Lake County Assessor v. Amoco Sulfur Recovery Corp.

• Decision Date: 14 July 2010
• Docket Number: No. 49T10-0909-TA-58.,49T10-0909-TA-58.
• Citation: 930 N.E.2d 1248
• Parties: LAKE COUNTY ASSESSOR, Petitioner,v.AMOCO SULFUR RECOVERY CORP., n/k/a BP Products North America, Inc., BP Products North America, Inc., Respondents,andDepartment of Local Government Finance, Intervenor.
• Court: Indiana Tax Court

930 N.E.2d 1248

LAKE COUNTY ASSESSOR, Petitioner,v. AMOCO SULFUR RECOVERY CORP., n/k/a BP Products North America, Inc., BP Products North America, Inc., Respondents,andDepartment of Local Government Finance, Intervenor.

No. 49T10-0909-TA-58.

Tax Court of Indiana.

July 14, 2010.

John J. Butler, Parker Poe Adams & Bernstein LLP, Raleigh, NC, John S. Dull Attorney at Law, Merrillville, IN, Brian P. Popp, Laszlo & Popp PC, Merrillville, IN, Attorneys for Petitioner.

Jeffrey T. Bennett, Bradley D. Hasler, Margaret M. Christensen, Bingham McHale LLP, Indianapolis, IN, Attorneys for Respondents.

Gregory F. Zoeller, Attorney General of Indiana, John D. Snethen, Deputy Attorney General, Indianapolis, IN, Attorneys for Intervenor.

FISHER, J.

The Lake County Assessor (Assessor) appeals the Indiana Board of Tax Review's (Indiana Board) final determinations concluding that its 2004, 2005, and 2006 personal property assessments of Amoco Sulfur Recovery Corp., n/k/a BP Products North America, Inc. and BP Products North America, Inc. (collectively, “BP”) were untimely under Indiana Code § 6-1.1-16-1. Because the pleadings, orders, and other materials in this case have been filed under seal see generally Indiana Administrative Rule 9, this Court's opinion will provide only that information necessary for the reader to understand its disposition of the issues.

FACTS AND PROCEDURAL HISTORY

BP owns and operates the “largest inland refinery in the world.” (Cert. Admin. R. at 975.) This 1,400 acre refinery stretches across the Indiana cities of Whiting, Hammond, and East Chicago. ( See Cert. Admin. R. at 975.)

BP timely filed its Business Tangible Personal Property Returns (Returns) on June 14, 2004 for the 2004 tax year; on June 8, 2005 for the 2005 tax year; and on June 13, 2006 for the 2006 tax year (the years at issue).¹ In completing its Returns, BP used the Department of Local Government Finance's (DLGF) personal property tax return forms and followed the instructions provided therein. Specifically, BP reported the actual cost of all of its depreciable business tangible personal property, it deducted the cost of certain property claimed to be exempt air pollution control system (hereinafter, “APCS”) property, and it excluded the assessed value of the APCS property from its overall personal property assessed value computation.

At some point in 2004, the Assessor engaged an accounting firm to review the accuracy of BP's “documentation.” ( See Cert. Admin. R. at 1150-51, 1174-75.) The accounting firm, however, could not review the propriety of BP's APCS exemption claim because it lacked the expertise. ( See Cert. Admin. R. at 1150.) Consequently, in January 2007, the Assessor contracted with Gerard Muller, a refinery engineer, to review BP's exemption claim. (Cert. Admin. R. at 928-30, 1150-51.) Muller visited the refinery in May 2007. Based on Muller's recommendation, the Assessor determined that BP's exemption claim was improper. On or about May 31, 2007, the Assessor issued several notices to BP whereby he increased the assessed value of its personal property as a result of the disallowance of BP's claimed APCS exemption. ( See Cert. Admin. R. at 9-32.)

On July 5, 2007, BP challenged the validity of the Assessor's increased assessments. BP argued that because Indiana Code § 6-1.1-16-1 expressly provided that such assessments were to be made within five months of the date that BP filed its Returns, the Assessor's increased assessments were untimely and therefore invalid. ( See Cert. Admin. R. at 6-8.) On November 28, 2007, the Lake County Property Tax Assessment Board of Appeals (PTABOA) conducted a hearing on the matter. The PTABOA subsequently determined that the increased assessments were timely under Indiana Code § 6-1.1-9-3. ( See Cert. Admin. R. at 35-41.)

On January 10, 2008, BP filed six “Petitions for Review” (Form 131s) with the Indiana Board.² In its Form 131s, BP again asserted that the assessments were untimely and requested that its prior assessments be reinstated. On or about January 21, 2009, BP filed a motion for summary judgment. On July 20, 2009, the Indiana Board held a hearing on the motion. On August 19, 2009, the Indiana Board granted summary judgment in favor of BP. In its final determinations, the Indiana Board explained that because BP's Returns substantially complied with the APCS statutes and regulations, the assessments were untimely under Indiana Code § 6-1.1-16-1. ( See Cert. Admin. R. at 339-40.)

On September 18, 2009, the Assessor initiated this original tax appeal. ³ On October 21, 2009, the DLGF moved to intervene; the Court subsequently granted the DLGF's motion. The Court heard the parties' oral arguments on April 14, 2010. Additional facts will be supplied as necessary.

ANALYSIS AND OPINION

Standard of Review

When this Court reviews a final determination of the Indiana Board it is limited to determining whether it is:

(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(2) contrary to constitutional right, power, privilege, or immunity;

(3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory jurisdiction, authority, or limitations;

(4) without observance of procedure required by law; or

(5) unsupported by substantial or reliable evidence.

Ind.Code Ann. § 33-26-6-6(e)(1)-(5) (West 2010). Accordingly, the Court reviews the Indiana Board's grant of summary judgment de novo. See

Williams v. Tharp, 914 N.E.2d 756, 761 (Ind.2009) (citing N. Ind. Pub. Serv. Co. v. U.S. Steel Corp., 907 N.E.2d 1012, 1018 (Ind.2009)).

The Indiana Board's judgment arrives on appeal “ ‘clothed with a presumption of validity,’ ” and the Assessor therefore “ ‘bears the burden of proving that the [Indiana Board] erred in determining that there [were] no genuine issues of material fact ⁴ and that [BP was] entitled to judgment as a matter of law.’ ” See id. at 762 (quoting Rosi v. Bus. Furniture Corp., 615 N.E.2d 431, 434 (Ind.1993) (footnote added)). The Court will draw all reasonable inferences in favor of the Assessor and will conclude that summary judgment is appropriate only “ ‘if the designated evidentiary matter shows that there [was] no genuine issue as to any material fact and that [BP was] entitled to judgment as a matter of law.’ ” See id. at 761 (quoting Ind. Trial Rule 56(C)).

Discussion

On appeal, the Assessor claims that the Indiana Board's grant of summary judgment in BP's favor was in error. While the Assessor advances several arguments to support his claim, he presents but only one issue for review: whether BP's Returns substantially complied with the APCS statutes and regulations.

During the tax years at issue, Indiana Code § 6-1.1-16-1, in relevant part, provided:

[A]n ... assessor ... may not change the assessed value claimed by a taxpayer on a personal property return unless the ... assessor ... takes the action and gives the notice required by IC 6-1.1-3-20 within ... 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 Ann. § 6-1.1-16-1(a)(2)(B) (West 2004) (amended 2008). The five month restriction does not apply, however, if a taxpayer (among other things) “fail[ed] to file a personal property return which substantially complie[d] with the provisions of [IC 6-1.1] and the regulations of the [DLGF.]” Id. at (d)(1) (emphasis added).⁵

As mentioned, the DLGF intervened in this cause to express its interpretation of substantial compliance: “[s]ubstantial compliance with [statutory and] regulatory requirements means compliance to the extent necessary to assure the reasonable objectives of the [statute and] regulation are met.” ( See DLGF's Mem. at 1 (citing Hamill v. City of Carmel, 757 N.E.2d 162, 165 (Ind.Ct.App.2001) trans. denied ).) ( See also DLGF's Mot. Intervene ¶¶ 5-6.) “An interpretation of a statute [or regulation] by an administrative agency charged with the duty of enforcing the statute [or regulation] is entitled to great weight, unless this interpretation would be inconsistent with the statute [or regulation] itself.” LTV Steel Co. v. Griffin, 730 N.E.2d 1251, 1257 (Ind.2000) (citing Indiana Dep't of State Revenue v. Bulkmatic Transp. Co., 648 N.E.2d 1156, 1158 (Ind.1995)). Accordingly, determining whether BP's Returns substantially complied with the APCS statutes and regulations depends on whether BP's complete return package ⁶ substantially undermined the objectives of those statutes and regulations.⁷

Indiana's personal property tax system is a self-assessment system. Paul Heuring Motors, Inc. v. State Bd. of Tax Comm'rs, 620 N.E.2d 39, 41 (Ind.Tax Ct.1993). As a result, the system relies on taxpayers to fully and accurately report their taxable property. See id. See also 50 I.A.C. 4.2-2-5. To that end, Indiana Code § 6-1.1-3-9 requires:

In completing a personal property return for a year, a taxpayer shall make a complete disclosure of all information required by the [DLGF] that is related to the value, nature, or location of personal property: (1) that the taxpayer owned on the assessment date of that year; or (2) that the taxpayer held, possessed, or controlled on the assessment date of that year.

The taxpayer shall certify to the truth of: (1) all information appearing in a personal property return; and (2) all data accompanying the return.

Ind.Code Ann. § 6-1.1-3-9 (West 2004). See also 50 Ind. Admin. Code 4.2-2-5 (2004).⁸

During the tax years at issue, Indiana Code § 6-1.1-10-12 exempted personal property from taxation if it inter alia, was “part of a stationary or unlicensed mobile air pollution control system of a private ... refining ... facility [and wa]s not primarily used in the production of property for sale [.]” Ind.Code Ann. § 6-1.1-10-12(a)(1)-(2) (West 2004). In turn, Indiana Code § 6-1.1-10-13 provided that:

The owner of personal property which is part of a stationary or unlicensed mobile air

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