Daily Development for Friday, August 29, 2008
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri

STATE AND LOCAL TAXATION; PROPERTY TAXES: A religiously affiliated conference center and RV Park may qualify for tax exempt status on the ground that the RV park was for religious use because its income came predominantly from persons participating in religious programming.

Cedar Lake Conference Ass’n v. Lake County Property Tax Assessment Board of Appeals, 887 N.E.2d 205 (Ind. Tax Ct. 2008).

Cedar Lake Conference Association (“CLCA”) is organized as a non-profit corporation with stated religious and educational purposes. It owns two parcels in Cedar Lake, Indiana. One parcel (the “Conference Center”) consists of lodging, restaurant, conference facilities, and recreational areas and is tax exempt due to its use for religious purposes. The other parcel contains a campground and an RV park, among other things (the “RV Park”). After the RV Park was used in conjunction with the Conference Center, CLCA filed for a tax exemption for the RV Park which the Lake County Property Tax Assessment Board of Appeals denied. The Indiana Board of Tax Review (the “Indiana Board”) upheld the denial on the basis that CLCA failed to demonstrate that the RV Park’s predominant use was for religious purposes because it did not provide a breakdown of the time spent on religious and non-religious activities. CLCA appealed this ruling to the Indiana Tax Court on the basis that the Indiana Board’s

 final determination was not supported by substantial evidence.

The Indiana Tax Court reviews fact-finding by the Indiana Board deferentially only when the Indiana Board’s conclusions are supported by substantial evidence that a “reasonable mind might accept as adequate to support a conclusion.” Amax Inc. v. State Bd. Of Tax Comm’rs, 552 N.E.2d 850, 851 (Ind. Tax Ct. 1990). Here, because CLCA submitted an affidavit that the RV Park was used for religious purposes and a park income report showing that 67.2% of the RV Park’s income was attributable to individuals participating in the Conference Center’s religious programming, the court held that the Indiana Board’s conclusion was not supported by substantial evidence in the record. The court went on to further find that the use of the RV Park for recreational activities, “does not necessarily lead to the conclusion that CLCA’s use of the property does not further its religious purposes.” The denial of tax-exempt status to CLCA for the RV Park was reversed and the matter was remanded to the India

na Board.

Comment: Note that this is a state tax ruling.  It may be useful in other jurisdictions, but don’t bet the ranch (or the trailer park) on that.

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