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Facility not predominately used for charitable purposes is taxable

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Despite a claim that labor unions are “inherently” charitable in nature and have historically been granted property tax exemptions, the Indiana Tax Court affirmed that one union’s banquet facility is 100 percent taxable.

In a ruling posted late Thursday in 6787 Steelworkers Hall, Inc. v. John R. Scott, Assessor of Porter County, No. 49T10-0906-TA-27, Tax Court Judge Thomas Fisher affirmed the Indiana Board of Tax Review decision that the union’s banquet facility is not exempt from property taxation.

The Tax Court was asked to decide whether the Indiana Board for Tax Review’s denial of the exemption application was supported by substantial evidence.

Local 6787 owned and operated a banquet facility and a union hall in Portage. In June 2006, Local 6787 filed an exemption application with the Porter County Assessor for an educational-purposes exemption on both of its buildings, the land, and the personal property there. In December 2006, the Porter County Property Tax Assessment Board of Appeals determined that Local 6787’s union hall, the personal property, and the land was exempt from property taxation but the banquet facility was 100 percent taxable. Local 6787 filed a petition for review with the Indiana Board of Tax Review.

The union claimed the banquet facility’s eligibility for an educational/charitable purposes exemption was “obvious.” The union noted that Ivy Tech taught culinary courses – primarily for Local 6787 members – in the facility, and other charitable organizations such as the American Heart Association and the United Way used the facility free-of-charge. Local 6787 also showed a schedule of events and a summary of the facility’s overall usage: it was used 41.67 percent of the time for union-related activities, 44.44 percent of the time for culinary classes, and 13.89 percent of the time for weddings/banquets. It claimed the facility was eligible for an 86.11 percent exemption for 2006.

However, the board concluded the union had not demonstrated that the banquet facility was predominately used for educational/charitable purposes.

The union asserted that the board’s final determination must be reversed because Local 6787 prima facie established that the banquet facility was used 86.11 percent of the time for educational or charitable purposes. The union argued that it demonstrated that both its organizational purposes and uses of the banquet facility were educationally and charitably grounded because, among other things, labor unions are “‘inherently” charitable and have historically been granted property tax exemptions – the union hall had always been exempted from property taxation.

Judge Fisher wrote the union’s claim does not establish that it predominately used its banquet facility for charitable or educational purposes. Also, Local 6787 did not provide any citations to Indiana statutes or caselaw for the proposition that unions are inherently charitable. Because its union hall qualified for a property tax exemption in the past doesn’t mean that its banquet facility should be automatically deemed exempt for the year at issue.

While Local 6787’s bylaws indicate the organization has some charitable or educational intent, such intent does not establish predominate use.

Local 6787’s educational uses of the banquet facility were insufficient to support a finding of predominate use because the facility was used for such activities less than 50 percent of the time for 2006.

Judge Fisher concluded, “The evaluation of whether property is used for educational/charitable purposes is a fact-sensitive inquiry; there are no bright-line tests. See Jamestown Homes, 914 N.E.2d at 15 (citation omitted). Here, the Indiana Board’s final determination indicates that it assigned minimal weight to Local 6787’s arguments because they were not supported by substantial evidence. As the fact finder, it was well within the purview of the Indiana Board to make that determination.”
 

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