The Petitioner 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. Lewis
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).
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. 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, Mr.
Borden, merely testified that the Articles of Incorporation, the club’s
constitution and its bylaws exist, but he failed to mention anything related to
a supreme governing body. 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.
More importantly, Petitioner
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 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
Petitioner failed to do so. Mr. Borden merely testified that Petitioner provides a benefit for
its members by giving them a place to gather in order to play cards and
socialize. Petitioner failed to meet its burden of proving that it is a
fraternal benefit association within the meaning of Ind. Code §6-1.1-10-23 or
Ind. Code §27-11-7-4.
The property has been exempt for
several years. In original tax appeals, however, each assessment and each tax
year stand alone. 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.
The Petitioner failed to show
that its property was entitled to an exemption under Ind. Code §6-1.1-10-16 or
under Ind. Code §6-1.1-10-23. Where the Petitioner has not supported its claim
with probative evidence, the Respondent’s duty to support the assessment with substantial
evidence is not triggered. Lacy Diversified Indus. v. Dep’t of Local Gov’t
Fin., 799 N.E.2d 1215, 1221-1222 (Ind. Tax Ct. 2003).
