Monroe Cnty. Assessor v. Strychalski

• Citation: 176 N.E.3d 267
• Decision Date: 31 August 2021
• Docket Number: Cause No. 20T-TA-00011
• Parties: MONROE COUNTY ASSESSOR, Petitioner, v. Kim STRYCHALSKI and Richard Strychalski, Respondents.
• Court: Tax Court of Indiana

176 N.E.3d 267

MONROE COUNTY ASSESSOR, Petitioner,

v.Kim STRYCHALSKI and Richard Strychalski, Respondents.

Cause No. 20T-TA-00011

Tax Court of Indiana.

August 31, 2021

ATTORNEY FOR PETITIONER: LEE F. BAKER, MONROE COUNTY LEGAL DEPARTMENT, Bloomington, IN

ATTORNEY FOR RESPONDENTS: JASON L. McAULEY, KOCH & McAULEY P.C., Bloomington, IN

WENTWORTH, J.

The Monroe County Assessor challenges the Indiana Board of Tax Review's final determination that Kim and Richard Strychalski were entitled to a standard homestead deduction for their Unionville, Indiana property during the 2015, 2016, and 2017 tax years. Upon review, the Court finds that they were not.

FACTS AND PROCEDURAL HISTORY

In 2014, Kim and Richard Strychalski, a married couple, purchased a residential property in Unionville, Indiana. (See Cert. Admin. R. at 18 - 19, 33.) Prior to purchasing their Indiana property, they lived at a house in Beach Park, Illinois. (See Cert. Admin. R. at 18, 33.) When they closed on the Illinois house, their attorney filled out the Illinois homestead exemption¹ paperwork, putting it in Kim and Richard Strychalski's names. (See Cert. Admin. R. at 34.)

In 2019, the Monroe County Auditor initiated a homestead audit and found the Strychalskis had claimed two homestead deductions for multiple years, one in Illinois and one in Indiana. (See Cert. Admin. R. at 34, 39.) The Auditor then issued a "Homestead Standard Deduction Audit Questionnaire" seeking information from the Strychalskis for the 2015, 2016, and 2017 tax years. (See Cert. Admin. R. at 18 - 19, 34.) Kim Strychalski completed the questionnaire stating that (1) they owned both the Indiana and Illinois properties, (2) the Illinois property receives a deduction, (3) they "live at both [the Indiana and Illinois] properties," (4) they filed Illinois, not Indiana tax returns, (5) had Illinois driver's licenses, and (6) were registered to vote in Illinois. (See Cert. Admin. R. at 18 - 19.) (See also Cert. Admin. R. at 20 -23, 34-36.) Based on those responses, the Strychalskis were notified that they would not be eligible for Indiana's homestead deduction for each of the years at issue. (See Cert. Admin. R. at 7 - 9, 12 - 16, 34.)

The Strychalskis appealed the revocation to the Monroe County Property Tax Assessment Board of Appeals ("PTABOA"), which denied their claim. (See Cert. Admin. R. at 7 - 9.) The Strychalskis appealed the PTABOA's denial to the Indiana Board, explaining in their July 29, 2019, petition for review:

Our [Indiana] home is in a trust and we have the rights to occupy under the terms of the trust. A homestead we think is defined as a legal owner of record and name listed on the deed to the property. Both of these are true for our property. We consider this as our primary residence. We also have a home in Illinois that [is] also owned by our son Theodore. We spend time there. His name is on the deed and he has the homestead [deduction] and pays the taxes.

(Cert. Admin. R. at 2 (emphasis added).)

At the Indiana Board hearing on February 27, 2020, Kim Strychalski stated:

It is our understanding that we have been, our homestead [deduction] has been revoked and that's based on us not being, not living in the house. l think that's based on, from our hearing, that it's based on documents from our old address that haven't been changed. So, we're here today to kind of explain that our understanding of being occupants is that you live there. We do, in fact, live the majority of the year in the house and we don't have a homestead [deduction] anywhere else and we think we should have one.

(Cert. Admin. R. at 17, 32.) Kim Strychalski further testified that when they purchased their Indiana home in 2014, they were "juggling between houses," but spent most, if not all their time, beginning in 2015, at the house in Indiana. (Cert. Admin. R. at 33.)

The Assessor responded that the Auditor properly revoked the Strychalskis’ Indiana homestead deduction because they had indicated on the questionnaire that their principal place of residence was Illinois and that they had two homestead deductions, one in Illinois and one in Indiana, during the years at issue. (See Cert. Admin. R. at 34-35, 37-38.) Accordingly, the Assessor argued that the Strychalskis were not entitled to an Indiana homestead deduction for those years. (See Cert. Admin. R. at 34, 38.)

On May 11, 2020, the Indiana Board issued its final determination stating that "[t]he Strychalskis used the [Indiana] property as their principal place of residence for the years under appeal[, and a]lthough they were originally receiving an additional homestead deduction in Illinois, that was an error they have since corrected." (Cert. Admin. R. at 25, 29 ¶ 13.) Consequently, the Indiana Board found the Strychalskis’ Indiana property was entitled to the homestead deduction. (Cert. Admin. R. at 29 ¶ 13.)

On June 24, 2020, the Monroe County Assessor initiated an original tax appeal. On November 4, 2020, the Court took the matter under advisement. Additional facts will be provided as necessary.

STANDARD OF REVIEW

The party seeking to overturn an Indiana Board final determination must demonstrate to the Court that it is invalid. Kellam v. Fountain Cnty. Assessor, 999 N.E.2d 120, 122 (Ind. Tax Ct. 2013), review denied. To prevail in her appeal, the Assessor must demonstrate that the Indiana Board's final determination 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 procedure required by law; or unsupported by substantial or reliable evidence. See IND. CODE § 33-26-6-6(e)(1)-(5) (2021). Here, the Assessor asks the Court to reverse the Indiana Board's final determination because the Indiana Board abused its discretion. (See Pet'r Br. at 9, 11.)

In reviewing a final determination, the Court cannot usurp the Indiana Board's prerogative as the trier of fact by reweighing the evidence or judging the credibility of witnesses absent an abuse of discretion. See Fisher v. Carroll Cnty. Assessor, 74 N.E.3d 582, 587 (Ind. Tax Ct. 2017). Nonetheless, "[t]he Court will review any questions of law arising from the Indiana Board's factual findings de novo." Purdom v. Knox Cnty. Assessor, 141 N.E.3d 83, 85 (Ind. Tax Ct. 2020) (citing Kellam, 999 N.E.2d at 122 ).

LAW

All real property in Indiana is subject to assessment and taxation on the statutorily prescribed assessment date. See IND. CODE §§ 6-1.1-2-1, -1.5(a) (2015). "Each year a homestead is eligible for a standard deduction from the assessed value of the homestead for an assessment date." IND. CODE § 6-1.1-12-37(b) (2015).

A "homestead" is a person's "principal place of residence[ ] that is located in Indiana" and that "the individual owns[.]" I.C. § 6-1.1-12-37(a)(2)(A), (B)(i). The term "principal place of residence" is not defined in Indiana Code § 6-1.1-12-37, but it is defined in an administrative regulation as "an individual's true, fixed, permanent home to which the individual has the intention of returning after an absence." 50 IND. ADMIN. CODE 24-2-5 (2015) (See http://www.in.gov/legislative/iac/). An individual or married couple may not have more than one homestead deduction in the same year. See I.C. § 6-1.1-12-37(h).

ANALYSIS

On appeal, the Assessor asserts that the Indiana Board abused its discretion by determining the Strychalskis were entitled to Indiana's homestead deduction during the years at issue. (See Pet'r Br. at 9, 11.) To prevail on her claim, the Assessor must show that "[t]he Indiana Board[’s] ... final determination is clearly against the logic and effect of the facts and circumstances before it or [ ] it misinterprets the law." Kooshtard Prop. I v. Monroe Cnty. Assessor, 38 N.E.3d 750, 753 (Ind. Tax Ct. 2015) (emphasis added). The Assessor argues that the evidence shows the Strychalskis’ principal place of residence was in Illinois during the years at issue. (See Pet'r Br. at 11-18.) Moreover, the Assessor claims the evidence also shows the Strychalskis had two homestead deductions, in each of the years at issue, violating the one deduction requirement under Indiana Code § 6-1.1-12-37(h). (See Pet'r Br. at 9-11.) The Court will address the Assessor's arguments in turn.

I. Principal Place of Residence

The Assessor asserts that the evidence in the record does not support the Indiana Board's finding that the Strychalskis’ Indiana property was their principal place of residence during the years at issue. (See Pet'r Br. at 11-18.) In support, the Assessor references the Strychalskis’ answers in the Monroe County Auditor's questionnaire, stating that their driver's licenses, voter registrations, and tax return filings were all in Illinois for those years. (See Pet'r Br. at 11-12.) (See also Cert. Admin. R. at 18 - 19.) Moreover, Kim Strychalski confirmed at the Indiana Board hearing that as of 2019, they still had not changed their Illinois voter registrations. (See Cert. Admin. R. at 37.)

As evidence of one's principal place of residence, county auditors may request from a property owner "a state income tax return, a valid driver's license, or a valid voter registration card showing that the residence for which the deduction is claimed is the individual's principal place of residence." I.C. § 6-1.1-12-37(j) (emphasis added). See also Kellam, 999 N.E.2d at 124 (acknowledging that the property's mailing address, voter registration, driver's license, bank statements, and tax returns were all indications of one's intent that a property is their principal place of residence). Here, the Strychalskis’ driver's licenses, state income tax returns, and voter registration cards indicate that their principal place of residence was in Illinois. A conclusion based on this limited evidence, however, may not be dispositive if other evidence persuades to the contrary that another residence is one's true, fixed,...