Tuesday, September 3, 2013

Board Finds Petitioner Presented "Little Meat on the Bones of its Case" to Support Exemption

As an initial matter, because the Petitioner did not file its articles of incorporation until May 3, 2010, the Assessor claims that the organization lacked standing to prosecute an appeal before the Board relating to taxes based on the subject property’s March 1, 2010 assessment. Whether the Petitioner existed as a legal entity at the time of the assessment, however, is beside the point. It exists now and owns the property. And there is nothing to suggest that anyone other than the Petitioner would be responsible for paying the taxes on the subject property should we determine that the property is taxable. We therefore turn to the appeal’s central question: Was the subject property owned, occupied and predominately used for religious or charitable purposes?

Although tangible property in Indiana is generally taxable, the legislature has exercised its constitutional power to exempt certain types of property. Indianapolis Osteopathic Hospital, Inc. v. Dep’t of Local Gov’t Fin., 818 N.E.2d 1009, 1014 (Ind. Tax Ct. 2004)(citing Ind. Code § 6-1-1-2-1). A taxpayer, however, bears the burden of proving that its property qualifies for exemption. Id.

The Petitioner claimed that the subject property was exempt under Ind. Code § 6-1.1-10-16 because the property was owned, operated, and used for religious or charitable purposes. Indeed, that general exemption statute exempts all or part of a building if it is owned, occupied and predominately used by a person for educational, literary, scientific, religious, or charitable purposes. I.C. § 6-1.1-10-16(a); see also, I.C. § 6-1.1-10-36.3(c) – (d) (requiring a property to be predominately used or occupied for one or more exempt purposes in order to qualify for exemption); Jamestown Homes of Mishawaka, Inc. v. St. Joseph County Assessor, 914 N.E.2d 13, 14 (Ind. Tax Ct. 2009). It similarly exempts land under an exempt building and personal property owned and used in such a manner that it would be exempt if it were a building. I.C. §§ 6-1.1-10-16 (c)(1) and -(e). Property is predominately occupied or used for an exempt purpose if it is occupied or used for that purpose more than 50% of the total time that it is used or occupied during the year ending on the assessment date. I.C. § 6-1.1-10-36.3(a). Evaluating whether a given property is owned, occupied and predominately used for exempt purposes is “fact sensitive inquiry; there are no bright-line tests.” Jamestown Homes 914 N.E.2d at 15. Every exemption appeal therefore “‘stand[s] on its own facts’ and, ultimately, how the parties present those facts.” Id. (citing Indianapolis Osteopathic Hospital, 818 N.E.2d at 1018).

The Petitioner offered little meat on the bones of its case. Ms. Davis testified in highly conclusory terms about her organization’s purpose and activities, simply describing the organization as a “religious brotherhood.” The Assessor, however, offered a portion of the Petitioner’s articles of incorporation showing that the corporation was formed “to establish a fellowship adhering to Christian principles to promote the Brotherhood of Man in alliance with the Fatherhood of God.” Resp’t Ex. 3. Thus, we find that the Petitioner is a religious organization. Also, while the Petitioner may not have been incorporated until May 2010, Ms. Davis testified without dispute that some form of that organization has operated since 1952. See Davis testimony; Pet’r Ex. 1.

But the Petitioner’s religious or charitable character is not dispositive—the Petitioner needed to prove that the subject property was predominately used for religious or charitable purposes. What little evidence the Petitioner offered on that point is ambiguous. For example, Ms. Davis testified that the building was used “solely for meetings and . . . different operations of the Masons, depending on the time . . . of year, whatever, they do different things for that.” Davis testimony. But she also testified that the building was “primarily used” by the Petitioner and that it “is used from time to time for social gatherings,” giving as an example the annual “Stop the Madness” event. Davis testimony (emphasis added).

Thus, even if one assumes that all of the Petitioner’s internal activities were religious or charitable, the subject property was used for other events, including social gatherings. While the Petitioner did not charge for those gatherings, that fact does not automatically make the gatherings charitable. The Petitioner needed to offer more-detailed information about the gatherings. Unfortunately, Ms. Davis described only one of the gatherings— the annual Stop the Madness event. The lack of information about the social gatherings held at the subject property might not be fatal to the Petitioner’s claim had the Petitioner offered probative evidence showing that those gatherings accounted for less than 50% of the time that the subject property was actually used or occupied. The Petitioner, however, did not offer a log or otherwise attempt to break down the subject property’s usage between the various activities conducted at the property. Instead, the Petitioner offered only Ms. Davis vague testimony that the property was used “primarily” for the Petitioner’s operations and that social gatherings occurred “from time to time.” Davis testimony.

We therefore find that the Petitioner failed to meet its burden of proving that the subject property was predominately used for religious or charitable purposes. We emphasize, however, that we base our decision on the record developed in this appeal. Had the Petitioner more fully developed the facts, we might have reached a different conclusion.