ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
TIMOTHY J. VRANA STEVE CARTER
SHARPNACK, BIGLEY, DAVID ATTORNEY GENERAL OF INDIANA
& RUMPLE Indianapolis, IN
TED J. HOLADAY
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
MARIAH FOODS LP, )
v. ) Cause No. 49T10-9906-TA-152
INDIANA STATE BOARD OF )
TAX COMMISSIONERS, )
ON APPEAL FROM A FINAL DETERMINATION OF THE
STATE BOARD OF TAX COMMISSIONERS
May 2, 2001
Petitioner Mariah Foods LP (Mariah) appeals the denial by the Indiana State Board
of Tax Commissioners (State Board) of its applications for deduction from assessed value
for new manufacturing equipment within an Economic Revitalization Area (ERA) for the March
1, 1997 and 1998 assessment dates. The issue presented is whether the
State Board erroneously refused to approve the requested applications for deduction.
FACTS AND PROCEDURAL HISTORY
As stipulated to by the parties, the relevant facts of this case follow:
On May 15, 1997, Mariah filed an Application For Deduction From Assessed Valuation,
New Manufacturing Equipment In Economic Revitalization Area, to be effective March 1, 1997,
for what it described as new pork processing equipment. On May 8,
1998, Mariah filed an Application for Deduction From Assessed Valuation, New Manufacturing Equipment
In Economic Revitalization Area, to be effective March 1, 1998, for what it
again described as new pork processing equipment. On December 29, 1998, the
Board sent Mariah ([via its Controller] Marvin Miller) a letter stating that all
required information was not submitted and requesting the description, cost and installation dates
of the equipment claimed to be eligible. On December 31, 1998, Mr.
Miller responded to the State Boards request of December 29 by providing the
information found in the Record of Administrative Proceeding at pages 79-89. On
January 8, 1999, the Board sent another letter . . . stating that
a detailed equipment list, with cost and installation dates for all items claimed
for abatement [for the March 1, 1997 assessment date] was required. Mariah
failed to provide the information. Subsequently, on April 14, 1999, the Board
sent Mariah notice that it intended to not allow any deduction [for 1998
or any prior year], but this notice allowed Mariah an additional three weeks
to object and/or present any additional evidence that [was] pertinent to the application[s].
Again, Mariah did not provide the information that was required. Therefore,
on May 6, 1999, the Board issued the final determination allowing no deduction.
(Stipulation, ¶ 2.) ANALYSIS AND OPINION
Mariah filed an original tax appeal on June 18, 1999. The Court
conducted a trial in this case on April 20, 2001, and thereafter took
the matter under advisement. Additional facts will be supplied where necessary.
Standard of Review
The Court gives great deference to the State Boards final determinations when the
State Board acts within the scope of its authority. Graybar Elec. Co.
v. State Bd. of Tax Commrs, 723 N.E.2d 491, 494 (Ind. Tax Ct.
2000). Accordingly, this Court reverses final determinations of the State Board only
when those decisions are unsupported by substantial evidence, are arbitrary or capricious, constitute
an abuse of discretion, or exceed statutory authority. Id. The taxpayer
bears the burden of demonstrating the invalidity of the State Boards final determination.
Clark v. State Bd. of Tax Commrs, 694 N.E.2d 1230, 1233 (Ind.
Tax Ct. 1998).
Mariah contends that the State Board abused its discretion or acted arbitrarily or
capriciously in refusing to grant it the new manufacturing equipment deductions for the
assessment years in question. Indiana Code Ann. § 6-1.1-12.1-4.5 (West 2000) (amended
by P.L. 4-2000, § 6) provides a deduction from the assessed value of
new manufacturing equipment installed by a taxpayer. The purpose of the ERA
deduction is to encourage equipment installation and new employment opportunities in an area
suffering from economic decline. Knauf Fiber Glass v. State Bd. of Tax
Commrs, 629 N.E.2d 959, 962 (Ind. Tax Ct. 1994). Each year, a
taxpayer must file a certified deduction application with the State Board and with
the auditor of the county in which the new manufacturing equipment is located.
Ind. Code § 6-1.1-12.1-5.5(a) (amended by P.L. 4-2000, §8). The deduction
application must contain the following: (1) the name of the owner of
the new manufacturing equipment; (2) a description of the new manufacturing equipment; (3)
proof of the date the new manufacturing equipment was installed; and (4) the
amount of the deduction claimed for the first year of the deduction.
Ind. Code § 6-1.1-12.1-5.5(b). See also Ind. Admin. Code tit. 50, r.
4.2-11-4 (2001) (stating that certified deduction application shall be filed annually and contain
a description of property in sufficient detail to afford identification, a statement of
the propertys ownership, possession and use, the grounds for claiming the deduction, the
full name and address of the applicant, and [a]ny additional information which the
state board may require by its prescribed form). The State Board is
charged with reviewing and verifying the correctness of each application and with notifying
the county auditor that the deduction is approved or denied or that the
amount of the deduction is altered. Ind. Code § 6-1.1-12.1-5.5(e). Taxpayers
may appeal the State Boards final determination regarding a deduction application pursuant to
Indiana Code § 6-1.1-12.1-5.5(h).
To prevail, Mariah was obligated to submit probative evidence sufficient to establish a
prima facie case that the State Board abused its discretion or acted arbitrarily
or capriciously in denying its deduction applications. See Damon Corp. v. State
Bd. of Tax Commrs, 738 N.E.2d 1102, 1106 (Ind. Tax Ct. 2000).
A prima facie case is a case in which the evidence is sufficient
to establish a given fact and if not contradicted will remain sufficient.
Id. (citation and internal quotes omitted). Indiana courts define abuse of
discretion as an erroneous conclusion and judgment which is clearly against logic and
the natural inferences to be drawn therefrom or a decision which contravenes reasonable[,]
probable and actual deductions. Palacios v. Kline, 566 N.E.2d 573, 575 (Ind.
Ct. App. 1991). See also Blacks Law Dictionary 10 (7th ed. 1999)
(defining abuse of discretion as [a]n appellate courts standard for reviewing a decision
that is asserted to be grossly unsound, unreasonable, or illegal). Further, an
administrative order is arbitrary and capricious when it is without some basis which
would lead a reasonable person to the same conclusion as the administrative agency.
Dawkins v. State Bd. of Tax Commrs, 659 N.E.2d 706, 709 (Ind.
Tax Ct. 1995). See also State Bd. of Tax Commrs v. South
Shore Marina, 422 N.E.2d 723, 727 (Ind. Ct. App. 1981) (defining an arbitrary
or capricious act in part to be one which is willful and unreasonable,
without consideration and in disregard of facts or circumstances in the case).
On both its 1997 and 1998 deduction applications, Mariah described the equipment for
which it was seeking deductions simply as new pork processing equipment. (R.
of Admin. Proceedings at 14, 26.) Both applications indicate that Mariah installed
the new equipment on October 15, 1996, and that the equipment had a
cost of $565,412. (R. of Admin. Proceedings at 14, 26.) The
label new pork processing equipment is a broad, general description. The
State Board reasonably could have concluded that this description lacked sufficient detail to
properly identify the new equipment.
In response to this lack of specificity, the State Board gave Mariah multiple
opportunities over approximately a four-month period to provide the requested information. First,
on December 29, 1998, the State Board sent Mariah a letter stating that
the State Board needed the description, cost and installation dates of equipment claimed
for the March 1, 1998 assessment date. (R. of Admin. Proceedings at
25.) This letter instructed Mariah that it had until January 12, 1999
to provide this information. Furthermore, the letter contained the State Boards address
and phone number; it instructed Mariah to mail the requested information to the
attention of the State Boards Brenda Harris and told Mariah to direct any
questions to the above telephone number. (R. of Admin. Proceedings at 25.)
In response to this letter, Mariah on December 31, 1998, gave the
State Board copies of the following items: (1) 1997 deduction application; (2)
Compliance with Statement of Benefits Form, filed February 28, 1997; (3) 1996 Business
Tangible Personal Property Assessment Return; (4) 1996 Real Estate Tax Statement; and (5)
a certified copy of the resolution by the Common Council of the City
of Columbus, adopting Mariahs Statement of Benefits and authorizing the new manufacturing equipment
deduction. (R. of Admin. Proceedings at 79-89.) At trial, Mariahs counsel
asserted that the information provided was not the things that the State Board
needed. (Trial Tr. at 6.) None of these items mentioned, identified
or described the new equipment with any specificity.
Second, on January 8, 1999, Brenda Harris faxed Mr. Miller, Mariahs Controller, a
memo stating that that State Board had received Mariahs 1997 deduction application.
To review the deduction, Harris indicated that the State Board needed a Detailed
equipment list, with cost and installation dates for all items claimed for abatement.
(R. of Admin. Proceedings at 47.) She also requested Mariahs 1996
and 1997 Business Personal Property Tax Returns. Harris ended the memo stating
If you have any questions, please call me. (R. of Admin. Proceedings
Third, the State Board mailed Mariah another letter, dated April 14, 1999.
This letter served as a recommendation with respect to the requested new manufacturing
equipment deductions. The letter stated that for both the 1998 application and
for the prior years application, the State Board intended to approve no deductions
for Mariah. (R. of Admin. Proceedings at 48.) In addition, the
letter informed Mariah that the State Board was giving it three weeks to
contact this office and question the enclosed recommended changes, voice objections, and/or present
any additional evidence which is pertinent to your application. (R. of Admin. Proceedings
at 48.) The recommendation letter further explained that the State Board did
not grant the deductions because it did not receive [the] requested information necessary
to approve [the] deduction[s]. (R. of Admin. Proceedings at 48.)
Mariah did not respond to the State Boards communications of January 8 and
April 14, 1999. The State Boards final determination followed on May 6,
1999. At no time prior to the State Boards final determination did
Mariah provide the State Board with a detailed list of the new manufacturing
equipment. The State Board is charged with reviewing and verifying
of each deduction application. Ind. Code § 6-1.1-12.1-5.5(e). The State
Board could not be expected to identify the new manufacturing equipment claimed to
be eligible for the deductions without a detailed list of the new equipment.
Mariahs inaction, not the State Boards actions, was the problem, especially where
the State Board gave Mariah several opportunities to submit the information and encouraged
Mariah to contact the State Board with questions it might have had about
the requests for information. As the business applying for the deductions, Mariah
was obligated (and, indeed, was in the best position) to provide the information
requested by the State Board. Without this information having been made available
to it, the State Board reasonably concluded that Mariahs deduction applications could not
See Hi-Temp, Inc. of Decatur County v. State Bd. of Tax
Commrs, 645 N.E.2d 680, 682 (Ind. Tax Ct. 1995) (observing that, where taxpayer
failed to file a deduction application, State Board lacked the information necessary to
calculate the amount of [taxpayers] deduction).
Mariah offered no probative evidence showing that the State Boards decision not to
grant the requested deductions was erroneous. Thus, it has not established a
prima facie case as to its claim. The Court holds that the
State Board neither abused its discretion nor acted in an arbitrary or capricious
manner in disapproving Mariahs deduction applications.
For the above reasons, the State Boards final determination is AFFIRMED.
The Court does not decide whether the installation date and cost figure
found on the face of each deduction application were inadequate.
Footnote: Mariah claims that, since the State Boards final determination, it has attempted
to provide the necessary information to the State Board. (Trial Tr. at
3.) Regardless of the relevance of the information Mariah has offered to
supply the State Board subsequent to the final determination, the State Board did
not possess the information at the time the information was needed. In
short, Mariahs post-final determination efforts have been too little, too late.