or any other persuasive authority for the
proposition that unions are inherently charitable… [and] while Local 6787’s
by-laws evidence some charitable/educational intent as to the organization,
intent does not establish predominant use.” 933 N.E.2d at 596. The Tax Court
found that “because the use of the property for union activities was not a per
se exemption qualifier under Ind. Code §6-1.1-10-16, Local 6787 needed to
provide additional support in order to demonstrate that those activities were indeed
educational/charitable in nature.” Id., fn. 10.
Thus,
even if the decisions of the State Board of Tax Commissioners or Union
Building Corporation could be read to support the Petitioner’s contention
that union property is exempt when it is used for union purposes, the Tax Court’s
decision in 6787 Steel Workers Hall held to the contrary and is now
binding. 933 N.E.2d 591. See State Bd. of Tax Comm’rs v. Fraternal Order of
Eagles, Lodge No. 255, 521 N.E. 2d 678, 679 (Ind. 1988), citing Baker v.
Compton, 211 N.E.2d 162 (Ind. 1965) (An administrative interpretation
“would not be binding if it were incorrect.”).
The
Petitioner’s interpretation of the Union Building Corporation decision
is contrary to decisions the Board has issued on union property since 2005. See
Local 692 Operative Plasterers and Cement Masons International Association v.
Porter County PTABOA, Indiana Board of Tax Review, Petition No. 64-026-06-2-8-00001
(June 11, 2007). In Local 692, the Board explained, “Here, the
Petitioner failed to submit any evidence supporting the claim for exemption.
The Petitioner did not identify any statute that exempts the property of labor union
representatives from taxation. Nor are we aware of any such statute. Further,
the Petitioner failed to show that its property is “owned, occupied, and used”
for “educational, literary, scientific, religious or charitable purposes.” Id.
Similarly,
in International Union of Operating Engineers, Local 150 Building
Corporation, Indiana Board of Tax Review, Petition No. 45-030-02-2-8-00001 et
al (October 9, 2007), the Board stated, “Petitioner assumes that,
because IUOE is a union and a non-profit entity, its union offices, land, and
outbuildings are exempt. The Petitioner, however, has offered no statute to
support a finding that property used for union purposes is exempt.”
Finally,
in Steelworkers Hall, Inc. v. Porter County PTABOA, Indiana Board of Tax
Review, Petition No. 64-016-06-2-8-00113 (May 8, 2009) and United
Brotherhood of Carpenters and Joiners of America, Local #1043 v. Porter County
Assessor, Indiana Board of Tax Review, Petition No. 64-025-08-2-8-00001
(Dec. 11, 2009), the Board held that, absent a showing that the property is
owned, occupied and predominantly used for an exempt purpose, union property is
not exempt. Also, in Steelworkers, the Board stated, “The Petitioner’s
assumption that because Steelworkers Hall is a non-profit, labor organization
its activities are exempt is incorrect….[I]f the legislature intended union
activities to be exempt, it would have provided a specific exemption for that
use.”
In
a much more recent and remarkably comparable case, the Board addressed similar
claims and determined that these kinds of uses do not qualify for an exemption.
In Local Union 414 International Brotherhood of Teamsters v. Allen County
Assessor, Indiana Board of Tax Review, Petition No. 02-074-08-2-8-00014
(November 30, 2012), the Petitioner/union argued that the property at issue was
entitled to an exemption because it was predominantly used for educational
and/or charitable purposes, or as a fraternal beneficiary association. The Petitioner
in Local Union 414, just like Petitioner in the instant case, argued that
the property had been tax exempt for numerous years prior to the assessment
year at issue, and thus, should continue to be exempt. Also, the majority of
the cases cited by the Petitioner in Local Union 414 were cited by the
Petitioner in the case at hand. The Board ultimately held that the majority of
activities that took place at the property were union business activities, and therefore,
did not qualify for an exemption. The Petitioner in Local Union 414 also
failed to meets its burden of proving that it was a fraternal beneficiary
association.
