Inland Container Corp. v. STATE BD. OF TAX COM'RS
| Decision Date | 01 October 2001 |
| Docket Number | No. 49T10-9609-TA-109.,49T10-9609-TA-109. |
| Citation | 756 N.E.2d 1109 |
| Parties | INLAND CONTAINER CORPORATION, Petitioner, v. STATE BOARD OF TAX COMMISSIONERS, Respondent. |
| Court | Indiana Tax Court |
Larry J. Stroble, Michael Rosiello, John T. Bailey, Barnes & Thornburg, Indianapolis, IN, Attorneys for Petitioner.
Steve Carter, Attorney General of Indiana, David A. Arthur, Deputy Attorney General, Indianapolis, IN, Attorneys for Respondent.
The Petitioner, Inland Container Corporation (Inland), appeals the final determination of the State Board of Tax Commissioners (State Board) denying it a resource recovery system (RRS)1 deduction for the March 1, 1994, assessment date. Inland moved for summary judgment, and the State Board replied and asked that summary judgment instead be granted in its favor. The Court finds the following issue dispositive in this case: whether the denial of the RRS deduction for Inland's certified RRS results in nonuniform and unequal taxation of substantially similar property in violation of Article 10, § 1 of the Indiana Constitution.2
For the reasons stated below, the Court GRANTS summary judgment in favor of Inland and DENIES the State Board's cross motion for summary judgment.
The facts of this case are undisputed. Inland manufactures corrugated fiber shipping containers. Inland owns and operates Newport Mill, which is located in Vermillion County, Indiana. Newport Mill is a facility that disposes of waste materials by converting them into recycled paper.
On March 24, 1994, Inland filed an application with the Indiana Department of Environmental Management (IDEM) to request that property at the Newport Mill be certified as an RRS under Indiana Code § 6-1.1-12-28.5. On April 29, 1994, IDEM certified that Inland's Newport Mill contained an RRS that converted solid waste into useful products.
In June 1994, Inland filed a Form RRS-1, Claim for Deduction of Assessed Valuation Applicable to Resource Recovery System, with the Vermillion County Auditor. Inland claimed the RRS deduction for its personal property in the amount of $6,298,018.3 The county assessor approved the Form RRS-1, and the auditor sent Inland a tax statement, which included the RRS deduction,4 due by May 10, 1995. Inland paid those taxes on May 10, 1995.
Thereafter, the legislature amended the RRS deduction statute, Indiana Code § 6-1.1-12-28.5, with an emergency effective date of May 1, 1995. The amendment provided that the RRS deduction would only be available for systems certified for the 1993 assessment year or earlier, and it phased out the deduction entirely after the 1997 assessment year.5 IND.CODE § 6-1.1-12-28.5 (2000); see also P.L 25-1995 § 15; Winski Bros., Inc. v. Bayh, 679 N.E.2d 912, 913 (Ind.Ct.App.1997),trans. denied (citing P.L. 25-1995, § 15). This 1995 amendment also stated that any RRS that was assessed and first deducted in the 1994 assessment year could not receive the deduction for property taxes due and payable in 1995 or later, I.C. § 6-1.1-12-28.5(d); see also Winski Bros.,679 N.E.2d at 913, but rather could claim a deduction for the 1994 assessment year for "new manufacturing equipment" under Indiana Code § 6-1.1-12.1. See P.L. 25-1995 § 104(b).
On October 27, 1995, the Vermillion County Treasurer informed Inland that, pursuant to the amendment, it was revoking Inland's RRS deduction for the 1994 assessment year. At that same time, the State Board notified Inland that, under Indiana Code § 6-1.1-12.1-5.5, Inland would get a deduction of $2,358,410 for the assessed value of "new manufacturing equipment." The treasurer mailed supplemental property tax statements to Inland for the 1994 assessment year that did not include Inland's RRS deduction but did include the new manufacturing equipment abatement.
Inland did not pay the additional amount listed in the supplemental property tax statement. Instead, on November 9, 1995, Inland filed a Form 133, Petition for Correction of an Error, and a Form 130, Petition for Review of Assessment, with the Vermillion County Board of Review (BOR) appealing the denial of the RRS deduction for the 1994 assessment year. Inland argued that the county had, in its supplemental tax statement, erroneously assessed Inland's property at $3,939,6106 (which reflected the denial of the $6,298,020 RRS deduction less the $2,358,410 abatement). Inland asserted that the property should be assessed at $331,475 (before any abatements).7 On December 22, 1995, the BOR denied Inland's appeal and stated that the assessment was without error because "[Inland's] abatement [was] correct pursuant to [Indiana Code § ] 6-1.1 12.1-5.5" and because "the resource recovery was repealed by the legislative session in 1995." (State Bd. Tr., Ex. B.)
On January 24, 1996, Inland filed a Form 131 Petition for Review challenging the BOR's denial of its RRS deduction for the 1994 assessment year. Inland submitted written evidence and a supporting brief in lieu of a State Board administrative hearing. In its Final Determination, issued August 30, 1996, the State Board recognized that the RRS statute created a distinction among taxpayers based on the certification date of RRS property but denied Inland's RRS deduction for the 1994 assessment year.
Inland filed this original tax appeal on September 11, 1996. On March 10, 1997, Inland filed a motion for summary judgment. On April 25, 1997, the Department filed its response opposing the summary judgment motion and asked the Court to enter summary judgment in its favor.8 The Court heard oral arguments from the parties and took the matter under advisement. Additional facts will be supplied as needed.
The Court gives great deference to the State Board's final determinations when the State Board acts within the scope of its authority. Wetzel Enters., Inc. v. State Bd. of Tax Comm'rs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct.1998). Accordingly, this Court reverses final determinations of the State Board only when those decisions are unsupported by substantial evidence, are arbitrary or capricious, constitute an abuse of discretion, or exceed statutory authority. Id. The taxpayer bears the burden of demonstrating the invalidity of the State Board's final determination. Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct.1998). Summary judgment is proper only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. See Ind. Trial Rule 56(C). See also W.H. Paige & Co. v. State Bd. of Tax Comm'rs, 732 N.E.2d 269, 270 (Ind. Tax Ct.2000)
. Cross motions for summary judgment do not alter this standard. W.H. Paige, 732 N.E.2d at 270.
Inland argues that the amended RRS statute, Indiana Code § 6-1.1-12-28.5, which phased out the RRS deduction, is unconstitutional as applied to Inland. Specifically, Inland claims that the State Board's denial of the RRS deduction was improper because the RRS deduction statute was in violation of Article 10, § 1 of the Indiana Constitution9 and resulted in nonuniform taxation of substantially similar property. (Pet'r Summary Judgment Br. at 1.) The State Board argues that the statutory amendment does not violate the state constitution. (Resp't Summary Judgment Br. at 1.)
The RRS deduction statute, Indiana Code § 6-1.1-12-28.5, was first enacted in 1979 to encourage recycling of waste by providing a substantial property tax deduction—ninety-five percent of the assessed value of the RRS—on tangible personal property used to recycle waste into energy or some other "useful product." Auburn Foundry, Inc. v. State Bd. of Tax Comm'rs, 628 N.E.2d 1260, 1261, 1265 (Ind. Tax Ct.1994); Winski Bros., 679 N.E.2d at 913 (citing P.L. 52-1979, § 2); I.C. § 6-1.1-12-28.5. IDEM was the agency responsible for determining whether a system or device qualified for the RRS deduction under Indiana Code § 6-1.1-12-28.5. IND.CODE § 6-1.1-12-35(b) (1994); see also Auburn Foundry, 628 N.E.2d at 1264
. Upon receiving an RRS certification from IDEM, a taxpayer was then required to file a Form RRS-1 and the IDEM certification with the county auditor. I.C. § 6-1.1-12-35(a); see also Auburn Foundry, 628 N.E.2d at 1265. The Form RRS-1 was then passed to the assessor for verification of the assessed value of the certified RRS property. I.C. § 6-1.1-12-35(a); Auburn Foundry, 628 N.E.2d at 1265. Upon verification by the assessor, the auditor was required to allow the RRS deduction. I.C. § 6-1.1-12-35(a); Auburn Foundry, 628 N.E.2d at 1265. A taxpayer was required to go through this process each assessment year it desired to obtain the RRS deduction. I.C. § 6-1.1-12-35(a).
In 1994, there was no provision, other than certification from IDEM and filing a deduction form with county officials, that limited who could qualify for the RRS deduction. Thus, in 1994, when Inland obtained its RRS certification from IDEM and filed its Form RRS-1 with the county auditor, the RRS deduction statute simply stated:
In 1995, the legislature amended the RRS deduction statute with an emergency effective date of May 1, 1995. The legislature stated that the amended RRS statute was applicable to property taxes due and payable after December 31, 1994. P.L. 25-1995 § 99(a). This amended RRS deduction statute stated, in pertinent part:
(1) the system was certified by the department of environmental management for the 1993...
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