Recent Developments in Indiana Taxation - I.U. School of Law ...

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1156 INDIANA LAW REVIEW [Vol. 40:1103 562 appeal of the 2002 assessment of their property on February 9, 2005. The Eckerlings’ land is located in Wayne Township, Marion County, Indiana, and has an improvement on the land that was originally built as a single-family residence 563 but that is currently being used as an office. There were no alterations made to the improvement to convert it from a single-family residence to an office. 564 The Wayne Township Assessor (“assessor”) used the residential pricing 565 guidelines in valuing the improvement. The Eckerlings appealed the assessment arguing that the improvement should be valued according to 566 commercial guidelines instead because it was being used as an office. This 567 appeal follows the BTR’s final determination that upheld the assessment. For a taxpayer to successfully seek reversal of a final determination of the BTR, the taxpayer must have submitted evidence regarding the error during the administrative hearing process that substantiates a prima facie case that an error 568 occurred in the assessment. The new assessment system assesses real property 569 based on its market value-in-use. The Tax Court explained that “a property’s market value-in-use `may be thought of as the ask price of the property by its 570 owner,” and lists three generally accepted appraisal techniques for calculating a property’s market value-in-use: the cost approach, the sales comparison 571 approach, and the income approach. Because tax assessors are limited in their resources, the cost approach is the primary method for assessing real property in 572 Indiana. However, the cost method is not mandatory and failure to comply with the assessment guidelines is not an indication that the assessment is not a 573 reasonable measure of the property’s market value-in-use. An assessment is 574 presumed to be correct unless the taxpayer can prove otherwise. The Eckerlings argued that the assessment should have reflected the improvement’s current use as an office if it were to accurately reflect the improvement’s market value-in-use. 575 However, a taxpayer must show that the assessment is not an accurate reflection of the property’s market value-in-use, not just that the assessor did not 576 strictly adhere to the guidelines. One way that a taxpayer can rebut the 562. Id. at 674-75. 563. Id. at 674. 564. Id. 565. Id. 566. Id. at 674-75. 567. Id. at 675. 568. Id. 569. Id. 570. Id. (quoting IND. TAX COMM’RS, 2002 REAL PROPERTY ASSESSMENT MANUAL 2 (2002)). 571. Id. 572. Id. 573. Id. 574. Id. at 676. 575. Id. at 678. 576. Id.
2007] TAX LAW 1157 presumption that the assessment is correct is to provide a professional appraisal of the property, use information such as “actual construction costs, sales information regarding the subject or comparable properties,” or other information as long as the additional information was available to the assessor at the time of 577 the assessment. The Eckerlings did not provide any of this evidence, focusing 578 instead on the alleged failure of the assessor to follow the guidelines. This is not sufficient to rebut the presumption that the assessment was correct so the final determination of the BTR was affirmed. 579 580 3. PIA Builders & Developers, LLC v. Jennings County Assessor. —In this consolidated opinion, the Tax Court denied three substantially identical petitions 581 for rehearing by separate taxpayers. The taxpayers argued that: 1) assessing officials can only use the cost approach for assessing property; 2) the assessing officials in the cases at bar ignored that law and adjusted the assessments to more accurately reflect the properties’ market values-in-use; and 3) the Tax Court 582 “endorsed the misapplication of the law” in making the rulings that it did. The Tax Court reiterated what it “explained in great length” in the cases below: that the goal of the new assessment system in Indiana is to accurately reflect a 583 property’s market value-in-use. The assessment guidelines provide a variety 584 of assessment approaches, including the cost approach. Further, the guidelines state that the cost approach is merely a starting point for determining a property’s 585 market value-in-use. The old system of assessment considered an assessment to be accurate if the regulations were correctly applied while the new system focuses more on ensuring that the assessed value is actually correct than on strict 586 application of regulations. The Tax Court denied the petitions saying that under the new system, a taxpayer cannot argue form over substance but must show that the assessed value is not an accurate reflection of the property’s market value-in-use. 587 588 4. BP Products North America, Inc. v. Matonovich. —BP Products North America, Inc. (BP) owned land and improvements in Lake County, Indiana, and initiated this action on April 4, 2003, to appeal the BTA’s denial of its June, 589 2000, petitions for review of assessments made in 1999. In June 2000, BP made 79 separate claims of review of assessments to the SBTC, claiming that its 577. Id. 578. Id. 579. Id. 580. 842 N.E.2d 899 (Ind. Tax Ct. 2006). 581. Id. at 899-900. 582. Id. at 900. 583. Id. 584. Id. 585. Id. 586. Id. 587. Id. at 900-01. 588. 842 N.E.2d 901 (Ind. Tax Ct. 2006). 589. Id. at 902-03.
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