ATTORNEY FOR PETITONER:
ATTORNEYS FOR RESPONDENT: STEVEN G. HEDGES
KAREN M. FREEMAN-WILSON
ATTORNEY GENERAL OF INDIANA
AMICUS CURIAE FOR PETITIONER:
TED J. HOLADAY
MARTHA B. WENTWORTH
HALL, RENDER, KILLIAN,
HEATH & LYMAN, P.S.C.
INDIANA TAX COURT
NEW CASTLE LODGE #147, )
LOYAL ORDER OF MOOSE, )
v. ) Cause No. 49T10-9701-TA-113
STATE BOARD OF TAX )
ON APPEAL FROM A FINAL DETERMINATION OF THE STATE BOARD OF TAX COMMISSIONERS
August 2, 2000
This case, along
with two others also decided today,
concerns the applicability of the property tax
exemption that Indiana grants to charitable, religious and educational organizations. The petitioner
New Castle Lodge No. 147, Loyal Order of Moose, Inc. (The Moose) appeals
the final determination of the State Board of Tax Commissioners (State Board) denying
it a property tax exemption for the 1992 tax year. In its
original tax appeal, the Moose raise one issue: Whether the Mooses property
was predominately used for charitable purposes under Ind. Code Ann. §§ 6-1.1-10-16(a), 6-1.1-10-36.3(a)
For the reasons explained below, the Court finds that the
Mooses property was predominately used for charitable purposes.
FACTS AND PROCEDURAL HISTORY
The Moose is a fraternal organization with a lodge building located in New
Castle, Indiana. Prior to 1988, the Moose had received a 100% exemption
from property tax from the State Board based on its charitable activities.
However, in 1988, the Henry County Board Of Review (BOR) found that the
Moose was 100% taxable. Upon appeal, the State Board determined that the
Moose should be 67% exempt, citing Ind. Code Ann. § 6-1.1-10-16(a) (West 2000).
In 1992, the Moose reapplied for its exemption status, per Ind.
Code Ann. § 6-1.1-11-3.5 (West 2000).
The BOR determined that the Moose
was 100% taxable. Subsequently, the Moose appealed to the State Board on
September 14, 1992. On November 27, 1996, the State Board issued its
final determination, upholding the BORs findings. The Moose then filed its original
tax appeal on January 14, 1997. On December 22, 1997, the Court
held a trial in this matter and on November 9, 1998, oral arguments
were heard from both parties. Additional facts will be supplied where necessary.
ANALYSIS AND OPINION
Standard of Review
This Court gives the State Boards decisions great deference when the Board acts
within the scope of its authority. See Bender v. State Bd. of
Tax Commrs, 676 N.E.2d 1113, 1114 (Ind. Tax Ct. 1997). As such,
final determinations by the State Board are only reversed by this Court when
the decision is unsupported by substantial evidence, is arbitrary or capricious, constitutes an
abuse of discretion, or exceeds statutory authority. See id.
The Moose argues that it is entitled to a property tax exemption for
the 1992 tax year. The State Board argues that the Moose did
not meet the requirements of section 6-1.1-10-36.3(a). Like other tax exemption statutes,
this section is strictly construed against the taxpayer. See Trinity Episcopal Church
v. State Bd. of Tax Commrs, 694 N.E.2d 816, 818 (Ind. Tax Ct.
1998). However, this provision is not to be construed so narrowly that
the legislatures purpose in enacting it is defeated or frustrated. See id.
Therefore, the proper inquiry into the propriety of an exemption is whether
the use of the property furthers exempt purposes. See id.
The factual aspects of this case closely mirror those of Plainfield Elks Lodge
No. 2186 as well as Alte Salems Kirche. In Plainfield Elks Lodge
No. 2186, No. 49T10-9611-TA-177, slip op. at 8, this Court held that the
taxpayer was entitled to a partial exemption, while in Alte Salems Kirche, No.
82T10-9810-TA-134, slip op. at 7, the Court held that the taxpayer was entitled
to a 100% exemption.
As stated in both the statute and Plainfield
Elks Lodge No. 2186, the exemption depends upon the property being used more
than 50% of the time for charitable purposes. See Ind. Code Ann.
§ 6-1.1-10-36.3(a); see also Plainfield Elks Lodge No. 2186, No. 49T10-9611-TA-177, slip op.
at 4. If this test is met, the property is entitled to
an exemption in proportion to the amount of time it was used for
charitable purposes. See Ind. Code Ann. § 6-1.1-10-36.3(b)(3) (West 2000). In
Plainfield Elks Lodge No. 2186, the Court found that the combination of the
Elks monetary and in-kind donations to the Plainfield, Indiana community were enough to
qualify it for a partial exemption. See Plainfield Elks Lodge No. 2186,
No. 49T10-9611-TA-177, slip op. at 8.
Such is the case here as well. At trial, the Mooses Administrator,
Mr. Richard Masters (Masters), testified at length about the various charitable activities the
Moose conducted during the 1992 tax year. For example, Masters testified that
the Moose donated roughly 20,000 hours per year to the community at a
value of $10.00 per hour. (Trial Tr. at 21.)
the Moose donated roughly $11,000 in 1992 to Moosehaven, a senior citizens home
located in Florida and Mooseheart, a school for orphan children in Illinois.
Tr. at 27, 31, 53.)
The Moose also held euchre tournaments and Bingo nights in order to raise
money for the community. (Trial Tr. 34, 37.) As in Plainfield
Elks Lodge No. 2186, the money raised was used by the Moose to
further other community programs. See Plainfield Elks Lodge No. 2186, No. 49T10-9611-TA-177,
slip op. at 6. Other charitable uses included repairing New Castles tornado
sirens, providing food, water and other necessities to victims of Hurricane Andrew and
raising money to help pay the medical bills of a Henry County Sheriffs
deputy who was shot and wounded while on duty. (Trial Tr. at
25, 39-40.) In order to implement these and other charitable activities, the
Moose members would meet at the lodge building for various planning meetings.
(Trial Tr. at 42.) However, the building was often utilized by other
community organizations as well. (Trial Tr. at 48, 50.)
In denying the exemption, the State Board relied mainly on the fact that
the Moose donated 4% of its gross income to charity. In support
of this, the State Board cites Indianapolis Elks Building Corporation v. State Board.
of Tax Commissioners, 145 Ind. App. 522, 539, 251 N.E.2d 673, 683 (1969),
where the Court of Appeals held that the taxpayer did not qualify for
the exemption when only 3% of its gross income was donated to charity,
as well as State Board of Tax Commissioners v. Fraternal Order of Eagles,
Lodge No. 255, 521 N.E.2d 678, 681 (Ind. 1988) where the Indiana Supreme
Court held that a taxpayers contributions were not enough to entitle it to
The State Board argues that since a 3% monetary gift is
not enough, then 4% must not be as well. However, the State
Boards position is incorrect. The determination of an organizations exempt status does
not turn on the percentage of its gross income used for charitable, educational
or other benevolent purposes. See Plainfield Elks Lodge No. 2186, No. 49T10-9611-TA-177,
slip op. at 7, n.6. Instead, a buildings exempt status turns on
whether the property is predominately used for the above-mentioned purposes more than 50%
of the time. See Ind. Code Ann. § 6-1.1-10-36.3(a).
The State Board also argues that since the Moose used its property partly
for social purposes, it is not entitled to the tax exemption. However,
the statute contemplates that a charitable organizations property can be used for some
social purposes and still receive the exemption. See Ind. Code Ann. §
6-1.1-10-36.3(a). The State Board thus abused its discretion by failing to grant
the Moose an exemption for the 1992 tax year. The Court finds
that the Moose used its property predominately, but not solely for charitable purposes.
For the above-stated reasons, the Court finds that the Moose are entitled to
a property tax exemption for the 1992 tax year. This case is
REVERSED and REMANDED to the State Board with instructions to conduct further proceedings
to determine the exemption allowed by Ind. Code Ann. § 6-1.1-10-36.3(b)(3) for the
1992 tax year.
Plainfield Elks Lodge No. 2186 v. State Bd. of Tax
Commrs, No. 49T10-9611-TA-177 (Ind. Tax Ct. June 26, 2000) and Alte Salems Kirche
v. State Bd. of Tax Commrs, No. 82T10-9810-TA-134 (Ind. Tax Ct. August 2,
The Moose also renew an issue that was originally raised
and relied upon at trial. In its motion at trial, the Moose
asked this Court to remand the case based on the fact that the
BOR failed to act upon the Mooses personal property part of its 1992
application for a property tax exemption. (Trial Tr. at 10.) However,
the State Board, in its final determination, considered both the real and personal
property belonging to the Moose. (Respt. Ex. A.) Ind. Code Ann.
§ 6-1.1-11-3.5(e) (West 2000) gives the State Board the power to review an
application for a property tax exemption at any time. The motion
was thus denied. (Trial Tr. at 16-17.) For the same reasons
as articulated above, the Court again denies the Mooses motion to remand.
Ind. Code Ann. § 6-1.1-10-16(a) states that all or part
of a building is exempt from taxation if it is used for charitable,
educational or religious purposes.
That section requires non-profit corporations like the Moose to apply
for exempt status every four years from 1988 onward.
Alte Salems Kirche dealt with Ind. Code Ann. § 6-1.1-36.3(b)(2),
which states that if a religious organization uses its property predominately for religious,
educational or charitable use, then it is entitled to a 100% exemption.
Mr. Masters based these figures on information gleaned from various
administrator meetings he attended. (Trial Tr. at 21.)
Both of these organizations were supported in part by donations
from the Moose. (Trial Tr. 27-28.)
Neither the State Board nor the legislature has adopted such
a test, and this Court likewise declines to establish such a test.
Rather, the law states that in determining whether an organization qualifies for the
donation, the whole of that organizations time, money, and other in-kind donations should
be considered. See State Board of Tax Commissioners v. Fraternal Order of
Eagles, Lodge No. 255, 521 N.E.2d at 681 (Ind. 1988) (In deciding
whether to grant a property tax exemption, an organizations time and monetary contributions
should be considered together.); see also National Assn. of Miniature Enthusiasts v. State
Bd. of Tax Commrs, 671 N.E.2d 218, 221 (Ind. Tax Ct. 1996) (In
determining whether property qualifies for an exemption, the predominant and primary use of
the property is controlling.); Plainfield Elks Lodge No. 2186 v. State Board of
Tax Commrs, No. 49T10-9611-TA-177, slip op. at 6-7.