A Deluge of Dismissals:  Indiana Tax Court dismisses 11 property tax exemption appeals for lack of jurisdiction

A Deluge of Dismissals: Indiana Tax Court dismisses 11 property tax exemption appeals for lack of jurisdiction

Taxpayers' 11 appeals were dismissed when they failed to exhaust administrative remedies.

Taxpayers’ 11 appeals were dismissed when they failed to exhaust administrative remedies.

When it rains, it pours.  On January 20, the Indiana Tax Court issued eleven rulings dismissing property tax exemption appeals for lack of jurisdiction.

Exempt today, gone tomorrow. The appeals involved the same basic facts.  Taxpayers owned multi-family cooperative apartment complexes, which served low-income persons.  In 2005, they filed property tax exemption applications, claiming the complexes and personal property were owned, occupied and used for charitable purposes.  The Marion County Board (the Property Tax Assessment Board of Appeals or “PTABOA”) granted the exemptions.  (Two  appeals involved the 2008 tax year, and one involved a partial exemption.)  Following a 2009 Tax Court ruling in an exemption appeal, the PTABOA reviewed and revoked the 2010 exemptions for Taxpayers’ property.

Moving on up.  Taxpayers appealed to the Indiana Board of Tax Review (the “IBTR”), asserting the PTABOA lacked statutory authority to revoke the exemptions.  Moreover, Taxpayers argued that even if the PTABOA could revoke the exemptions, its actions were untimely.  The IBTR denied Taxpayers’ summary judgment motions on these two issues.  The IBTR rejected Taxpayers’ petitions for rehearing (treated as motions to reconsider).  Taxpayers filed petitions in the Tax Court, which the Assessor sought to dismiss.

Tired, but not exhaustedThe Tax Court has jurisdiction over original tax appeals.  To be an original tax appeal, a case must arise under Indiana’s tax laws and be “an initial appeal of a final determination” of the IBTR.  Slip op. at 4 (citing Ind. Code § 33-26-3-1).  In these eleven appeals, the second component was in dispute, i.e. whether the IBTR had issued final determinations.  Failing to exhaust administrative remedies, the Tax Court noted, “generally deprives the Court of subject matter jurisdiction.”  Slip op. at 5 (citation omitted).  However, failure to exhaust administrative remedies is not fatal “when extraordinary circumstances establish that doing so would be futile, would cause irreparable harm, or where the relevant statute is alleged to be void on its face.”  Id.  And the exhaustion of administrative remedies requirement may not be appropriate if “an agency’s action is challenged as being ultra vires and void.”  Id. (citation omitted).

In these appeals, the IBTR’s orders did not end the administrative process.  Slip op. at 6-7.  The Court explained that a substantive issue remained:  whether the complexes and personal property were owned, occupied and used for charitable purposes during the relevant time.  Consequently, Taxpayers had appealed interlocutory orders, not final determinations.  Slip op. at 7.

Finally, while Taxpayers claimed the PTABOA had gone “rogue” in reviewing the 2010 exemptions (by acting beyond the scope of its authority), the Court concluded that requiring Taxpayers to exhaust their remedies “may avoid premature litigation by providing an opportunity for the case to be resolved on grounds other than those currently before the Court.”  Slip op. at 8-9.  It also conserves the Court’s resources by allowing the IBTR to develop an adequate record for judicial review on the substantive issue.  Slip op. at 9.

The cases were remanded to the IBTR.

One of the Court’s eleven decisions, Three Fountains Cooperative, Inc. v. Marion County Assessor, can be viewed here.  (Citations in this post are to this ruling.)  You can find all of the decisions by visiting the web site for Indiana’s appellate decisions.

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