Wendy H Elwood Tr. v. Bartholomew Cnty. Assessor
| Docket Number | 23T-TA-00002 |
| Decision Date | 07 August 2023 |
| Parties | WENDY H ELWOOD TRUST, Petitioner, v. BARTHOLOMEW COUNTY ASSESSOR, Respondent. |
| Court | Indiana Tax Court |
ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW
ATTORNEY FOR PETITIONER:
MARILYN S. MEIGHEN
ATTORNEY AT LAW
BRIAN A. CUSIMANO
ATTORNEY AT LAW
The Wendy H Elwood Trust (the "Trust") challenges the Indiana Board of Tax Review's final determination that its petitions for a correction of error for assessment years 2018 and 2019 were untimely. Upon review, the Court affirms the Indiana Board's final determination.
In 2016, Carr Road Development, LLC owned several undeveloped, vacant lots in what was to become the Tipton Lakes Subdivision. (See Cert. Admin. R. at 53-56, 109, 148-49.) During its period of ownership, Carr Road Development invested at least $1.5 million in the subdivision. (See Cert. Admin. R. at 66, 149.) This included excavating the land and installing vital infrastructure such as water/sewer hookups, sidewalks, curbs, and various roadways. (See Cert. Admin. R. at 66-76, 149.)
In 2017, Mark Elwood reached out to Jeffrey Bush, the manager of Carr Road Development, expressing his interest in purchasing four contiguous lakefront lots to construct his primary residence. (See Cert. Admin. R. at 108-09.) Elwood and Bush reached a verbal agreement in which Elwood agreed to purchase the four lakefront lots, and Bush agreed to oversee the re-platting of the four lots into two lots before closing. (See Cert. Admin. R. at 108-09, 157.) Elwood and Bush did not, however, formalize their gentleman's agreement in a written contract. (See Cert. Admin. R. at 108-09, 157.) After Elwood and his wife, Wendy, found an existing home to purchase as their primary residence, Elwood contacted Bush in an attempt to withdraw from the sale. (See Cert. Admin. R. at 108-09, 157.) Bush, however, indicated that he had relied on their verbal agreement and was intent on proceeding with the sale. (See Cert. Admin. R. at 65, 10809, 157.) The Elwoods decided to proceed with the purchase, intending to resell the contiguous lots thereafter. (See Cert. Admin. R. at 65, 108.) Accordingly, on December 11, 2017, the Trust[1] purchased Lots 8 and 9, which are the subject of this appeal, from Carr Road Development for $1,550,000. (See Cert. Admin. R. at 62-64, 66.)
At the time of the sale, it appears that both lots had been receiving the benefit of the "developer's discount"[2]; thus, their assessments were calculated by applying a negative 99 percent influence factor[3] to the extended value of each lot. (See, e.g., Cert. Admin. R. at 46, 49, 62-64.) As a result, the 1.07 acres encompassing Lot 8 had an assessed value of $1,900, while the 0.88 acres spanning Lot 9 carried an assessment of $2,000. (See Cert. Admin. R. at 46, 49, 62-64.)
In 2018, however, the Bartholomew County Assessor removed the developer's discount from each lot, increasing the assessment of Lot 8 to $729,100 and of Lot 9 to $705,600. (See, e.g., Cert. Admin. R. at 46, 49, 148.) While these assessment valuations remained the same in 2019, they were reduced to $412,600 and $416,100 respectively, in 2020. (See Cert. Admin. R. at 47-48, 50-51.) Sometime thereafter, the Elwoods initiated the re-platting of their two lots, dividing them back into four lots, to facilitate their resale. (See Cert. Admin. R. at 108, 112, 157-58.)
On May 27, 2020, the Trust filed three Form 130 appeals with the Assessor, challenging the removal of the developer's discount for each of the 2018 to 2020 assessment years. (See, e.g., Cert. Admin. R. at 133 ¶ 1.) Specifically, for the 2018 and 2019 assessment years, the Trust's Form 130 appeals requested relief under the correction of error appeal procedure, which is reserved for correcting only objective errors. (See, e.g., Cert. Admin. R. at 7-8, 23-24.) See also Bushmann, LLC v. Bartholomew Cnty. Assessor, 187 N.E.3d 355, 357-58 (Ind. Tax Ct. 2022). Under this procedure, an appeal must be initiated no "later than three (3) years after the taxes were first due." See Ind. Code § 6-1.1-15-1.1(a)-(b) (2020); see also Bushmann, 187 N.E.3d at 357-60. In contrast, for 2020, the Trust opted for the appeal procedure that allows all assessment errors to be addressed, provided that the appeal is filed within the shorter appeal deadline prescribed under Indiana Code § 6-1.1-15-1.1.[4] (See, e.g., Cert. Admin. R. at 133 ¶ 1.) See also I.C. § 6-1.1-15-1.1(a)-(b).
On April 6, 2021, the Bartholomew County Property Tax Assessment Board of Appeals ("PTABOA") conducted a hearing on the Trust's appeals. (See, e.g., Cert. Admin. R. at 13.) On July 15, 2021, the PTABOA issued three final assessment determinations ("Forms 115") that reinstated the developer's discount for each of the assessment years at issue. (See, e.g., Cert. Admin. R. at 11-13.) The PTABOA's decision resulted in substantial assessment reductions, amounting to over $700,000 for 2018 and 2019, and over $400,000 for 2020. (See, e.g., Cert. Admin. R. at 46-51.)
Dissatisfied with the PTABOA's decisions, the Assessor appealed all three of the PTABOA's determinations to the Indiana Board on September 1, 2021, and the Indiana Board conducted a hearing on July 28, 2022. (See, e.g., Cert. Admin. R. at 17-18, 144.) During the hearing, the Assessor claimed that the PTABOA's reinstatements were improper because subjective judgment, not an objective "yes or no" query, was necessary to determine whether the developer's discount applied. (See Cert. Admin. R. at 150.) Consequently, she argued that because the Trust's 2018 and 2019 appeals required subjective judgment, they were filed after the applicable deadline under Indiana Code § 6-1.1-15-1.1(b) and were time-barred. (See Cert. Admin. R. at 150.)
The Assessor also asserted that the Trust presented evidence throughout the administrative proceedings that failed to demonstrate the Elwoods' eligibility for the developer's discount. (See Cert. Admin. R. at 148-51.) For example, she emphasized evidence alleged to be contrary to a finding that the Trust was a land developer: 1) it was Carr Road Development, not the Trust, that incurred the costs related to land development and infrastructure installation; 2) Elwood openly described himself as being in the and not in land development; and 3) Elwood acquired the two lots intending to build his own residence. (See Cert. Admin. R. at 148-51.) In addition, the Assessor claimed that because the lots were valued at only $1,434,700 in 2018, their assessments should be increased to align with the Trust's 2017 purchase price of $1,550,000. (See Cert. Admin. R. at 77, 150-52.)
The Trust responded that the Assessor's removal of the developer's discount was illegal as a matter of law. (See Cert. Admin. R. at 161.) In support, the Trust claimed it was acting as a land developer because at the time of actual purchase, it intended to resell the two lots, having subsequently re-platted them back to four lots to enhance their marketability. (See Cert. Admin. R. at 156-58, 161.) The Trust further asserted that the developer's discount should never have been removed because none of the statutory events that allowed a reclassification of the property had occurred. (See Cert. Admin. R. at 155-56.)
On December 21, 2022, the Indiana Board issued its final determination, finding in favor of the Assessor on the 2018 and 2019 appeals and the Trust on the 2020 appeal.
Specifically, the Indiana Board determined that the Trust's 2018 and 2019 appeals were untimely because ascertaining a taxpayer's eligibility for the developer's discount indeed depended on the application of subjective judgment. (See Cert. Admin. R. at 138-39 ¶¶ 20-24, 142 ¶ 38.) As a result, the Indiana Board found that the PTABOA had no authority to reinstate the developer's discount for those years, and the Assessor's request to increase the 2018 and 2019 assessments was time-barred. (See Cert. Admin. R. at 13640 ¶¶ 12-25.) Additionally, the Indiana Board found that the Trust's 2020 appeal was timely "[a]nd [that] the Assessor, who had the burden of proof, failed to make a prima facie case for changing the PTABOA's determinations." (See Cert. Admin. R. at 140-42 ¶¶ 28-37, 142-43 ¶ 39 (emphasis added).) Accordingly, for the 2018 and 2019 tax years, the Indiana Board reinstated the original assessments of $729,100 for Lot 8 and $705,600 for Lot 9 and, for the 2020 tax year, the Indiana Board upheld the PTABOA's assessments of $5,200 for each lot. (See Cert. Admin. R. at 133 ¶ 2, 142-43 ¶¶ 38-39.)
On February 4, 2023, the Trust initiated this original tax appeal, challenging the Indiana Board's determination for only the 2018 and the 2019 tax years. The Court conducted oral argument on July 13, 2023. Additional facts will be supplied as necessary.
The party seeking to reverse an Indiana Board final determination bears the burden of demonstrating its invalidity. Square 74 Assocs. LLC v. Marion Cnty. Assessor, 138 N.E.3d 336, 340 (Ind. Tax Ct. 2019). Consequently, the Trust must demonstrate to the Court that the Indiana Board's final determination in this matter 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. See Ind. Code § 33-26-6-6(e)(1)-(5) (2023).
When the Trust filed its three Form 130 appeals in 2020, Indiana Code § 6-1.1-15 1.1, in relevant part, stated:...
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