State Tax Commission of Missouri
| NORTHWEST HEALTH SERVICES, INC. | ) | |
| ) | ||
| Complainant, | ) | |
| ) | Appeal No. 18-60501 & 18-60502 | |
| v. | ) | |
| ) | ||
| LADONNA JONES, ASSESSOR, | ) | |
| HOLT COUNTY, MISSOURI, | ) | |
| ) | ||
| Respondent. | ) |
DECISION AND ORDER
HOLDING
The Decision of the Holt County Board of Equalization (BOE) is SET ASIDE. Northwest Health Services, Inc. (Complainant) presented substantial and persuasive evidence establishing the subject property is exempt under Article X, Section 6 of the Missouri Constitution and Section 137.100 RSMo.
Complainant appeared by counsel John Lentell.
Ladonna Jones, Assessor of Holt County Missouri (Respondent) appeared pro se.
Case heard and decided by Senior Hearing Officer John Treu (Hearing Officer).
ISSUE
Complainant contests the taxability of the subject property under Article X, Section 6 of the Missouri Constitution and Section 137.100 RSMo.
FINDINGS OF FACT
- Jurisdiction over this appeal is proper. Complainant timely appealed to the STC.
- Motion Hearing. The issue of exemption was presented at an evidentiary hearing on February 26, 2019, at the Holt County Courthouse, Oregon, Missouri.
- Identification of Subject Property. The subject property is identified by parcel/locator number 09-9-31-03-13-01.001 and account number 2-2877 respectively. The subject property is located at 1303 State Street, Mound City, Missouri. (Complaint for Review)
- Description and Use of Subject Property. The subject property consists of commercial real property and business personal property owned by Complainant. Complainant provides health care services on the real property and with the business personal property including medical, dental and psychological services. The property is not held as an investment.
- Respondent denied exemption to the subject property.
- Board of Equalization. The Board of Equalization denied exemption to the subject property.
- Complainant’s Evidence. Complainant asserts that the subject property is exempt from ad valorem taxation because Complainant is a not-for-profit organization which owns and operates the property for a charitable purpose. To support its assertion, Complainant offered the following exhibits which were received into the record without objection:
| Exhibit | Description |
| A | IRS 501(c)(3) Status Notice |
| B | Articles of Incorporation, Amended Articles of Incorporation & Certificate of Missouri Certificate of Amendment of General Not For Profit Corporation |
| C | Amended and Restated Bylaws of Complainant |
| D | Statistical and General Facts regarding Mound City Clinic |
| E | Information Sheet |
| F | Health Resources and Services Administration Health Professional Shortage Area Report |
| G | Prescription Drug Discount Program Details |
| H | Missouri Primary Care Association Community Health Centers Pamphlet |
Complainant offered the testimony of Rodney Hummer, RN, BSN (Hummer) who is the Director of Development & Community Engagement for Complainant. Hummer previously worked at the subject property and is intimately familiar with the subject property. Hummer testified that the subject property is both owned and operated as a not for profit. He testified that Complainant serves as a primary resource in providing a) medical, dental and psychological care to the community regardless of income, b) health education, and c) promotion of general community health. He stated that the Complainant’s mission is to serve underserved areas and underserved populations, such as rural areas. These services are provided in rural areas where there would be a shortage of quality health care (medical, dental and psychological) without the services of Complainant. Hummer further testified that its board members are not compensated, but are volunteers. He testified that the health care providers are compensated appropriately but that they do not share in any profit of Complainant. Hummer stated that the Complainant does not make a profit. He also testified that pursuant to Complainant’s bylaws, Complainant provides comprehensive quality primary health care services to people in the community regardless of any financial barriers or other impediments to obtaining health care. Hummers testified that patients are billed on a sliding scale based upon their financial situation. He testified that in the event a patient has an outstanding bill the patient is not turned away or refused health care services. He stated the following makes up the payer mix of Complainant:
| Medicaid | 33% |
| Medicare | 31% |
| Private Insurance | 24% |
| Self Pay | 12% |
Hummer testified that Complainant has a discount prescription drug program and that the amount of payment for prescriptions by patients is dependent upon their poverty level and family size. Patients pay between cost +$10 (if at or below 100% of poverty level) and no discount (if above 200% of poverty level). He testified that Complainant has the only counselor in Holt County, the only dentist in Holt County, that Complainant allows the Holt County Health Department to operate the WIC clinic out of the Mound City clinic for no charge, that Complainant aids in assisting Holt County combat the opioid crisis, and that Complainant has applied for a federal grant to aid in the opioid crisis.
- Exemption Established. Complainant presented substantial and persuasive evidence that the subject property is exempt from ad valorem taxation under the Missouri Constitution.
CONCLUSIONS OF LAW AND DECISION
Jurisdiction
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary, or capricious, including the application of any abatement. The Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the Board of Equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo.
Basis of Assessment
The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass. Article X, Sections 4(a) and 4(b), Mo. Const. of 1945. The constitutional mandate is to find the true value in money for the property under appeal. By statute, real property and tangible personal property are assessed at set percentages of true value in money: residential property at 19%; commercial property at 32%; and agricultural property at 12%. Section 137.115.5 RSMo.
Investigation by Hearing Officer
In order to investigate appeals filed with the Commission, the Hearing Officer may inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification, or assessment of the property. Section 138.430.2 RSMo. The Hearing Officer’s decision regarding the assessment or valuation of the property may be based solely upon his inquiry and any evidence presented by the parties or based solely upon evidence presented by the parties. Id.
Complainant’s Burden of Proof
A presumption exists that the assessed value fixed by the BOE is correct. Rinehart, 363 S.W.3d at 367; Cohen, 251 S.W.3d at 348; Hermel, Inc., 564 S.W.2d at 895. “Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348. Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion. Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact. Cupples Hesse Corp., 329 S.W.2d at 702. 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). See also, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P.D. George Co., 77 S.W.3d 645 (Mo. App E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).
There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof. The taxpayer is the moving party seeking affirmative relief. Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.” Westwood Partnership, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P.D. George Co., 77 S.W.3d 645 (Mo. App E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. W.D. 1991).
Weight to be Given Evidence
The Hearing Officer is not bound by any single formula, rule or method in determining true value in money and is free to consider all pertinent facts and estimates and give them such weight as reasonable they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).
Exemption
Article X, Section 6 of the Missouri Constitution exempts from taxation all real and personal property of the state, counties and other political subdivisions and nonprofit cemeteries. The Constitution also provides that all real and personal property, not held for private or corporate profit and used exclusively for religious worship, for schools and colleges, for purposes purely charitable, or for agricultural and horticultural societies may be exempted from taxation by general law. The legislature by enactment of Section 137.100, RSMo has exempted property not held for private or corporate profit and used exclusively for religious worship, for schools and colleges, for purposes purely charitable, and for agricultural and horticultural societies.
Charitable Exemption
The legal test for a charitable exemption is whether:
- The property is dedicated unconditionally to the charitable activity;
- The property is owned and operated on a not-for-profit basis; and
- The dominant use of the property is for the benefit of an indefinite number of people and directly or indirectly benefits society generally. Franciscan Tertiary Province of Missouri v. State Tax Commission, 566 S.W.2d 213, 224 (Mo. banc 1978); Twitty v. State Tax Commission, 896 S.W.2d 680, 684 (Mo. App. S.D. 1995).
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 at 224. This does not mean that the property or charity cannot operate “in the black”.
In order for a property to be exempt from taxation for state, county or local purposes, 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 there 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. Exemption rest on the use of the property not merely charitable character of the owner. The phrase “regularly used exclusively” has been interpreted to mean the primary inherent and dominate use of the property as opposed to a mere secondary and incidental use.
The property must be used such that it is available to an indefinite group of people. The public nature of a charity is diminished when it is systematically denied to those who need and can least afford the service.
Jackson County v. State Tax Commission, 521 S.W.2d 378 (Mo. banc 1975), held that a charitable use includes a hospital so long as it is operated in a not-for-profit manner and is available to rich and poor alike. A hospital which meets the test is a charity. No further proof that a certain number or percentage of indigent patients are served is necessary.
Discussion
Complainant provides health care including medical, dental and psychological care at and with the subject property, in an unserved area and to underserved individuals. Complainant provides such services to all, whether rich or poor. Complainant offers a sliding scale billing practice depending upon financial condition. Complainant offers a discounted prescription drug program based upon financial condition and size of family. No one is denied health care. There was no evidence that anyone had been denied treatment because of inability to pay. There was no evidence of any profit to individuals or corporations. Complainant assist in addressing the opioid crisis in Holt County. Complainant allows the Holt County Health Department to operate the WIC clinic out of the Mound City clinic for no charge. The provision of the health care services provided by Complainant in the subject property clinic clearly qualifies as an appropriate use under the Salvation Army definition in that medical treatment directly benefits people by relieving their bodies of disease, suffering or constraint. See St. John’s Health System v. Strahan, Appeal No. 00-89501 and 00-89502.
ORDER
The determination of taxability of the subject property as determined by the BOE is SET ASIDE. The subject property is determined to be exempt.
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, or emailed to Legal@stc.mo.gov, and a copy of said application must be sent to each person 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.
Disputed Taxes
The Collector of Holt 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 March 15th, 2019.
STATE TAX COMMISSION OF MISSOURI
John J. Treu
Senior Hearing Officer
Certificate of Service
I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 15th day of March, 2019, to: Complainant(s) and/or Counsel for Complainant(s), the County Assessor and/or Counsel for Respondent and County Collector.
Jacklyn Wood
Legal Coordinator