ATTORNEYS FOR PETITIONER: ATTORNEY FOR RESPONDENT:
BARTON T. SPRUNGER JEFFREY A. MODISETT
MARK J. RICHARDS Attorney General of Indiana ICE MILLER DONADIO & RYAN Indianapolis, Indiana
PPG INDUSTRIES, INC., ) ) ) Petitioner, ) ) v. ) Cause No. 49T10-9611-TA-00150 ) STATE BOARD OF TAX COMMISSIONERS, ) ) Respondent. ) _____________________________________________________________________COMMISSIONERS _____________________________________________________________________
ON APPEAL FROM A FINAL DETERMINATION OF THE STATE BOARD OF TAX
finished glass reported for March 1, 1994 and 98.2% of the finished glass reported for
March 1, 1995.
During 1994 and 1995, the Scott Township Assessor reviewed PPG's property tax returns and determined that there were some deficiencies (not relevant to this original tax appeal) in PPG's personal property tax returns. Accordingly, the Scott Township Assessor issued a Form 113See footnote 2 changing the assessed value of PPG's personal property. PPG appealed the actions of the Scott Township Assessor to the Vanderburgh County Board of Review (BOR). After the BOR issued its decisions for each tax year, PPG petitioned the State Board for review of those decisions.
On May 24, 1996, the State Board held an administrative hearing concerning PPG's petitions. On September 27, 1996, the State Board issued its final determination.See footnote 3 In its final determination, the State Board sua sponte raised the issue of the proper place of assessment for the finished glass stored in the Center Township warehouse and concluded that the finished glass stored in the Center Township warehouse should have been reported to and assessed in Center Township. As a result, the State Board allowed the interstate commerce exemption for the finished glass stored at the glass processing plant, but disallowed the exemption for the finished
glass stored at the warehouse located in Center Township. The disallowance was
based on the State Board's conclusion that PPG should have reported the finished
glass stored at the Center Township warehouse in Center Township rather than Scott
Township. The State Board also assessed a 20% undervaluation penalty on the
taxable value of that finished glass because it was not reported in Center Township.
See Ind. Code Ann. § 6-1.1-37-7(e) (West Supp. 1998). On November 4, 1996, PPG
filed this original tax appeal. The parties have filed cross-motions for summary
and that the State Board erroneously assessed PPG with a 20% undervaluation
penalty. The State Board based its disallowance of the interstate commerce exemption
for the finished glass stored in the Center Township warehouse on its view that those
products were to be assessed in Center Township. According to the State Board, PPG
was therefore required to file a personal property tax return in Center Township and
because PPG did not, PPG waived its right to the exemption. See Ind. Code Ann. § 6-
1.1-11-1 (West 1989); Dav-Con, Inc. v. State Bd. of Tax Comm'rs, 644 N.E.2d 192, 198
(Ind. Tax Ct. 1994). (The State Board does not dispute that the finished glass stored in
the Center Township warehouse would otherwise qualify for the interstate commerce
exemption.) In addition, the 20% undervaluation penalty was based on the fact that
PPG did not file a personal property tax return in Center Township.See footnote
resolution of the issues PPG raises turns on whether PPG was required to file a
personal property tax return in Center Township due to the presence of the finished
glass in the Center Township warehouse on the assessment dates.
Ind. Code Ann. § 6-1.1-3-1(b)-(c) (West Supp. 1998) governs the place where tangible personal property owned by non-residents of Indiana is to be assessed:
(b) Except as provided in subsection (c) of this section, personal property which is owned by a person who is not a resident of this state shall be assessed
where the owner's principal office within this state is located on the assessment
date of the year for which the assessment is made.
(c) Personal property shall be assessed at the place where it is situated on the assessment date of the year for which the assessment is made if the
(1) regularly used or permanently located; or
(2) owned by a non-resident who does not have a principal office within this state.
PPG is a non-resident corporation that has a principal office located within this state. Therefore, the tangible personal property it owns will be assessed where PPG's principal office within this state is located, unless that property is regularly used or permanently located elsewhere. Accordingly, the finished glass stored at the Center Township warehouse was to be assessed in Scott Township (PPG's principal office in Indiana), unless it was regularly used or permanently located in Center Township. It is undisputed that on the assessment dates, the finished glass was being temporarily stored in the Center Township warehouse pending shipment. Therefore, it is impossible to square the State Board's position with the plain language of section 6- 1.1-3-1, which requires that the finished glass have more than an ephemeral presence in Center Township in order to make it taxable there. See Paul Heuring Motors, Inc., 620 N.E.2d at 42-43. Because the finished glass was neither regularly used nor permanently located in Center Township, the finished glass was to be assessed at the place of PPG's principal office within this state, namely, Scott Township. Consequently, the State Board erred in determining that PPG should have reported the finished glass in Center Township. As a result, the State Board's disallowance of the interstate commerce exemption for the finished glass stored in the Center Township warehouse was contrary to law, as was its assessment of the 20% undervaluation
The State Board's arguments to the contrary do not alter this result. The State Board points to the fact that PPG regularly used the Center Township warehouse to store items awaiting shipment. Therefore, according to the State Board, the finished glass stored in the Center Township warehouse fell within the purview of [s]ubsection [6-1.1-3-1](c)(1) . . . [,] and PPG was required to report the property in Center Township. (State Bd. Br. in Supp. Summ. J. at 9). This argument cannot withstand serious analysis.
The problem with the State Board's argument is that it focuses on PPG's regular use of the Center Township warehouse, rather than whether the finished glass itself was regularly used or permanently located in Center Township. In addition, the Court notes that a similar argument was emphatically rejected in Paul Heuring Motors, Inc. In that case, the taxpayer, an automobile dealer, moved some of the vehicles it owned from Lake County to Porter County a few days before the March 1 assessment date in order to conduct a special sale. The taxpayer then returned the unsold vehicles to Lake County shortly after the assessment date. The taxpayer argued that because it intended to make regular use of the Porter County location, its reading of section 6-1.1- 3-1 to make the vehicles moved to Porter County taxable in Porter County was reasonable. In rejecting this argument, this Court focused on whether the vehicles
themselves were regularly used in Porter County, not whether the taxpayer made
regular use of the place where the vehicles happened to be located on the assessment
date. See Paul Heuring Motors, Inc., 620 N.E.2d at 42-43.
The State Board next argues that the Legislature in enacting section 6-1.1-3-1 intended that tangible personal property be reportedSee footnote 6 where it is located. In support of this argument, the State Board contends that the taxing district in which property is located provides many benefits to the taxpayer and the property itself. Therefore, if property is not taxed where it is located, the taxpayer would be sponging off the community in which the property is located. See State Bd. of Tax Comm'rs v. Jewell Grain Co., 556 N.E.2d 920, 924-25 (Ind. 1990). This, in the opinion of the State Board, would be contrary to the purpose of the personal property tax laws, which is to have those enjoying the benefits conferred by a taxing district pay their fair share of the tax burden. See id. at 925. The State Board further contends that requiring taxpayers to report property where it is located will better allow assessors to ensure that tangible personal property will be reported because the assessor in the place where the [property] is located stands the best chance of discovering [property that has] not been properly reported. In other words, [property] is most easily found where it is located. Id.
These contentions are properly addressed to the Legislature, not this Court. By
enacting section 6-1.1-3-1, the Legislature has determined where tangible personal
property will be assessed. Had the Legislature desired to have tangible property
assessed where it happened to be located on the assessment date, the Legislature
would have said so. Instead, the Legislature stated in unmistakable terms that, where
the tangible personal property of a non-resident is involved, that property is to be
assessed at the non-resident's principal office within this state, unless 1) it was
regularly used or permanently located elsewhere or 2) the non-resident has no
principal office within this state. Ind. Code Ann. § 6-1.1-3-1. The Legislature is
presumed to mean what it says. See Hyatt Corp., 695 N.E.2d at 1053.
The State Board also contends that PPG failed in its reporting obligations by failing to disclose the actual location of the finished glass on the assessment date on its personal property tax returns.See footnote 7 As pointed out by PPG in its brief, the State Board's argument is premised on the finished glass stored in the Center Township warehouse being subject to assessment in Center Township. To that extent that the State Board's argument rests on that premise, it fails because, as explained above, the finished glass was not subject to assessment in Center Township.See footnote 8
finished glass in this case was already sold as of the assessment dateSee footnote
more importantly, was already in transit on the assessment date. This makes the
finished glass a far cry from merchandise placed on a retailer's shelf to await sale.See footnote
Therefore, the Court cannot adopt a rule in this case that merchandise awaiting sale
does not fall under subsection 6-1.1-3-1(c)(1) because that issue is not before the
Court. Consequently, the State Board's fear that, as a result of this decision, individual
Wal-Mart stores will not pay personal property taxes where the individual stores are
located is misplaced.
Second, the Court is also not adopting a per se rule that merchandise awaiting shipment can never fall under subsection 6-1.1-3-1(c)(1). The Court merely makes the unremarkable holding that where tangible personal property owned by a non-resident taxpayer has a temporary location, it is not to be assessed there if the non-resident taxpayer has a principal office elsewhere in this state. The finished glass stored in the Center Township warehouse had only a temporary presence in Center Township. Therefore, it was not to be assessed there, but rather in Scott Township, the location of
PPG's principal office within this state.
without further processing, to an out-of-state destination. See Colwell/General, Inc. v. State Bd. of Tax Comm'rs, 680 N.E.2d 892, 895-96 (Ind. Tax Ct. 1997).
Township on the personal property tax returns filed with the Scott Township Assessor. See Ind. Code Ann. § 6-1.1-3-9(a) (West 1989). If that is the State Board's argument, the State Board's brief fails to explain why the failure of PPG to state the actual location of the finished glass stored in the Center Township warehouse on returns that were properly filed with the Scott Township Assessor (even if the law required PPG to do so) has any bearing on this case. Because this case involves the proper place of assessment of the finished glass stored in the Center Township warehouse and not its actual location, the relevance of the actual location of that finished glass is, to say the least, not self-evident. Accordingly, without an adequate explanation by the State Board of why PPG's failure to disclose the actual location of the finished glass on its property tax returns is relevant, the Court will not examine the issue. See Bulkmatic Transp. Co. v. Department of State Revenue, 691 N.E.2d 1371, 1375 (Ind. Tax Ct. 1998).
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