Bock Products, Inc. v. Indiana State Bd. of Tax Com'rs

• Decision Date: 18 July 1997
• Docket Number: No. 49T10-9605-TA-00040,49T10-9605-TA-00040
• Citation: 683 N.E.2d 1368
• Parties: BOCK PRODUCTS, INC., Petitioner, v. INDIANA STATE BOARD OF TAX COMMISSIONERS, Respondent.
• Court: Indiana Tax Court

Page 1368

683 N.E.2d 1368

BOCK PRODUCTS, INC., Petitioner, v. INDIANA STATE BOARD OF TAX COMMISSIONERS, Respondent.

No. 49T10-9605-TA-00040.

Tax Court of Indiana.

July 18, 1997.

David L. Pippen, Curtis Dickinson, Dickinson & Abel, Indianapolis, for Petitioner.

Jeffrey A. Modisett, Attorney General, Marilyn S. Meighen, Deputy Attorney General, Indianapolis, for Respondent.

FISHER, Judge.

Bock Products, Inc. (Bock) appeals the State Board of Tax Commissioners' (State Board) final determination of its real property assessment for 1989 and 1990. Bock filed two Form 133 Petitions for Correction of Errors, alleging that mathematical errors occurred when the assessor calculated the Perimeter to Area Ratio (PAR), calculated the Base Rate, and failed to apply Instruction Bulletin 91-8 to its real property. The issue before this Court is whether Form 133 is the appropriate petition for challenging these types of errors.

FACTS AND PROCEDURAL HISTORY

Bock owns real property in Elkhart County, Indiana. Bock appealed assessments for the years 1989 and 1990 by filing Form 133 Petitions with the County Board of Review. Bock stated that there were mathematical errors in computing the assessment in each year. Specifically, Bock argued that the Perimeter to Area Ratio (PAR) was incorrectly computed, that an improper base rate had been applied, and that the "kit building" adjustment described in Instructional Bulletin 91-8 should have been made.

The County Board of Review denied Bock's Form 133 Petitions, and Bock timely appealed to the State Board. The State Board rejected Bock's petition on November 1, 1995, stating the "kit building" adjustment was not available for years prior to 1991. Bock then submitted argument in support of its Form 133 Petitions on November 2, 1995. On March 15, 1996, the State Board denied the petitions, finding that they did not qualify for action under IND.CODE ANN. § 6-1.1-15-12 (West 1989). Bock filed an original tax appeal on April 29, 1996, challenging the State Board's final determination. The State Board then filed a motion for partial summary judgment on January 3, 1997. Bock responded with its own motion for summary judgment on February 5, 1997. Additional facts will be provided as needed.

STANDARD OF REVIEW

This Court gives the decisions of the State Board great deference, and its final determinations are reversed only when the decision is unsupported by substantial evidence, is arbitrary or capricious, constitutes an abuse of discretion, or exceeds statutory authority. Bender v. State Bd. of Tax Comm'rs, 676 N.E.2d 1113, 1114 (Ind.Tax Ct.1997).

Summary judgment is appropriate only when no genuine issues of material fact exist and a party is entitled to judgment as a matter of law. IND.TRIAL RULE 56(C). Cross motions for summary judgment do not alter this standard. Roehl Transp., Inc. v. Department of State Revenue, 653 N.E.2d 539, 541 (Ind.Tax Ct.1995).

DISCUSSION AND ANALYSIS

The petition at issue in this case is the Form 133 Petition for Correction of Errors, which is governed by section 6-1.1-15-12. This statute states:

[A] county auditor shall correct errors which are discovered in the tax duplicate for any one (1) or more of the following reasons:

(1) The description of the real property was in error.

(2) The assessment was against the wrong person.

(3) Taxes on the same property were charged more than one time in the same year.

(4) There was a mathematical error in computing the taxes or penalties on the taxes.

(5) There was an error in carrying delinquent taxes forward from one tax duplicate to another.

(6) The taxes, as a matter of law, were illegal.

(7) There was a mathematical error in computing an assessment.

(8) Through an error of omission by any state or county officer the taxpayer was IND.CODE. ANN. § 6-1.1-15-12(a) (West 1989) (amended 1993 & 1995) (emphasis added). In this case, Bock does not specify the subsection under which it challenges its assessment. Bock simply maintains that the errors are correctable via Form 133, and refers generally to the subsections emphasized above.

not given credit for an exemption or deduction permitted by law.

This Court has held that subsection 6-1.1-15-12(a) provides an avenue for correcting objective mistakes in an assessment, not errors in subjective judgment. See Franchise Realty Corp. v. State Bd. of Tax Comm'rs, 682 N.E.2d 832, 834 (Ind.Tax Ct.1997), Bender, 676 N.E.2d at 1115, Williams Indus. v. State Board of Tax Comm'rs, 648 N.E.2d 713, 717 (Ind.Tax Ct.1995), Hatcher v. State Bd. of Tax Comm'rs, 561 N.E.2d 852, 857 (Ind.Tax Ct.1990), Thus, "[t]he only errors subject to correction by Form 133 are those which can be corrected without resort to subjective judgment." Id. Regarding subsection 12(a)(7) in particular, this Court has found that the legislative intent of that provision is to limit mathematical errors to those "involving the incorrect use of numbers in determining the assessment" and "errors which can be corrected accurately, with precision, and with rigorous exactness." Id. at 854.

PAR Calculations

The PAR is one element used to determine the commercial cost of a structure. The State Board's regulations explain how to calculate the PAR. IND. ADMIN. CODE tit. 50, r. 2.1-4-1 (1992), IND. ADMIN. CODE tit. 50, r. 2.1-4-3 (1992). The PAR is defined as:

the total linear feet in the perimeter of a building divided by the corresponding square foot area and multiplied by 100 to convert to a whole number.

IND. ADMIN. CODE tit. 50, r. 2.1-4-1. In addition to these simple mathematical computations, the regulations also provide for adjustments. Adjustments are available for a building's use, its framing, and the number of stories it has. Id. These calculations often require an assessor to make a qualitative judgment, such as in the case of a mixed use building.

In this case, the assessor found that the building was used for mill manufacturing and light warehousing. Instead of calculating one PAR for the entire building, the assessor computed the PAR for different areas of the structure based upon its use. As a result, a PAR of 3 was assigned to the mill manufacturing area and one of the areas used for light warehousing, while another area used for light warehousing was assigned a PAR of 2. Resp't Br. at 5.

In its appeal to the State Board, Bock alleged that the PAR was calculated incorrectly. Without explanation or further investigation, the State Board issued a Final Assessment Determination that dismissed Bock's allegation. They stated that Form 133 could not be used in the appeal because "the calculation of the PAR is a subjective determination." Resp't Mot. Summ. J. at Ex. E-1 & E-2. This is not enough action on the part of the State Board. In addition, it is a misapplication of the law.

"The State Board is charged with the responsibility of interpreting the property tax laws and of ensuring that property assessments are made in the manner proscribed by law." Vonnegut v. State Board of Tax Comm'rs, 672 N.E.2d 87, 89 (Ind.Tax Ct.1996). Furthermore, this duty is not merely a goal, but an obligation owed to the taxpayers. Bielski v. Zorn, 627 N.E.2d 880, 885 (Ind.Tax Ct.1994). Here, the State Board has failed in that duty. As can be seen from the above definition, the calculation of a PAR does involve some objective measurements (such as calculating the total linear feet of a building's perimeter). If those objective measurements are challenged, then a Form 133 is the appropriate avenue by which a taxpayer can challenge their assessment. If, however, the taxpayer is challenging a subjective component of the PAR determination (such as calculating different PARs for different use areas), then a Form 133 petition is not appropriate. In any event, a Form 133 challenge may be appropriate in a dispute over the PAR calculation. To determine if it is, the State Board must This is not to say that the State Board is incorrect here. Bock may be trying to appeal something that involves the subjective judgment of the assessor, but the State Board needs to investigate the County Board's findings in order to determine this. If there are objective errors, then the State Board should make corrections. There is nothing in the record that indicates why Bock's petition was dismissed. The Court must be able to determine from the record whether the assessed value was calculated correctly. Corey v. State Board of Tax Comm'rs, 674 N.E.2d 1062, 1066 (Ind.Tax Ct.1997). The record presently before the Court is inadequate for this purpose. As such, the decision is both unsupported by substantial evidence and arbitrary.

investigate the claim. It failed to do so in this case.

It should be noted that the taxpayer has the burden of proof in these appeals. Bender, 676 N.E.2d at 1114. In order to meet this burden, the better practice would have been for Bock to state specifically what was in error. While this is not required by law, it certainly would behoove a taxpayer to bear this in mind. Had Bock been specific in its 133 petition as to what was in error, Bock could have saved the parties in this case a great deal of time and trouble. Instead, Bock merely scrawled at the...