Gary church files lawsuit
Members: Some $300K in unpaid property taxes should be erased under tax exemption
Members of a Gary church have taken their fight with Lake County to federal court after the church was recently sold for the third time in a tax sale and property taxes on the building have increased to just under $300,000.
“We are busy being in the church doing our religious duties and we cannot be bothered to be having to track down when we have to ask for something, which by right should be ours anyway,” Otto Schulze, Abyssinian Baptist Church director, said. “The constitution has bestowed the exemption upon us and that’s where we derive our rights from.”
As the county continues to sell the church’s property tax lien, the next step after three installments of unpaid property taxes, the church leadership is trying to figure out how to reinstate its previous tax exempt status and have the county forgive the accrued property taxes.
The church, currently the only building in the 700 block of Massachusetts Street, was established in January 1900, as Trinity Lutheran, which had tax exemption as a religious institution, according to county records.
But, in 2004, new church leadership filed records to establish Abyssinian Baptist Church, but it did not file a required tax exemption form, according to county records. When churches file tax exemption forms, the forms need to be refiled every few years, according to Lake County Auditor’s Office officials.
Records show the church has not paid its property taxes since 2004, and have accumulated to $294,829.39 as of Nov. 15. In July, the church changed its name to Abyssinian Outreach Ministries, according to county records.
Because the property taxes haven’t been paid, the church has been sold three times in a “commissioner tax sale,” which means the church was sold in a secondround of delinquent property sales for a lower bid than the back property taxes owed, according to the Auditor’s Office.
The church tax lien was sold in June 2012, which was ultimately canceled, and in May 2015, which didn’t go through because the buyer did not finish the process to receive the tax deed, according to
county records.
Church leadership retained ownership of the building during and after the previous sales but did not pay property taxes, the Auditor’s Office said.
New owner steps in
On March 21, David Epstein, an Oregon businessman, purchased the church tax lien for $500, according to county records.
Epstein said he just knew the parcel number and a legal description of the property when he purchased the building.
After buying the building, Epstein said he realized it was a church.
As an investor, Epstein said he purchased the property for its price but without a specific plan.
“I thought it was a good price for a big building,” Epstein said.
Epstein said he reached out to the congregation and said they could buy the church back for $10,000 and eventually negotiated the price down to $1,500, the amount he spent to buy the building and other fees.
“If it’s a viable congregation, I don’t want to take it,” Epstein said. “I don’t know the legalities of it … if they give $1,500 I can sign it back to them.”
Church takes fight to court
The Rev. Hugh Nelson, head of Abyssinian Outreach Ministries, filed a federal civil lawsuit against the Lake County treasurer and auditor in September for selling the church and not recognizing its tax exemption status.
In the lawsuit, Nelson states that after Abyssinian Baptist Church parishioners “left and died out” the “new and remaining worshipers had no knowledge of reinstating corporation status or attaining tax exemption.”
Church leadership “prays that that court will order the Lake County Treasurer to stop the sale of the church building and remove the taxes from the treasurer’s taxpayer files, t h e re by a l l owi n g the church to register for tax exemptions,” the civil suit says.
Nelson and Schulze said current church parishioners were not aware of county tax exemption processes and did not pay property taxes because churches are tax exempt.
The goal of filing the civil suit, Schulze said, is to “have our property free and clear of liens,” to stop the county from selling the property “out from under us” and to forgive the unpaid property taxes because the church is tax exempt.
The church currently has between 10 to 15 parishioners who attend services on Sundays and participate in Bible study and a prayer meeting on Wednesdays, Nelson said.
One parishioner has been with the church before the change in name and ownership, but she was not aware of the tax exemption process, Nelson said.
“It was always active, but the paperwork (and) the legal status of it wasn’t enforced. So we got the legal status of it enforced through the Secretary of State and now we’re just trying to get the tax exemption put back from the Lutheran time,” Nelson said.
Lawyers for the Lake County auditor and treasurer filed a motion to dismiss the case on Nov. 11 stating that the case needs to be reviewed by the the local Property Tax Assessment Board of Appeals, the
Indiana Board of Tax Review and, finally, the Indiana Tax Court, as directed by Indiana code.
“A party cannot circumvent the ‘ final determination’ requirement basis for the Indiana Tax Court’s exclusive jurisdiction simply by filing an action in the trial court instead of with the relevant administrative agency. That is exactly what the church landowner in this case has tried to accomplish by filing its complaint directly with this court,” according to the motion.
Indiana code states that property tax owners still have to pay property taxes while “a petition for review or a proceeding for judicial review is pending,” which church leadership has not done, resulting in the tax sale, according to the county’s motion.
“(Church leadership) jumped straight to a lawsuit, which is not allowed,” said Randy Wyllie, attorney for the Lake County Auditor John Petalas.
Church leadership has until Dec. 10 to find a lawyer to continue its federal lawsuit, Nelson said. They hope that the lawsuit resolves the accrued property taxes and reinstates tax exemption, he said.
“They should allow us to have tax exemption, dismiss the prior taxes and let us continue worshiping God and having spirit-filled services,” Nelson said.