State Tax Commission of Missouri
|v.||)||Appeal No. 13-88500 to 13-88511|
|BRAD HUDSON, ASSESSOR||)|
|STONE COUNTY , MISSOURI||)|
DECISION AND ORDER
Decisions of the County Board of Equalization sustaining the assessments made by the Assessor are SET ASIDE . Complainant presents substantial and persuasive evidence demonstrating the property should be exempt from taxation for tax year 2013.
Complainant represented by Virginia L. Fry, Esq. and Ashley L. Nogard.
Respondent is not represented by counsel.
This case is decided by Senior Hearing Officer, John Treu based upon exhibits provided by Complainant and Direct Written Testimony of Donald C. Frank (which has been marked by this Hearing Officer as Exhibit K for ease of reference. Respondent presented no exhibits. Both parties have consented to the appeal being decided on the record.
|A||Restate Articles of Incorporation filed by Kanakuk Ministries on March 24, 2003|
|B||Letter Kanakuk Ministries received from the Internal Revenue Service confirming exemption from federal income tax|
|C||July 2009 letter Kanakuk Ministries received from the Missouri Department of Revenue approving its application for sales & use tax exemption|
|D||February 2009 and February 2010 letters Kanakuk Ministries submitted to Stone County Assessor|
|E||August 18, 2014 State Tax Commission Decision and Order in Kanakuk Ministries v. Pennel, Assessor, Taney County|
|F||July 2013 letter Kanakuk Ministries received from Stone County Equalization Board|
|G||December 2013 amended letter Kanakuk Ministries received from Stone County Equalization Board and listing of Kanakuk Ministries personal property|
|H||Daily activities of Kanakuk Ministries’ Christian summer camps for children|
|I||Sample of guides and curricula used in camps|
|J||Education brochures describing each camp|
|K||Direct Testimony of Donald C. Frank|
Complainant appeals, on the grounds of exemption, the decisions of the Stone County Board of Equalization, which sustained the Assessor’s valuations of the subject properties. The Commission takes these appeals to determine whether or not the property should be exempt from taxation for tax year 2013.
The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.
FINDINGS OF FACT
- Jurisdiction. Jurisdiction over these appeals is proper. Complainant timely appealed to the State Tax Commission from the decisions of the Stone County Board of Equalization.
- Characteristics of Complainant. Complainant is a Missouri Not-For-Profit Corporation formed under Chapter 355 of the Revised Statutes of Missouri. It is recognized by the Internal Revenue Service as tax exempt under Section 501(c) (3) of the Internal Revenue Code (Ex. B). In the event of dissolution, the assets of Complainant must go to another 501(c) (3) organization or the corporation must otherwise “distribute the assets of the corporation exclusively for the corporation’s religious, charitable and educations purposes”. (Ex. A).
- Complainant’s Purpose and Operation. Complainant’s stated purposes are:
- “To relieve poverty by providing food, clothing, medical supplies, and other basic needs to underprivileged or impoverished children;
- To advance the Kingdom of God and promote Christian virtue in individuals by providing support for Christian evangelistic organizations and programs;
- To educate children and advance the Kingdom of God by operating camps to teach Christian faith and athletic skills;
- To assist other religious, charitable, and educational organizations in the conduct of similar activities; and
- To engage in any and all lawful activities to accomplish the foregoing purposes….”
The personal property of Kanukuk Ministries in Stone County, Missouri is used in substantially the same way as its personal property in Taney County, Missouri. (Exhibit K). The personal property of Kanukuk Ministries in Stone County, Missouri is used for the same purposes and mission as its personal property in Taney County, Missouri. (Ex. K). Such Taney County personal property of Kanakuk Ministries has been ruled exempt by the Missouri State Tax Commission. (Ex. E).
The personal property of Kanukuk Ministries in Stone County, Missouri “are owned and operated on a not-for-profit religious basis to an indefinite number of people by modeling Christian behavior, deepening an individual’s relationship with God, strengthening Christian family bonds, and developing Christian leaders.” (Ex. K, Page 4, Lines 19-22 & 29-31). Part of Kanakuk Ministries’ mission is to “develop dynamic Christian leaders through our Christian summer camps, which are primarily aimed toward children”. (Ex. K, page 5). Kanakuk Ministries’ mission statement is “Developing dynamic Christian leaders through life-changing experiences, Godly relationships, and Spiritual training”. (Ex. K). Kanakuk Ministries effectuates this mission through everyday activities at its summer camps, “all day” and “every day”. (Ex. K). The following is are some of the activities used by Kanakuk where the campers are “encouraged to keep their focus on Christ and model Christ’s behavior:
- Team Sports
- Other water activities
- Morning, Afternoon and Evening devotionals
- Bible Study
- Praise and Worship service
In 2012, Complainant provided $1,300,000 in scholarships to 1,900 underprivileged children. In 2013, Complainant provided $1,670,000 in scholarships to 2,400 children. Of the 2013 scholarships, $425,000 went to 342 underprivileged children in Taney and Stone counties (Ex. K).
- Identification of Subject Property.
- Appeal No. 13-88500, Account No. 8094-0: This account includes boats and jet skies used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88501, Account No. 8094-1: This account consists of boats and jet skies used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88502, Account No. 8094-2: This account consists of boat trailers used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88503, Account No. 8094-3: This account consists of boat trailers used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88504, Account No. 8094-4. This account consists of various trailers used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88505, Account No. 8094-5: This account consists of boat motors used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88506, Account No. 8094-6: This account consists of boat motors used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88507, Account No. 8094-7: This account consists of sailboats used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88508, Account No. 8094-8: This account consists of sailboats used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88509, Account No. 8094-9: This account consists of various heavy duty trucks, buses and vehicles used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88510, Account No. 602252-0: This account consists of boat lifts, computers, electronics and various other personal property (e.g. coolers, bleachers, etc.) used in the operation and administration of the summer camps and other ministry programs.
- Appeal No. 13-88511, Account No. 602252-1: This account consists of vans, pickups and SUV’s used in the operation and administration of the summer camps and other ministry programs.
5. Previous Exempt Status. Kanakuk Ministries, prior to 2013, never had to pay personal property tax in Stone County. While exempt status may change based upon use, there is no evidence that the use of the property changed between January 1, 2012 and January 1, 2013
Burden of Proof
Although a taxing statute is construed strictly against the state, an exemption statute is strictly construed against the one claiming the exemption. State ex rel. Union Electric Co. v. Goldberg, 578 S.W.2d 921, 923 (Mo. banc 1979). In order to prevail, Complainant must demonstrate by substantial and persuasive evidence, that it is entitled to an exemption. Substantial evidence is that evidence which, if true, has probative force upon the issues, i.e., evidence favoring facts which are such that reasonable men may differ as to whether it established them, and from which the Commission can reasonably decide an appeal on the factual issues. Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). Respondent has no obligation to submit any evidence. It is solely Complainant’s burden of proof to meet.
Properties which can be exempted from taxation are set out within our Constitution and the statutes enacted to enforce that Constitution, to wit:
“. . .all property, real and personal, not held for private or corporate profit and used exclusively for religious worship, for schools and colleges, for purposes purely charitable, . . .may be exempt from taxation by general law but any such law may provide for approximate restitution to the respective political subdivisions of revenues lost by reason of the exemption. All laws exempting from taxation property other than the property enumerated in this article, shall be void. Article X, Section 6, Mo. Const. of 1945.
In support of this Constitutional provision, the Legislature has enacted Section 137.110, RSMo, which provides in relevant part:
The following property shall be exempt from taxation:
(5) All property, real and personal, actually and regularly used exclusively for religious worship, for schools and colleges, or for purposes purely charitable and not held for private or corporate profit, except that the exemption herein granted does not include real property not actually used or occupied for the purpose of the organization but held or used as investment even though the income or rentals received therefrom is used wholly for religious, education or charitable purposes; Section 137.110, RSMo 1994.
Case Law on Charitable Use
In order for a property to be exempt from taxation for state, county or local purposes, the following tests must be met:
- The property must be actually and regularly used exclusively for a charitable purpose, as charity is defined by Salvation Army v. Hoehn, 188 S.W.2d 826 (Mo. banc 1945). “Charity” is therein defined as “. . .a gift, to be applied consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their hearts under the influence of education or religion, by relieving their bodies of disease, suffering or constraint, by assisting them to establish themselves for life, or by erecting or maintaining the public buildings or works or otherwise lessening the burdens of government.” Salvation Army at 830.
- The property must be owned and operated on a not-for-profit basis. The property “must be dedicated unconditionally to the charitable activity in such a way that there will be no profit, presently or prospectively, to individuals or corporations. Any gain achieved in use of the building must be devoted to achievement of the charitable objectives of the project.” Franciscan Tertiary Province v. State Tax Commission, 566 S.W.2d 213, at 224 (Mo. banc 1978).
- The dominant use of the property must be for the benefit of an indefinite number of persons and must directly or indirectly benefit society generally. “It is required that there be the element of direct or indirect benefit to society in addition to and as a result of the benefit conferred on the persons directly served by the humanitarian activity.” Franciscan at 224. See also, Barnes Hospital v. Leggett, 589 S.W.2d 241 (Mo. banc 1979).
- If religiously based, the primary and inherent use of the property is for “religious worship”. “Religious worship” embodies as a minimum requirement a belief in a Supreme Being and references the rituals, customs, and practices required or believed necessary to carry out the faith’s belief in its Supreme Being; and the property is owned and operated on a not-for-profit basis. CSCEA v. Nelson, 898 S.W.2d 547, 549 (Mo. banc 1995); Missouri Church of Scientology v. State Tax Commission, 560 S.W.2d 837, 842 (Mo. banc 1978); Temple Emanuel v. Morton, STC #88-11774.
Complainant has presented substantial and persuasive evidence to meet its burden to demonstrate an exempt use for the subject properties. None of Complainant’s evidence was objected to. Complainant’s evidence clearly demonstrates the personal property at issue is used as a tool in their religious mission. Complainant’s evidence clearly shows that it teaches, through its camps and the use of the subject personal property, to make Christ part of one’s life at all times.
The taxable status for the subject properties as determined by the Assessor and sustained by the Board of Equalization for Stone County for the subject tax day are SET ASIDE. The Clerk is hereby ORDERED to change the taxable status to “exempt” for tax year 2013. Market value and classification were not appealed and are not determined by this decision.
Application for Review
A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision. The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous. Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.
Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, RSMo
The Collector of Stone County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED this 26 day of November, 2014.
STATE TAX COMMISSION OF MISSOURI
Senior Hearing Officer
Delivery or Notice was made via mail, email, fax, or personally on November 26, 2014 to the following Individuals of this Decision/Order/Holding
Ashley Norgard, Attorney for Complainant, Ashley.Norgard@huschblackwell.com
901 E. St Louis St. #1800, Springfield, MO 65806
Virginia Fry, Attorney for Complainant, Virginia.Fry@huschblackwell.com
901 E. St Louis St. #1800, Springfield, MO 65806
Brad Hudson, Assessor, firstname.lastname@example.org
Stone County Assessor, P.O. Box 135, Galena, MO 65656
Vicki May, Collector, email@example.com
Stone County Collector, P.O. Box 256, Galena, MO 65656
Judy Berkstresser, Clerk, firstname.lastname@example.org
Stone County Clerk, P.O. Box 45,Galena, MO 65656