High court reverses tax decision

Back to TopCommentsE-mailPrintBookmark and Share

An owner of leased property must prove it possesses an exempt purpose separate and distinct from the exempt purpose of its lessee to be entitled to statutory exemption, ruled the Indiana Supreme Court in a decision reversing the Indiana Tax Court.

The justices held in Hamilton County Property Tax Assessment Board of Appeals & Hamilton County Assessor v. Oaken Bucket Partners, LLC, No. 49S10-1003-TA-140, just charging below market rent for part of a building rented to a church is insufficient to justify a religious and charitable purpose property tax exemption.

Oaken Bucket filed an exemption application with the Hamilton County Property Tax Assessment Board of Appeals seeking a charitable and religious purposes exemption on the portion of its building that it leased to Heartland Church Inc. The county board denied the application. Oaken Bucket claimed to charge the church below market-value rent, a fact the county board disputed before the Indiana Board of Tax Review when Oaken Bucket appealed the earlier decision. The Indiana Board of Tax Review affirmed the county board’s decision. Oaken Bucket appealed again and the Tax Court reversed, reasoning there was insufficient evidence supporting the state board’s decision.

Even assuming Oaken Bucket charged below market-rate rent to the church, that fact alone has little bearing on the question of whether Oaken Bucket possessed its own exempt purposes.

“Stated somewhat differently, where an entity charges below market rent to a charitable or religious organization, this may demonstrate some indicia of the entity’s beneficent motives. But more is required to show that the entity possesses its own exempt purposes,” wrote Justice Robert Rucker.

Heartland is a nonprofit and possesses an exempt purpose in its own right, but besides arguing that it charges the church below market-rate rent, Oaken Bucket hasn’t shown an exempt purpose separate from that of the church.

“At most what Oaken Bucket has proven is that it leased and primarily used its property for religious and charitable purposes. This is laudable. But in order to qualify for an exemption the property, among other things, must be ‘owned’ for religious and charitable purposes,” wrote the justice.  “And absent evidence that an owner of leased property possesses an exempt purpose separate and distinct from the exempt purpose of its lessee, the owner holds the property for its own benefit, not that of the public, and thus its property is not entitled to the statutory exemption.”


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
Subscribe to Indiana Lawyer
  1. Lori, you must really love wedding cake stories like this one ... happy enuf ending for you?

  2. This new language about a warning has not been discussed at previous meetings. It's not available online. Since it must be made public knowledge before the vote, does anyone know exactly what it says? Further, this proposal was held up for 5 weeks because members Carol and Lucy insisted that all terms used be defined. So now, definitions are unnecessary and have not been inserted? Beyond these requirements, what is the logic behind giving one free pass to discriminators? Is that how laws work - break it once and that's ok? Just don't do it again? Three members of Carmel's council have done just about everything they can think of to prohibit an anti-discrimination ordinance in Carmel, much to Brainard's consternation, I'm told. These three 'want to be so careful' that they have failed to do what at least 13 other communities, including Martinsville, have already done. It's not being careful. It's standing in the way of what 60% of Carmel residents want. It's hurting CArmel in thT businesses have refused to locate because the council has not gotten with the program. And now they want to give discriminatory one free shot to do so. Unacceptable. Once three members leave the council because they lost their races, the Carmel council will have unanimous approval of the ordinance as originally drafted, not with a one free shot to discriminate freebie. That happens in January 2016. Why give a freebie when all we have to do is wait 3 months and get an ordinance with teeth from Day 1? If nothing else, can you please get s copy from Carmel and post it so we can see what else has changed in the proposal?

  3. Here is an interesting 2012 law review article for any who wish to dive deeper into this subject matter: Excerpt: "Judicial interpretation of the ADA has extended public entity liability to licensing agencies in the licensure and certification of attorneys.49 State bar examiners have the authority to conduct fitness investigations for the purpose of determining whether an applicant is a direct threat to the public.50 A “direct threat” is defined as “a significant risk to the health or safety of others that cannot be eliminated by a modification of policies, practices or procedures, or by the provision of auxiliary aids or services as provided by § 35.139.”51 However, bar examiners may not utilize generalizations or stereotypes about the applicant’s disability in concluding that an applicant is a direct threat.52"

  4. We have been on the waiting list since 2009, i was notified almost 4 months ago that we were going to start receiving payments and we still have received nothing. Every time I call I'm told I just have to wait it's in the lawyers hands. Is everyone else still waiting?

  5. I hope you dont mind but to answer my question. What amendment does this case pretain to?