ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
WILLIAM W. BARRETT STEVE CARTER
WILLIAMS HEWITT & ROBBINS, LLP ATTORNEY GENERAL OF INDIANA
Greenwood, IN Indianapolis, IN
TED J. HOLADAY
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
TRINITY SCHOOL OF NATURAL )
HEALTH, INC., )
v. ) Cause No. 49T10-0203-TA-36
KOSCIUSKO COUNTY PROPERTY TAX )
ASSESSMENT BOARD OF APPEALS, )
ON APPEAL FROM A FINAL DETERMINATION
OF THE INDIANA BOARD OF TAX REVIEW
December 11, 2003
The Petitioner, Trinity School of Natural Health, Inc. (Trinity), appeals the final determination
of the Indiana Board of Tax Review (Indiana Board) denying its application for
a property tax exemption for the 1998 tax year.
is whether Trinity is entitled to the educational purposes exemption as provided by
Indiana Code § 6-1.1-10-16.
For the reasons stated below, the Court finds that Trinity is entitled to
the exemption and REVERSES and REMANDS the final determination of the Indiana Board.
FACTS AND PROCEDURAL HISTORY
Trinity is a correspondence school that offers courses in natural health for personal
enrichment and self-improvement. (Petr Br. at 2-3.) Trinity owns two parcels
of real property in Kosciusko County, Indiana. The first parcel is located
in Warsaw, Indiana. It contains an office where staff members receive and
grade tests, mail course work, answer phones, enroll students, and perform other administrative
tasks. The second parcel is located in Winona Lake, Indiana. It
contains an improvement that is used as both the office and primary residence
of Dr. George de la Torre, the Hispanic Director of the school.
On May 14, 1998, Trinity filed an application for the educational purposes exemption
on both parcels with the Kosciusko Property Tax Assessment Board of Appeals (PTABOA).
On January 11, 1999, after an administrative hearing, the PTABOA denied the
application for both parcels. On February 8, 1999, Trinity filed a Form
132 Petition for Review of Exemption with the State Board of Tax Commissioners
(State Board). On June 23, 1999, the State Board held a hearing
on Trinitys petition. On February 5, 2002, the Indiana Board
On March 22, 2002, Trinity filed an original tax appeal. The parties
submitted briefs and this Court heard oral arguments. Additional facts will be
supplied as needed.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to final determinations of the Indiana Board when
it acts within the scope of its authority. Miller Vill. Prop. Co.,
LLP v. Indiana Bd. of Tax Review, 779 N.E.2d 986, 988 (Ind. Tax
Ct. 2002), review denied. Consequently, the Court may reverse a final determination
of the Indiana Board only if it is:
(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(2) contrary to constitutional right, power, privilege, or immunity;
(3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory jurisdiction,
authority, or limitations;
(4) without observance of procedure required by law; or
(5) unsupported by substantial or reliable evidence.
Ind. Code § 33-3-5-14.8(e)(1)-(5).
To qualify for the educational purposes exemption, a taxpayer must demonstrate that the
predominant use of its property is educational. See State Bd. of Tax
Commrs v. New Castle Lodge #147, Loyal Order of Moose, Inc., 765 N.E.2d
1257, 1259 (Ind. 2002). Trinity argues that because its sole purpose is
to teach courses in science, health, and nature, the predominant use of its
property is educational. (See Petr Br. at 9.) Trinity is correct.
The educational purposes exemption will be denied when educational training . . .
[is] merely incidental to [ ] recreational and hobby activities. Natl
Assn of Miniature Enthusiasts v. State Bd. of Tax Commrs, 671 N.E.2d 218,
222 (Ind. Tax Ct. 1996) (NAME).
In State Board of Tax Commissioners
v. Fort Wayne Sports Club, Inc., 258 N.E.2d 874 (Ind. Ct. App. 1970),
Indianas Court of Appeals rejected the educational purposes exemption for a club that
taught soccer classes and conducted recreational soccer leagues.
Id. at 882.
The Court found that, at most[,] the educational phase of [the Sports
Clubs] activities is incidental and collateral to the social, recreative, promotional and propaganda
phases which constitute its major reasons for existence. Id. (quoting Hazen
v. Natl Rifle Assn of America, 101 F.2d 432, 436, (1938)).
This Court considers the public benefits that accrue from a propertys use
a method of determining whether a propertys predominant use is educational. In
other words, those taxpayers who predominantly use their property to provide instruction and
training equivalent to that provided by tax-supported institutions of higher learning and public
schools will qualify for the exemption because they provide a benefit to the
public by relieving the state of its obligation to provide such instruction.
See NAME, 671 N.E.2d at 222. In this case, the PTABOA argues
there is no evidence that the programs offered by Trinity are comparable to,
or replace, those offered by Indianas tax-supported schools. (Respt Br. at 9.)
However, the PTABOA misinterprets NAME to mean that a taxpayer must teach
classes taught in tax-supported schools in order to receive the exemption.
In 1971, Indianas Court of Appeals granted the educational purposes exemption to a
photography school. See State Bd. of Tax Commrs v. Profl Photographers of
Am., 268 N.E.2d 617, 623 (Ind. Ct. App. 1971). In doing so,
the Court of Appeals stated:
[i]t is clear that the courses offered at the [photography s]chool are of
a type and quality which are not readily available in Indiana or in
other parts of the country and therefore do, to some limited extent, relieve
the State of some of its . . . burdens by providing such
courses. . . . Indiana residents have regularly attended the courses given at
[the photography school] since there are no comparable facilities in the State[.]
This [C]ourt knows judicially that the curricula of public high schools and colleges.
. . is constantly expanding and does include courses related to the field
Id. at 623 (emphases added)(internal citation omitted). The PTABOAs interpretation of
relieving the States educational burden is inconsistent with this standard. C ONCLUSION
Under Professional Photographers, the present benefits test can be met by providing courses
found in tax-supported schools,
or by providing courses that are related to those
found in tax-supported public schools, but not necessarily provided. See id.
Indeed, taxpayers that fill an educational void can relieve the States burden by
adding a new course of study as much as they can by providing
a program that is a direct analogue to classes taught in Indianas tax-supported
schools and universities.
Thus, Trinity need not teach an exact coordinate class
found in Indianas tax-supported schools.
Furthermore, under Professional Photographers, a taxpayer need only relieve the States burden to
some limited extent with programs and courses merely related to those found in
tax-supported schools. Id. As the Court of Appeals recognized, Indiana does
not have a fixed and frozen definition of education. See id.
In this case, courses in natural health and wellness are related to other
science and health classes taught in tax-supported schools. See id. Because
Trinity offers a unique program of study not readily available in tax-supported schools,
this to some limited extent, relieves the States burden.
Trinitys purpose is to educate its students on nature, science, and personal health.
If Trinity stopped providing lessons to students or grading tests, the program
would not exist. As a result, Trinitys educational use of the property
is predominant, and not merely incidental.
These courses provide a public benefit
by filling an educational void as articulated in Professional Photographers. Therefore, Trinitys
application for an educational purposes exemption was erroneously denied.
The Indiana Boards denial of Trinitys exemption petition was an abuse of discretion
and otherwise not in accordance with law. Thus, for the foregoing reasons,
the Indiana Boards final determination is REVERSED and REMANDED with instructions to grant
All or part of a building is exempt from property taxation
if it is owned, occupied, and used by a person for educational, literary,
scientific, religious, or charitable purposes.
Ind. Code § 6-1.1-10-16(a).
On December 31, 2001, the legislature abolished the State Board of Tax
Commissioners (State Board). 2001 Ind. Acts 198 § 119(b)(2). Effective January
1, 2002, the legislature created the Indiana Board of Tax Review (Indiana Board)
as successor to the State Board.
Ind. Code §§ 6-1.5-1-3; 6-1.5-4-1; 2001
Ind. Acts 198 § 95. Consequently, when the final determination was issued
on Trinitys appeal in February 2002, it was issued by the Indiana Board.
n National Association of Miniature Enthusiasts v. State Board of Tax Commissioners,
this Court found that the Miniature Enthusiasts educational purposes were merely incidental to
its other activities of publishing a magazine and newsletter, operating a museum and
library devoted to miniatures, and organizing house parties and local clubs. Natl
Assn of Miniature Enthusiasts v. State Bd. of Tax Commrs, 671 N.E.2d 218,
222 (Ind. Tax Ct. 1996) (NAME).
The Courts justification was that [w]e fail to detect that the
requisite dominant purpose of the . . . property . . .
is educational. . .. [T]he dominant uses . . . are social
and privately recreational.
State Bd. of Tax Commrs v. Ft. Wayne Sports
Club, Inc., 258 N.E.2d 874, 882 (Ind. Ct. App. 1970). The
Court noted that the taxpayers exemption petition stated that its premises were used
for athletic activities, membership meetings, and dances. Id.
In addition, the PTABOA argues the exemption must be denied because there
is no probative evidence that Trinitys program has relieved tax supported schools from
the financial burden of providing such classes. (Respt Br. at 10.)
However, an economic quid pro quo requirement is not found in the statute
or the cases interpreting the statute there is no dollar-for-dollar test.
The PTABOA attempts to distinguish the Professional Photographers holding because the Court
noted that the school provided courses in photography and the law that were
attended by law enforcement officers, whereas Trinity has provided no evidence that its
courses are attended by public sanitarians. (See Respt Br. at 12); see
also State Bd. of Tax Commrs v. Profl Photographers of Am., 268 N.E.2d
617, 623 (Ind. Ct. App. 1971). The Court of Appeals used the
Photography and the Law course as an example of the public benefits conferred
by the school, but not the only public benefit conferred. Id.
If Trinity offered courses attended by public health officials, the calculus of public
benefits would not change. Ultimately, it is the relief of the States
burden that is the public benefit in question, not who takes the courses.
The PTABOA also contends that Trinitys lack of meaningful accreditation [is] evidence
that the program does not . . . relieve the [States] . .
. burden to provide public education. (Respt Br. at 10.) Accreditation
is not a qualification test for the exemption.
Footnote: Counsel for the Respondent proposed during oral argument that because the
Winona Lake property also serves as Dr. de la Torres residence, its predominant
use is not educational, and therefore it does not qualify for the exemption.
See Oral Argument Tr. at 14-17.) However, because the record does
not indicate that the educational use of Dr. de la Torres office was
merely incidental, the fact that Dr. de la Torre lives at the Winona
Lake property does not disqualify it for the exemption.