Hatcher v. Indiana State Bd. of Tax Com'rs

• Decision Date: 22 October 1990
• Docket Number: No. 45TO5-8912-TA-00061,45TO5-8912-TA-00061
• Parties: Richard G. HATCHER and Ruthellyn Hatcher, Plaintiffs, v. INDIANA STATE BOARD OF TAX COMMISSIONERS, Defendant.
• Court: Indiana Tax Court

Page 852

561 N.E.2d 852

Richard G. HATCHER and Ruthellyn Hatcher, Plaintiffs, v. INDIANA STATE BOARD OF TAX COMMISSIONERS, Defendant.

No. 45TO5-8912-TA-00061.

Tax Court of Indiana.

Oct. 22, 1990.

Douglas M. Grimes, Gary, for plaintiffs.

Linley E. Pearson, Atty. Gen. by Joel Schiff, Deputy Atty. Gen., Indianapolis, for defendant.

FISHER, Judge.

Richard and Ruthellyn Hatcher (Hatchers) appeal the Indiana State Board of Tax Commissioners' (State Board) final determination denying their petition for correction of error. The State Board filed a motion for summary judgment and the Hatchers responded to the same. The court finds that there are genuine issues of material fact concerning the nature of the damage resulting to the Hatcher property and whether the damage rendered the assessment subject to correction pursuant to IC 6-1.1-15-12. The motion for summary judgment filed by the State Board is denied. The trial of this matter was held following the hearing on the State Board's motion for summary judgment.

FACTS

In 1979, an apartment building owned by the Hatchers located in Gary, Indiana, was assessed at a value of $26,400. In July of 1984, the Hatchers boarded up and vacated the apartment building. Soon thereafter persons unknown ransacked the building by breaking windows, stealing copper sheathing from the roof, and removing sinks, toilets, carpeting, and other items. No action was taken by the Hatchers to obtain a reassessment of the property at that time; however, due to reported negative references in the newspaper indicating that the township assessor knew about the devaluation of the property, the Hatchers assumed the assessor had adjusted the property value.

On July 3, 1989, the Hatchers filed a petition for correction of error for the years of 1985, 1986, 1987, and 1988. The Hatchers asserted that after 1984 the assessor committed a mathematical error in computing the assessment because the assessment continued to be computed using the 1979 assessed value, instead of a lower value reflecting the damage done to the property in 1984. On July 12, 1989, the county assessor, county auditor, and township assessor disapproved the Hatchers' petition for correction of error. The Hatchers then appealed to the State Board. On October 18, 1989, the State Board denied At trial, Richard Bess, Northern Supervisor of the Real Estate Division of the State Board, testified that upon receiving the Form 133 petition (petition for correction of error) ¹, he visited the Hatchers' building and discovered errors on the property record card compiled in 1979 that were correctable pursuant to Form 133; i.e., the unit size had been under-calculated, a basement was entered where there was none, and the assessment was based upon one floor instead of four. After recalculating the assessment with these errors corrected, Bess discovered the corrections increased the assessed value of the property. Bess did not alter the assessment, however, because the property did not warrant an increase in value, in his opinion. None of these errors concerned the errors raised by the Hatchers in their petition. According to Bess, he did not correct these errors because the correction would have required him to consider obsolescence, a figure derived from the assessor's subjective judgment and a factor not subject to correction by Form 133.

the petition for correction of error. The Hatchers filed their petition in the Indiana Tax Court on December 1, 1989.

ISSUE AND DISCUSSION

The issue is whether the errors raised by the Hatchers are the types of errors the legislature intended to be corrected by a petition for correction of error under IC 6-1.1-15-12(a)(7).

The State Board contends that the errors raised by the Hatchers are not mathematical errors made in computing the assessment because they cannot be corrected without referring to the assessor's subjective judgment.

The Hatchers contend that using numbers in the assessment computation which do not reflect the current value of the property constitutes a mathematical error in computing the assessment under IC 6-1.1-15-12(a)(7). The Hatchers rely first upon the fact that three officials are required to approve a correction of a mathematical error committed in computing the assessment. Second, the State Board's own interpretation of IC 6-1.1-15-12 indicates that the entire assessment is open for review, not just that part based upon the assessor's errors which can be corrected according to objective standards.

This court's review is limited to determining whether the State Board's determination is supported by substantial evidence, is an abuse of discretion, is arbitrary or capricious, or is in excess of the State Board's statutory authority. Bailey Seed Farms, Inc. v. State Bd. of Tax Comm'rs (1989), Ind. Tax, 542 N.E.2d 1389, 1391.

The State Board denied the petition for correction of error because it did not "qualify for action pursuant to IC 6-1.1-15-12."

IC 6-1.1-15-12 provides:

(a) Subject to the limitations contained in subsections (c) and (d), 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 (1) 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 (1) 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 not given credit for an exemption or deduction permitted by law.

(b) The county auditor shall correct an error described under subsection (a)(1), (a)(2), (a)(3), (a)(4), or (a)(5) when he finds that the error exists.

(d) If the tax is not based on an assessment made or determined by the state board of tax commissioners, the county auditor shall correct an error described under subsection (a)(6), (a)(7), or (a)(8) only if the correction is first approved by at least three (3) of the following officials:

(1) The township assessor.

(2) The county auditor.

(3) The county treasurer.

(4) The county assessor.

However, if two (2) of these officials do not approve such a correction, the county auditor shall refer the matter to the state board of tax commissioners for final determination.

The Hatchers' petition is based upon IC 6-1.1-15-12(a)(7).

No Indiana cases have defined the term "mathematical error" in the context it is used in IC 6-1.1-15-12, or IC 6-1.1-26-1. ² The State Board, however, has interpreted IC 6-1.1-15-12 in its regulations and in an instructional bulletin.

50 I.A.C. 4.2-3-12 provides in pertinent part:

A taxpayer who claims that an error in an assessment entitles them to a refund must file both a Form No. 133 ... and a Form No. 17T ... for a refund. ³ A fact to keep in mind when dealing with these forms is that they are not to be used to challenge the methodology used in generating an assessment. There are appeal provisions for that purpose.

....

(c) Form 133 required. Form No. 133 ... is to be filed in duplicate with the auditor of the county where the assessment was made to correct one (1) of the following errors in the tax duplicate:....

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

In addition, Instructional Bulletin 84-7 provides:

Example (c): A correction is not available for claimed errors in judgment, such as incorrect determinations of grade, percentage of completion, or age of a structure. (Sec. II(A)4(c) at 4.)

To ascertain the legislature's intent, the words "mathematical error in computing an assessment" should be read in their plain, ordinary and usual sense, "unless a contrary purpose is clearly shown by the statute itself." Marion County Sheriff's Merit Bd. v. Peoples Broadcasting Corp. (1989), Ind., 547 N.E.2d 235, 237; IC 1-1-4-1. Accordingly, the State Board refers the court to the dictionary definition of mathematical: "1. of, having the nature of, or concerned with mathematics 2. rigorously exact, precise, accurate, etc." WEBSTER'S NEW WORLD DICTIONARY 875 (2d college ed. 1984). Mathematics is "dealing with quantities, magnitudes, and forms, and their relationships, attributes, etc., by the use of numbers and symbols." Id. Compute is "to determine (a number, amount, etc.) by reckoning; calculate." Id. at 292.

Pursuant to these definitions, the legislature intended to limit the types of errors correctable by IC 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. It is this second category with which the Hatchers' petition is concerned, for it is not merely the incorrect use of numbers but also the assessor's subjective judgment which must be examined before many of the alleged errors can be corrected.

Many numbers derived from the assessor's subjective judgment, such as the value assigned to a building's grade, are used to compute an assessment. If the incorrect number is assigned and then used to compute the total assessment, there is an error in the computation, as the Hatchers contend. The legislature, however, chose to limit the types of computation errors correctable by IC 6-1.1-15-12(a)(7) to mathematical errors, errors which can be corrected pursuant to precise and exact standards.

Congress has enacted a statute to define the term. A "mathematical or clerical error" is

(A) an error in addition, subtraction, multiplication, or division shown on any return,

(B) an incorrect use of any table provided by the Internal Revenue Service with respect to any return if such incorrect use is apparent from the existence of other...