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Property Tax Resources

Jan
01

Arizona Property Tax Updates

UPDATED July 2017

Rooftop Solar Systems Cannot be Assessed by the Arizona Department of Revenue

In a unanimous published opinion at the Arizona Court of Appeals, the Court held that rooftop solar systems cannot be assessed or taxed by the Arizona Department of Revenue (“ADOR”).  Starting in 2013, ADOR reversed years of practice by unilaterally deciding that it could assess and tax rooftop solar systems owned by companies that lease and install the systems on customers’ properties.  ADOR argued that the panels were subject to assessment as equipment involved in the operation of an electric generation facility.  Taxpayers – represented by Mooney, Wright & Moore, PLLC – sued for declaratory relief in the Arizona Tax Court, arguing that ADOR did not have authority to assess the rooftop solar systems because they were not part of an electric generation facility.  Taxpayers also argued that the systems had no value for property taxation purposes pursuant to A.R.S. 42-11054(C)(2) because they were designed primarily for on-site consumption. 

Taxpayers sought a quick resolution, filing a motion for summary judgment within thirty days of filing the lawsuit.  Through various discovery delays, however, ADOR did not respond to the motion for summary judgment for over seven months.  Ultimately, ADOR responded with a cross-motion for summary judgment, arguing that ADOR had the authority to tax the solar systems and that, alternatively, A.R.S. 42-11054(C)(2) was unconstitutional and the systems should be assessed by local counties.  The Tax Court issued a declaratory judgment agreeing with Taxpayers that ADOR had no authority to assess the rooftop solar systems.  The Tax Court further ruled, however, that the rooftop systems were assessable locally by the counties and that A.R.S. 42-11054(C)(2) was unconstitutional. 

Both parties appealed.  In a complete victory for Taxpayers, the Court of Appeals (Division 1) affirmed the Tax Court’s ruling that ADOR did not have authority to assess or tax the systems.  The Court also reversed the Tax Court’s ruling that A.R.S. 42-11054(C)(2) was unconstitutional (under either the Exemptions Clause or Uniformity Clause).  The Court also reversed the ruling that the counties in Arizona should be taxing such equipment.  The also reversed the Tax Court’s denial of attorneys’ fees to Taxpayers – holding that the Tax Court abused its discretion by failing to grant Taxpayers their fees and costs as the prevailing party pursuant to A.R.S. 12-348.  Finally, the Court granted Taxpayers request for attorneys’ fees on appeal.  The opinion represents a victory for all taxpayers in curtailing an overreach by ADOR and a significant victory for the solar industry in Arizona.  It can be found at SolarCity Corp. v. Arizona Dept. of Rev., No. 1 CA-TX 15-0008 (May 18, 2017) (2017 WL 2180393).

 
Mooney, Wright & Moore, PLLC
American Property Tax Counsel (APTC)

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Jan
01

California Property Tax Updates

UPDATED JUNE 2019

Property Tax Appeal Filing Season Opens in California

The season for filing Assessment Appeal Applications on 2019-2020 property tax assessments opens on July 2. In most of California’s 58 counties, taxpayers have until December 2 to file their appeals. In ten counties, however, appeals must be filed by September 16. Those counties include San Francisco, Alameda, Santa Clara, San Luis Obispo and Ventura, as well as five smaller and less populous counties. Applications must be postmarked by the U.S. Postal Service on or before these due dates to be timely. Assessment Appeal Applications are available on the websites for the county assessment appeals board or, for smaller counties, county board of supervisors’ websites. For most counties, the appeal applications can be filled-in on-line and, in some cases, the applications can even be submitted electronically. Note also that most counties require a filing fee be paid at the time the Assessment Appeal Application is submitted.

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Greenberg Traurig, LLP
American Property Tax Counsel (APTC)

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Jan
01

Canada Property Tax Updates

Updated July 2017

New Rules in Ontario

The Assessment Review Board (“ARB”), which provides the first and only level of administrative law review of assessment appeals in Ontario, has changed its rules.

The ARB new rules are effective April 1, 2017. There are 122 rules and several Practice Directions.  Most significantly, all appeals will be grouped as either “General” or “Summary”.  General proceedings have a detailed schedule to be adhered to unless it is altered by the parties with the consent of the ARB. All appeals are deemed to be general proceedings unless they are specified as summary proceedings.  The details include specified hard dates for inspections, productions, examinations for discovery, motions, exchange of witness statements and reports.

All of this means that the litigation before the ARB will be increasingly complex and rule-bound. It is not an area for amateurs. 

J. Bradford Nixon
Nixon Fleet & Poole LLP
American Property Tax Counsel (APTC)

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Jan
01

Colorado Property Tax Updates

Updated March 2015

Colorado Begins Its 2015 Reassessment

Bi-annually, Colorado Assessors perform a revaluation/reappraisal for purposes of assessing the value of Colorado property using a “base period” method. In tax years 2013 and 2014, nonresidential property values were based on sales, income and cost data from a “base period” commencing on January 1, 2011 and ending on June 30, 2012. A new “base period” with its likely higher values now comes into play. 2015 is a revaluation year in which Colorado County Assessors will reappraise the value of real property. Under Colorado law, 2015 and 2016 nonresidential property values will be based on sales, income and cost data from a base period commencing January 1, 2013 and ending June 30, 2014.

Given the general upward trend in real estate values since the last base period ending June 30, 2012, many property owners may expect to see an increase in their property values and consequently, their property taxes for 2015 and 2016. The assessors are required by law, absent significant changes in the property after the base period, to use the same value for tax years 2015 and 2016. Even if an appraised value does not increase, budget demands will likely incentivize cities, counties and other taxing entities to maximize tax revenues by increasing the mil levies that determine the assessed value and the resulting tax, to the extent permissible by a Colorado Constitutional Amendment that limits tax increases called the "Tabor Amendment".

Beginning May 1, 2015, County Assessors will mail the 2015 Notices of Valuation for real property. The property owner will have a very short period of time to evaluate these notices and protest the value set on the property. Protests of valuation for most Colorado counties must be filed by May 31, 2015. Protests of valuation for Denver County properties must be filed no later than November 15, 2015. Our property tax attorneys know the critical legal and business factors that affect real property values and classifications. We are prepared to meet with property owners to assist in evaluating their property tax situation and, when appropriate, plan their strategies for their 2015 property tax protests.

Larry R. Martinez, Esq.
Berenbaum Weinshienk PC
American Property Tax Counsel (APTC)

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Jan
01

Delaware Property Tax Updates

UPDATED September 2017

Delaware Court Unlocks Opportunities to Reduce Property Tax Burden

Managing expenses is one of the best ways to ensure the long-term profitability of investment properties.  Owners of real property know that achieving reductions in property tax assessments can be challenging under the best of circumstances, and distinctions between state tax systems can make minimizing the real estate tax burden across a commercial or industrial portfolio a daunting task.  But a recent decision by the Delaware Supreme Court provides taxpayers with a new, yet surprisingly familiar, opportunity to reduce the burden of property taxes on their properties in The First State.

Delaware’s tax assessment system shows its age
Under Delaware Law, property must be valued at its “true value in money,” a term interpreted to mean the property’s “present actual market value.”  However, in order to implement the Delaware Constitution’s mandate of tax uniformity, Delaware applies a base year method of assessing property, meaning that all property in a jurisdiction is assessed in terms of its value as of a certain date, then that value remains on the property indefinitely until the jurisdiction performs a general reassessment.  For Delaware’s northernmost county, New Castle County, the last reassessment occurred in 1983, so all property in the County is valued as of July 1, 1983.

A major challenge to contesting property tax assessments in Delaware is that a taxpayer must determine the property’s market value in 1983.  Determining what a property is worth today is not always easy, but proving a property’s value three decades ago has proven increasingly difficult.  Furthermore, because the County makes no regular adjustments to a property’s assessed value, the County asserts that a property should be valued as it existed in 1983 or, if it was built after 1983, as if it is new and undepreciated.

Delaware’s courts have explained that taxpayers have two options in assessment appeals: they can use data from the base year (by, for example, finding sales of comparable properties in or around 1983, or using prevailing market rents and capitalization rates from 1983) or they can calculate the current market value of the property and “trend back” that amount to 1983.  The County Board of Assessment Review has expressed a near-absolute preference for 1983 data, and rarely finds a taxpayer’s trending formula acceptable.

The inequities of this system are blatant.  Under the county’s interpretation of the base year system, a 34-year-old building located next door to a similar new building should be assessed and taxed at the same level, despite that buyers, sellers, and tenants might value the buildings quite differently.  If the owner of the 30-year old building wanted to contest its assessment, the owner would have to identify data for new buildings in 1983.  Of course, as time marches on and years turn to decades, relevant data from the base year becomes increasingly difficult to find.

Taxpayers highlight the system’s obsolescence
Taxpayers have raised many challenges to Delaware’s assessment system, but most successful challenges are fact-specific, and no recent court has gone so far as to order Delaware’s counties to complete a reassessment.  But after several attempts, the taxpayers in Commerce Associates LP v. New Castle County Office of Assessment underscored the largest flaw in the system.

One Commerce Center is an office condominium building in Wilmington, Delaware.  Each office condominium was originally assessed by the County upon construction in 1983.  After keeping the same tax assessment for decades, the owners of several of the condominiums challenged their assessments in 2015.

Before the County Board of Assessment Review, the owners presented five different analyses: two relied on comparable sales transactions (one using 1983 sales of buildings that were about 32 years old, and one using modern asking prices trended back to 1983 using the Consumer Price Index); two relied on income (one using 1983 data, and one using 2015 data trended back to 1983 using CPI); and a cost approach using the original construction costs and reflecting depreciation.  These approaches showed that the properties were overassessed by more than 40%.

The County presented evidence of the condominiums’ sale prices in 1985, when each unit was relatively new.  The County also presented an income approach using 1983 data and a cost approach reflecting no depreciation.  The County’s approaches all supported the original assessed values, and the Board ultimately denied the taxpayers’ appeals.

Delaware’s Court approves a decrease in value
After having their appeals denied by the Superior Court, the taxpayers brought their challenge to the Delaware Supreme Court.  In a tersely-worded decision, the Supreme Court reiterated that all relevant factors bearing on the value of a property in its current condition must be considered.  While the County argued that no depreciation was needed because the properties were brand new in 1983, the Court noted that the properties were, in reality, more than 34 years old.  Failing to account for their age and the resulting depreciation (or appreciation) resulted in a flawed value.

Although the Court’s decision has yet to be implemented by the County, its effects will likely be widely felt.  Most properties in New Castle County built after 1983 are assessed without any depreciation.  Because each tax year brings with it a new opportunity to challenge an assessment, property owners can bring a new appeal to the Board every year reflecting the property’s current depreciation.  Ultimately, this could result in the downfall of the decades-old base year assessment, as the County finds it necessary to update assessments for a larger number of properties.

A number of questions remain unanswered by the Court’s ruling.  How should properties be valued in areas that were rural in 1983 but are now highly developed?  How can appreciation and depreciation be quantified and reconciled?  Future cases will need to resolve these questions, but for now, owners of Delaware property should evaluate their portfolios and determine whether opportunities exist to improve profitability by reducing property taxes.

Benjamin A. Blair
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

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Jan
01

Florida Property Tax Updates

UPDATED JUNE 2019

A Charitable Purpose May Be Broader Than You Think

A Florida court recently ruled that a charitable purpose does not have to be a benevolent purpose to qualify for a tax exemption under the Florida Statutes. In so ruling, the court reinforced a basic tenet that the property appraiser may not extend, modify or limit an unambiguous statute.

The issue before the court arose when the Alachua County property appraiser denied the Gainesville Area Chamber of Commerce a tax exemption from ad valorem taxation. The Chamber argued that it was entitled to the exemption under the Florida Statutes, which exempts property used predominantly for charitable purposes from taxation.

According to the Florida Statutes, a charitable purpose means a function or service which is of such a community service that its discontinuance could legally result in the allocation of public funds for the continuance of the function or service. The property appraiser argued that tax exemptions for charitable purposes must be limited to benevolent purposes, such as providing material assistance to the needy. The property appraiser further argued that the Chamber’s stated purpose of promotion of business and economic development was not traditionally understood as a charitable activity and not inherently benevolent. The court disagreed with the property appraiser’s position, finding that the statutes are unambiguous and do not limit the exemption to “benevolent” purposes. The court reasoned that because legal public funds could be allocated for the Chamber’s stated purpose (and in fact had been in the past), that was sufficient to entitle the Chamber to the tax exemption.

Daniel Wolfe Esq.
Rennert Vogel Mandler & Rodriguez P.A.
American Property Tax Counsel (APTC)

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Jan
01

Georgia Property Tax Updates

UPDATED JUNE 2019

Foreclosure Sale - Arm's Length or Not?

In DeKalb County Bd. of Tax Assessors v. Astor Atl, LLC, 2019 Ga. App. LEXIS 215, 826 S.E.2d 685 (April 1, 2019), the Georgia Court of Appeals held that a bank foreclosure sale pursuant to deed under power can be an arm’s length bona fide sale. The county board of tax assessors was precluded from valuing properties at fair market values higher than the amounts paid at the public auctions for the tax year subsequent to the year of purchase, pursuant to O.C.G.A. § 48-5-2(3). The fact that the sale may not be at true fair market value is irrelevant; the fact that the sale results in financial loss is irrelevant as well.


Lisa F. Stuckey
Ragsdale, Beals, Seigler, Patterson & Gray, LLP
American Property Tax Counsel (APTC)

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Jan
01

Idaho Property Tax Updates

Updated JUNE 2019

A Fresh Look at Idaho Property Tax Rules

The State Tax Commission’s Property Tax Rules Committee has been busy reviewing all Idaho property tax rules to determine which ones to eliminate. This is part of a general review of all Idaho administrative rules. Idaho has an unusual system whereby the legislature must vote on whether to continue rules forward each year; if they do not, all rules expire at the end of June. The 2019 legislative session failed to pass this annual “drop dead” bill, thus handing Gov. Brad Little an opportunity to streamline regulations and choose which temporary rules he will adopt until the legislature convenes again in 2020.

Committee Co-chair Kathylynn Ireland says that most property tax rules will become temporary rules on July 1. Rules that are not needed will find a new home in a manual; though no longer binding regulations, they will continue to exist as guidance and will be available online.
 
Michelle DeLappe and Norm Bruns
Garvey Schubert Barer, P.C.
American Property Tax Counsel (APTC)

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Jan
01

Illinois Property Tax Updates

Updated March 2015

The Story of Real Estate Taxes - 2015

Chicagoans should be wary about their 2015 Real Estate Tax Bills. Up to now, Chicago Taxpayers have fared much better than their suburban neighbors when it comes to real estate taxes. Tax Year 2015 may well mark the beginning of a “Perfect Tax Storm” in Chicago.

In 2015, all property lying within Chicago will be re-valued. It seems very clear that the Assessor has determined that the Great Recession has become an event of history and that most segments of the real estate market are well on the way to recovery.

Thus far, new valuation Notices have only been sent to the property owners in one of the eight townships that comprise the City of Chicago. We have been able to review the new values. On average, the assessed values in that township have increased approximately fifteen (15%) percent. Multi-family residential properties have increased beyond twenty (20%) percent, single family residences and condominiums have risen to triple digit increases in some cases. Based on what we have seen in the first townships, we have to forecast even greater increases for most of the other townships.

Real estate values are only one component in the calculation of real estate taxes. The other critical component is the Tax Rate. The Tax Rate is determined by dividing the total budgets of all the Municipal and County agencies which provide services to the public by the total taxable value of the service area. That will include school districts, police, fire, park districts and more.

In 2015 and 2016, the pension deficits of the City agencies are about to reach catastrophic proportions. The Mayor’s staff is looking to Real Estate Taxes to reduce these deficits.

A PERFECT TAX STORM!

James P. Regan
Fisk Kart Katz Regan & Levy, Ltd.
Telephone:  (312) 726-1833
American Property Tax Counsel (APTC)

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Jan
01

Indiana Property Tax Updates

UPDATED JUNE 2019

2019 Changes to Property Tax Assessment Laws by the Indiana General Assembly

The following grid provides a summary of various provisions impacting property tax assessments that passed in the 2019 session of the Indiana General Assembly.

BILL                             2019 Legislation - Notes

HB1001

  • Sections 102-104 add IC §§ 6-1.1-3-26 to -28Requires development of a personal property tax online submission portal to provide a single point for submission and review of returns and related information.  It shall be available for taxpayer use no later than January 1, 2021.

HB1056

  • IC § 6-1.1-15-1.1, -1.2, -2.5, -3, -4, -5, eff. 1/1/20Provides notice to and expands authorized participation by the county auditor for appeals involving matters within the auditor’s discretion.
  • Section 6 (IC § 6-1.1-15-4), eff. 1/1/20Authorizes notice to the party or its representative.
  • Section 8 (IC § 6-1.1-15-6), eff. 1/1/20: IBTR must file notice of completion of certified record within 45 days of a petition’s filing; requires explanations for delays in filing; allows for revised due date to file or, if delay due to cause within petitioner’s control, dismissal of petition.
  • Section 17 (IC § 6-1.5-3-4.5), eff. 1/1/20: Removes this section requiring IBTR to recommend settlement or mediation in certain appeals.

HB1305

  • Provides for a $25 penalty for late filing of schedules by owners or their agents of oil and gas interest, as well as 10% penalty for failure to file within 30 days of due date.

HB1345

  • Section 1 (IC § 6-1.1-4-12), eff. 1/1/20: “Land in inventory” acquired by a for-profit entity from a school corporation or local governmental unit shall be assessed at the ag rate as of the next assessment date following acquisition.
  • Section 2 (IC § 6-1.1-10-48), eff. upon passage and applies to assessment dates starting 1/1/17Adds an exemption for property (i) owned by an Indiana non-profit public benefit corporation exempt from tax under IRC 501(c)(3), (ii) used in the operation of a nonprofit health, fitness, aquatics and community center, and (iii) funds have been in part provided under the regional cities initiative.

HB1405

  • Section 1 (IC § 6-1.1-10-44), eff. 7/1/19Increases the required investment for Indiana data centers from $10 Million to $25 Million in real and personal property; eliminates need for property to be located in a “high technology district area.”

HB1427

  • Section 13 (IC § 6-1.1-4-12), eff. 1/1/20: Similar to HB 1345, Sec. 1; if acquired from a local government unit, it applies only if the unit “has held the land for not less than three (3) years prior to the date on which the for-profit land developer acquires it from the local unit of government.”
  • Section 17 (IC § 6-1.1-11-3), eff. upon passage:  Adding subsection (i), allows a person seeking an exemption under IC § 6-1.1-10-16 to file an application up to 30 days after the deadline, if the person pays the lower of (i) a late-fee of $25 for each day after the deadline or (ii) $250.
  • Section 30 (IC § 6-1.1-15-1.1), eff. 7/1/19New June 15th appeal deadlines starting with 1/1/2019 assessments apply only to real property; for personal property, appeals must be filed within 45 days of assessor’s mailing of the change of assessment notice (for modified assessments or the addition of personal property).
  • Section 31 (IC § 6-1.1-15-4), eff. 7/1/19Requires IBTR to conduct a hearing within 1 year; limits extensions for IBTR to issue final determination to 180 days; excludes from calculation of days various actions by parties; requires party to request an IBTR hearing before seeking a direct appeal to the Tax Court and to wait at least 60 days.
  • Section 62 (IC § 6-1.1-31-9), eff. 7/1/19: New DLGF rules may not apply to the assessment of a property contemporaneously being conducted under a county’s reassessment plan

SB 233

  • Section 2 (IC § 6-1.1-3-7.2), eff. 7/1/19 (applies first to 1/1/20 assessment) – expands the exemption for personal property from $20,000 to $40,000 of acquisition cost.  (Section 3 eliminates the optional $50 service fee.)

 SB 582

  • Section 1 (IC § 6-1.1-15-1.1), eff. 7/1/17 (retroactive).  Adds subsection (h), prohibiting a taxpayer from challenging the legality or constitutionality of a (i) a user fee, (ii) any other charge, fee or rate imposed by a political subdivision, or (iii) any tax other than a property tax.
  • Section 2 (IC § 33-23-1-10.5), eff. 12/1/15 (retroactive)Defines and lists various “user fees.”
  • Assigns jurisdiction to user fee challenges to local courts.


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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Tax Court has jurisdiction over challenge to Storm Water charges, which Court held constituted a tax – not a user fee.

Name:  Daw, Hoback, Co-Trustees of Sagacious Sentinel Sycamore Revocable Trust v. Hancock County Assessor

Date Issued: December 5, 2018

Property Type: 54 acres of land, with 37 acres leased to a farmer

Assessment Date: January 1, 2016

Point of Interest:  Court had jurisdiction to hear claims regarding storm water charges, as the Court considered the charges to be taxes and not user fees. IBTR’s ruling that it lacked jurisdiction to hear Taxpayer’s annexation and storm water claims was a final determination that could be appealed.  

Synopsis: Taxpayer appealed the $88,400 assessment of their 54.05 acres of land.  37 acres of the property was leased to farmer who used no-till practices.  Before the IBTR, Taxpayer argued that (i) its tax bill was incorrect, because the subject property had been annexed to the Town of McCordsville pursuant to an invalid ordinance, (ii) it did not owe storm water charges and penalties imposed by the Town’s improper imposition of tax, and (iii) the assessment of the land was excessive. IBTR ruled that it lacked jurisdiction over the annexation and storm water claims.  The Board further found that 1.05 acres of land should have been assessed as non-tillable land but no other changes were warranted.

Tax Court has jurisdiction over “original tax appeals,” which are cases that (i) arise under Indiana’s tax laws and (ii) are appeals of final determinations of the IBTR. (citing ind. code§ 33-26-3-1).  Taxpayer claimed they were contesting the Town’s unauthorized attempt to collect special benefit taxes.  Assessor argued the storm water charges were user fees and not taxes, and further asserted the IBTR had not issued a final determination.

The Court first determined the charges constituted a tax.  The Court first noted that it “should consider the character, operation, and effect of the charge rather than merely its label.” Traditionally, the Court observed, “amounts collected to build, operate, and maintain a special taxing district’s local public improvement (e.g. a sewer system) have been traditionally characterized as taxes in Indiana.” In addition, taxes are compulsory, not optional.  In contrast, user fees are optional and represent a charge for the use of a publicly-owned or publicly-provided facility or service.  Here, the Town imposes the storm water charges on all property within its corporate boundaries, and they are billed on a monthly or bi-annual basis (with the Spring and Fall property tax statements).  The charges are compulsory – property owners cannot decline the storm water services or control the extent of the use of the service. 

Moreover, benefits received from the charges are not limited to the properties or the owners of the properties. “Indeed, [i] improved water quality, [ii] avoiding penalties for improper discharge, and [iii] creating a mechanism to remove excess water from the property and prevent flooding are goals that benefit all the Town’s residents and do not necessarily enhance the value of property.” 

Taxpayer raised defenses to the collection of a tax, and their claims satisfied the “arising under” requirement for purposes of determining the Court’s subject matter jurisdiction.

Taxpayer appealed a final determination of the IBTR. Because the Board had not reached the merits of Taxpayer’s annexation and storm water claims, Assessor argued they had not appealed a final determination. A final determination is an “order that determines the rights of, or imposes obligations on, the parties as a consummation of the administrative process.” (quoting Grandville Co-op., Inc. v. O’Connor, 25 N.E.3d 833, 837 (Ind. Tax Ct. 2015)). The Board determined it had no jurisdiction over Taxpayer’s claims, which ruling ended the administrative process with respect to those claims. Taxpayer was compelled to appeal to the Tax Court at that point. Taxpayer therefore satisfied the final determination requirement.

In addition, the Court explained, this case involved the imposition of a tax, not primarily the allocation of property tax revenues. 

Taxpayer did not show assessment reduction was warranted – valuation method did not comport with generally accepted appraisal principles.  An assessment prepared under the Indiana Real Property Tax Assessment Guidelines is presumed to be correct. Taxpayer claimed its assessment should be reduced to about $61,860 to reflect its decreased productivity.  The Board concluded, “nothing within the certified administrative record demonstrates that [Taxpayer’s] evidence actually converts the decreased crop production capacity into a value or that their valuation method comports with generally accepted appraisal principles.” 

Court may not consider evidence from outside the record. The Court also noted that it did not consider several articles regarding soil productivity of agricultural land that Taxpayer identified, explaining that “[b]ecause the evidence was not presented to the Indiana Board during the course of the administrative proceedings in this case, the Court may not consider it on appeal.” (citing State Bd. of Tax Comm’rs v. Gatling Gun Club, Inc., 420 N.E.2d 1324 (Ind. Ct. App. 1981)).

Appeal remanded to IBTR. While the IBTR lacked authority to determine the validity of the annexation and storm water ordinances at issue, the Court remanded the case to the Board to make factual findings for the Court to use in resolving the matter. The Board was directed to consider whether the Town or any other entity should be joined as a party under Ind. Trial Rule 19, to conduct another hearing on the annexation and storm water claims (allowing additional evidence), and to enter specific findings of fact. The Court ordered the certified record of the supplemental proceedings to be filed as expeditiously as possible.

Taxpayer failed to follow statutory steps to challenge annexation; Town as Intervenor permitted to raise new arguments on rehearing.

Name:  Daw, Hoback, Co-Trustees of Sagacious Sentinel Sycamore Revocable Trust v. Hancock County Assessor and Town of McCordsville

Date Issued: March 8, 2019

Property Type: 54 acres of land, with 37 acres leased to a farmer

Assessment Date: January 1, 2016

Point of Interest: Taxpayer failed to take the proper statutorily prescribed steps to challenge annexation; on rehearing, Town as intervenor was permitted to raise new arguments.

Synopsis:  Following the Court’s December 5, 2018 decision, the Town of McCordsville intervened and filed a petition for rehearing. The Court granted rehearing, but not as to the issue of whether the storm water charges are taxes.  On rehearing, the Town argued that further proceedings were unnecessary because it was too late for Taxpayer to challenge the annexation.  The Court observed that “[a]nnexation is an essentially legislative function that is subject to judicial review only as provided by statute.” (citing Bradley v. City of New Castle, 764 N.E.2d 212, 2015 (Ind. 2002) (citation omitted).  There are two methods for challenging a town’s annexation: (i) remonstrance (“the exclusive manner for landowners of the annexation area to obtain relief from annexation proceedings”); and (ii) a declaratory judgment suit (“available only to taxpayers of the annexing town”). (citing Deaton v. City of Greenwood, 582 N.E.2d 882, 885 (Ind. Ct. App. 1991), internal brackets omitted). 

Taxpayer failed to properly challenge the annexation.  Taxpayer conceded it did not remonstrate. Instead, it sought relief via a declaratory judgment action. But Taxpayer was not entitled to initiate such an action, because “it generally is available to taxpayers of the annexing town only, not landowners [like Taxpayer] of the annexation area.” (citing Deaton, 582 N.E.2d at 885). Taxpayer further failed to make other necessary allegations (i.e. its land was not contiguous to the Town’s boundaries or that the Town failed to implement a fiscal plan). (citation omitted).

As Intervenor, Town was permitted to raise new arguments post-judgment.  Taxpayer, on rehearing, argued that the Tax Court was not permitted to consider the Towns’ new arguments.  But Trial Rule 24(C) “expressly recognizes a party’s right to intervene post-judgment for purposes of seeking relief from the judgment or filing an appeal of that judgment.” (citing Panos v. Perchez, 546 N.E.2d 1253, 1255 (Ind. Ct. App. 1989)).  Furthermore, an intervenor “may litigate other issues or claims that were not already determined by the court.” Id.  Accordingly, the Town’s petition and new arguments were permissible. 

The certified record included showed that the Town had adopted three ordinances regarding storm water management.  One ordinance allowed for the development of storm water drainage facilities and systems. Had the Town created a plan for its storm water project, adopted the plan by resolution, and held a public hearing after the adoption, Taxpayer could have then filed a written remonstrance.  If that failed, Taxpayer could have then filed an appeal with the local court. The record did not establish that Taxpayer “used the specified statutory process to pursue their storm water claim in the prescribed period and appropriate forum.”  The Court held that Taxpayer’s storm water claim was untimely, explaining the “object of the declaratory judgment statute is to afford a new form of relief, not a new choice of tribunals.” (citing Quiring v. GEICO Gen. Ins. Co., 953 N.E.2d 119, 126 (Ind. Ct. App. 2011) (citation omitted)). 

The Court vacated the part of its December 2018 decision that remanded Taxpayer’s annexation and storm water claims to the IBTR. That decision was otherwise affirmed. The Court entered final judgment in favor of the Assessor and Town.

NOTE:  In 2019, the Indiana General Assembly responded to this decision by passing legislation stating that storm water charges are fees and disallowing challenges to user fees from the property tax appeals process. Local courts now have jurisdiction over these claims.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

 

Ruling from the Indiana Board of Tax Review discuss its Jurisdiction and the Burden of Proof on Appeal

Jurisdiction.  The Indiana Board of Tax Review is charged with reviewing and ruling on appeals of property tax assessments, exemptions, and limited other matters. Following are recent rulings where the IBTR concluded that it lacked jurisdiction to consider the claims raised or to order the remedy requested. 

  1. IBTR did not have authority to calculate refunds or compel Assessor to act on refunds.  Hoovler v. Clinton County Assessor, Pet. No. 12-012-15-1-1-00890-16 (10/9/18) (2015 tax year).  Taxpayer requested that IBTR: (i) calculate refunds she was owed; (ii) order the Assessor to provide those refunds; and (iii) order an investigation of the Assessor’s office.  “The Board is a creation of the Indiana Legislature, and it only has those powers conferred by statute.”  Taxpayer cited no authority requiring these actions and noted that Ind. Code § 6-1.1-26-2.1 “explains the requirements for obtaining a refund.”
  2. IBTR refused to issue time for Assessor to implement assessment changes.  Hoovler v. Clinton County Assessor, Pet. No. 12-012-16-1-5-00749-17 (10/9/18) (2016 tax year). Assessor conceded a lower value, and Taxpayer asked IBTR to issue a timeline for Assessor to apply that change. Taxpayer further requested the IBTR require Assessor to provide proof to Taxpayer and IBTR of the change.  Taxpayer failed to cite authority permitting the request. Again noting it is a “creature of statute with powers limited by statute,” IBTR denied the request.

  3. IBTR could not address Taxpayer’s claims that tax bills, including delinquencies and penalties, were improper.  Hiatt v. Delaware County Assessor, Pet. Nos. 18-007-12-3-5-00897-17 et seq. (11/26/18) (2012 – 2015 tax years).  Taxpayers contested the taxes applied to their assessments. “The Board, however, lacks jurisdiction to address appeals where taxpayers contest only their tax bill and not their property’s assessment.”  Similarly, “the Board lacks the authority granted in the enabling statute to review either penalties or delinquencies.”

  4. IBTR lacks authority to change a statute. Dover Hills v. Hendricks County Assessor, Pet. No. 32-016-16-2-8-01340-16 (12/19/18) (2016 tax year). Taxpayer requested IBTR to order a “jury trial” to nullify the 2015 early childhood property tax exemption law.  The Board declined this request, explaining “The statutes governing the Board’s operations do not contemplate jury trials.”

  5. IBTR cannot order attorneys’ fees or appoint a different assessor.  Draheim v. Marion County Assessor, Pet. Nos. 49-101-12-3-4-01535-17 et seq. (1/14/19) (2012 – 2017 tax years).  Taxpayer’s “motion for attorney’s fees and her request for the Board to appoint a different assessor are both denied.  The Board is a creature of statute and cannot act beyond its statutory authority.  No statute gives the Board the power to supplant an elected assessor.”

  6. PTABOA’s Form 115 issued after Taxpayer’s appeal deemed “nullity”.  TLC Properties, Inc. v. Lake County Assessor, Pet. Nos. 45-018-15-1-5-01442-16 et seq. (2/4/19) (2015 and 2016 tax years).  Taxpayer appealed directly to the IBTR as permitted by Ind. Code § 6-1.115-1.2(k).  IBTR treated the Form 115 notice for the 2015 assessment issued after that appeal as a “nullity.” 

Burden of Proof.  Depending on the facts of the property and the assessment, Taxpayer or Assessor may have the burden of proof for Indiana property tax appeals 

Following are summaries of various rulings of the Indiana Board of Tax Review involving the burden of proof in property tax appeals.  The summary addresses two statutes —ind. code§§ 6-1.1-15-17.1 and -17.2, which dictate which party (the Taxpayer or the Assessor) has the burden of proof. Generally, the Assessor has the burden of proof when he or she changes the classification of land under Section 17.1. In addition, the Assessor typically has the burden of proof if the property’s assessment has increased by more than 5% over the last assessment date but the subject property’s physical status or use has not materially changed year-over-year.  If the Taxpayer successfully appealed the assessment for the immediately prior year, any increase in value (not just 5%+) shifts the burden of proof to the Assessor.

  1. New construction. Kappa Investments, LLC v. Shelby County Assessor, Pet. Nos. 73-002-11-1-4-82434-15 et seq. (10/2/2018) (2011, 2012, 2013 tax years). Assessor asserted that the burden of proof should not shift under Ind. Code § 6-1.1-15-17.2 because improvements were constructed at the subject property between the March 1, 2010 and 2011 assessment dates. Taxpayer conceded it had the burden of proof, so the IBTR concluded the burden of proof remained with Taxpayer.

  2. IBTR reverses ALJ’s determination due to prior year’s successful appeal. Hoovler v. Clinton County Assessor, Pet. No. 12-012-15-1-1-00890-16 (10/9/18) (2015 tax year). The Administrative Law Judge initially ruled that Taxpayer had the burden of proof. In 2017, the IBTR issued a final determination lowering the subject property’s 2014 assessment. “Because this was a successful appeal, any increase in assessment causes the burden to shift.” The 2015 assessment increased $1,100 above the finally determined 2014 assessment. IBTR concluded that Assessor, in fact, had the burden of proof.

  3. Failing to show change of use for land, Assessor had burden of proof on appeal. Russell Family Partnership v. Bartholomew County Assessor, Pet. Nos. 03-011-15-1-5-00305-15 et seq. (10/16/18) (2015, 2016, 2017 tax years). Assessor conceded that the assessment increased by more than 5% from the March 1, 2014 to 2015 assessments. But Assessor claimed the change was due to the reclassification of the properties’ land classification from agricultural to excessive residential. The burden-shifting provision does not apply if the new assessment is based on a use that was not considered in the prior year’s assessment. Ind. Code § 6-1.1-15-17.2(c)(3). But the Assessor failed to show that there was change of the properties’ actual use.

  4. Assessor had burden to show change of land classification was correct. In addition, Assessor under Ind. Code § 6-1.1-15-17.1(2) had the burden to show the change in land classification was correct. Thus, Assessor had the burden of proof for the March 1, 2015 assessment. Assigning the burden for the 2016 and 2017 years depends on the IBTR’s ruling for 2015 assessment.

  5. Burden-shifting statute applies to contested assessments – not homestead deduction challenges. Sickmeier v. Hamilton County Assessor, Pet. Nos. 29-007-14-1-5-00410-18 et seq. (12/10/18) (2014, 2015, 2016 tax years). Taxpayer requested application of the homestead deduction and mortgage deduction. “Because the Petitioner did not challenge the current assessments of the subject property, the burden shifting provisions of Ind. Code § 6-1.1-15-17.2 do not apply.”

  6. Burden-shifting statute does not apply to uniformity claims. 546 Investments, LLC v. Bartholomew County Assessor, Pet. Nos. 03-005-16-1-5-01514-17 et seq. (12/27/17) (2016 and 2017 tax years). Taxpayer “raises a claim based on a lack of uniformity and equity in assessments. The burden-shifting rule under Ind. Code § 6-1.1-15-17.2 does not apply to such claims.” (citing Thorsness v. Porter County Assessor, 3 N.E.3d 49, 52 (Ind. Tax Ct. 2014)).

  7. Assessor failed to meet his burden, but IBTR applied value conceded by Taxpayer. Bishop v. Bartholomew County Assessor, Pet. Nos. 03-005-15-1-5-00342-15 et seq. (1/7/19) (2015, 2016, 2017 tax years). Assessor had, and failed to meet, his burden of proof for the March 1, 2015 assessment date. Therefore, the 2015 assessment under the burden-shifting statute would be reduced to its 2014 assessment of $340,500. However, Taxpayer requested a 2015 assessment of $350,500. The Board accepted and applied this concession.

  8. Burden of proof switched during hearing based on prior successful appeal. Geroulis v. Porter County Assessor, Pet. No. 64-09-19-379-008.000-019 (9/6/18) (2016 tax year). ALJ made a preliminary determination that Taxpayers had the burden of proof. But during the hearing ALJ realized that Taxpayers had successfully appealed their 2015 assessment and therefore told the parties that Assessor had the burden of proof.

  9. Assessor re-classified land from agricultural to residential, causing a substantial increase year-over-year; assessor had burden of proof under two statutes. Susan Mudge-Trustee/Trust v. Bartholomew County Assessor, Pet. No. 03-001-17-1-5-01515-17 (3/11/19) (2017 tax year). The assessment of Taxpayer’s land increased from $8000 to $101,100, after Assessor changed the land’s classification. Therefore, Assessor had the burden of proof under both Ind. Code §§ 6-1.1-15-17.1 (changed land classification) and -17.2 (5+% increase).

Voluntary withdrawals of IBTR appeals

Whether a party, typically the Taxpayer, can voluntarily withdraw an appeal from the Indiana Board of Tax Review recently has been discussed in several cases. The rulings tend to focus on whether the responding party, typically the Assessor, is potentially prejudiced by the requested withdrawal. Following are summaries of some of these cases.

  1. Withdrawals permitted – no substantial expense incurred by Assessor.  Cornerstone Holdings LLC v. Bartholomew County Assessor, Pet. Nos. 03-005-12-1-3-20426-15 et seq. (10/22/18) (2012 and 2015 tax years).  Taxpayer requested withdrawals of its appeals 34 days before the scheduled hearing, after Assessor engaged an appraiser.  Assessor objected, claiming it had expended too many resources.  IBTR analyzed the issue under Indiana Trial Rule 41(A), citing 52 IAC 2-1.2-1 and noting that the trial rules may be applied to the extent they do not conflict with the Board’s procedural rules or applicable statutes.  The standard is “substantial expense” – not simply an “expense.” Taxpayer had denied the appraiser access to the parcel, and the appraisal was “put on hold.”  Assessor had not incurred the “substantial expense of a completed appraisal.” (citing Joyce Sportswear Co. v. State Bd. of Tax Comm’rs, 684 N.E.2d 1189, 1193 (Ind. Tax Ct. 1997). The withdrawals were granted.

  2. Withdrawals prohibited – Late withdrawal would “squander” resources; Assessor demonstrated substantial expense ($900 appraisal) and legal prejudice.  TLC Properties, Inc. v. Lake County Assessor, Pet. Nos. 45-018-15-1-5-01442-16 et seq. (2/4/19) (2015 and 2016 tax years). In this appeal of land supporting a billboard sign, Taxpayer sought to withdraw its appeals eight days before the hearing.  IBTR observed that to allow the withdrawals “at such an advanced stage would mean the Board and the parties squandered substantial time and effort.” IBTR found that Assessor’s $900 appraisal was a “strong showing of substantial expense.”  In addition, Assessor would be legally prejudiced by not being able to seek an increase of assessment.  “Because the assessor demonstrated both substantial expense and legal prejudice, and because it preserves the Board’s and parties’ limited resources,” IBTR denied Taxpayer’s request for voluntary dismissals. 

  3. Withdrawals prohibited – substantial expense incurred by Assessor. Russell Properties, LLC v. Bartholomew County Assessor, Pet. No. 03-005-15-1-3-00097-16 (11/8/18) (2015 tax year). The IBTR discussed its 2014 ruling in Props v. Hamilton County Assessor, where it found that “a taxpayer’s last-minute request to withdrawal should be granted over the assessor’s objection because the assessor did not seek to raise the assessment [thus, no legal prejudice to the assessor] and did not present evidence of substantial expense.”  In this appeal, Assessor was seeking to raise the assessment and demonstrated a substantial expense had been incurred.  The Assessor’s objection to the withdrawal was sustained.Voluntary dismissal reversed; trending stipulation maintained. CVS Corporation #2519-01 v. Lake County Assessor, Pet. Nos. 45-036-07-1-4-99024-15 et seq. (1/4/19) (2007 - 2014 tax years).  Taxpayer’s request for voluntary dismissals was granted.  Assessor objected, and IBTR reinstated the Form 131 petitions.  IBTR also rejected Taxpayer’s request to set aside the trending stipulation to which the parties had agreed.

Default judgments / Judgment on the Evidence.

  1. IBTR prefers to resolve cases on the merits.  Draheim v. Marion County Assessor, Pet. Nos. 49-101-12-3-4-01535-17 et seq. (1/14/19) (2012 – 2017 tax years).  Assessor filed a motion to dismiss, claiming use of Form 133s [which form has now been eliminated and incorporated into the Form 130] was improper.  IBTR overruled the motion, reasoning: “In Indiana, there is a longstanding preference for resolving the case on the merits.” (citing Keener v. Kendallville, 191 N.E.2d 6, 7 (Ind. 1963)).
  2. Default judgment denied. CVS Corporation #0434-01 v. Lake County Assessor, Pet. Nos. 45-045-12-1-4-00001 et seq. (1/4/19) (2012 - 2016 tax years). Assessor alleged that an anonymous email to the press contained allegations of misconduct against him. The email, the Assessor contended, included information about the case not available to the public.  Assessor argued this was abusive conduct and justified default judgment under 52 IAC 2-10-2.  Taxpayer denied knowledge of the email.  Noting the email was not placed into evidence and that the record contained no proof that Taxpayer engaged in abusive conduct, IBTR described the situation as “troubling” but denied the request.

  3. Motion for Judgment on the Evidence rejected.  Draheim v. Marion County Assessor, Pet. Nos. 49-101-12-3-4-01535-17 et seq. (1/14/19) (2012 – 2017 tax years).  Assessor moved for judgment on the evidence, citing Trial Rule 50, before commencing his case-in-chief.  Noting that its rules allow it discretion to apply the trial rules, IBTR explained that a “litigant is always free to rest on the burden of proof without offering additional evidence.”  Here, Assessor chose to proceed with his valuation case. Assessor’s appraiser concluded to a value of the subject property that was $100,000 lower than the January 1, 2016 assessment (the only date for which Taxpayer filed a Form 130 appeal petition).  The Board denied the motion, reasoning that to ignore “such evidence would be unfair and against the interest of justice.” 

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Indiana Board of Tax Review Denies Real Property Tax Exemptions for Early Childhood Educational Facilities for Lack of Proper Certifications

Name: Rainbow Rascals Warsaw, LLC v. Kosciusko County Assessor

Date Issued: April 10, 2019

Property Type: Childcare Facility

Assessment Year(s): 2015-2018

Point of Interest: Tangible property owned, occupied, or used by a for-profit provider of early childhood education services to children ages 4-5 years old may qualify for an educational exemption only if the requirements set forth in Ind. Code § 6-1.1-10-16(p) and Ind. Code § 6-1.1-10-46 are met.

Synopsis: Rainbow Rascals Warsaw, LLC (“Rainbow”) timely filed Form 136 exemption applications on two of its early childhood educational facilities in Warsaw for the 2015 to 2018 assessment dates. The Kosciusko Property Tax Assessment Board of Appeals (the “PTABOA”) denied each of the applications. Rainbow contested the denials, filing Form 132 appeal petitions with the Indiana Board of Tax Review for all four assessment dates.

Motion to dismiss not addressed. Rainbow had 45 days to appeal the PTABOA’s exemption denials. The Assessor asked the Indiana Board to dismiss the 2015 to 2017 appeals, because Rainbow had filed those petitions more than 45 days past the date listed on the PTABOA’s Form 120 notices denying the exemptions. Rainbow claimed it never received the PTABOA’s notices. The Indiana Board observed that Rainbow did “little to show” that it had not received, but then discarded, the notices. However, because the Indiana Board ultimately determined Rainbow failed to make its case on the merits, it declined to address the motion to dismiss.

Lacking required program ratings, Taxpayer failed to show it qualified for exemption. Indiana Code § 6-1.1-10-46 (“Section 46”) provides the requirements that a for-profit early childhood educational provider must meet to be eligible for a property tax exemption. Section 46 provides in part:

(a) Tangible property owned, occupied, or used by a for-profit provider of early childhood education services to children who are at least four (4) but less than six (6) years of age is exempt from property taxation under section 16 of this chapter only if all the following requirements are satisfied:
(1) The primary purpose of the provider is educational.
(2) The provider is the property owner and the provider also predominantly occupies and uses the tangible property for providing early childhood education services to children who are at least four (4) but less than six (6) years of age.
(3) The provider meets the standards of quality recognized by a Level 3 or Level 4 Paths to QUALITY program rating under IC 12-17.2-2-14.2 or has a comparable rating from a nationally recognized accrediting body.

(emphasis added). Additionally, the exemption percentage is calculated based on the percentage of children (out of the total enrollment of children) that are ages 4-5.

The Indiana Board pointed to the requirement set forth by Ind. Code § 6-1.1-10-46(a)(3) requiring that the provider meet the standards of quality recognized by a Level 3 or Level 4 Path to QUALITY program rating under Ind. Code § 12-17.2-2-14.2 or has a comparable rating from a nationally recognized accrediting body. One of Rainbow’s facilities did not receive its Level 3 certification until October 2018 – well after the assessment dates at issue — and the other facility had only a Level 1 certification. Moreover, even had the certifications been in place, Rainbow failed to provide necessary information to prove what an appropriate exemption percentage would have been. Having failed to show that the childcare facilities were properly certified on the assessment dates, the two facilities did not qualify for an educational exemption for any of the assessment dates at issue.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

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