Tax Court shifts burden of proof to Assessor but upholds commercial land assessment based on application of the Indiana Guidelines

Tax Court shifts burden of proof to Assessor but upholds commercial land assessment based on application of the Indiana Guidelines

The Tax Court reversed the Indiana Board's burden of proof determination but affirmed the assessment.

The Tax Court reversed the IBTR’s burden of proof determination but affirmed the assessment.

In Peters v. Boone County Assessor (May 14, 2015), Taxpayers challenged the assessment of land supporting an office building for the March 1, 2010 assessment date.  The land was .16 acre, but the Assessor previously had only assessed one-half of the lot.  Assessing the entire lot doubled the land’s value.

Tax Court reverses the IBTR’s burden of proof determination.  Indiana’s “burden-shifting rule,” Ind. Code § 6-1.1-17.2, assigns the burden of proof on appeal to the assessor, if the assessed value of the contested property increased by more than 5% year-over-year and the property’s physical status and use did not materially changed.  See my prior blog post here.  The Board assigned the burden of proof to the Taxpayers, even though the property’s assessed value had increased by more than 5%.  The Indiana Board of Tax Review (IBTR) concluded that the property was not the “same” in 2010 as it was in 2009 – even though nothing had changed – because in 2010 the Assessor assigned value to the entire .16 acre.  The Tax Court reversed on this point, reasoning that the Board’s determination “not only ignores the fact that the [Taxpayers] have always owned the same 0.16 acres of land but that the Assessor never created a new parcel identification number when she incorporated the ‘new’ property into their assessment.”  Slip op. at 5 n.2.  The Assessor had the burden of proof.

But the Court affirms the assessment based on the Indiana Guidelines.  The Assessor added the omitted .08 acre to the property’s assessment and assigned the same base rate as applied to the original assessment, doubling the land’s value.  The Assessor also supported her increase by pointing to the sales of four allegedly comparable properties in Zionsville.  In response, Taxpayers argued in part “that the best use of their land was to bulldoze the improvement because it had no value, as it was not ADA-compliant and its heating system was ‘soon to go belly up.’”  Slip op. at 7.  Taxpayers also submitted evidence of sales of commercial property sales, relying in part on the same sales presented by the Assessor.

The Assessor met her burden by relying on the original application of Indiana’s Guidelines (presumably via the land order) to the land that was not omitted.  The Court concluded, “The Assessor’s explanation as to why and how she increased the assessment was, at first blush, sufficient to demonstrate that the increase in the assessment was proper.”  Slip op. at 9 (citations omitted).  That shifted the burden of production (or going forward with the evidence) to the Taxpayers.  (The Court explains in footnote six that the burden of proof incorporates both the burden of persuasion and the burden of production; the burden of persuasion never shifts, though the burden of production may shift between the parties during litigation.)

The Assessor’s and Taxpayers’ arguments regarding comparable sales suffered the same fatal flaw; neither party provided the Board “with any explanation as to how the properties from which that data was culled were comparable to the subject property and how any differences between the properties affected their market values-in-use.”  Slip op. at 10.  Taxpayers failed to shift the burden of production back to the Assessor.  Consequently, the assessment stood.

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