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Indiana Property Tax Updates

UPDATED september 2019

Indiana Tax Court to Assessor: "Taxpayers deserve more than taxation by trickery"

On May 24, 2018, the Indiana Tax Court in Switzerland County Assessor v. Belterra Resort Indiana, LLC partially reversed the Indiana Board of Tax Review, ordering a further reduction to the values of its hotel, riverboat casino, golf course and related property for the 2009 to 2014 assessments – resulting in Taxpayer’s right to additional refunds. The Court’s opinion included instructions for recalculating Taxpayer’s assessments. On remand, the Indiana Board ordered reassessment of the property but abdicated any oversight role in the recalculations. More than a year later, the assessments remained unchanged. Taxpayer, accordingly, asked the Tax Court to enforce its order. In response, the Assessor argued that the Tax Court lacked subject matter jurisdiction to consider the request. Before the Court rendered a decision, Assessor claimed that final assessed values, in fact, had been assigned and the refunds had been consummated. Therefore, Assessor contended that only a local trial court had jurisdiction to hear Taxpayer’s refund dispute.

On August 15, 2019, the Tax Court issued its order on Taxpayer’s request for enforcement. The Tax Court first noted that it retains jurisdiction over its decisions until final disposition. No final disposition had yet occurred here, so the Court retained jurisdiction over the case. The Tax Court (like any other court) inherently possesses the authority to ensure that its instructions are carried out. The Indiana Board was obligated to oversee compliance with the Court’s assessment instructions. By fulfilling its oversight function, the Indiana Board reduces “the possibility that additional judicial resources must be expended” and “insulates an assessor – typically a party in property assessment cases – from the appearance that she advanced her own self-interest.”

The Court admonished the Assessor for her tortured efforts to avoid complying with its unambiguous order, observing:

Here, the Assessor’s post-decision actions and claims appear to be intended to reduce the adverse effects of the Court’s decision. First, the Assessor conjured an ambiguity in the Court’s instructions for calculating the corrected assessments where there was none. Then, when corrected values were issued presumably based on that conjured ambiguity, the Assessor invented procedural infirmities to prevent the Court from enforcing its decision. Taxpayers deserve more than taxation by trickery, and the Court will not countenance such actions.

The Court ordered the Indiana Board to verify and provide written notice that the corrected assessments comply with the Court’s instructions.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Evidence of Construction Costs and Comparable Assessments Insufficient to Challenge Indiana Homeowner's Assessment

In Guthrie v. Clark County Assessor (August 13, 2019), Taxpayer challenged the 2018 assessment of her home, pole barn and other improvements before the Indiana Board of Tax Review.

She argued that the actual construction costs were below the assessed value. Taxpayer’s husband was a builder and contractor, and he built the improvements with help from subcontractors. Moreover, he failed to keep all of the receipts and could not fully separate the costs from three other homes which he was constructing. Nevertheless, he reported spending less than the property’s assessed value on the property, which at $334,600 equated with $116 per square foot.

In addition, Taxpayer presented a summary of the assessed values to sales prices for home sales in the neighborhood for 2017 and 2018. She also provided assessment information for thirteen neighborhood homes, showing a median year of construction of 1970, a median depreciation adjustment of -35%, and a median assessed value of $78 per square foot. Taxpayer argued that because the subject property was new, it should be assigned its own neighborhood and should receive no positive neighborhood factor.

Assessor attacked the Taxpayer’s evidence on various grounds. Among other arguments, the Assessor asserted that Taxpayer’s “analyses also failed to comply with the Uniform Standards of Professional Appraisal Practice (“USPAP”).”

The Indiana Board found that Taxpayer’s arguments regarding depreciation and the neighborhood factors was merely attacking the assessment methodology used by the Assessor, which is insufficient to rebut the presumption that the assessment is correct.

Taxpayer “came up short” arguing that comparable assessments indicated a lower value under Ind. Code § 6-1.1-15-18 (Section 18) or under equity and uniformity principles. The Board explained:

To effectively use an assessment comparison approach, parties must show the properties are comparable to the subject using generally accepted appraisal and assessment practices. To establish that properties are comparable, the proponent must identify the characteristics of the subject property and explain how those characteristics compare to the characteristics of the purportedly comparable properties. Similarly, the proponent must explain how any differences between the properties affect their relative market values-in-use.

(Citations omitted). Taxpayer failed to meaningfully compare the subject property to the purported comparable properties. “While the properties may share similarities to the subject due to their location, [Taxpayer] failed to discuss their characteristics in any detail.” In addition, she failed to explain why adjustments to the comparable sales were unnecessary. And she failed to calculate and present a requested value.

Taxpayer’s uniformity and equity argument likewise failed. She presented no sales ratio study, and provided no market data to show the subject property’s market value – meaning she did not show the sales ratio for the subject property in order to compare it with those of neighborhood properties.

Testimony regarding costs of construction was too vague to be probative, the Board concluded. Evidence suggested that the costs incurred may, in fact, have been below market. Finally, the board noted that “there is no indication that [the husband’s] estimates complied with USPAP.”               

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

 

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