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Indiana Board: Superheroes Museum Must Pay Property Tax

Posted on Feb. 17, 2022

The Indiana Board of Tax Review ruled that a museum dedicated to the history of superheroes does not qualify for a real property tax exemption.

The board concluded in Hall of Heroes Super Hero Museum Inc. v. Elkhart County Assessor that the museum failed to show that it is predominately used for educational or charitable purposes, finding that the property is taxable. The decision, dated January 7, was released February 14.

The Hall of Heroes Superhero Museum applied for a real property exemption for property used as a museum dedicated to the history of superheroes in comics, toys, art, film, and animation for the 2020 assessment date, claiming that the property is used for educational and charitable purposes. 

But the Elkhart County Property Tax Assessment Board of Appeals determined that the property was 100 percent taxable, and the museum appealed.

Though the board of tax review noted that the museum is a not-for-profit corporation formed in 2009 and is exempt from federal income taxation under IRC section 501(c)(3), it concluded that “the grant of a federal or state income tax exemption does not entitle a taxpayer to a property tax exemption.”

The board stated that to receive an educational purpose exemption a taxpayer must show that it provides a public benefit that is substantially equivalent to instruction offered in Indiana’s public schools. It noted that the museum admitted that it held only one educational program during 2019 and that its executive director taught classes only about 25 percent of the time the museum was open. 

The board also rejected the museum’s argument that its offerings are analogous to the offerings of a military history museum that qualified for an exemption for property used predominately for charitable purposes under a 2019 Indiana Tax Court ruling (McClain Museum Inc. v. Madison County Assessor).

The board concluded that “a museum focused on the history of superheroes is fundamentally different than a museum devoted to preserving our country's military history,” finding that the former is more akin to a museum housing a collection of miniatures that was determined not to be entitled to the exemption under the tax court's ruling in National Association of Miniature Enthusiasts v. State Board of Tax Commissioners.

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