ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
THOMAS P. NORTON JEFFREY A. MODISETT
STATHAM, JOHNSON & McCRAY INDIANA ATTORNEY GENERAL Evansville, IN
MARILYN S. MEIGHEN
DEPUTY ATTORNEY GENERAL
WETZEL ENTERPRISES, INC., ) ) Petitioners, ) ) v. )Cause No. 82T10-9604-TA-00030 ) STATE BOARD OF TAX COMMISSIONERS, ) ) Respondent. ) _____________________________________________________________________FOR PUBLICATION Fisher, J.
ON APPEAL FROM THE STATE BOARD OF TAX COMMISSIONERS _____________________________________________________________________ May 27, 1998
As a result of the BOR's decision, Wetzel began to receive, and pay, lower property tax
On February 21, 1992, eight months after the BOR's decision was issued, a Form 131 Petition for Review of Assessment was filed with the State Board by Angermeier.See footnote 4 Notice of the State Board hearing was sent to Angermeier, but Wetzel received no notice of the hearing. The State Board hearing was held on June 8, 1994 and on February 23, 1996, the State Board issued its final assessment determination. The State Board's determination reinstated the assessed value of Wetzel's property as determined during the 1989 general reassessment. The State Board based this decision on a determination that only the taxpayer may file a Form 130 with the BOR and therefore the BOR's reduction of Wetzel's assessment was invalid. Wetzel appealed that decision by filing an original tax appeal on March 27, 1996. Both parties moved for summary judgment, and oral argument was heard on April 4, 1997. Additional facts will be supplied as necessary.
reverses final determinations of the State Board when those decisions are unsupported
by substantial evidence, are arbitrary or capricious, constitute an abuse of discretion,
or exceed statutory authority. Id.
Whether or not Wetzel's assessment was properly reviewed and adjusted by
is not relevant.
The issue in this case is whether the State Board may review
and alter Wetzel's assessment more than four years after Wetzel began receiving, and
paying, reduced tax bills. It is clear that the State Board may not.
There are two basic methods by which the State Board may review a taxpayer's assessment. The first method is where the taxpayer files a petition asking the State Board to review an assessment. See id. § 6-1.1-15-3 (West 1989) (amended 1993 & 1997). The second method is where the State Board decides to sua sponte review an assessment. See id. § 6-1.1-14-10 (West 1989). In the present case, there was a Form 131 petition filed with regard to Wetzel's assessment.
After the BOR reduced Wetzel's assessment, the State Board received a Form 131 petition (filed on March 4, 1992) asking for review of Wetzel's assessment. This Form 131 was filed eight months after the BOR's June 21, 1991 final determination regarding Wetzel's assessment. A petition for review of a final determination of the BOR must be filed within 30 days of the BOR's final determination. See Ind. Code Ann.
§ 6-1.1-15-3 (West Supp. 1997). Therefore, the Form 131 petition was late filed.See footnote
Generally, late filed petitions for review will not be reviewed. See Willliams Indus., 648
N.E.2d at 717.
However, in some cases, the State Board may review assessments despite untimely filed petitions for review. Cf. State Bd. of Tax Comm'rs v. New Energy Co. of Indiana, 585 N.E.2d 38, 39 (Ind. Ct. App. 1992) (holding that State Board may consider untimely filed application for deduction). This may be done because, subject to the limitations contained in Ind. Code Ann. § 6-1.1-14-11 (West 1989), the State Board may invoke its authority to review an assessment sua sponte. See Ind. Code Ann. § 6- 1.1-14-10. However, the State Board's authority to alter an assessment is limited to three years after that assessment has been made. See Ind. Code Ann. §§ 6-1.1-9-4, 6- 1.1-14-11; see also Joyce Sportswear Co. v. State Bd. of Tax Comm'rs, 684 N.E.2d 1189, 1191 (Ind. Tax Ct. 1997), appeal dismissed.
In the present case, the State Board admits that it "could not review Wetzel's assessment sua sponte because more than three years had passed between the March 1, 1989 assessment date and the State Board's final determination on February 23, 1996." (Resp't Br. in Opp'n to Summ. J. Dec 16, 1996 at 6). Inexplicably however, the
State Board issued a final determination voiding the action by the BOR and returning
the assessed value of Wetzel's property to the value determined during the 1989
reassessment. By limiting the State Board's ability to alter an assessment to three
years after the assessment date, the legislature clearly intended to prevent this from
happening. The constraints on the State Board's ability to sua sponte alter an
assessment are intended to provide the taxpayer with protection from the worry that a
claim for more taxes will be made several years after the taxes were paid.
Additionally, the Court notes that the State Board may not exercise its sua sponte power unless the taxpayer has been afforded proper notice and a hearing. See id. § 6-1.1-14-11; see also Mills v. State Bd. of Tax Comm'rs, 639 N.E.2d 698, 703 (Ind. Tax Ct. 1994). Procedural protections, such as a limit on the State Board's sua sponte power and the requirement of notice to the taxpayer, are in place for the taxpayer's protection. As early as 1926, the Indiana Supreme Court discussed whether a tax assessment statute provided a mandatory procedural step (in order to have a valid assessment) or whether the procedural step was merely directory. Our Supreme Court recognized that:
If the provision is mandatory it must be followed or the assessment will be invalid; but if it is merely directory the assessment is not necessarily invalid because of failure to observe the statute. The test is whether the provision is for the benefit and protection of the individual taxpayer. If it is, the provision is mandatory. On the other hand if the regulations are designed to secure order, system and dispatch in proceedings, and the rights of interested taxpayers cannot be injuriously affected, the provisions are merely directory."
Board Comm'rs of Marion County, 198 Ind. 417, 422, 153 N.E. 177, 178 (1926)
(quoting 3 Cooley, The Law of Taxation, § 1060 (4th ed.).
Taxpayers stand to be "injuriously affected" in instances where the State Board seeks to review tax years beyond the normal statutory limitation. Moreover, were the State Board not required to provide proper notice to taxpayers before altering an assessment, taxpayers could face having their assessments increased without the opportunity to respond. The statutory limitation on the State Board's authority to review an assessment, as well as the requirement that notice and a hearing be provided the taxpayer before an assessment may be changed, are mandatory provisions because they are included to protect the taxpayer. Thus, any action taken by the State Board in this case is invalid because the State Board provided no notice to Wetzel regarding its decision to hold a hearing regarding Wetzel's assessment. Wetzel was not informed of the State Board's action until it received a revised tax bill for $15,196.11.See footnote 7 At any time the State Board could have provided Wetzel with the appropriate notice of intent to hold a hearing. The State Board could then have reviewed Wetzel's assessments for the three previous years. It did not do so and, to this Court's knowledge, has not. As such, the State Board is now foreclosed from sua sponte reviewing Wetzel's assessment with respect to any of the tax years controlled by the 1989 general reassessment.
regarding the change in assessment made by the BOR. Wetzel was given the
mandatory notice by the BOR and chose not to protest any perceived procedural
irregularities to the State Board. This Court has previously held that procedural defects
can be waived by a taxpayer. See Lakeview Country Club, 565 N.E.2d at 395 n.4; see
also Jewell Grain Co. v. State Bd. of Tax Comm'rs, 524 N.E.2d 49, 51 (Ind. Tax Ct.
1989), rev'd on other grounds, 556 N.E.2d 920 (Ind. 1990).
In this case, Wetzel not only waived any procedural defects, it gladly accepted the outcome of the BOR's decision. This is well within Wetzel's right. It is logical that procedural protections included in the law to protect the taxpayer may be voluntarily waived by the taxpayer if so desired. That is precisely the choice Wetzel made with respect to the BOR's review of its assessment. Regardless, the Court does not, and need not, decide whether the BOR's action in this case was valid.
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