Ingredion, Inc. v. Marion Cnty. Assessor, Case No. 20T-TA-00006

Docket NºCase No. 20T-TA-00006
Citation184 N.E.3d 731
Case DateFebruary 25, 2022
CourtTax Court of Indiana

184 N.E.3d 731

INGREDION, INCORPORATED, Petitioner,
v.
MARION COUNTY ASSESSOR, Respondent.

Case No. 20T-TA-00006

Tax Court of Indiana.

February 25, 2022


ATTORNEY FOR PETITIONER: RANDAL J. KALTENMARK, BARNES & THORNBURG LLP, Indianapolis, IN

ATTORNEYS FOR RESPONDENT: JESSICA R. GASTINEAU , SPECIAL COUNSEL – TAX LITIGATION, ANNE C. HARRIGAN, CHIEF LITIGATION COUNSEL, OFFICE OF CORPORATION COUNSEL, Indianapolis, IN

WENTWORTH, J.

184 N.E.3d 732

Ingredion, Incorporated challenges the Indiana Board of Tax Review's final determination that its 2012 and 2013 personal property tax returns did not "substantially comply" with the property tax statutes and regulations, and thus, upholding the timeliness of the Assessor's audit assessments under the three-year statute of limitations. In the alternative, Ingredion challenges the Indiana Board's failure to determine the Assessor was required to offset any 2012 and 2013 audit assessments by its 2011 tax overpayment. Upon review, the Court reverses the Indiana Board's final determination.

FACTS AND PROCEDURAL HISTORY

Ingredion timely filed its Indiana Business Tangible Personal Property Assessment Returns reporting the assessed value of its tangible personal property located at its Indianapolis manufacturing facility for the 2011, 2012, and 2013 tax years. (See Cert. Admin. R. at 44-155.) On April 4, 2014, the Assessor sent Ingredion a letter initiating an audit of those returns and requesting certain documents necessary to reconcile Ingredion's reported values with its financial records. (See Cert. Admin. R. at 39, 156.)

During the course of the audit, Ingredion discovered that its former personal property tax preparation firm had incorrectly reported the costs of its assets by "using the original installed (aka "historical") cost basis, rather than its federal tax cost basis." (See Cert. Admin. R. at 40 ¶ 17, 173.) On June 30, 2014, Ingredion provided the Assessor with a written report comparing its personal property costs reported on its Indiana returns to its costs reported on its federal depreciation schedules. (See Cert. Admin. R. at 40 ¶ 18.) The comparison showed that upon correcting its reporting errors, Ingredion would owe additional personal property taxes for 2012 and 2013, but would have overpaid its taxes for 2011. (See Cert. Admin. R. at 40-41 ¶ 19.)

On April 14, 2015, the Assessor issued two Forms 113/PP (Notice of Assessment/Change) and a letter summarizing the final 2012 and 2013 audit findings, noting that Ingredion's "asset cost[s were] underreported for tax years 2012 and 2013[, and that Ingredion had o]mitted assets including outdoor lighting, process electrical, process piping, foundations, and dock equipment." (Cert. Admin. R. at 157-65, 167-68.) As a result, the Assessor increased Ingredion's assessments for both 2012 and 2013. (See Cert. Admin. R. at 157, 167-68.) The record does not contain a Form 113/PP regarding Ingredion's 2011 return, nor did the Assessor's audit summary letter make any reference to the results for 2011. (See Cert. Admin. R.)

On May 28, 2015, Ingredion appealed the Assessor's 2012 and 2013 audit assessments to the Marion County Property Tax Assessment Board of Appeals (PTABOA) claiming, among other things, that the Assessor's increased assessments were untimely under the limitation periods prescribed in Indiana Code § 6-1.1-16-1. (See Cert. Admin. R. at 209-16.) The PTABOA denied Ingredion's appeals on December 15, 2017. (See Cert. Admin. R. at 219-22.)

On January 24, 2018, Ingredion appealed the PTABOA's final determinations to the Indiana Board. (See Cert. Admin. R. at 223-34.) Nearly eleven months later, on December 20, 2018, Ingredion filed a motion

184 N.E.3d 733

for summary judgment claiming the Assessor's 2012 and 2013 audit assessments were untimely as a matter of law under Indiana Code § 6-1.1-9-3(a) and Indiana Code § 6-1.1-16-1(a)(2) because its returns substantially complied with the applicable property tax statutes and regulations. (See Cert. Admin. R. at 14 -37.) On January 14, 2019, Ingredion amended its motion to add a claim that even if the Indiana Board were to find the 2012 and 2013 audit assessments timely, the Assessor was required by Indiana Code § 6-1.1-9-10 to correct the improperly reported costs for 2011 discovered during the audit and either process a refund or apply a credit. (See Cert. Admin. R. at 241-43.)

The Assessor subsequently filed a cross-motion for summary judgment, contending that Ingredion's claim wrongly relied on the regulation defining "nonsubstantial compliance" rather than the Court's controlling interpretation of "substantial compliance" in Lake County Assessor v. Amoco Sulfur Recovery Corp., 930 N.E.2d 1248, 1251-52 (Ind. Tax Ct. 2010), review denied. (Cert. Admin. R. at 244-51.) The Assessor further argued that Ingredion had waived raising any arguments other than its exclusive reliance on the regulation to support its claim that its returns substantially complied. (See Cert. Admin. R. at 248-49.)

On January 30, 2020, the Indiana Board issued its final determination finding the audit assessments timely and granting summary judgment to the Assessor. (See Cert. Admin. R. at 326 ¶ 1, 335 ¶ 25.) Specifically, the Indiana Board determined that Ingredion's use of the wrong cost basis made its returns "almost entirely inaccurate," because they accurately reported only about 1.6% of its 2012 and 2.2% of its 2013 property costs. (See Cert. Admin. R. at 328-29 ¶¶ 8-9.) Accordingly, the Indiana Board concluded that Ingredion's inaccurate returns did not substantially comply "to the extent necessary to assure the reasonable objectives of the [statute and] regulation" were met. (Cert. Admin. R. at 333 ¶ 20.) In addition, the Indiana Board concluded that it lacked the authority to order the Assessor to offset any underpayment of taxes owed for 2012 and 2013 by the amount of any overpaid taxes for 2011. (See Cert. Admin. R. at 334-35 ¶ 24.)

On March 13, 2020, Ingredion initiated this original tax appeal. The Court heard oral argument on October 8, 2020. Additional facts will be supplied as necessary.

STANDARD OF REVIEW

The party seeking to overturn an Indiana Board final determination bears the burden of demonstrating its invalidity. Hubler Realty Co. v. Hendricks Cnty. Assessor, 938 N.E.2d 311, 313 (Ind. Tax Ct. 2010). The Court will reverse a final determination if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; contrary to constitutional right, power, privilege, or immunity; in excess of or short of statutory jurisdiction, authority, or limitations; without observance of the procedure required by law; or unsupported by substantial or reliable evidence. IND. CODE § 33-26-6(e)(1)-(5) (2022). Upon review, the Court will not reweigh the evidence or judge the credibility of witnesses, but will review questions of law arising from the Indiana Board's factual findings de novo. Kellam v. Fountain Cnty. Assessor, 999 N.E.2d 120, 122 (Ind. Tax Ct. 2013), review denied.

LAW

Taxpayers are required to file a personal property tax return each year. See IND. CODE § 6-1.1-3-7(a) (2011) (amended 2015). "In completing a personal property return for a year, a taxpayer [must] make a complete

184 N.E.3d 734

disclosure of all information required by the department of local government finance that is related to the value, nature, or location of [the] personal property." IND. CODE § 6-1.1-3-9(a) (2011) (emphasis added); see also 50 IND. ADMIN. CODE 4.2-2-5(a) (2011) ("The taxpayer shall, in completing the return, make a full and complete disclosure ... relating to the value, nature, and location of all the personal property[....]" (emphasis added)). Therefore, Indiana's personal property self-assessment tax system "relies on taxpayers to fully and accurately report their taxable property." Lake Cnty. Assessor v. Amoco Sulfur Recovery Corp., 930 N.E.2d 1248, 1252 (Ind. Tax Ct. 2010), review denied.

Upon giving proper notice, an assessing official or a county property tax assessment board of appeals may assess omitted or undervalued personal property or increase a taxpayer's personal property assessment within three years after the date the return is filed. IND. CODE § 6-1.1-9-3(a) (2011) (the "3-Year Limitation"). If a taxpayer's return substantially complies with the property tax statutes and the Department's regulations, however, the 3-Year Limitation does not apply, giving way to the shorter time period prescribed in Indiana Code § 6-1.1-16-1. See I.C. § 6-1.1-9-3(a). Indiana Code § 6-1.1-16-1 provides that when a return substantially complies

a county assessor or a county property tax assessment board of appeals must make a change in the assessed value, including the final determination by the board of an assessment changed by an assessing official, and give the notice of the change on or before the later of:

(A) October 30 of the year for which the assessment is made; or

(B) five (5) months from the date the personal property return is filed if the return is filed after May 15 of the year for which the assessment is made.

IND. CODE § 6-1.1-16-1(a)(2) (2011) (amended 2014) (the "5-Month...

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