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County, day care await ruling on tax exemption

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A Greenwood day care and early education center is involved in a legal dispute with Johnson County government over whether it should pay property taxes.

Both sides recently argued their cases to the Indiana Tax Court during a public hearing at Franklin College. The outcome of the case could potentially set a precedent statewide, said Dustin Huddleston, who represents the Johnson County Assessor’s Office.

The tax court has previously ruled on a few cases where day cares asked for education-related tax exemptions, but this is the first time a for-profit company has in Indiana, said Fort Wayne-based attorney Joshua Neal, who represents KinderCare.

KinderCare’s disagreement with the county centers mostly on whether it is mainly an education facility or a day care provider.

Johnson County wants KinderCare Learning Center on 980 S. State Road 135 to pay property taxes, while the day care says it shouldn’t have to. Neal said that it’s an early learning center that should be exempt from taxes because of its educational purpose.

KC PropCo., a company that does business as KinderCare, asked the county for a property tax exemption in 2009. Schools, churches and nonprofits have to apply for tax-exempt status whenever they buy new property, Huddleston said.

Each individual request is evaluated on its own merits, but the cases have grown increasingly complex, Huddleston said. Non-traditional religions, for instance, might move into a foreclosed home, or a nursing home might file as a charity.

Johnson County denied KinderCare’s request for tax-exempt status, and the company appealed to the Johnson County Property Tax Assessment Board of Appeals. The board found the property was 100 percent taxable.

KinderCare then appealed to the state tax board, an appointed commission that handles tax disputes, Huddleston said.

The tax board sided with KinderCare, but the county appealed.

Johnson County has several objections to exempting KinderCare from tax bills on its 2.6-acre property valued at $1.3 million, according to court records. Huddleston argued before the tax board that the educational use is incidental to the property being used as a child care center, that KinderCare’s marketing materials describe the facility as a licensed child care center and that only a fraction of the kids are enrolled in the kindergarten program.

“We’re arguing that it’s not deserving of a tax exemption for educational purposes,” Huddleston said. “We feel that the purpose being carried out at the property is not educational.”

KinderCare attorneys argued that it’s a state-licensed early learning center that’s accredited by several agencies, that the state evaluates the content of its curriculum and that the curriculum is in most respects aligned with that of local elementary schools to make the transition to the public school system smooth and natural. They contended that KinderCare provides age-appropriate education programs to infants, toddlers, preschoolers and all-day kindergarteners.

Neal said the preschool’s curriculum was certified under a state program and followed the guidelines of local school districts. He said the day care offered early education to all age groups.

Indiana Tax Court Judge Martha Blood Wentworth, of Greenwood, heard both sides argue their cases at Franklin College earlier this month and will reach a decision later. She faces no timeline or deadline.

The ruling could be appealed to the Indiana Supreme Court.

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