ATTORNEY FOR PETITIONER:
ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN
KAREN M. FREEMAN-WILSON
GENERAL OF INDIANA
Deputy Attorney General
INDIANA TAX COURT
QUALITY STORES, INC., )
) Cause No. 49T10-9806-
STATE BOARD OF TAX COMMISSIONERS, )
ON APPEAL FROM A FINAL DETERMINATION OF THE
STATE BOARD OF TAX COMMISSIONERS
September 26, 2000
The petitioner, Quality Stores, Inc. (Quality), 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 Qualitys
building for the 1995 tax year. In this original tax appeal, Quality
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. For the reasons explained below, the Court affirms the
State Boards final determination.
FACTS AND PROCEDURAL HISTORY
During the tax year in question, Quality owned a building located in Noblesville,
Indiana. Believing that its assessment was too high, Quality appealed to the
Hamilton County Board of Review (BOR), which made some unrelated changes to physical
depreciation in a determination issued on December 27, 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 4, 1998.
Fleet then filed its original tax appeal on June 22, 1998. This
Court held a trial on June 14, 1999, and heard oral arguments from
both parties on December 15, 1999. Additional facts will be supplied where
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 can 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.
Quality argues that the 30-year table should have been applied to its building
for depreciation purposes, since the subject property qualifies as a light pre-engineered structure.
The State Board contends that the 40-year table it applied was correct,
because Qualitys building was constructed of materials that are not usually found in
light pre-engineered buildings.
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 other fire resistant buildings not listed elsewhere 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. The State Board based its decision upon
its inspection of the structure, Qualitys evidence and the assessors evidence. (Joint Ex.
1.) At trial, the State Boards hearing officer, Ms. Phyl Olinger, testified
that Qualitys building possessed I-beam columns. (Trial Tr. at 41-42.) According
to Ms. Olinger, light construction-type buildings possess C-channel columns or hollow steel posts,
while I-beams are typical of heavier load capacities. (Trial Tr. at 42.)
Ms. Olinger stated that Qualitys building did not possess any C-channel columns
or hollow steel posts. (Trial Tr. at 42.) Ms. Olinger also
remarked that Qualitys taxpayer representative, Mr. M. Drew Miller, failed to point out
anything, either at the State Board hearing below or at the inspection, concerning
the construction of Qualitys building. (Trial Tr. at 40.)
The only evidence presented by Quality to make its prima facie case consisted
of a 1992 appraisal study (Study) that was presented at Ms. Olingers request
for additional information after the hearing. Among other things,
the Study contained
photographs showing the exterior and interior of Qualitys building. Finally, Quality submitted
the trial testimony from Mr. Miller. (Petr. Ex. 1.) (Trial Tr. at
15-16, 21-22, 27.)
The Study was a fee appraisal explaining the market value of Qualitys building
as of 1992 that was to be utilized as a guide relative to
the amount of security that might be available for mortgage investment. (Petr.
Ex. 1 at 19.) The Court notes that generally accepted appraisal techniques
may be used to help determine physical depreciation in the absence of guidance
from the regulations, but when the regulations are clear, as they are in
this case, then those regulations govern. See King Indus. Corp. v. State
Bd. of Tax Commrs, 699 N.E.2d 338, 343 n.4 (noting that in any
mass appraisal system, certain properties are over-assessed and some are under-assessed. In
most states, these inevitable flaws in the mass appraisal techniques are corrected through
the presentation of evidence of actual value during the appeal process.)
While the Study does indicate a 30-year useful life for Qualitys building, it
does not reference the regulations in doing so. (Petr. Ex. 1 at
33.) Further, the Study describes the building as being constructed upon a
reinforced concrete foundation with reinforced slab flooring. (Petr. Ex. 1 at 25.)
In addition, the Study refers to Qualitys building simply as being supported
by a pre-engineered steel frame. (Petr. Ex. 1 at 25.) Such
descriptions do not support Qualitys contention that its building is a light pre-engineered
Also, the Court notes that the Study deals with 1992 figures that are
not relevant to the 1995 tax year. 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); see also Kent Co.
v. State Bd. of Tax Commrs, 685 N.E.2d 1156, 1159 (Ind. Tax Ct.
1997). As far as the pictures in the study are concerned, this
Court has stated before that photographs, standing alone, do not constitute the evidence
needed to present a prima facie case. 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, neither the Study nor the submitted photos constitute
probative evidence in this instance.
Quality finally introduced the testimony of Mr. Miller in an effort to establish
Mr. Miller testified that, [W]e were asking that the thirty-year
life be applied to the subject property. It is a light pre-engineered
structure. (Trial Tr. at 15.) To support this statement, Mr. Miller
submitted the final determination of the State Board for the 1992 tax year,
showing that a thirty-year table was used. (Trial Tr. at 21.)
As noted above, however, each tax year stands alone. See supra at
6. Thus, this evidence does not help Qualitys case.
In addition, Mr. Miller stated that, [T]here were other Quality . . .
[s]tores that were depreciated off a thirty-year life. (Trial Tr. at 16.)
However, in support of this statement, Quality only introduced the property record
cards from two of its other stores. (Petr. Exs. 5 & 6.)
At trial, Mr. Miller admitted that the cards themselves do not show how
much physical depreciation was applied to the buildings. (Trial Tr. at 21.)
Therefore, this evidence does not help Qualitys case either, since these conclusory
statements are nothing more than bare allegations that cannot constitute probative evidence.
See Heart City Chrysler, 714 N.E.2d at 333 (This 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 therefore
finds that Quality has failed to establish a prima facie case concerning its
assessment. Thus, the State Board was not required to rebut any of
Qualitys 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.
Neither party asserts that Qualitys building is a fire-resistant building
not listed elsewhere in the regulations.
In addition to the photographs, the study contained a detailed
history of the area surrounding Qualitys building, as well as an analysis of
Qualitys building under the cost, sales comparison and income capitalization methods of valuing
real estate. (Petr. Ex. 1).
The Court notes that Mr. Millers testimony could be interpreted
as that of an expert witness. The United States Supreme Court has
recently stated that expert testimony is admissible only if it is both relevant
and reliable. See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137,
141, 119 S.Ct. 1167, 1171 (1999), Daubert v. Merrell Dow Pharmaceuticals, Inc., 509
U.S. 579, 597, 113 S.Ct. 2786, 2799 (1993). The Court will not
speculate as to whether Mr. Miller is an expert witness or not in