23. SPA claims that it owns,
occupies, and predominately uses the two properties at issue for charitable
purposes.4 The exact meaning of what constitutes a charitable purpose has spawned
much litigation. Broadly speaking, courts have linked a taxpayer’s right to exemption
to its property being used to provide a public benefit. See, e.g., Fort
Wayne Sports Club, Inc. v. State Bd. of Tax Comm’rs, 147 Ind. App. 129, 258
N.E.2d 874, 881 (1970) (“In our view, the well-established and obvious purpose
for legislative conferral of tax exemptions requires a showing of some public
benefit as a condition precedent to the granting of such exemption.”). Thus, to
show a charitable purpose, a taxpayer must demonstrate (1) the “relief of human
want . . . manifested by obviously charitable acts different from the everyday
purposes and activities of man in general,” and (2) a benefit inuring to the
public that is sufficient to justify the loss of tax revenue. Jamestown Homes
of Mishawaka, Inc. v. St. Joseph County Assessor, 909 N.E.2d 1138, 1141
(Ind. Tax Ct. 2009), reh’g den. 914 N.E.2d 13 (Ind. Tax Ct. 2009) (quoting
Indianapolis Elks Bldg. Corp. v.
State Bd. of Tax Comm’rs, 145 Ind. App. 522, 251 N.E.2d 673, 683 (1969)).
24. SPA did not offer significant
detail about its operations or about how it uses the two properties at issue.
But what evidence there is demonstrates that SPA owns and operates the
properties as part of its ministry to provide shelter, counseling, and other
services to women in need. Thus, SPA has shown that it uses the properties to
relieve human want in ways that differ from the ordinary activities of man in
general.
25. The Assessor disagrees,
pointing to the fact that SPA charges rent to the women who live at both
properties. But there is no evidence that SPA charges rent in order to make a profit.
To the contrary, SPA pegs the rent for Phase II to a percentage of the women’s income,
which tends to be very low given their entry-level jobs. While the rent for
Phase III is slightly higher, there is still nothing to show that SPA seeks to
profit from that rent. Instead, SPA charges rent as part of teaching the women
in both phases of the program budgeting skills as a necessary component of
their recovery.
27. Of course, having a
charitable purpose by itself is not enough. The property also must be predominately
used for that purpose. A property is predominantly used or occupied for an
exempt purpose if it is used or occupied for that purpose more than 50% of the
time that it is used or occupied in the year ending on the assessment date.
I.C.§ 6-1.1-10-36.3(a). If it is exclusively used or occupied for an exempt
purpose, the property is 100% exempt. I.C. § 6-1.1-10-36.3(a)(c)(1). If it is
predominantly—but not exclusively—used for an exempt purpose, the property is
exempt from taxes “on the part of the assessment of the property that bears the
same proportion to the total assessment of the property” as the amount of time
that the property was used or occupied for exempt purposes. I.C. § 6-1.1-10-36.3(a)(c)(3).5
The determination applies separately to each part of the property identified
under Ind. Code § 6-1.1-11-3(c)(5). That statute (Ind. Code § 6-1.1-11-3(c)(5)),
in turn, requires taxpayers applying for exemptions to identify each part of a property
that is and is not used for exempt purposes in the year leading up to the assessment
date. I.C. § 6-1.1-10-36.3(b); I.C. § 6-1.1-11-3(c)(5).
29. It was. In fact, the
undisputed evidence shows that SPA used 313 N. Riverside for only one purpose
in the year leading up to March 1, 2012—to provide a Phase II graduate with housing
so that she could attempt to re-unite her family. As already explained, that is
an exempt purpose. It appears that one woman from the program stayed at 313 N.
Riverside in July 2011 and that it remained vacant the rest of the year.
Indiana Code § 6-1.1-10-36.3, however, only requires that a property be used
for an exempt purpose a majority of the time that it is in use. Based on the
admittedly lean record in this case, the Board concludes that 313 N. Riverside
was used for an exempt purpose 100% of the time that it was in use for the year
leading up to March 1, 2012. That portion of the property is therefore entitled
to a 100% exemption.
30. The Assessor apparently
believes that applying an exemption to only part of the duplex will pose a
problem because, as she testified, the duplex’s assessment is not broken down between
the two sides. SPA attempted to solve that problem by saying that it was seeking
a 50% exemption for the entire property. While that is not how the exemption statute
works, it may be functionally equivalent to applying a 100% exemption to the
half of the duplex located at 313 N. Riverside, at least if the two halves of
the duplex are mirror images. The parties did not offer a property record card.
But given that SPA's exemption application describes each side of the duplex as
having three bedrooms, a living room, a dining room, a kitchen, and a bath, the
two sides of the duplex may well be identical. In any case, SPA is entitled to
an exemption for the portion of the duplex located at 313 N. Riverside and the
land on which it is situated.
31. The Assessor contends that
SPA should nonetheless be denied exemptions because it did not adequately
support its claims at the time it filed its applications. In the Assessor’s view,
that failure operated to waive SPA’s exemption claims. The Board disagrees. As explained
above, SPA substantially complied with the statutory procedures for claiming an
exemption.
32. The Assessor apparently
focuses on the fact that SPA did not include with its exemption applications
every document that supports its claims. But neither the relevant statutes nor the
exemption application form itself requires a taxpayer to do so. Instead, the
exemption statute requires a taxpayer to provide the following information:
(1) A description of the property
claimed to be exempt in sufficient detail to afford identification.
(2) A statement showing the
ownership, possession, and use of the property.
(3) The grounds for claiming the
exemption.
(4) The full name and address of
the applicant.
(5) For the year that ends on the
assessment date of the property, identification of:
(A) each part of the property
used or occupied; and
(B) each part of the property not
used or occupied;
for one (1) or more exempt
purposes under IC 6-1.1-10 during the time the property is used or occupied.
(6) Any additional information
which the department of local government finance may require.
I.C. § 6-1.1-11-3. Similarly, the
exemption application form indicates that a taxpayer “must present evidence
that a property qualifies under a specific statute.” And it asks the taxpayer
to indicate that it has provided the following documents: articles of incorporation
or other organizational documents, By-laws, and financial statements for the
last three years consisting of either balance sheets or a summary of income and
expenditures. Resp’t Ex. A.
33. SPA answered most of the
questions on the exemption applications and provided all of the statutorily
required information. Similarly, SPA attached certificates of amendments to its
articles of incorporation together with its By-Laws, profit and loss
statements, and balance sheets for three years. Thus, SPA substantially
complied with the application requirements and did not waive its exemption
claims.
34. This case differs from State
Bd. of Tax Comm’rs v. Stanadyne, Inc., 435 N.E.2d 278 (Ind. Ct. App. 1982),
which the Assessor cites in support of her position. In Stanadyne, the taxpayer
had filed a personal property return claiming an exemption for a portion of its
inventory located at a warehouse in Indiana. Stanadyne, 435 N.E.2d at
279. At a later hearing before the State Board of Tax Commissioners, the
taxpayer claimed all of its inventory at the warehouse should be exempt, a
claim the trial court granted on judicial review. Id. at 279-80. Among
other things, the court of appeals held that the trial court erred in granting
a larger exemption than what the taxpayer claimed on its return. Id. At 283-84.
The court cited Ind. Code § 6-1.1-11-1, which it described as codifying the
long established principle that an exemption unclaimed is forever lost. Id.
at 283. In response to the taxpayer’s argument that it did not waive the
exemption for its inventory but merely claimed an incorrect amount, the court
explained that Ind. Code § 6-1.1-11-1 requires taxpayers to comply with the
statutory procedures for claiming an exemption. And to claim the type of
exemption at issue, a taxpayer had to report on its return the true cash value
of all the property for which it claimed an exemption. Id. at 283-84.
Thus, the taxpayer was entitled to an exemption, but only to the extent claimed
on its return. Id.
35. Unlike Stanadyne, SPA
did not seek to bypass the application procedure by claiming a greater
exemption on appeal than it had claimed below. While the Assessor argues that SPA
cannot offer any documents to support its claims beyond those attached to its applications,
the exemption statutes do not support her position.
