Thorsness presents two issues on appeal. First, he claims
that the Indiana Board erred in determining that he, and not the Assessor, bore
the burden of proof at the administrative hearing. Second, Thorsness claims
that the Indiana Board erred in determining that his evidence was not probative
in demonstrating that the Assessor’s assessment lacked uniformity.
I.
Prior to 2009, a taxpayer who challenged his property tax
assessment always bore the burden of proof. See IND. CODE § 6-1.1-15-1(m)(2)
(2008) (indicating that a taxpayer that initiates a property tax appeal must
“prosecute” the review). See also 2002 REAL PROPERTY ASSESSMENT MANUAL (2004
Reprint) (Manual) (incorporated by reference at 50 IND. ADMIN. CODE 2.3-1-2
(2002 Supp.)) at 5 (explaining that an assessment made pursuant to its
guidelines is presumed accurate unless the taxpayer demonstrates otherwise). In
2009, however, the General Assembly established an exception to that rule by
adding subsection (p) to Indiana Code § 6-1.1-15-1:
[I]f the assessment for which a notice of review is filed
increased the assessed value of the assessed property by more than five percent
(5%) over the assessed value finally determined for the immediately preceding assessment date[,] [t]he county assessor or
township assessor making the assessment has the burden of proving that the assessment
is correct.
IND. CODE § 6-1.1-15-1(p) (eff. July 1, 2009) (repealed
2011). This statute contains what is commonly referred to as “the
burden-shifting rule.”
Thorsness claims on
appeal that at the time of his Indiana Board hearing in 2010, Indiana Code §
6-1.1-15-1(p) clearly applied to his case because his property’s assessment had
increased by more than 5% from 2006 and 2007. He asserts, therefore, that the
Indiana Board erred when it held in its final determination that under the
statute, the burden shifted to the Assessor at the PTABOA level only, and not
at the Indiana Board level. (Compare Pet’r Br. at 8-12 with Cert. Admin. R. at
114-117 ¶¶ 19(a)-(f).)
Just recently, this
Court explained the proper application of the burden-shifting rule. See Orange
Cnty. Assessor v. Stout, 996 N.E.2d 871, 873-75 (Ind. Tax Ct. 2013). Pursuant
to the Court’s holding in Stout, the Indiana Board interpreted Indiana Code § 6-1.1-15-1(p)
incorrectly. See id. Nonetheless, the Indiana Board’s mistake does not constitute
reversible error in this case because the burden-shifting rule contained in Indiana
Code § 6-1.1-15-1(p) (and its progeny) applies only to valuation challenges,
not to uniform and equal constitutional challenges for the following reasons.
The language of
Indiana Code § 6-1.1-15-1(p) is clear and unambiguous, and the Court will not
expand or contract its meaning by reading into it language that is not there.
See Kohl’s Dep’t Stores, Inc. v. Indiana Dep’t of State Revenue, 822 N.E.2d
297, 300 (Ind. Tax Ct. 2005). Indiana Code § 6-1.1-15-1(p) clearly states that
when an assessment increases by more than 5% from one year to the next, an
assessor “has the burden of proving that the assessment is correct.” I.C. §
6-1.1-15-1(p) (emphasis added). In Indiana, a property’s assessment is the
value placed on the property that reflects its market value-in-use (i.e., its
market value). See supra note 1. See also Manual at 8 (defining “assessment” as
the market value-in-use that is officially assigned to the property by an
assessing official/body, or a court). Thus, the burden-shifting rule does not
apply unless the claim is that a property’s assessment does not reflect its market
value-in-use. This is not Thorsness’s claim. (See, e.g., Cert. Admin. R. at
184-86, 189-90; Pet’r Reply Br. at 6; Oral Arg. Tr. at 5-6 (where Thorsness
admits that his assessment is correct)).
Instead, by claiming
that his assessment lacks uniformity and equality, the remedy Thorsness seeks
is not one of “correctness,” but is, in effect, one of “incorrectness.” Indeed, Thorsness’s claim
calls for an evaluation of how his property’s assessment compares to its market
value in relation to how the assessments of other properties within the
assessing jurisdiction compare to their market values. In other words,
Thorsness wants his otherwise correct property assessment to be reduced by 20.5%
so that it is on par with the assessment to market value ratios of other
properties in Dune Acres. Indiana Code § 6-1.1-15-1(p), however, does not apply
to the relational evaluation required by a uniformity and equality claim that
seeks an equalization adjustment.
The Indiana Board
determined that Thorsness bore the burden of proof at its administrative
hearing. This result was right, although the Indiana Board was wrong in how it
arrived at that result. Consequently, the Court will not reverse the Indiana Board’s
final determination on this basis.
II.
Thorsness also
contends that the Indiana Board erred when it determined that he did not
present probative evidence to demonstrate that the Assessor’s assessment lacked
uniformity. To the contrary, Thorsness claims that because his spreadsheet contained
“virtually every sale [in Dune Acres] . . . [that] sold in the two years prior
to the assessment of March 1, 2007[, it] . . . is [a] statistically reliable
[ratio study that] demonstrate[s] systematic under-assessment” of the
residential property in Dune Acres.” (Pet’r Br. at 2, 13.) (See also Oral Arg.
Tr. at 5, 8 (referring to the spreadsheet as an assessment ratio study).)
The Department of
Local Government Finance (DLGF) – the administrative agency charged with
ensuring that Indiana’s property assessments are uniform and equal – has provided guidance about how to
compile and evaluate the data necessary for an assessment ratio study. More
specifically, the DLGF has, through its duly promulgated administrative
regulations, incorporated into law the International Association of Assessing
Officers’ Standard on Ratio Studies. See 50 IND. ADMIN. CODE 14-1-1, 14-2-1 (2007) (see
http://www.in.gov/legislative/iac/).
Pursuant to the
Standard, a valid assessment ratio study must be based on data that has been
both appropriately stratified and statistically analyzed. See INT’L ASS’N ASSESSING
OFFICERS, Standard on Ratio Studies 9 (1999) (hereinafter “Standard”). For example, the Standard provides that all the properties
within the taxing district that fall within the scope of the study must be
divided (i.e., stratified) into two or more subpopulations. See id. at 10. The
DLGF has determined that for purposes of measuring assessment uniformity in
Indiana, assessment ratio studies must stratify properties by property class
within each township. See 50 IND. ADMIN. CODE 14-5-1 (2007) (see http://www.in.gov/legislative/iac/)
(delineating the property classes within townships as improved residential,
unimproved residential, improved commercial, unimproved commercial, improved
industrial, unimproved industrial, and agricultural land).
The Standard further
explains that a statistical measure of assessment uniformity must be calculated
for the entire taxing district and each stratum therein. See Standard at 24,
36. The most widely accepted statistical measure of tax assessment uniformity is
the “coefficient of dispersion,” which indicates the average deviation from the
median sale/assessment ratio. See id. at 24-25, 36, 38. The DLGF has declared
the Standard’s coefficient of dispersion to be the yardstick by which
assessment uniformity is measured in Indiana’s townships. See 50 IND. ADMIN.
CODE 14-7-1 (2007) (see http://www.in.gov/legislative/iac/). See also Manual at
6, 20-22.
In reviewing the
record, the Court cannot conclude that the Indiana Board erred by determining
that Thorsness’s ratio study did not demonstrate that the Assessor’s assessment
lacked uniformity. Thorsness’s evidence indicated that there were six residential
properties in Dune Acres that apparently were assessed, and therefore taxed, at
a lower percentage of market value than his property. While this evidence is no
doubt relevant, the Indiana Board did not err in determining that it was not
probative in demonstrating that Thorsness’s property was assessed and taxed at
a level that exceeded the common level within Westchester Township overall.
Accordingly, the Court will not reverse the Indiana Board’s final determination
on this basis.
