Excerpts of
the Tax Court Determination follow:
Prior to 2009, a taxpayer who
challenged his property tax assessment bore the burden of proof (i.e., the
burden of persuading the fact-finder that the assessment was incorrect and the
initial burden of producing evidence to demonstrate that the assessment was
incorrect). See, e.g., IND. CODE § 6-1.1-15-1(m)(2) (2008) (indicating that a taxpayer
that initiates a property tax appeal must “prosecute” the review) (footnote
added). See also 2002 REAL PROPERTY ASSESSMENT 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:
This
subsection applies if 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(repealed 2011). Then, in July of 2011, the General Assembly repealed Indiana
Code § 6-1.1-15-1(p), while enacting a similar provision, Indiana Code §
6-1.1-15-17, the same day. See Pub.L. No. 172-2011 §§ 30, 32 (eff. July 1,
2011); IND. CODE §
6-1.1-15-17 (2011) (repealed 2012). Indiana Code § 6-1.1-15-17 stated:
This section
applies to any review or appeal of an assessment under this chapter if the
assessment that is the subject of the review or appeal increased the assessed
value of the assessed property by more than five percent (5%) over the assessed
value determined by the county assessor or township assessor (if any) for the
immediately preceding assessment date for the same property. The county
assessor or township assessor making the assessment has the burden of proving
that the assessment is correct in any review or appeal under this chapter and
in any appeals taken to the Indiana board of tax review or to the Indiana tax
court.
I.C. §
6-1.1-15-17. These statutes contain what is commonly
referred to as “the burden-shifting rule.”
ANALYSIS
I.
On appeal, the
Assessor first claims that the Indiana Board’s final determination is not in
accordance with the law because it “incorrectly applies the new burden of proof
statute, Ind[iana] Code § 6-1.1-15-17[.]” (Pet’r Br. at 1 (emphasis added).)
More specifically, the Assessor argues that in applying Indiana Code §
6-1.1-15-17 to Stout’s 2009 assessment appeal, which was already pending before
the statute’s effective date of July 1, 2011, the Indiana Board applied the new
statute retroactively, in contravention of Indiana case law.5 (See Pet’r Br. at 7-8 (footnote added).) The Assessor’s
argument fails, however, for the following interrelated reasons.
First,
contrary to the Assessor’s argument, Indiana Code § 6-1.1-15-17 is not a “new”
statute, as its content had already been codified at Indiana Code §
6-1.1-15-1(p). See supra at p. 4; Lake Cnty. Assessor v. Amoco Sulfur Recovery
Corp., 930 N.E.2d 1248, 1254-55 (Ind. Tax Ct. 2010) (stating that “[s]tatutes
related to the same general subject matter are in pari materia and should be
construed together so as to produce a harmonious result”) (citation omitted),
review denied. The General Assembly repealed Indiana Code § 6-1.1-15-1(p) and enacted
§ 6-1.1-15-17 to clarify its original intent in enacting Indiana Code §
6-1.1-15-1(p): that the 5% burden-shifting rule was to be applied not solely at
the preliminary level of the administrative process (i.e., the PTABOA level),
but throughout the entire appeals process. This clarification makes particular
sense considering the overall structure of the property tax appeal process: PTABOA
hearings are informal, non-record proceedings; whereas, hearings before the
Indiana Board are more formalistic proceedings where a record is created for
subsequent review. Accordingly, in originally enacting Indiana Code §
6-1.1-15-1(p), the General Assembly could not have intended the illogical
result of shifting the burden of proof to the Assessor in the preliminary
stages of an appeal only to shift it back to the taxpayer thereafter. See
Uniden Am. Corp. v. Indiana Dep't of State Revenue, 718 N.E.2d 821, 828 (Ind.
Tax Ct. 1999) (explaining that statutes must be read in such a way that
prevents an illogical or absurd result). See also Indiana Dep’t of State
Revenue v. Kitchin Hospitality, LLC, 907 N.E.2d 997, 1002 (Ind. 2009) (stating
that “[w]here it appears that the Legislature amends a statute to express its
original intention more clearly, the normal presumption that an amendment
changes a statute’s meaning does not apply”) (citation omitted). Thus, as early
as 2009, the General Assembly deemed an annual increase in the assessed value
of property in excess of 5% to automatically shift the burden of proof from the
taxpayer (to demonstrate that the assessment was incorrect) to the assessing
official (to demonstrate that the assessment was correct). See Johnson Cnty.
Farm Bureau Coop. Ass’n v. Indiana Dep’t of State Revenue, 568 N.E.2d 578,
580-81 (Ind. Tax Ct. 1991) (explaining that in construing a statute, a court’s
primary goal is to determine and implement the legislature’s intent in enacting
the statute and the actual language of the statute itself is the best evidence
of that intent), aff’d by 585 N.E.2d 1336 (Ind. 1992).
Second, the
Assessor’s argument fails because it is premised on the belief that the
statutory “trigger” for shifting the burden of proof from the taxpayer to an
assessing official is the assessment date. In other words, the Assessor
believes that for Indiana Code § 6-1.1-15-17 to apply, the assessment – as well
as the subsequent appeal thereon – must have occurred after the statute’s
effective date. (See, e.g., Oral Arg. Tr. at 20-22.) Neither the plain language
of Indiana Code § 6-1.1-15-17, nor the plain language of its predecessor,
Indiana Code § 6-1.1-15-1(p), supports this interpretation. Both statutes
similarly indicate that the burden of proof shifts from the taxpayer to an
assessing official when a taxpayer files an appeal on an assessment that
increased by more than 5% from one year to the next. See supra at p. 4. This
shift in the burden of proof applies to the process and procedure of appeals
alone, not to the mechanics of valuing property as of a certain assessment
date. Accordingly, the statutes apply to all pending appeals regardless of
assessment dates. Moreover, it would be impractical to find that the statute’s
trigger is the assessment date because an assessment that increases by more
than 5% from one year to the next matters little if the taxpayer chooses not to
challenge the increase. See City of Carmel v. Steele, 865 N.E.2d 612, 618 (Ind.
2007) (stating that courts will not presume that the Legislature intended
statutory language to be applied illogically or in a way that would bring about
an absurd result).
Between 2008
and 2009, the Assessor increased Stout’s land assessment by more than 5%. When
Stout appealed that assessment to the PTABOA on May 18, 2010, Indiana Code §
6-1.1-15-1(p) was in effect, placing the burden of proof on the Assessor to
establish the propriety of the assessment increase. Consequently, the Indiana
Board’s final determination that the Assessor bore the burden of proof in this
case is in accordance with the law.
II.
As an
alternative argument, the Assessor contends that the Indiana Board’s final
determination is not supported by the evidence because she clearly met her
burden of proof in this case: she provided a reasonable basis for reclassifying
Stout’s land. (See Pet’r Br. at 3.) This alternative argument also fails.
Land is
classified and assessed as agricultural land when it is devoted to an
agricultural use. IND. CODE §
6-1.1-4-13(a) (2009) (amended 2012). Devoting land to an agricultural use
involves, among other things, the cultivation of income-producing crops. See REAL PROPERTY
ASSESSMENT GUIDELINES FOR 2002 – VERSION
A (2004 Reprint)
(incorporated by reference at 50 I.A.C. 2.3-1-2), Bk. 1, Ch. 2 at 99
(explaining that in valuing agricultural land, assessing officials typically
use the income approach to determine “the residual or net income that will
accrue to the land from [the] agricultural production”). One type of
agricultural classification is “woodland,” which is defined as
land
supporting trees capable of producing timber or other wood products. This land
has 50% or more canopy cover or is a permanently planted reforested area. This
land use type includes land accepted and certified by the Indiana Department of
Natural Resources as forest plantation under guidelines established to minimize
soil erosion.
During the
Indiana Board hearing, the Assessor submitted an aerial map that not only
demonstrated that the tree canopy covered more than 50% of Stout’s property,
but also that Stout’s tree canopy was similar to the neighboring properties.
(See Cert. Admin. R. at 63, 149-52.) When asked to clarify why some of those
neighboring properties were classified as “agricultural” while others were
classified as “residential excess,” the Assessor stated:
What the
County has attempted to do . . . is any property that is . . . classified as
ag, it . . . would need to be either actively farmed or in the case of wooded,
it would need to be harvestable timber[.] . . . The State has asked,
recommended [to] the counties if it is wooded ground that the [property owner]
provide a forest management plan and/or a timber harvesting plan for it to
qualify as agricultural property. And what the County is doing . . . [is]
reviewing all parcels that have been classified as agricultural to see if they
actually would [meet] the State’s mandate or the DLGF’s mandate for
agricultural property.
(Cert. Admin.
R. at 152-53.) In other words, the Assessor explained that she changed the
classification on Stout’s land from “agricultural” to “residential excess”
solely on the basis that she did not have a forest management plan or a timber
harvesting plan for the property. (See
Cert. Admin. R. at 152-53 (footnote added).)
A final
determination is not supported by the evidence if, upon reviewing the record in
its entirety, a reasonable person cannot find enough relevant evidence to
support the determination. See Amax, Inc. v. State Bd. of Tax Comm’rs, 552
N.E.2d 850, 852 (Ind. Tax Ct. 1990). Here, a reasonable mind would not accept
the lack of a forest management plan or a timber harvesting plan alone as
adequate support for the conclusion that Stout’s property was not being used
for agricultural purposes. For example, the Department of Natural Resources
only prescribes forest management plans for parcels that are a minimum of ten
contiguous acres. See IND. CODE §§
6-1.1-6-5, -16(b) (2009). The land at issue, however, is only 8.12 acres.
Moreover, the
fact that the Assessor did not have in her possession a timber harvesting plan
for the property does not mean that one does not exist. (See generally Cert.
Admin. R. (failing to indicate that the Assessor actually requested or provided
Stout with an opportunity to present such a plan at the time she began her
investigation).) Similarly, the lack of a timber harvesting plan does not mean
that Stout has not harvested, or is harvesting, timber from the property.8 Because the Assessor failed to provide any evidence that
demonstrated that Stout was not using his 8.12 acre property for an
agricultural purpose, the Court cannot say that the Indiana Board’s final
determination is not supported by substantial evidence.
