Chesterton Tribune

County Assessor to check tax exempt status of nonprofit properties

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Porter County Assessor Jon Snyder has recently announced to the County Council he intends to inspect the county’s 6,246 parcels that are receiving property tax breaks or exemptions and check if they qualify under the state’s guidelines.

According to figures from the assessor’s office, exempt properties in the county hold nearly $700 million total in assessed value and the county could gain some revenues after reviewing the qualifications for tax exempt status.

At the Council’s meeting last week, Snyder said the county’s Property Tax Assessment Board of Appeals (PTABOA) members suspect there could be inequities in the application of tax exempt status across the county.

All tangible property must be assessed under Indiana code, but groups like non-profit organizations can appeal to the PTABOA board to get an exemption.

Snyder cited two court cases that prompted him to reevaluate the parcels. One case in particular was a legal challenge made by Snyder’s predecessor, John Scott, against the Steelworkers Local 6787 Hall in Chesterton. Having received a tax-exempt status in 2006, The Indiana Board of Tax Review in 2009 issued a determination that Local 6787 had not demonstrated the banquet hall was used for charitable or educational purposes.

The second court case regards the Fraternal Order of Eagles #2455 in Noble County which made a similar appeal to the Indiana Tax Board. Like the Steelworkers, the Eagles did not provide sufficient evidence their building was being used 100 percent for charitable purposes.

Snyder said his objective is not a political one and he takes no stance against the unions or questions their role in the community. Instead, the goal is to ensure “fair and equitable” assessments by abiding by what the legislature has passed concerning the qualifications for tax exemptions and using that to establish criteria for further exemptions.

“It is really about following the law,” said Snyder.

Partial charitable or educational work by non-profits, Snyder said, is not recognized by Indiana’s legal principles governing real estate and taxation exemptions.

Snyder said he has reached out to local state legislators to discuss legislation that aims to clarify the criteria used to classify exempt properties.

State Rep. Ed Soliday, R-Valparaiso, said there was a summer study committee which considered legislation addressing the topic. A bill has been introduced by state Rep. Milo Smith, R-Columbus, proposing that all 501(c)(3) organizations will be exempt from property tax. If the bill gains momentum, Soliday said amendments are likely to be made since the bill does not guard against the possibility of one of the groups opening or renting out a shop or a restaurant tax-free that would be in direct competition with commercial businesses.

Tax exemption laws written more than 30 years ago allow local officials to interpret if community entities are actually making a contribution to society, such as the Boys and Girls Clubs or the YMCA.

After subsequent rulings by courts, some counties interpret the law broadly while there are others with narrower interpretations.

The situation can be complex and difficult for venues that have been tax exempt for years such as Moose lodges and Masonic lodges which may not have revenue enough to absorb property taxes if their status is revoked, Soliday said.

This may cause organizations to relocate to counties where their exempt statuses are still valid, thus reducing services in the community.

Soliday believes more discussion between state officials and various attorneys is needed on the issue before legislation is drafted, but says it is unlikely a solution will be found before the bill drafts are due on Dec. 9.

Minor amendments or tweaks may be passed, but the issue is complex with many competing viewpoints.

“Let’s start thinking about this because once you start down this path, you have some very strong factions. There are some people, even in the legislature, that say let’s tax everybody, there are some who say the system works the way it is and there are those in the middle that say non-profit groups should pay for some of it,” said Soliday.

PTABOA Attorney Christopher Buckley wrote a memo to Commissioner President John Evans and County Council President Dan Whitten informing them of the board’s intention to see that exempt properties are meeting legal standards.

Buckley said all tangible property is subject to taxation but may be exempted if the property is used for municipal, educational, literary, scientific, religious or charitable purposes which are generally formed as 501(c)(3) organizations. Certain community organizations are also exempted by statute including the YMCA, Boys and Girls Clubs, the Salvation Army, the American Legion and other veterans’ organizations.

Buckley said the taxpayer bears the burden of providing evidence of how their organization fits the qualifications to be exempt from property tax.

Religious exemptions tend to be the simplest in determining an exemption, Buckley said, while “charitable use” exemptions tend to be the broadest and most common.

An organization’s 501(c)(3) non-profit status does not automatically mean its property is entitled to charitable exemption. It must first show that its charitable acts benefit the general public.

Snyder said the assessor cannot make a determination on PTABOA exemption cases because he serves as secretary for the board and not as a voting member, but he can make the effort to see that assessments are made fairly.

Buckley points out that the more property tax exemptions are granted, the more burden is put on other property owners who must pay the remainder of the tax levy.

The assessor and PTABOA plan to start reviewing all parcels within the next year.

Costs for the inspections will be paid out of the county auditor’s non-reverting fund set up as part of the Total Quality Management plan at no expense to taxpayers.

If properties lose their exemption status as a result of the reviews, Snyder said the property owner can file an appeal to the Indiana Board of Tax Review.


Posted 11/30/2011