Tax Court: tax rate recalculation incorrect

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The Indiana Tax Court ruled that a government agency incorrectly calculated a Marion County school district’s capital project fund levy property tax rate for 2011, and it has ordered the Department of Local Government Finance to recalculate the tax rates going back to 2007.

In Metropolitan School District of Pike Township v. Indiana Department of Local Government Finance, No. 49T10-1103-TA-21, the Pike Township school district appealed the DLGF’s final determination recalculating the school district’s capital projects fund levy property tax rate for 2011. The DLGF notified the school district that it was reducing the estimated tax rate pursuant to the formula provided in Indiana Code 6-1.1-18-12. The school district challenged the rate reduction, but the DLGF issued a final determination certifying its previous order as final.

But Tax Judge Martha J. Wentworth reversed, finding the DLGF did not properly follow the law when it performed the steps outlined in I.C. 6-1.1-18-12. Based on DeKalb County. E. Cmty. Sch. Dist. v. Dep’t of Local Gov’t Fin., 930 N.E.2d 1257, 1260-61 (Ind. Tax Ct. 2010), the DLGF should use a zero value in steps two and four of the formula when there is no increase in a school district’s assessed value from one year to the next, and it should also use a zero value in those steps when a school district’s assessed value actually decreases.

The DLGF applied DeKalb in its 2011 CPF levy property tax rate adjustment by using zeros in steps two and four of the statutory formula, but the school district contended that the DLGF should have gone back and recalculated the rates for 2007-2010 because CPF levy property tax rate calculations are affected by previous years’ rate calculations. Judge Wentworth agreed, rejecting the DLGF’s argument that it would be improper to recalculate the previous rates and that the Tax Court lacks subject matter jurisdiction to order the DLGF to provide the retroactive recalculations.

"The School District does not ask the DLGF to recalculate the CPF levy property tax rate for years 2007 through 2010 using zero values instead of negative values in steps two and four to recover ‘lost’ funds from each of those years,” she wrote. “Rather, the School District simply seeks to correct those erroneous calculations for the sole purpose of ensuring the accuracy of its 2011 CPF levy property tax rate calculation, which is the subject of the final determination at issue, so that it may levy and collect the funds to which it is statutorily entitled.”

She remanded to the DLGF with instructions to recalculate the tax rates for 2007-2010 using zero values instead of negative values in steps two and four of the statutory formula.



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