Indiana allows taxpayers to correct certain property tax assessment mistakes using a Form 133 Petition for Correction of an Error.  In Muir Woods, Inc. v. Marion County Assessor (June 18, 2015), the Indiana Tax Court held that Taxpayers could not use a Form 133 Petition to correct the assessments of their common area land.  The opinion was a consolidation of five cases with identical issues.  Taxpayers challenged their 2004 and 2005 assessments using Form 133 Petitions, claiming the assessments were illegal as a matter of law. Taxpayers also claimed the Assessor failed to adjust the base rates of the land.  After ordering Taxpayers to show cause why the petitions were properly brought before it and holding a hearing, the Indiana Board of Tax Review (IBTR) dismissed the petitions.  The Board found that Taxpayers had alleged errors that were not correctable using Form 133 Petitions.

The Court explained that taxpayers have two avenues for appeal – filing a Form 130 Petition for Review of Assessment or filing a Form 133 Petition.  Form 130 Petitions have a 45-day filing deadline but allow taxpayers to assert any type of error.  Form 133 Petitions may be filed within three years of the due date for the tax, but the types of issues that may be raised are limited.  Correctable errors are objective and do not require subjective judgment.  Slip op. at 5 (citing Hatcher v. State Bd. of Tax Comm’rs, 561 N.E.2d 852, 857 (Ind. Tax Ct. 1990).)

Taxpayers challenged the IBTR’s ruling on various procedural and substantive grounds.

  • IBTR had authority to compel Taxpayers to show cause.  Taxpayers claimed the IBTR could not sua sponte require it show cause as to the propriety of its petitions.  The Board’s regulations, however, expressly allow it to “issue an order of default or dismissal on motion of a party or on its own motion.”  Slip op. at 6 (quoting 52 IND. ADMIN. CODE 2-10-2(a)(1), emphasis in original).  Because it had this authority, the IBTR “necessarily had the authority to determine whether it should dismiss [the] case by issuing” the show cause order.
  • IBTR was not required to conduct an evidentiary hearing to dismiss petitions.  The appeals statute requires a hearing before the Board can “correct any errors” in the assessment.  But a dismissal stops a case from proceeding on the merits.  Even if a hearing was required, however, that requirement was met; the Board had permitted Taxpayers to present evidence and argument before and at the show cause hearing.  Slip op. at 7.
  • The errors asserted were not correctable with a Form 133 Petition.  Taxpayers raised several arguments as to why they could use a Form 133 Petition to challenge the common area assessments.  The Court first concluded that Taxpayers could not rely upon a 2006 administrative ruling to support their allegation that the assessments were illegal as a matter of law.  Slip op. at 8.  And a determination as to whether the contested land was so encumbered that it had no value requires subjective judgment, which cannot be addressed using a Form 133 Petition.  Slip op. at 9.  Taxpayers offered no evidence supporting their conclusory statements that all other common area land in the County had been assessed at no value since the 2006 administrative ruling was issued.  Slip op. at 10.  Moreover, guidance from the Department of Local Government Finance did not mandate a zero assessment for common area land.  It only identified factors to consider in valuing such land.  By not raising it at the administrative level, Taxpayers waived the argument that the property was being assessed more than once.  Id.  Finally, Taxpayers’ claim that the Assessor misapplied the land order failed because a copy of the land order was not in the record.  Slip op. at 11.

    • The Court affirmed the IBTR’s final determinations.

    New Exemption Created.  The 2015 session of the Indiana General Assembly created a new exemption for common area land.  Effective May 4, 2015, the legislature added Ind. Code § 6-1.1-10-37.5 to provide an exemption for a “common area,” which is a parcel of land, including improvements, in a residential development that (a) is legally reserved for the exclusive use and enjoyment of all lot owners, occupants and their guests (regardless of whether the owner actually uses the property), (b) is owned by the developer, its assignee, each lot owner within the development, or a person, trust, or entity that holds title to the land for the benefit of all lot owners, (c) cannot be transferred for value to another party without approval of lot owners, and (d) does not include and is not designed or approved for construction of “Class 2 structures” under Ind. Code § 22-12-1-5 (which includes townhouses).  The term includes a lake, pond, street, sidewalk, park, green area, trail, wetlands signage, swimming pool, clubhouse, or other features or amenities that benefit all lot owners within the residential development.

    The common area is exempt provided appropriate notice is provided to the assessor. If the assessor determines that an area is not a common area, it must provide notice to the owner stating the basis for the decision and giving the owner thirty (30) days to respond. If the assessor fails to provide notice, the area shall be considered a common area. Once a common area is designated, a subsequent refiling is not required unless the area fails to meet the definition.  An owner may obtain review by the County Board (PTABOA) of the assessor’s determination.  Indiana Code § 6-1.1-15(a)(3) also has been added to give the PTABOA authority to review the assessor’s decision.

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