ATTORNEY FOR PETITIONER
DAVID L. PIPPEN
ATTORNEY AT LAW
ATTORNEYS FOR THE RESPONDENT
ATTORNEY GENERAL OF INDIANA
KATHRYN SYMMES KIRK
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
COMPANY, Successor in Merger with
v. ) Cause No. 49T10-9905-TA-127
STATE BOARD OF TAX COMMISSIONERS, )
ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
October 16, 2001
Barth, Inc. (Barth) appeals the April 23, 1999 final determination by the State
Board of Tax Commissioners (State Board) that assessed Barths commercial buildings for the
March 1, 198991 assessment dates. Barth raises various issues, which the Court
consolidates and restates as: whether Barth is entitled to adjustments to the
base rates used to assess its buildings.
FACTS AND PROCEDURAL HISTORY
The Court has previously reviewed the facts of this case in Barth, Inc.
v. State Bd. of Tax Commrs, 699 N.E.2d 800, 801 (Ind. Tax Ct.
1998) (Barth I), rehg denied. Therefore, the Court will briefly review only
the relevant factual and procedural history.
On December 20, 1991, Barth filed six Form 133 Petitions to Correct an
Error (133 Petition) with the Kosciusko County Auditor (County Auditor). In its
petitions, Barth claimed that the base rates used to calculate the assessments on
its commercial buildings in Milford, Indiana for the March 1, 198991 tax years
were in error.
See footnote Local assessing officials denied Barths 133 Petitions on January
13, 1992. The County Auditor forwarded the petitions to the State Board
for final determination.
On November 22, 1996, the State Board, without substantively reviewing Barths claims, denied
Barths 133 Petitions on the ground that any correction of the alleged errors
would require the use of subjective judgment, which it deemed uncorrectable in a
Barth I, 699 N.E.2d at 8012. Barth then filed
an original tax appeal with this Court, and a trial was held on
December 22, 1997. Id. at 801. This Court subsequently held that
the 133 Petitions were an appropriate method to correct any objective errors in
Barths assessment and remanded the case to the State Board to evaluate whether
the base rate calculations assigned to Barths commercial buildings were erroneous Id. at
On January 15, 1999, the State Board held a remand hearing. On
April 23, 1999, the State Board issued a final determination on Barths 133
Petitions. The State Board concluded that Barth failed to present a prima
facie case that it was entitled to a correction of the alleged assessment
errors and that some of the issues Barth raised would require subjective judgment
to resolve, thus rendering the issues improperly brought in the 133 Petition.
On May 21, 1999, Barth filed an original tax appeal with this Court.
The Court heard oral arguments on July 11, 2000. Additional facts
will be provided as necessary.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to the final determinations by the State Board
when it acts within the scope of its authority. Wetzel Enters v.
State Bd. of Tax Commrs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998).
This Court will reverse a final determination by the State Board only
when its findings are unsupported by substantial evidence, or when its final determination
is arbitrary, capricious, constitutes an abuse of discretion, or exceeds statutory authority.
Moreover, a taxpayer who appeals to this Court from a State Board final
determination bears the burden of showing that the final determination was invalid.
Clark v. State Bd. of Tax Commrs, 694 N.E.2d 1230, 1233 (Ind. Tax
Ct. 1998). The taxpayer must present a prima facie case, which means
that the taxpayers claim must be supported by probative evidence, i.e., evidence that
is sufficient to establish a given fact and which if not contradicted will
remain sufficient. Damon Corp. v. State Bd. of Tax Commrs, 738 N.E.2d
1102, 1106 (Ind. Tax Ct. 2000) (citation omitted, internal quotation marks omitted).
Once the taxpayer presents a prima facie case, the burden shifts to the
State Board to rebut the taxpayers evidence and justify its decision with substantial
evidence. Clark, 694 N.E.2d at 1233.
A taxpayer may file a 133 Petition to correct certain mathematical errors that
the taxpayer discovers in its tax duplicate. Ind.Code § 6-1.1-15-12(a)(7).
See footnote The
legislature limited the types of mathematical errors correctable by Indiana Code § 6-1.1-15-12(a)(7)
first, to those errors involving the incorrect use of numbers in determining the
assessment; and second, to those errors which can be corrected accurately, with precision,
and with rigorous exactness.
Hatcher v. State Bd. of Tax Commrs, 561
N.E.2d 852, 854 (Ind. Tax Ct. 1990) (Hatcher I). Moreover, the only
errors subject to correction by [a] 133 [Petition] are those which can be
corrected without resort to subjective judgment. Id. at 857. Thus, a
taxpayer who files a 133 Petition must be able to show with probative
evidence that the error is an objective error, and not a subjective error.
Id. at 855.
Barth argues that it is entitled to a reduction in the base rate
assessment of its buildings because certain components that actually exist in its subject
buildings differ from the models used to assess the buildings. Barth also
argues that that it is entitled to a reduction in the base rate
assessment of its buildings because the models describe certain components that do not
exist in the buildings.
To be entitled to a base rate adjustment, Barth must submit probative evidence
that its buildings do not contain components listed in the models or that
its buildings contain components that are not listed in the models.
Hatcher I, 561 N.E.2d at 857; Rinker Boat Co. v. State Bd. of
Tax Commrs, 722 N.E.2d 919, 922 (Ind. Tax Ct. 1999). Barth then
has the burden of proof to ascertain the cost of each component based
on the regulations without exercising any subjective judgment. See Hatcher I, 561
N.E.2d at 857; Hatcher v. State Bd. of Tax Commrs, 601 N.E.2d 19,
2122 (Ind. Tax Ct. 192) (Hatcher II); Barth I, 699 N.E.2d at 8023;
Rinker Boat, 722 N.E.2d at 924.
A. The Heater
Barth claims it is entitled to an adjustment to the base rate used
to assess its Light Manufacturing Building because the heater that actually exists in
its building differs from the heater listed in the model. The parties
agree that the Light Manufacturing Building contains a hot water radiant heater, whereas
the model in Indiana Administrative Code tit. 50, r. 2.1-4-7(b) lists a [g]as
fired, forced air heater. 50 IAC 2.1-4-7(b). (Petr Br. at 7;
Respt Br. at 6.) Because Barths building does not contain a
gas fired, forced air heater, Barth asks that $3.55 per square foot be
deducted from the appropriate base rate.
See footnote (Petr Br. at 67.) Barth,
however, offers no evidence of the cost of the hot water radiant heater
that actually exists in its building.See footnote Because Barth failed to meet
its burden of proof with respect to the cost of the heater in
its building, subjective judgment would be required to correct the alleged error, which
is not allowed in a 133 Petition.
See Rinker Boat, 722 N.E.2d
at 924. Accordingly, the State Board did not act arbitrarily and capriciously
when it denied relief to Barth on this issue.
B. The Windows
The Court next considers whether Barth is entitled to an adjustment to the
base rate to account for the fact that the Light Manufacturing Building has
no windows. The parties agree that Barths Light Manufacturing Building has no
windows, (Petr Br. at 78; Respt Br. at 1315), despite the fact that
the GCI-Light Manufacturing model lists 25%  Vented steel sash glass windows.
50 IAC 2.1-4-7(b).
The Unit-In-Place (UIP) Tables list vented steel-sash windows at $21 per square foot.See footnote
Ind. Admin. Code tit. 50, r. 2.1-4-10 (1992). Although the model
lists windows that cover 25% of wall area, Barth requests a $21 per
square foot reduction for 20% of the wall area. (Petr Br. at
8.) The UIP Tables do not, however, list a cost for windows
that cover 20% or 25% of wall area and therefore do not correlate
with the GCI-Light Manufacturing model. When the UIP Tables do not correlate
with the model, the assessing official is required to use subjective judgment to
adjust for the difference between the UIP tables and the model. Hatcher
II, 601 N.E.2d at 22. As stated before, a 133 Petition cannot
be used to correct errors that require subjective judgment. See Rinker Boat,
722 N.E.2d at 924. As a result, Barths 133 Petition must fail.
Thus, the State Board did not act arbitrarily or capriciously when it
denied Barths 133 Petition on the issue of the windows.
C. The Exterior Walls
The next issue is whether Barth is entitled to an adjustment to the
base rates used to assess the Light Manufacturing Building, the Small Shop, and
the Light Utility Building because each of these buildings was assessed for concrete
block exterior walls, the walls that actually exist in the subject buildings differ
from the models used to assess the buildings. (Petr Br. at 67.)
Exterior walls are classified as Type 1, 2, or 3. 50 IAC
2.1-4-3(a). All three of Barths commercial buildings were assessed as Type 1
walls, (Joint Ex. A at 24, 33, 37), which denotes concrete block, stucco,
tile, wood, aluminum, or metal siding, or equal. 50 IAC 2.1-4-7(b)
The GCI-Small Shop and -Light Utility models lists their Type 1 walls as
[r]einforced concrete block. 50 IAC 2.1-4-7(b).
At trial, Barth submitted photographs of its buildings in an effort to show
that the exterior walls of the buildings were not concrete block. (Joint
Ex. D.) A taxpayer who submits photographic evidence should provide an explanation
of the dispositive features in the photographs. Heart City Chrysler v. State
Bd. of Tax Commrs, 714 N.E.2d 329, 333 (Ind. Tax Ct. 1999).
Nevertheless, Barth did not identify the types of exterior walls of the buildings
shown in the photographs, nor are the photographs self-explanatory. Therefore, the photographs
are insufficient to prove that the walls are anything other than Type 1.
Accordingly, the State Board did not act arbitrarily and capriciously when it
denied Barths 133 Petition in this instance.
D. The Partitioning
Barth argues that it is entitled to an adjustment to the base rates
used to assess the Light Manufacturing Building, the Small Shop, and the Light
Utility Building because the partitioning in all three buildings differs from the models
used to assess them. The parties do not dispute that the partitioning
in all three of Barths buildings differs from the models used to assess
them. (Petr Br. at 67; Respt Br. at 11, 21, 23.)
Barth points to the model cost schedules in Schedule C and requests that
each of the following costs be subtracted from the respective base rates:
$0.75 per square foot for the Small Shop, $0.35 per square foot for
the Light Utility Building, and $0.40 per square foot for the Light Utility
Building. (Petr Br. at 6.) Barth, however, offers no objective evidence
quantifying the extent to which the partitioning in the subject building differs from
the model. In the absence of such evidence, subjective judgmentwhich is not
permitted in a 133 Petitionis required to determine how the subject partitioning differs
from that of the models. See Rinker Boat, 722 N.E.2d at 924.
Thus, the State Board did not act arbitrarily and capriciously when it
denied Barths 133 Petition in this instance.
E. The Floor Finish
Barth also claims it is entitled to an adjustment to the base rate
assigned to the Small Shop because the existing floor finish differs from that
of the model. Barth argues that the Small Shop floor finish differs
from the model floor finish, but it does not specify how it differs.
(See Petr Br. at 5; Joint Ex. C.) The State Board
contends that the Small Shop floor is covered by linoleum in the office
and is concrete throughout the rest of the building and, therefore, the Small
Shop assessment comports with the GCI-Small Shop model. (Respt Br. at 19.)
The GCI-Small Shop model presumes a floor that is 90% metallic floor
hardener[,] 10% vinyl composition tile. 50 IAC 2.1-4-7(b). Barth has not
shown how its flooring differs from that in the model,
See footnote therefore, this
Court determines that the State Board did not err when it denied relief
on this issue.See footnote
F. The Wall Height
Barths final issue is whether it is entitled to an adjustment to the
base rate assigned to its Small Shop because the building is unfinished rather
than semi-finished as provided for in the model. Specifically, Barth alleges that
interior finish does not exist for at least ninety percent of the Small
Shop, therefore, the Small Shop wall height should be calculated using the unfinished
portion of Schedule C. (Petr Br. at 5.) The State Board contends
that the Small Shop was correctly assessed as semi-finished because the office and
restroom have acoustical tile ceilings and linoleum floors. (Respt Post tr. Brief
at 1820.) Furthermore, the State Board contends that determining whether a building
is unfinished or semi-finished requires subjective judgment and is therefore outside the scope
of Barths 133 Petition. (Respt Br. at 1618.)
An assessor uses objective judgment if he merely verifies the existence of a
component through a visual inspection.
See Hatcher I, 561 N.E.2d at 857.
On the other hand, an assessor uses subjective judgment when, for example,
he evaluates the design and quality of the buildings interior. Bender v.
State Bd. of Tax Comm'rs, 676 N.E.2d 1113, 1115 (Ind. Tax Ct. 1997).
In determining whether a buildings interior is unfinished or semi finished, an
assessor not only verifies the existence of paint and tile, but must also
decide whether the finish is very minimal, whether it covers most of the
interior, and whether it generally consists of paint and tile. 50 IAC
2.1-4-3(a). The latter decisions involve subjective judgments of design and qualityjudgments that
cannot be challenged in a 133 Petition. Bender, 676 N.E.2d at 1115.
Accordingly, the State Board did not act arbitrarily or capriciously when it
denied Barths 133 Petition in this instance.
Barth fails to show that it is entitled to adjustments to the base
rates used to assess its buildings. For the foregoing reasons, the Court
AFFIRMS the final determination of the State Board of Tax Commissioners.
Footnote: Barth also argues that its assessment should be voided because portions of
Indianas regulations for taxing tangible property have been declared unconstitutional. In 1998,
the Indiana Supreme Court affirmed this Courts determination that the existing cost schedules
. . . violate the Property Taxation Clause of the Indiana Constitution.
State Bd. of Tax Commrs v. Town of St. John, 702 N.E.2d 1034,
1043 (Ind. 1998). That same year, this Court declared that [r]eal property
must still be assessed, and, until the new regulations are in place, must
be assessed under the present system. Whitley Prods., Inc. v. State Bd.
of Tax Commrs, 704 N.E.2d 1113, 1121 (Ind. Tax Ct. 1998), trans. denied;
see also Town of St. John v. State Bd. of Tax Commrs, 729
N.E.2d 242, 246 & 251 (Ind. Tax Ct. 2000) (ordering real property in
Indiana to be reassessed under constitutional regulations as of March 1, 2002 and
providing that until then, real property tax assessments shall be made in accordance
with the current system). The Court, therefore, will not analyze Barths state
constitutional claim in this opinion.
Barth also contends that because Indianas system of taxing tangible property is not
based upon objectively verifiable data, (Petr Br. at 11), Barths due process rights
under the Fifth and Fourteenth Amendments to the U.S. Constitution are violated.
This Court has in the past rejected legal arguments analogous to Barths.
See Town of St. John v. State Bd. of Tax Commrs, 690 N.E.2d
370, 38897 (Ind. Tax Ct. 1997), revd in part on other grounds.
Even if Barths federal constitutional claims had merit, real property must still be
assessed, and, until the new regulations are in place, must be assessed under
the present system. See Whitely Products, 704 N.E.2d at 1121. The
Court, therefore, will not analyze Barths federal constitutional claim in this opinion.
The Court will refer to these buildings as the Light Manufacturing Building,
the Small Shop, and the Light Utility Storage Building.
Footnote: Indiana Code § 6-1.1-15-12(a)(7) provides, [A] county auditor shall correct errors which
are discovered in the tax duplicate for any one (1) or more of
the following reasons: . . . There was a mathematical error in computing
Ind.Code § 6-1.1-15-12(a)(7).
To compute the base rates for real property in Indiana, an assessor
[l]ocate[s] the model that best matches the parcel being assessed, and use[s] that
model throughout the pricing making adjustments when necessary.
Ind. Admin. Code tit.
50, r. 2.1-4-3(a) (1992). A building model is comprised of a model
description and a model price schedule. See Barth I, 699 N.E.2d at
802. Schedule A contains base prices for model types. Ind. Admin.
Code tit. 50, r. 2.1-4-5 (1992). Schedule C contains modified price schedules for
common deviations from the models. Id. (Schedule C).
Schedule C lists the cost for the GCI Light Manufacturing Building model
heater at $3.55 per square foot. 50 IAC 2.1-4-5.
Footnote: Barths designated tax representative, M. Drew Miller of Landmark Appraisals, Inc., argued
before the State Board that Barths heater was like the GCI Truck Terminal
Warehouse model heater, (Joint Ex. A at 22), which is a gas fired
unit heater with [a] fan. 50 IAC 2.1-4-7(b). The GCI Truck
Terminal model does not list the type of heater present in Barths
improvement, thus, Mr. Millers argument is without merit.
Footnote: The 25% refers to the square-feet wall area occupied by windows.
Footnote: The UIP tables list this as the cost for two different types
of steel sash windows that cover 10% or 40% of the square-feet wall
area occupied by windows. 50 IAC 2.1-4-10.
Footnote: The State Board argues that the regulations do not provide for the
use of the UIP Tables to calculate the cost of windows in a
133 Petition. (Respt Br. at 14, 3031.) Because Barth has not presented
specific evidence to show that the cost of its windows can be objectively
ascertained, the Court need not discuss the State Boards argument here.
The only evidence that Barth submits to support its argument is the
testimony of Mr. Miller: The assessment on [the Small Shop] . .
. includes costs for features that do not exist in the  building.
These features include the following:  costs for floor finish which
the [building] does not have. (Joint Ex. C.) This so-called evidence
has no probative value at all.
See Hoogenboom-Nofziger v. State Bd. of
Tax Commrs, 715 N.E.2d 1018, 1023 (Ind. Tax Ct. 1999).
During oral arguments, counsel for Barth claimed that the floor finish in
the Small Shop covered only four percent of the floor, not ten percent
as listed in the model. (Tr. at 14.) Assuming that this
claim is true, Barth still fails to submit objective evidence of what the
cost should be for the floor finish that actually exists in the Small
Footnote: The State Board argues in the alternative that the holding in
of St. John, 702 N.E.2d at 103940, prohibits Barth from seeking absolute and
precise exactitude as to the uniformity and equality of each individual assessment.
(Respt Br. at 27 (emphasis in original).) In particular, the State Board
argues that Barth cannot look outside the respective model schedules originally used to
assess its subject buildings to prove component costs. (Respt Br. 2731.)
Because Barth fails to show that it is entitled to any adjustments, the
Court need not analyze the State Boards alternative argument except to say that
a taxpayer is entitled to a fair application of the regulations in assessing
his or her property.