82 N.E.3d 940 (Ind.Tax 2017), 49T10-1608-TA-21, Whitelick Indiana Aerie 3702 Fraternal Order of Eagles, Inc. v. Hendricks County Property Tax Assessment Board of Appeals
|Citation:||82 N.E.3d 940|
|Opinion Judge:||Mark E. GiaQuinta, Special Judge|
|Party Name:||WHITELICK INDIANA AERIE 3702 FRATERNAL ORDER OF EAGLES, INC., Petitioner, v. HENDRICKS COUNTY PROPERTY TAX ASSESSMENT BOARD OF APPEALS AND HENDRICKS COUNTY ASSESSOR, Respondent|
|Attorney:||ATTORNEYS FOR PETITIONERS: WILLIAM W. BARRETT, WILLIAMS BARRETT & WILKOWSKI LLP, Greenwood, Indiana. ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR., ATTORNEY GENERAL OF INDIANA; WINSTON LIN, DEPUTY ATTORNEY GENERAL, Indianapolis, Indiana.|
|Case Date:||September 01, 2017|
|Court:||Tax Court of Indiana|
ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW.
ATTORNEYS FOR PETITIONERS: WILLIAM W. BARRETT, WILLIAMS BARRETT & WILKOWSKI LLP, Greenwood, Indiana.
ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR., ATTORNEY GENERAL OF INDIANA; WINSTON LIN, DEPUTY ATTORNEY GENERAL, Indianapolis, Indiana.
Mark E. GiaQuinta, Special Judge
This case concerns whether the Indiana Board of Tax Review (the " Indiana Board" ) Conclusions determining that Whitelick Indiana Aerie 3207 Fraternal Order of Eagles, Inc. (" Aerie 3207" ) was not entitled to a property tax exemption under either Indiana Code § 6-1.1-10-23 or Indiana Code § 6-1.1-10-16 were not in accordance with law. The court affirms.
FACTS AND PROCEDURAL HISTORY
Aerie 3207 was incorporated in Indiana as a domestic, not-for-profit corporation, with no capital stock, for the following purposes as set forth in its Articles of Incorporation: (a) To strengthen the bonds of fraternity between local Aeries, State Aeries and the Grand Aerie of the Fraternal Order of Eagles;
(b) To promote the patriotic, humanitarian and fraternal teachings of the Fraternal Order of Eagles; and
(c) To inculcate among the members a sense of their individual obligation to their community, to their state and to their nation.
Aerie 3207 is a local chapter instituted by the authority of the Grand Aerie of the Fraternal Order of Eagles. The Grand
Aerie is the supreme governing body. Local Aerie chapters are part of individual Districts and Zones within each state Aerie. These state Aeries are part of Regions. Aerie 3207 uses the term " Grand Aerie" to refer to what appear to be two separate things: (1) the society itself (the Fraternal Order of Eagles), and (2) its supreme governing body (the Grand Aerie). The society's constitution requires local aeries to adopt by-laws that the Grand Aerie must approve.
During the 2013 and 2014 tax years, Aerie 3207 owned two parcels located at 5556 East U.S. Highway 40, Plainfield. The larger parcel is a 4.4-acre tract with a 7,560-square-foot lodge, a surface parking lot, a shelter house, horseshoe pits, and a playground. Members gather at the property to socialize. The lodge is comprised of three main sections: (1) a social room with a restaurant and bar used exclusively by members, (2) a banquet hall, and (3) offices, meeting rooms and restrooms. Each of these sections accounts for approximately 33% of the total building. And, the lodge contains personal property used for the organization's activities such as kitchen equipment, table, chairs, dish and glassware and office supplies.
The banquet hall functions as a party room, bingo room and ballroom. For example, Aerie 3207 holds weekly bingo nights open to the public. Non-members can rent the banquet hall for weddings, receptions and other events. Those rentals occur approximately 8-10 times per year. Aerie 3207 also donates use of the banquet hall, meeting rooms, and outside facilities to the Chamber of Commerce, various charities, local organizations, youth groups, and businesses.
At various times during the years under appeal, the lodge and surrounding grounds were used for weekly bingo nights; 52 Club drawings; Annual Charity Ball/Sweetheart Dance; banquet hall rentals; Eagles Riders Club raffles and charity rides; fundraising for the State Aerie and State Auxiliary projects; collecting goods for the Grand Aerie's Operation Eagle program; member's funeral dinners; dart tournaments; real estate agency clothing drives and pork chop sales; Chamber of Commerce meetings; Veteran's Day banquets and dinners; dinners for local police and firemen; children's Christmas programs; Easter egg hunts; Halloween parties and dances; picnics; Act of Faith's Charity Cat Show; and a fundraising event for Premier Academy of the Performing Arts Competition Team.
The other parcel is a 2.75-acre tract with a storage shed/garage. Aerie 3207 uses the shed to store its business records and personal property such as lawn-maintenance equipment.
Aerie 3207 generates most of its income through its restaurant, gaming, membership dues, and fundraisers and uses that income to pay operating expenses. Aerie 3207 gives funds not used for operations to charity. Aerie 3207 also collects donations for specific charitable causes, some of which are passed through to benefit the charitable endeavors of the society.
Members of the local pay annual membership dues of up to $30 per year. Aerie 3207's by-laws provide for a funeral benefit ranging from $150 (if a member dies in his first year of membership) to $300 (if he dies in the tenth year of membership or after). To qualify for the funeral benefit, the member must have been initiated into Aerie 3207 before his 55th birthday and be current with membership dues at the time of death. Aerie 3207 pays funeral benefits out of its benefit fund; no funds come from the society.
Aerie 3207 filed Applications for Property Tax Exemption with the Hendricks
County Property Tax Assessment Board of Appeals (PTABOA) requesting either a fraternal benefit association exemption or a charitable purposes exemption for the 2013 and 2014 tax years on its real and personal property. The PTABOA denied those exemption applications on August 29, 2013, and July 7, 2014, respectively.
Aerie 3207 then timely appealed to the Indiana Board. On November 17, 2015, the Indiana Board held a hearing during which Aerie 3207 presented evidence including, but not limited to, its relationship to the society and the Grand Aerie, mission, and ownership, occupancy and use of the parcels. On June 20, 2016, the Indiana Board issued a final determination in which it held that Aerie 3207 was not entitled to either the fraternal benefit association exemption or the charitable purposes exemption.
On August 4, 2016, Aerie 3207 filed this original tax appeal. The court heard oral argument on June 7, 2017.
STANDARD OF REVIEW
This court gives great deference to final determinations of the Indiana Board when it acts within the scope of its authority. The court will 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 § § 33-26-6-6(e)(1)-(5) (2014). See, Fraternal Order of Eagles # 3988, Inc. v. Morgan Cnty. Property Tax Assessment Bd. of Appeals, 5 N.E.3d 1195, 1198 (Tax Ct. 2014). Aerie 3207 contends that the Board's conclusions that Aerie 3207 neither established itself as a fraternal benefit association under Indiana Code § 27-11-1-1 nor that it met the charitable exemption requirements under Indiana Code § 6-1.1-10-16(a) were not in accordance with law.
Aerie 3207's first claim addresses the Board's conclusion that it was required to provide an insurance " Benefit Contract," including the issuance of certificates of insurance, to qualify as a fraternal benefit association for tax exempt status under Indiana Code § 6-1.1-10-23.
Aerie 3207 next claims that the Indiana Board erred when it determined that it failed to establish that its buildings and personal property were predominantly used for charitable purposes and exempt under Indiana Code § 6-1.1-10-16(a).
I. Burden on Taxpayer to Establish Exempt Status.
" [E]xemption statutes are to be strictly construed against the taxpayer, and thus, the burden is on the taxpayer to prove that it is entitled to the exemption that it seeks." Fraternal Order of Eagles No. 3988, Inc., 5 N.E.3d at 1200 (citing Tipton Cnty. Health Care Found v. Tipton Cnty. Assessor, 961 N.E.2d 1048, 1051 (Ind.Tax Ct. 2012)); see also Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 471 (Ind.Tax Ct. 2005) (explaining that a taxpayer must walk the Indiana Board through each element of its analysis and may not simply assume that the evidence speaks for itself to make a prima facie case). Therefore, Aerie 3207 was required to meet the statutory definition of a fraternal
benefit association set forth in Indiana Code § 27-11-1-1. Fraternal Order of Eagles No. 3988,
Inc., 5 N.E.3d at 1200 (citing State Bd. of Tax Com'rs v. Fort...
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