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Charitable exemption for Starke County nonprofit upheld

December 8, 2017

A Starke County mental health non-profit was properly awarded a partial charitable exemption on its real property because the nonprofit provides a public benefit and lessens the government’s burden of addressing mental health issues, the Indiana Tax Court ruled Friday.

During the 2015 tax year, Porter-Starke Services, Inc. operated a state-certified community mental health center that treated patients at discounted rates based on their ability to pay. Porter-Starke applied for a full charitable purposes exemption for its property in 2015, claiming the property was used exclusively to operate the mental health center.

The Starke County Property Tax Assessment Board of Appeals initially denied Porter-Starke’s application, but the full Indiana Board of Tax Review found 81 percent of the property had been used exclusively for the charitable purpose of operating the mental health center and had provided a public benefit by lessening the burden on law enforcement and correctional resources to address mental health issues. Thus, the board granted an 81 percent exemption on the real property.

The Starke County assessor filed an appeal in Starke County Assessor v. Porter-Starke Services, Inc., 71T10-1701-TA-2, but Indiana Tax Court Judge Martha Wentworth upheld the board’s determination in a Friday opinion.

Specifically, Wentworth disagreed with the assessor’s argument that the board had granted the exemption based on a per se entitlement. Rather, she said the board “weighed all the evidence regarding Porter-Starke’s operations, services, and resultant public benefits in concluding that Porter-Starke’s property was entitled to a charitable purposes exemption.”

The assessor further argued Porter-Starke failed to present sufficient evidence that it relieves government burdens, but Wentworth disagreed with that proposition as well. Under Housing Partnerships, 10 N.E.3d, a taxpayer must provide evidence that it relieves a government burden beyond the extent of government grants, which Porter-Starke receives. The nonprofit met that burden, the judge said.

“The record further showed that Porter-Starke worked with local law enforcement, taking on some of Starke County’s burden in fighting abuse and addiction and treating the mentally ill,” she wrote. “Moreover, the record contains testimony from Porter-Starke’s CFO that Porter-Starke would provide mental health services even in the absence of its public funding. Accordingly, there is more than a scintilla of evidence supporting the Indiana Board’s determination and a reasonable person reviewing the entire record could find relevant evidence to support that determination.”

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