ATTORNEY FOR PETITIONER:
ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN
KAREN M. FREEMAN-WILSON
GENERAL OF INDIANA
Deputy Attorney General
INDIANA TAX COURT
FLEET SUPPLY, INC.,
No. 49T10-9808- ) TA-97
STATE BOARD OF TAX
ON APPEAL FROM A FINAL DETERMINATION OF THE
STATE BOARD OF TAX COMMISSIONERS
September 26, 2000
The petitioner, Fleet Supply, Inc. (Fleet), appeals from a final determination of the
State Board of Tax Commissioners (State Board), whereby the State Board applied a
40-year life expectancy table (Table) when calculating the physical depreciation allowed on Fleets
building for the 1995 tax year. In this original tax appeal, Fleet
raises one issue: Whether the State Board acted properly when it applied
the 40-year table, rather than the 30-year table when calculating physical depreciation on
the subject property.
See footnote For the reasons explained below, the Court affirms the
State Boards final determination.
FACTS AND PROCEDURAL HISTORY
During the tax year in question, Fleet owned a building located in Kokomo,
Believing that its assessment was too high, Fleet appealed to the
Howard County Board of Review (BOR), which applied the 40-year life table to
calculate the physical depreciation of Fleets building in a determination issued on September
3, 1996. Following this determination, Fleet appealed to the State Board.
After a hearing, the State Board affirmed the BOR in a final determination
issued on June 29, 1998. Fleet then filed its original tax appeal
on August 11, 1998. This Court held a trial in this matter
on April 19, 1999, and heard oral arguments from both parties on November
8, 1999. Additional facts will be supplied where necessary.
ANALYSIS AND OPINION
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. See Wetzel Enters.,
Inc. v. State Bd. of Tax Commrs, 694 N.E.2d 1259, 1261 (Ind. Tax
Ct. 1998). 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. See id.
The taxpayer can demonstrate the invalidity of the State Boards final determination by
presenting probative evidence sufficient to establish a prima facie case. See Clark
v. State Bd. of Tax Commrs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct.
In order to establish a prima facie case, a taxpayer must introduce
evidence sufficient to establish a given fact which if not contradicted will remain
sufficient. See Loveless Const. Co. v. State Bd. of Tax Commrs, 695
N.E.2d 1045, 1049 (Ind. Tax Ct. 1998). Once the taxpayer carries this
burden, the burden then shifts to the State Board to rebut the taxpayer's
evidence and justify its decision with substantial evidence. See id. (explaining
that the State Board must offer an authoritative explanation of its decision to
discount the taxpayers prima facie showing.)
Fleet argues that the 30-year table should have been applied to its building
for depreciation purposes, because it qualifies as a light pre-engineered structure. The
State Board contends that the 40-year table it applied was correct, because Fleets
building was a fire resistant building not listed elsewhere in the regulations.
Physical depreciation is determined by the combination of age and condition. See
Ind. Admin. Code tit. 50, r. 2.1-5-1 (1992) (codified in present form at
id., r. 2.2-10-7 (1996)); see also Phelps Dodge v. State Bd. of Tax
Commrs, 705 N.E.2d 1099, 1103 (Ind. Tax Ct. 1999), review denied. Based
on the construction of a building, either a 20, 30, 40, 50 or
60-year table is used to depreciate a structure. See Ind. Admin. Code
tit. 50, r. 2.1-5-1. While light pre-engineered buildings are depreciated under the
30-year table, all fire-resistant buildings not listed elsewhere in the regulations are depreciated
under the 40-year table. See id.
The State Board has issued an instructional bulletin, in which various aspects of
light pre-engineered buildings are discussed. See Instructional Bulletin 91-8 (1991). These
buildings, which sometimes qualify as kit buildings, contain features such as Cold Form
Cee Channel wall supports, tapered roof beams and round steel columns. See
King Indus. Corp. v. State Bd. of Tax Commrs, 699 N.E.2d 338, 339
(Ind. Tax Ct. 1998). In addition, such buildings are generally lightweight and
are made of inexpensive materials. See id.
In its final determination, the State Board noted that it did not change
the depreciation on Fleets building, based upon its fire-resistant framing. (Joint Ex.
1.) At trial, the State Boards hearing officer, Mr. Edward Bisch, testified
that Fleets building possessed a six-inch thick concrete floor with a terrazzo-type finish
on it. (Trial Tr. at 26-27.) Mr. Bisch also noted that
Fleets building possessed steel I-beam columns. (Trial Tr. at 27.) According
to Mr. Bisch, light construction-type buildings can possess I-beams, but one usually finds
other features in the building, such as hollow steel posts, to go along
with them. (Trial Tr. at 28.) Mr. Bisch also stated that a
weaker type of steel is common in such buildings. (Trial Tr. at
28.) Such features were not found in Fleets building. (Trial Tr.
at 28.) Mr. Bisch concluded that Fleets building was something better than
light construction. (Trial Tr. at 28.)
The only evidence presented by Fleet to establish its prima facie case consisted
of two photographs showing the exterior of Fleets building, a closing statement that
seemingly shows Fleets subsequent sale of the building in 1997, and scant trial
testimony from Fleets taxpayer representative, Mr. M. Drew Miller. (Joint Exs. 2
& 3, Petr. Ex. 1) (Trial Tr. at 8-9, 12-15.) This
Court has stated before that photographs, standing alone, do not constitute the evidence
needed to rebut the State Boards final determination. See Heart City Chrysler
v. State Bd. of Tax Commrs, 714 N.E.2d 329, 333 (Ind. Tax Ct.
1999) (This Court has rejected attempts by taxpayers to put forth evidence such
as photographs without explanations.) Thus, the submitted photographs do not constitute probative
evidence in this case.
Similarly, Fleets closing statement
does not assist its case because Indiana does not
use market value when assessing property. See Kemp v. State Bd. of
Tax Commrs., 726 N.E.2d 395, 403 (Ind. Tax Ct. 2000) (Indiana does
not value property based on its market value; rather the assessed value of
property is based on its reproduction cost as determined by the State Board's
regulations.). Rather, Indiana uses the true tax value method of appraisal.
See Dawkins v. State Bd. of Tax Commrs, 656 N.E.2d 706, 708 (Ind.
Tax Ct. 1995). Under this method, the true tax value of an
improvement is calculated by determining the reproduction cost (as determined by the State
Boards regulations) of the building, minus any physical depreciation or obsolescence depreciation to
which it is entitled. See Ind. Admin. Code tit. 50, r. 2.1-5-1.
Fleets evidence is also faulty since it deals with a tax year not
in question here. In this Court, each tax year stands alone.
See Barth, Inc. v. State Bd. of Tax Commrs, 699 N.E.2d 800, 808
n.14 (Ind. Tax Ct. 1998), rehg. denied; see also Kent Co. v. State
Bd. of Tax Commrs, 685 N.E.2d 1156, 1159 (Ind. Tax Ct. 1997).
The closing statement shows that Fleet subsequently sold the subject property in 1997.
However, since Fleet is appealing the State Boards final determination for the
1995 tax year, this evidence has no relevance to the case at hand.
Therefore, the closing statement does not aid Fleets case.
Fleet finally introduced the testimony of Mr. Miller in an effort to establish
its case. Mr. Miller stated that, We felt that it [the assessment]
was excessive and there were some errors in the assessment. (Trial Tr.
at 8.) Mr. Miller also testified that, [W]e believe that the building
should have been physically depreciated from a 30-year life table under the presumption
that it fits the light pre-engineered building description. (Trial Tr. at 8.)
Mr. Miller also believed that Fleets building was listed elsewhere as a
light pre-engineered building, but did not elaborate on this statement. (Trial Tr.
Without additional support, these conclusory statements are nothing more than bare allegations that
do not support Fleets case. See Heart City, 714 N.E.2d at 333
([T]his Court will not substitute conclusory statements for probative evidence.); see also
Herb v. State Bd. of Tax Commrs, 656 N.E.2d 890, 893 (Ind. Tax
Ct. 1995) (Allegations, unsupported by factual evidence, remain mere allegations.). Therefore, Millers
testimony also fails to constitute the probative evidence needed to establish a prima
facie case. The Court thus finds that Fleet has failed to establish
a prima facie case concerning the invalidity of its assessment. Therefore, the
State Board was not required to rebut any of Fleets evidence. As
a result, the State Boards final determination will stand.
For the reasons stated above, the Court AFFIRMS the final determination of the
State Board in this case.
Both at the State Boards hearing and at trial, Fleet
attempted to raise an additional issue concerning obsolescence that was not originally stated
on its Form 131 petition. The Court notes that where a taxpayer
petitions the State Board for a review of an assessment, the State Board
may limit its inquiry to only those errors raised by the taxpayer.
See Whitley Prods. v. State Bd. of Tax Commrs, 704 N.E.2d 1113, 1119
(Ind. Tax Ct. 1998), review denied. This means that all other constituent
parts of the assessment, if the State Board declines to review them, will
not be changed, and, as far as the law is concerned, will be
deemed to be correct. See id. The Court's scope of
review precludes the Court from considering issues and evidence not presented to the
State Board. See id; see also Ind. Code Ann. § 33-3-5-14 (West
1996 and Supp. 2000) (When dealing with issues not raised at the administrative
level, the Court is bound by the law that existed before the creation
of the Court.); State Bd. of Tax Commrs v. Gatling Gun Club Inc.,
420 N.E.2d 1324, 1328 (Ind. Ct. App. 1981) ([O]nly those exhibits introduced at
the board's hearing may be introduced on judicial review.)
Therefore, the Court finds that the State Board did not act arbitrarily and
capriciously when it failed to consider Fleets obsolescence argument. Thus, the Court
will limit its discussion to Fleets depreciation argument.
Fleet subsequently sold the building in 1997. (Petr. Ex.
At trial, Mr. Miller testified that the closing statement was
introduced to show that the buildings selling price was less than its true
tax value, thus demonstrating a loss in value. (Trial Tr. at 13.)
However, as discussed below, this exhibit tells the Court nothing about why
the 40-year table was wrongfully applied by the State Board. See supra