ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
TAMATHA A. STEVENS STEVE CARTER
ATTORNEY AT LAW ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
QUALITY STORES, )
) Cause No. 49T10-9701-TA-96
DEPARTMENT OF LOCAL )
ON APPEAL FROM THREE FINAL DETERMINATIONS OF
THE STATE BOARD OF TAX COMMISSIONERS
NOT FOR PUBLICATION
May 28, 2004
Quality Stores (Quality) appeals the three final determinations of the State Board of
Tax Commissioners (State Board) valuing its real property for the 1989, 1990, and
1991 assessment years (years at issue). The issue for the Court to
decide is whether the State Board erred in refusing to adjust the base
rate assigned to Qualitys improvement.
FACTS AND PROCEDURAL HISTORY
Quality owns land and a light, pre-engineered building in Lafayette, Indiana. For
the years at issue, the Tippecanoe County assessing officials assessed Qualitys improvement using
the General Commercial Mercantile (GCM) general retail model.
Quality filed three Petitions for Correction of Error (Forms 133) with the Tippecanoe
County Auditor challenging those assessments. The Forms 133 stated [d]epreciation should have
been based off of a 30 yr. life[,] [i]ncorrect base rate used.
(Respt Trial Ex. 1 at A-1 to A-3.) The Auditor denied Qualitys
Forms 133; Quality appealed this denial to the State Board. The State
Board inspected Qualitys improvements and, on November 22, 1996, issued three final determinations
denying Qualitys requested adjustments.
On January 6, 1997, Quality initiated an original tax appeal. On March
16, 1998, the Court held a trial. The Court heard the parties
oral arguments on October 6, 1998. Additional facts will be supplied as
STANDARD OF REVIEW
This Court accords great deference to the State Board when it acts within
the scope of its authority. Wetzel Enters., Inc. v. State Bd. of
Tax Commrs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998). Thus, this
Court will reverse a final determination of the State Board only when its
findings are unsupported by substantial evidence, arbitrary and capricious, constitute an abuse of
discretion, or exceed statutory authority. Id.
When appealing to this Court from a State Board final determination, the taxpayer
bears the burden of showing that the final determination is invalid. Hamstra
Builders, Inc. v. Dept of Local Govt Fin., 783 N.E.2d 387, 390 (Ind.
Tax Ct. 2003). Where the taxpayer has failed to provide the State
Board with probative evidence supporting its position, the State Boards duty to support
its final determination with substantial evidence is not triggered. See Whitley Prods.,
Inc. v. State Bd. of Tax Commrs, 704 N.E.2d 1113, 1119 (Ind. Tax
Ct. 1998), review denied.
The GCM general retail model provides the following for interior finish: Walls
[m]asonry [p]aint [two] coats for a 12 ceiling height[;] Floors 85%
of floor area is 90% vinyl asbestos tile and 10% carpeting, 15%
is unfinished[;] Ceilings 85% of floor area is acoustical tile constructed
of mineral fiber and supported throughout by [a] suspension system[;] and Partitions
[f]rame interior partitions of average cost construction typical of finished open construction found
in retail areas[.] Ind. Admin. Code tit. 50, r. 2.1-4-7 (1992).
Quality claims it is entitled to several base rate adjustments to account for
its improvements deviation from the GCM general retail model used to assess it.
Additionally, Quality claims it is entitled to a kit-building adjustment.
Trial Tr. at 5.)
The State Board denied Qualitys claims on the basis that subjective judgment would
be required to make the requested adjustments and therefore, such relief was not
appropriate for a Form 133. (See Respt Trial Ex. 1 at 17.)
See also Bock Prods., Inc. v. State Bd. of Tax Commrs, 683
N.E.2d 1368, 1370 (Ind. Tax Ct. 1997) (stating that [t]he only errors subject
to correction by Form 133 are those which can be corrected without resort
to subjective judgment).
To support its claims, Quality submitted photographs of its improvements interior and exterior
and the testimony of its property tax consultant, Mr. M. Drew Miller (Miller).
(Petr Trial Exs. D-1 to D-11.) Miller testified that Qualitys improvement
does not have a concrete block exterior wall, suspended ceiling tiles, or carpeting.
(See Trial Tr. at 52.) Miller further explained that the pictures
clearly show that it [is] exposed steel framing and insulation in the ceiling
finish. The wall finish . . . [is] exposed[ with some] pegboard.
(Trial Tr. at 56.)
Qualitys testimonial and pictorial evidence fails to objectively establish what type of interior
finish its improvement does have. Indeed, the evidence demonstrates that the interior
of Qualitys improvement comprises a range of qualities and designs.
Furthermore, Quality failed to provide any objective base rates to account for the
differing features that it claimed existed in its improvement. See Barth, Inc.
v. State Bd. of Tax Commrs, 756 N.E.2d 1124, 1129 (Ind. Tax Ct.
2001) (stating that taxpayers must ascertain the amount of each adjustment requested).
Consequently, to determine the correct amount to deduct from Qualitys base rate to
compensate for the alleged deviations from the model, the State Board would have
to determine the type of interior finish present in Qualitys improvement, how those
interior features differ from those presumed in the model, and then what amount
of adjustment is appropriate under the regulations. Because such determinations may require
subjective judgment, the remedy Quality seeks is not appropriate for a Form 133.
See Hatcher v. State Bd. of Tax Commrs, 601 N.E.2d 19, 22
(Ind. Tax Ct. 1992). Thus, the Court cannot say the State Board
erred in denying Qualitys requested relief in this regard.
With respect to the kit-building adjustment request, Miller testified that buildings similar to
Qualitys had qualified for the adjustment. (See Trial Tr. at 54.)
Qualitys evidence, however, fails to establish that its improvement has the construction characteristics
that qualify light, pre-engineered buildings for the 50% base rate adjustment. See
Hamstra Builders, Inc., 783 N.E.2d at 391 (describing construction characteristics used to identify
kit buildings). Therefore, the State Board did not err in denying this
claim as well.
For the reasons stated above, the Court AFFIRMS the State Boards three final
determinations with respect to Qualitys base rate adjustment claims. Because the State
Board conceded at trial that Quality was entitled to a physical depreciation adjustment
(see footnote three, supra.), the Court REVERSES the State Boards final determinations on
that issue and REMANDS it to the Indiana Board of Tax Review (Indiana
to instruct the local assessing officials to apply the thirty-year depreciation schedule
for the years at issue to Qualitys improvement.
The State Board of Tax Commissioners (State Board) was originally the Respondent
in this appeal. However, the legislature abolished the State Board as of
December 31, 2001. 198 Ind. Acts 2001 § 119(b)(2). Effective January
1, 2002, the legislature created the Department of Local Government Finance (DLGF), see
Indiana Code § 6-1.1-30-1.1 (West Supp. 2003)(eff. 1-1-02); 198 Ind. Acts 2001 §
66, and the Indiana Board of Tax Review (Indiana Board). Ind. Code
Ann. § 6-1.5-1-3 (West Supp. 2003)(eff. 1-1-02); 198 Ind. Acts 2001 § 95.
Pursuant to Indiana Code § 6-1.5-5-8, the DLGF is substituted for the
State Board in appeals from final determinations of the State Board that were
issued before January 1, 2002. Ind. Code Ann. § 6-1.5-5-8 (West Supp.
2003)(eff. 1-1-02); 198 Ind. Acts 2001, § 95. Nevertheless, the law in
effect prior to January 1, 2002 applies to those appeals. Id.
See also 198 Ind. Acts 2001 § 117. Although the DLGF has
been substituted as the Respondent, this Court will still reference the State Board
throughout this opinion.
At trial and in its post-trial brief, Quality also alleged that
the State Board erred in determining its land classification for the years at
issue. [T]he general rule is that the Court is bound by the
issues and evidence raised at the administrative level. Miller Structures, Inc. v.
State Bd. of Tax Commrs, 748 N.E.2d 943, 948 (Ind. Tax Ct. 2001).
Accordingly, because the issue was not raised at the administrative level, the
issue is waived and may not now be considered by the Court.
The depreciation issue was resolved at trial when the State Board conceded
that the thirty-year depreciation schedule should have been used in assessing Qualitys improvement.
(See Trial Tr. at 8.)
Specifically, Quality asserts that its improvement lacks a ceiling, concrete block, partitioning,
and interior finish. (See Trial Tr. at 5.)
Quality failed to
list these specific adjustments on its Forms 133. Thus, the State Board
had no way of discerning what errors Quality was specifically alleging.
Quality claims, however, that the State Board should have looked at the final
determinations on its 1992 appeal to ascertain its request for relief. The
Court reminds Quality that not only does each assessment year stand alone, but
also it is not the State Boards duty to make the taxpayers case
See Barth, Inc. v. State Bd. of Tax Commrs, 699
N.E.2d 800, 805 n.14 (Ind. Tax Ct. 1998) (stating that each tax year
stands on its own); see also Whitley Prods., Inc. v. State Bd. of
Tax Commrs, 704 N.E.2d 1113, 1118 (Ind. Tax Ct. 1998) (stating that the
State Board need not search the property to find errors), review denied.
For the years at issue, certain light pre-engineered buildings assessed under the
GCM schedule received a 50% base rate reduction (kit building adjustment) to account
for the low-cost materials used in their construction. See Ind. Admin. Code
tit. 50, r. 2.1-4-5 (Schedule A.1) (1992).
All cases that would have been remanded to the State Board are
now remanded to the Indiana Board of Tax Review (Indiana Board). Ind.
Code Ann.§ 6-1.1-15-8 (West Supp. 2003). Final determinations made by the Indiana
Board are subject to review by this Court pursuant to Indiana Code §
6-1.1-15. Ind. Code Ann. §§ 6-1.5-5-7, 33-3-5-2 (West Supp. 2003).