Paul Heuring Motors, Inc. v. State Bd. of Tax Com'rs

• Decision Date: 14 September 1993
• Docket Number: No. 45T10-9206-TA-00042,45T10-9206-TA-00042
• Citation: 620 N.E.2d 39
• Parties: PAUL HEURING MOTORS, INC., Petitioner, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.
• Court: Indiana Tax Court

Page 39

620 N.E.2d 39

PAUL HEURING MOTORS, INC., Petitioner, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.

No. 45T10-9206-TA-00042.

Tax Court of Indiana.

Sept. 14, 1993.

Joseph S. Van Bokkelen, Goodman Ball & Van Bokkelen, Highland, for petitioner.

Pamela Carter, Atty. Gen., Joel Schiff, Deputy Atty. Gen., Indianapolis, for respondent.

FISHER, Judge.

The Petitioner, Paul Heuring Motors, Inc. (Heuring), appeals the final determination of the Respondent, the State Board of Tax Commissioners (the State Board), assessing Heuring's business personal property for the March 1, 1991, assessment.

FACTS

Heuring, an Indiana corporation with its principal place of business in Hobart Township, Lake County, operates an automobile dealership. Heuring sells both new Ford automobiles and trucks in addition to used vehicles.

On or about February 26, 1991, Heuring moved fewer than half of its vehicles to a lot in Porter County for a special sale. During the sale, Heuring placed sale advertisements in the Porter County newspapers and paid rent to the owner of the lot. Heuring returned the unsold vehicles to Lake County approximately five days later, on or about March 3, 1991.

Heuring filed property tax returns with the officials in both Lake County and Porter County, reflecting the inventory in each location on March 1, 1991. The State Board conducted an audit of Heuring in January 1992. It concluded that Heuring had not obtained a taxable situs in Porter County and that all the inventory reported there should have been reported in Lake County. Consequently, the State Board determined Heuring had under-reported its inventory by more than five percent (5%) in Lake County and it assessed a twenty percent (20%) penalty pursuant to IND.CODE 6-1.1-37-7(e). Additional facts will be supplied as necessary.

ISSUE

Whether the State Board acted arbitrarily and capriciously in assessing a twenty percent (20%) undervaluation penalty under IC 6-1.1-37-7(e) for the value of the vehicles which Heuring reported for assessment in Portage Township, Porter County.

DISCUSSION AND DECISION

The State Board is accorded great deference when acting within the scope of its authority, and the Tax Court will reverse the State Board's final determination only when it is unsupported by substantial evidence, constitutes abuse of discretion, exceeds statutory authority, or is arbitrary or capricious. Wirth v. State Bd. of Tax Comm'rs (1993), Ind.Tax, 613 N.E.2d 874, 876 (citing Centrium Group v. State Bd. of Tax Comm'rs (1992), Ind.Tax, 599 N.E.2d 242, 243 and Hatcher v. State Bd. of Tax Comm'rs (1992), Ind.Tax, 601

                N.E.2d 19, 20).   Like any other party appealing an administrative decision, the taxpayer bears the burden to show the State Board's assessment was inaccurate.  Meridian Hills Country Club v. State Bd. of Tax Comm'rs (1987), Ind.Tax, 512 N.E.2d 911, 913
                

I.

Heuring contends it should not be penalized for undervaluing its property because it reported all of its property, albeit in two different counties. Rather, Heuring argues an interpretive difference existed concerning the proper county for assessment. "Except as otherwise provided by law, all tangible property which is within the jurisdiction of this state on the assessment date of a year is subject to assessment and taxation for that year." IND.CODE 6-1.1-2-1. IND.CODE 6-1.1-3-1 provides for the place of assessment:

(a) Except as provided in subsection (c) of this section, personal property which is owned by a person ¹ who is a resident of this state shall be assessed at the place where the owner resides on the assessment date of the year for which the assessment is made.

. . . . .

(c) Personal property shall be assessed at the place where it is situated on the assessment date of the year for which the assessment is made if the property is:

(1) regularly used or permanently located where it is situated....

IC 6-1.1-3-1 (footnote added). Therefore, unless the property in question falls within subsection (c), personal property owned by an Indiana resident must be assessed where the owner resides. The general rule is that a corporation's domicile or residence, within the state of its creation, is in the county and city, town, or district in which its principal office or place of business is located, Flournoy v. McKinnon Ford Sales (1974), 90 Nev. 119, 121, 520 P.2d 600, 601-02, as designated in its charter or certificate of incorporation, Mavity v. First of Georgia Ins. Co. (1967), 115 Ga.App. 763, 156 S.E.2d 191, 192, although it may also have offices or places of business elsewhere. Dairymen's League Co-op Ass'n v. Brundo (1927, Oneida County Ct.), 131 Misc. 548, 549, 227 N.Y.S. 203, 206. When in conflict, the State Board shall determine the proper county to assess personal property. IND.CODE 6-1.1-3-4(a). Heuring does not contest that Lake County is the correct place for assessment, but protests only the assessment of the penalty for its undervaluation in Lake County.

The Indiana personal property tax system is a self assessment system. It is therefore heavily reliant on full disclosure and accurate reporting. IND.CODE 6-1.1-3-9 requires:

(a) In completing a personal property return for a year, a taxpayer shall make a complete disclosure of all information, required by the state board of tax commissioners, that is related to the value, nature, or location of personal property:

(1) which he owned on the assessment date of that year; or

(2) which he held, possessed, or controlled on the assessment date of that year.

(b) The taxpayer shall certify to the truth of:

(1) all information appearing in a personal property return; and

(2) all data accompanying the return.

IC 6-1.1-3-9. If a taxpayer has made a complete disclosure on its return form, no penalty should be charged to the extent that a claimed exemption, adjustment for abnormal obsolescence, or adjustment for permanently retired equipment was disclosed and then later denied, but all other undervaluation must be penalized. See IND.CODE 6-1.1-37-7(a) and (e); 50 I.A.C. 4.2-2-10(d). When undervaluation exceeds five percent (5%) of the value that should to ensure a complete disclosure of all information required by the state board on the prescribed self-assessment personal property form(s). This enables the township assessor, county board of review, and state board to carry out their statutory duties....

have been reported on the return, a twenty percent (20%) penalty must be imposed under IC 6-1.1-37-7(e). Under 50 I.A.C. 4.2-2-10(d), the purpose of undervaluation penalties is

50 I.A.C. 4.2-2-10(d). The purpose of the penalty regulation is to ensure complete disclosure and not to penalize those who have made complete disclosure, mathematical errors, or interpretive differences. See 50 I.A.C. 4.2-2-10. "The imposition of a penalty when reasonable interpretive differences exist is inconsistent with the purpose of the penalty statute and regulation." Rogers v. State Bd. of Tax Comm'rs (1991), Ind.Tax, 565 N.E.2d 398, 403. The present case, however, does not involve interpretive differences.

To determine whether a taxpayer has made complete...