Responsibility for property taxes is governed by Indiana
Statute. “The owner of any real
property on the assessment date of a year is liable for the taxes imposed for
that year on the property…" I.C. § 6-1.1-2-4. “When a person other than the owner pays any
property taxes, as required by this section, that person may recover the amount
paid from the owner, unless the parties have agreed to other terms in a
contract.” Id.
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.
I.C. § 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).
Regardless of whether or not Petitioners owned the subject
property on the assessment date, the purchase of the property by Petitioners
did not affect the tax lien that attached when the 2007- pay-2008 taxes were
not paid in a timely manner. While Petitioners may have a possible claim
against the prior owner of the property, this is not an issue for the
Board.
Petitioner McElwee argued that I.C. 6-1.1-9-1 and I.C.
6-1.1-9-4(b) apply, and therefore no lien should have attached to the subject
property. Those statutes state the
following:
IC 6-1.1-9-1
If a township assessor (if any), county assessor, or county
property tax assessment board of appeals believes that any taxable tangible
property has been omitted from or undervalued on the assessment rolls or the
tax duplicate for any year or years, the official or board shall give written
notice …of the assessment or increase in assessment.
IC 6-1.1-9-4(b)
With respect to real property which is owned by a bona fide
purchaser without knowledge, no lien attaches for any property taxes which
result from an assessment or an increase in assessed value, made under this
chapter for any period before his purchase of the property.
While I.C. 6-1.1-9-1 appears to be directly applicable to
this case because the assessor increased the prior year’s assessment and added
the house that had been omitted from the previous assessment, I.C. 6-1.1-9-4(b)
pertains only to bona fide purchasers without knowledge. McElwee left out the language regarding
knowledge when explaining the application of this statute to his case. McElwee admitted that he was aware that the
home itself had not been assessed and had even called the township assessor’s
office about this very fact. He claimed
he was told that he would not be responsible if changes were made. Regardless of what he was told, the language
of I.C. 6-1.1-9-4(b) is clear.
Petitioner McElwee’s argument regarding his inability to
file for a mortgage or homestead deduction is irrelevant. The Petitioners would not have been entitled
to either the homestead standard deduction or the mortgage deduction for the
2007-pay-2008 period… Petitioners did
not have a mortgage on the property and could not have complied with the
October 15, 2007, application deadline, because Petitioners did not purchase
the home until after that deadline.
Fuller v. Cass County Assessor, 957 N.E.2d 711 (Ind. Tax Ct. 2011).
Petitioner McElwee also relied on an Indiana Tax Court case
holding that assessment values must be carried forward to the next general
assessment if no changes had occurred to the property. K.P. Oil, Inc. v. Madison Township Assessor,
818 NE2d 1006 (Ind. Tax Ct. 2004).
…
Each tax year stands alone. If an assessing official were
bound to the value determined during a general reassessment, then evidence of
that property’s assessment in a general reassessment year would be probative of
its value in subsequent years. The Tax
Court, however, has determined that evidence of an assessment in one tax year
is not probative of its true tax value in a different tax year. Fleet Supply,
Inc. v. State Bd. of Tax Comm’rs, 747 N.E.2d 645, 650 (Ind. Tax Ct. 2001)
(citing Glass Wholesalers, Inc. v. State Bd. of Tax Comm’rs, 568 N.E.2d 1116,
1124 (Ind. Tax Ct. 1991)). The Petitioner’s argument that the assessments in
question cannot be changed between general reassessments does not square with
precedent that each year stands alone.
Prior to 2002, the assessed value of real property in
Indiana had no relation to any external, objectively verifiable standard of
measure. Beginning in 2002, however,
Indiana's property tax assessment system began to incorporate market
value-in-use. This new system of
assessment acknowledges that market trends affect the assessed value of real
property. Charwood LLC v. Bartholomew
County Assessor, 906 N.E.2d 946 (Ind. Tax Ct. 2009). Petitioners’ case pertains to a 2007
assessment and consequently the “carry forward” rule from K.P. Oil, Inc. no
longer applies.
