Here the Petitioner’s
representative argues that, under the terms of the agreement the Petitioner
signed with the seller of the subject property as memorialized in the
settlement statement, the Petitioner’s liability for taxes should be limited to
$404.34 for the 2010 assessment year.
Property taxes are a lien on
the property and attach on the assessment date. The sale and purchase of the
property does not affect the lien. Ind. Code § 6-1.1-22-13(a). Due to the delay
between assessment and billing, as well as the possibility of a having a lien on
the property, parties frequently assign responsibility for the tax liability
within the purchase agreement. Van Prooyen Builders, Inc. v. Lambert,
907 N.E.2d 1032 (Ind. Ct. App. 2009).
In the present case, the
Petitioner contracted with the seller of the subject property in regards to the
2010 property taxes. The Petitioner now appears to ask the Board to impose that
agreement on the county. However, the general rule is that only parties to a
contract, or those in privity with the parties to the contract, have rights
under the contract. OEC-Diasonics, Inc. v. Major, 674 N.E. 2d 1312,
1314-15 (Ind. 1996). While it is unfortunate that the closing company
underestimated the tax burden facing the Petitioner, the county was not a party to that
agreement and cannot be bound by the taxes estimated by the closing company.
Even if the
county assessor or auditor could be seen as somehow bound by the agreement
between the Petitioner and the property’s former owner, the Board could not
enforce that agreement. The Board is a creature of the legislature and
therefore has only those powers conferred by statute. See Matonovich v.
State Bd. of Tax Comm’rs, 705 N.E.2d 1093, 1096 (Ind. Tax Ct. 1999)
(addressing the authority of the now abolished State Board of Tax
Commissioners). And “[a]ll doubts regarding a claim to power of a governmental
agency are resolved against the agency.” State ex rel. ANR Pipeline Co. v.
Indiana Dep’t of State Revenue, 672 N.E.2d 91, 94 (Ind. Tax Ct. 1996). The
Board therefore must address appeals from determinations made by local
assessing officials or county PTABOAs that concern property valuations,
property tax deductions, property tax credits or property tax exemptions. Ind.
Code § 6-1.5-4-1. By contrast, no statute authorizes the Board to review or
enforce the private contract rights or obligations of buyers and sellers in
real estate transactions.
Finally,
to the extent that the Petitioner’s representative can be seen as arguing that
the Petitioner should continue to receive the seller’s homestead deduction on
the subject property, that argument must also fail.
In Fuller
v. Cass County Assessor, Pet. No. 09-014-08-1-5-00001 (Ind. Bd. Tax Rev. Nov.
10, 2010), aff’d Fuller v. Cass County Assessor, Cause No.
49T10-1011-TA-68 (Ind. Tax Ct., Nov. 9, 2011) (unpublished decision), the
taxpayers bought a house on October 31, 2007. Although the previous owner had
what Mr. Fuller referred to as “exemptions” for
2007, he claimed that those exemptions had been removed and that the county
auditor’s office had told the taxpayers that it was too late to file an
application for that tax year. Fuller, at 3. The Board explained that
there were several benefits – including the homestead credit and the standard
deduction – that a taxpayer could claim if the taxpayer owned or was buying a
homestead as of March 1, 2007. Id. at 6. But, because the taxpayers had
not bought the property under appeal until October 31, 2007, the Board held
that the taxpayers were not entitled to those benefits for the March 1, 2007,
assessment date. Id.
Like the
taxpayers in Fuller, Brazil First United Methodist Church did not buy
the subject property until after the assessment date for which it seeks a
homestead deduction. When a taxpayer claims entitlement to a property tax
credit or deduction, he must establish that he comes within the specific
statutory provisions allowing those credits and deductions. See, e.g.,
Indiana Dep't of State Revenue v. Estate of Daugherty, 938 N.E.2d 315, 320
(Ind. Tax Ct. 2010) (citation omitted), review denied. Accordingly, to
establish that it qualified for the homestead deduction in 2010, the Petitioner
needed to show, among other things, that it filed a statement with the county
auditor “on or before January 5 of the immediately succeeding calendar year.” See
Ind. Code § 6-1.1-12-37. More importantly, a "homestead" is an
individual's principal place of residence. Ind. Code § 6-1.1-12-37. A
“homestead” does not include “property owned by a corporation, partnership,
limited liability company, or other entity not described in this subdivision.” Id.
Thus, even if the Petitioner had properly filed, it would not have been
entitled to a homestead deduction on the property pursuant to the requirements
of the statute.
The Board
therefore reaches the same result that it did in Fuller – Brazil First
United Methodist Church did not make a prima facie showing that it was entitled
to the former owner’s homestead deduction on the property.
The bigger
issue here was the Petitioner’s inability to timely file for an exemption on
the property for 2010 because the Petitioner did not own the property until
after the application deadline.
In Ind.
Cmty. Action Assoc., Inc. v. Dep't of Local Gov't Fin., 797 N.E.2d 878
(Ind. Tax Ct. 2003), CAP, a non-profit organization, acquired property located
in Indianapolis, Indiana on August 25, 1998. As the new property owner, CAP
filed a Form 136 Application for Property Tax Exemption (application) for the
1998 tax year on April 28, 1999. 797 N.E.2d at 879. The Marion County Property
Tax Assessment Board of Appeals denied the application and the State Board held
a hearing on January 13, 2000, at which time it ascertained that CAP's
application was not timely filed. Id. The Tax Court found that “CAP, not
having received a tax exemption for the previous year, filed its application
seeking a tax exemption for the 1998 tax year on April 28, 1999. CAP was
required to file its application by May 15, 1998. As a result, CAP's exemption
application was properly denied.” Id.
Indiana Code
§6-1.1-11-3.5 clearly specifies that the Petitioner was required to file an
application for exemption by May 15th of the year for which the exemption was
sought. The undisputed evidence established that the Petitioner bought the
subject property on October 21, 2010, and therefore did not file by May 15,
2010, for the 2010 assessment year (nor could the Petitioner have reasonably
filed by May 15, 2010). While the result appears unfair, especially in light of
the fact that the Petitioner is unable to benefit from the former property
owner’s homestead deduction, the Board is bound to follow the law as written
and interpreted by the Tax Court. See Word of His Grace Fellowship, Inc. v.
State Board of Tax Commissioners, 711 N.E.2d 875, 878, fn. 2 (Ind. Tax Ct.
1999) (“It is true that in this case requiring [the property owner] to file the
exemption application is exalting form over substance, especially in light of
the fact that Word, as a possessor, can be responsible for the property taxes
at issue… However, because the legislature has stated in unmistakable terms
that only a legal title holder may be an ‘owner’ for purposes of this case, the
Court has no choice but to follow that legislative command.”)
Under these
circumstances, denying the property an exemption for 2010 because of the
Petitioner’s untimely exemption application was not an error.
