HOA tax refund dispute to stay in trial court for now, COA rules

Despite being based in Indiana tax law, a motion to compel Marion County taxing officials to rule on refund requests by two homeowners associations must continue in trial court until a final determination on the refunds is reached.

After the 2006 tax year, the Muir Woods Section One Association Inc. challenged real estate tax assessments of certain parcels for that year. The Marion County Property Tax Assessment Board of Appeals determined the parcels had assessed values of zero, so Muir Woods filed for a refund of the amount it overpaid. The Marion County treasurer issued a refund of $11,481.42, but Muir Woods did not believe that was enough.

Similarly, the Nantucket Bay Homeowners Association Inc. changed assessed values of certain parcels for the 2006 tax year, and the Marion County assessor agreed the parcels had a zero value. But like Muir Woods, Nantucket Bay did not believe its refund — $11,290.29 – was sufficient.

Thus, in February 2018, both Muir Woods and Nantucket Bay filed complaints to collect determined overpaid real estate taxes. The Marion County treasurer, auditor and assessor moved to dismiss, arguing the case belonged in the Indiana Tax Court, and the Marion Superior Court agreed.

In the first appeal of the case, the Indiana Court of Appeals upheld the dismissal, finding the trial court lacked jurisdiction to order the treasurer to issue refunds. Then in January 2020, the HOAs filed an amended complaint and petition in action for mandate, requesting a mandate requiring the county officials to issue rulings on the claims for refunds.

The auditor, treasurer and assessor again moved to dismiss, once again on jurisdictional grounds, and the trial court again granted the dismissal. In this second appeal of the case, however, the COA reversed.

Though the case “arises under” Indiana tax laws, there has been no final determination of the Indiana Board of Tax Review.

“Thus, the lack of a final determination by the Board of Tax Review is equivalent to a failure to exhaust administrative remedies and therefore jurisdiction could not lie with the Tax Court,” Senior Judge Ezra Friedlander wrote. He then pointed to Indiana Code § 6-1.1-26-3(a), which requires that a refund claim “shall be either approved or disapproved by the county auditor, the county treasurer, and the county assessor.”

“Though Section 6-1.1-26-3(a) imposes this duty, the statutory scheme does not provide a method for taxpayers to obtain a ruling if the Taxing Authorities fail to act,” Friedlander wrote. “… Here, although the Taxing Authorities’ duty to act arises under and is imposed by the tax laws of this state, any suit to enforce that duty must nonetheless be brought in a court of general jurisdiction because the ‘final determination’ jurisdictional requirement has not been met in order for the Tax Court to properly assume jurisdiction of the matter. …

“Accordingly, we reverse and remand to the trial court for consideration of the Homeowners Associations’ mandamus action.”

The case is Muir Woods Section One Association, Inc., and Nantucket Bay Homeowners Association, Inc. v. Claudia O. Fuentes, Marion County Treasurer; Julie Voorhies, Marion County Auditor; and Joseph P. O’Connor, Marion County Assessor, 20A-CC-1144.