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Practitioners say recent tax rulings help clarify precedent

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When Indianapolis attorney Larry Stroble read two recent rulings from the Indiana Tax Court, he saw one consistent message that speaks broadly to an overall inadequacy of the legal system.

That lesson: Courts don't always provide enough guidance when issuing decisions, and that leads to more litigation in order to flesh out a final resolution.

Now, the pair of tax rulings reaches back more than a decade to when the Indiana Supreme Court threw out the state's property-tax infrastructure, which led to what attorneys describe as confusion for tax practitioners, assessors, appraisers, and property owners.

"The lack of guidance on this issue has shown a weakness of our system," the Barnes & Thornburg partner said. "These are important decisions, but I wouldn't go as far as saying they're landmark rulings. I'd say it's a step forward in clarifying a basic principle in determining property value using market valuation."

Indiana Tax Court Judge Thomas Fisher issued rulings March 26 in Meijer Stores Limited Partnership v. Betty Smith, Wayne Twp. Assessor, et al., No. 49T10-0609-TA-89, and Sue Ann Stinson, in her official capacity as the Washington Township Assessor, et al. v. Trimas Fasteners, Inc., No. 49T10-0702-TA-4, which both help lay out more guidance since the landmark Indiana Supreme Court decision in 1998.

In State Board. of Tax Comm'rs v. Town of St. John, 702 N.E.2d 1034, 1043 (Ind. 1998), justices held that the tax statutes at the time violated the Indiana Constitution's property-taxation clause. The court determined that real property must be assessed on the basis of "market value inuse," which is the value "of a property for its current use, as reflected by the utility received by the owner or a similar user, from the property," according to the state assessment manual. That system began in 2002. But the ruling didn't spell out how appraisals should be used to determine the "in-use" standards for the non-residential property-tax assessments.

Since then tax attorneys say the process has remained unclear about how the valuations are actually to be determined. That may be changing with these recent Tax Court rulings, though.

Stroble and his colleagues agree that these decisions are part of a larger puzzle spelling out how the property-tax assessment process and subsequent litigation should be handled.

Judge Fisher rejected assessor appraisals and found in favor of the property owners, based on specific market data. In both cases, the property owners cited external obsolescence - a loss of value that may be caused by an oversupply of the type of space it provides, light or noise pollution, crime, or other issues.

In Meijer, the retailer appealed its property assessments, charging they were too high. The Wayne County Property Tax Assessment Board of Appeals subsequently valued the property as: $10,954,800 for 2002; $12,420,400 for 2003; and $12,132,000 for 2005. Meijer then appealed to the Indiana Board of Tax Review and hired a licensed Indiana appraiser to complete an independent appraisal, which showed the value at $6.3 million for those years.

The appraiser Meijer hired used a cost approach, a sales comparison approach and an income approach, but in reconciling the value estimates, he concluded the sales comparison approach was the most reliable. The Wayne Township Assessor didn't present any evidence at a hearing but rejected those methods. In ruling on the issue, the tax board held the appraiser had utilized properties that weren't "comparable" to the Meijer property.

Judge Fisher reversed the tax board's judgment, finding that Meijer's appraisal was based on more reliable evidence presented in the case. Those representing Meijer were Baker & Daniels attorneys Brent Auberry, Jon Laramore, and Stephen Paul; they declined to comment on the rulings because the lawyers weren't certain if rehearings or appeals would be sought.

In the Trimas decision, Judge Fisher heard a case involving the Washington Township Assessor's office in Clinton County and an industrial complex in Frankfort. For the 2002 assessment, the assessor valued the 200,000-square-foot Trimas facility on 44 acres to be worth $7.7 million, though it was later reduced to $7.2 million. Trimas appealed and argued - based on an appraisal conforming to the Uniform Standards of Professional Appraisal Practice - the property's market value-in-use was $2.9 million. The assessor presented an appraisal along with testimony of the appraiser that the market value-in-use of Trimas' property was $8 million on March 1, 2002.

The state's tax board later decided the company's appraisal was more probative than the assessor's data and reduced Trimas' assessment to $2.9 million. The local assessor appealed, and Judge Fisher ruled that other comparable properties since vacated could be used in the analysis.

"Generally speaking, market value-inuse, as determined by objectively verifiable market data, is the value of a property for its use, not the value of its use," Judge Fisher wrote.

Trimas' attorneys, David Suess and Thomas Atherton at Bose McKinney & Evans, described the rulings a triumph for the property owners. They said it was entirely consistent with what the Supreme Court had said in the 1998 decision, that market value means more than looking at the sticks and bricks.

"I don't see this as a revolutionary decision," Atherton said. "In 1998 we were sent on a voyage of complete subjectivity to objectivity, and this case is an important stop on that voyage," he said. "If you look at the two cases jointly, this will eliminate a theory being advanced that vacant properties are inherently less valuable than those occupied as far as what you could sell it for."

Suess said from a practitioner's point of view, the rulings reinforce that it's important for any party to get appraisals and evidence in on a timely fashion. That didn't happen in the Meijer case when the board excluded the assessor's late filings, he said.

Analyzing the decisions, Stroble said this isn't the end of the issues. More lawsuits will need to go before the appellate courts, he said.

"This is a growing problem, as assessors and taxpayers continue trying to arrive at the best market value," he said. "It will take several other decisions to completely establish a clear picture and a full set of rules for assessors and appraisers to follow."

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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