Supreme Court rejects ‘dark box’ case, lets Tax Court ruling stand

A divided Indiana Supreme Court has denied review to a tax case involving the use of vacant, or “dark,” retail store properties in determining tax assessments for similar-functioning retail properties, allowing the Indiana Tax Court’s ruling in the case to stand.

In an order Thursday afternoon, Justices Robert Rucker, Mark Massa and Geoffrey Slaughter voted to deny review to Howard County Assessor v. Kohl’s Indiana, LP, 49T10-1502-TA-00004. The justices heard oral arguments on the petition for review Thursday morning after the Indiana Tax Court issued an opinion in September allowing retail stores to base their assessed valuations on similar “dark box” retail properties.

During arguments before the Supreme Court, counsel for the Howard County assessor warned the justices that allowing such a practice to continue would redefine the term “market value-in-use” to mean something closer to “fair market value.” But Paul Jones, counsel for the Kokomo Kohl’s store at issue in the case, said the state’s tax manual allows an assessment to be made by looking at the utility received by the owner of the property in question or a “similar user.”

The divided court’s decision to let the Tax Court’s ruling stands also reinforces the Tax Court’s previous decisions in a string of similar cases, including Meijer Stores Ltd. P’ship v. Smith, 926 N.E.2d 1134, 1137 (Ind. Tax Ct. 2010); Stinson v. Trimas Fasteners, Inc., 923 N.E. 2d 496 (Ind. Tax Ct. 2010); and Millennium Real Estate Inv., LLC v. Assessor, Benton Cnty., 979 N.E.2d 192 (Ind. Tax Ct. 2012). Counsel for the Howard County assessor specifically told the court Thursday that Meijer had been wrongly decided.

Chief Justice Loretta Rush and Justice Steve David voted to grant the transfer petition.

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