ATTORNEY FOR PETITONER : ATTORNEYS FOR RESPONDENT :
M. FREEMAN-WILSON Indianapolis, Indiana
TED J. HOLADAY
Deputy Attorney General
INDIANA TAX COURT
ALTE SALEMS KIRCHE, INC. )
v. ) Cause No. 82T10-9810-TA-134
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. As in
the other two cases, the petitioner, Alte Salems Kirche, Inc. (Alte Salems) appeals
the final assessment determination of the State Board of Tax Commissioners (State Board),
which denied it a property tax exemption. In its original tax appeal,
Alte Salems raises one issue for this Courts consideration: Whether Alte Salems
meets the charitable purpose requirements of Ind. Code Ann.§§6-1.1-10-16(a), 6-1.1-10-36.3(a) (West 2000) for
the 1990 tax year.
For the reasons explained below, the Court finds
that Alte Salems meets the requirements and is thus entitled to the exemption.
FACTS AND PROCEDURAL HISTORY
This case returns to this Court following a remand ordered by the Court
on May 1, 1998. See Alte Salems Kirche v. State Bd. of
Tax Commrs, 694 N.E.2d 810 (Ind. Tax Ct. 1998) (Alte Salems I).
The facts and procedural history of this case are not in dispute and
have been stated once before in Alte Salems I, 694 N.E.2d at 812-14.
Therefore, the Court will not restate the facts or the procedural history
in their entirety a second time, but rather will present an abbreviated version
of both for purposes of this case. Alte Salems property consists of
a church building, mobile home and barn located in Posey County. The
church is officially non-denominational, and people of various faiths often worship there.
From 1973-83 the State Board granted Alte Salems a property tax exemption.
Also in 1973, the church was moved to its current location from its
old site three miles away. In a 1995 final determination, the State
Board denied Alte Salems an exemption for the 1990 tax year. This
Court found in Alte Salems I that the State Board failed to consider
all the evidence before it and remanded this case for further consideration on
May 1, 1998. See Alte Salems Kirche, 694 N.E.2d at 816.
Following the remand, the State Board held a hearing on August 18, 1998.
After the hearing, it issued its final determination on September 14, 1998, affirming
its earlier decision to deny Alte Salems a property tax exemption for the
1990 tax year. Alte Salems subsequently appealed this ruling and the Court
held a second trial in this matter on July 9, 1999, after which
oral arguments were heard from both parties on May 5, 2000. 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.
Alte Salems argues that it is entitled to a property tax exemption for
the 1990 tax year. The State Board claims that Alte Salems 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 resemble those of Plainfield Elks Lodge
No. 2186 as well as New Castle Lodge No. 147. In both
Plainfield Elks Lodge and New Castle Lodge No. 147, the Court held that
the taxpayers used their property predominately for charitable purposes. See Plainfield Elks
Lodge No. 2186, No. 49T10-9611-TA-177, slip op. at 8. See also New
Castle Lodge No. 147, Loyal Order of Moose Inc., No. 49T10-9701-TA-113, slip op.
at 6-7. As stated in both the statute and Plainfield Elks Lodge,
the exemption depends on the property being predominately used 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 5. In addition, Ind. Code Ann. §
6-1.1-10-36.3(b)(2) (West 2000) states that if property is predominately used for religious or
charitable purposes by a church or religious society, then it is totally exempt
In this case, the church building was used by people to attend to
their own spiritual needs. (Trial Tr. at 18.) In addition, the
building was often used by other churches for worship services. (Trial Tr.
at 15.) Also, community groups like the Girl Scouts, Audubon Society and
the Evansville Hiking Club all used the building at no charge. (Trial
Tr. at 25.) Sunday school classes were normally held on a weekly
basis at the church. (Trial Tr. at 16). At trial, Mrs.
Burgdorf, who also served as Alte Salems treasurer, testified that she visited the
church weekly, during which time she would often pray or play the piano.
(Trial Tr. at 17.)
Mrs. Burgdorf also testified that Alte Salems sometimes donated money to worthy causes
in and around the community. (Trial Tr. at 24.) According to
Mrs. Burgdorf, Alte Salems main contribution to the community was its constant openness
to anyone who wished to use its facilities. (Trial Tr. at 24.)
Alte Salems also submitted evidence of other comparable properties that received charitable,
religious or educational exemptions in previous years. (Petr Ex. M.) The
Court may consider such evidence if it finds it helpful in the present
case. See Alte Salems I, 694 N.E.2d at 814; see also North
Park Cinemas v. State Bd. of Tax Commrs, 689 N.E.2d 765, 771 (Ind.
Tax Ct. 1997) (taxpayer presented evidence of comparable properties.) Presented with such
evidence, the State Board found it irrelevant to the present case and failed
to consider it. (Respt Ex. 1.) This amounts to an abuse of
discretion, which the Court will not tolerate. See North Park Cinemas, 689
N.E.2d at 771 (Ind. Tax Ct. 1997) (The State Board is required to
compare similar properties when such evidence is proffered by a taxpayer seeking review
of his assessment.)
In denying the exemption, the State Board concluded that none of Alte Salems
charitable activities should be classified as such. (Respt Ex. 1.) According
to the State Board, The provision of facilities to other organizations or groups
for meetings or gatherings at no cost does not constitute a charitable act.
(Respt. Ex. 1.) The State Board is mistaken. As this
Court held in Foursquare Tabernacle Church of God in Christ v. State Board
of Tax Commissioners, 550 N.E.2d 850, 854 (Ind. Tax Ct. 1990), the rationale
behind the exemption is that a present benefit to the general public exists
from the operation of the charitable institution sufficient to justify the loss of
tax revenue. Here, the testimony shows that Alte Salems church is available
24 hours a day, seven days a week for prayer, meditation or other
religious purposes. Considering also the educational and religious uses noted above, the
Court finds that Alte Salems church building is entitled to the property tax
exemption for the 1990 tax year. See State Board of Tax Commissioners
v. Fraternal Order of Eagles, Lodge No. 255, 521 N.E.2d 678, 681 (Ind.
1988) (when deciding whether or not to grant a property tax exemption, an
organizations educational, charitable and religious contributions should be analyzed together).
In addition to the aforementioned church building, Alte Salems also owns a mobile
home and barn on the property that were also denied exemptions for the
1990 tax year. According to Mrs. Burgdorf, the mobile home served three
main purposes. First, the small amount of rent generated by it helped
pay for upkeep of the churchs property. (Trial Tr. at 12.)
Second, the mobile homes presence served as a deterrent to vandals who might
otherwise damage the property. (Trial Tr. at 12.) Lastly and perhaps
most importantly, the presence of the mobile home helped keep Alte Salems insurance
costs down because someone was always able to monitor the property. (Trial
Tr. at 13.) The barn was used for storage of Alte Salems
maintenance tools. (Trial Tr. at 12.) This Court has stated that
property must be reasonably necessary for the maintenance of, and not just related
to, the exempt purposes of the charitable organization. See St. Marys Medical
Center v. State Bd. of Tax Commrs, 534 N.E.2d 277, 279 (Ind. Tax
Ct. 1989), affd, 571 N.E.2d 1247, 1249 (Ind. 1991). The Court finds
that the storage of maintenance tools in the barn, along with the uses
of the mobile home described above are reasonably necessary for the upkeep of
Alte Salems and should be allowed a property tax exemption as well.
The State Board abused its discretion in denying Alte Salems a property tax
exemption for the 1990 tax year. The Court finds that Alte Salems
used its property predominately for religious, charitable and educational purposes during the 1990
tax year. For the reasons stated above, the Court REVERSES the final
determination of the State Board denying Alte Salems a property tax exemption on
its church building, mobile home and barn for the 1990 tax year and
REMANDS this case with instructions to grant Alte Salems a 100% property tax
exemption for the 1990 tax year on its building, mobile home and barn,
pursuant to Ind. Code Ann. § 6-1.1-10-36.3(b)(2).
Plainfield Elks Lodge No. 2186 v. State Bd. of Tax
Commrs, No. 49T10-9611-TA-177 (Ind. Tax Ct. June 9, 2000) and New Castle Lodge
No. 147, Loyal Order of Moose, Inc. v. State Bd. of Tax Commrs,
No. 49T10-9701-TA-113 (Ind. Tax Ct. August 2, 2000).
The State Board claims that the Statute of Frauds requires
the Court to dismiss this case by suggesting that the owner of both
the land and Alte Salems building, Mrs. Pauline Burgdorf, and not Alte Salems
should have applied for the exemption. The State Board is mistaken.
The Statute of Frauds is located at Ind. Code Ann. § 32-2-1-1 (West
1979 and Supp. 1999) and states that any sale of real property must
be consecrated in writing.
At trial, Mrs. Burgdorf testified that she gave the church building to
Alte Salems. (Trial Tr. at 9-11, 37-38.). The State Board did
not refute this. Since the record is clear that both parties agreed
that Alte Salems church building was not sold, but rather given to Alte
Salems, the Statute of Frauds does not apply here.
As this Court noted in Alte Salems I, Alte Salems
qualifies as a church for purposes of section 6-1.1-10-36.3(b)(2). See Alte Salems
Kirche, 694 N.E.2d at 812-14 (Alte Salem is a non-denominational church located in
a remote section of Posey County.)
While the facts state that Mrs. Burgdorf was a regular
visitor to the church, the evidence does not show that she used the
church for anything but religious purposes during her visits.