Tax Court affirms, reverses in property tax disputes with ingredient provider

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Editor’s note: This article has been updated.

An American multinational ingredient provider that ran into trouble with the Indiana Board of Tax Review has secured a reversal from the Indiana Tax Court for its personal property taxes for the 2012 and 2013 tax years. However, it wasn’t as successful in its request for a refund after finding it overpaid for the 2011 tax year.

Issues began for Ingredion, Incorporated after it filed its Indiana business tangible personal property assessment returns reporting the value of its tangible personal property located at its Indianapolis manufacturing facility for the 2011, 2012 and 2013 tax years.

In April 2014, the Marion County assessor sent Ingredion a letter initiating an audit of those returns and requesting certain documents necessary to reconcile Ingredion’s reported values with its financial records.

During the audit, Ingredion discovered that its former personal property tax return preparation firm had incorrectly reported the costs of its assets. Ingredion then provided the assessor with a written report showing that upon correcting the overstated costs reported for each year, Ingredion would owe additional personal property taxes for 2012 and 2013 but would have overpaid for 2011.

When the assessor issued two notice of assessment/change forms and a letter summarizing his final 2012 and 2013 audit findings, increasing Ingredion’s assessments for both 2012 and 2013, it failed to mention the overpayment for 2011.

During the pendency of the audit in Ingredion, Incorporated v. Marion County Assessor, 20T-TA-7, Ingredion filed a refund claim in 2015 seeking to recover its tax overpayment, but the assessor failed to approve or deny the claim until ordered to do so by the Marion Superior Court in January 2019. The Marion County Property Tax Assessment Board of Appeals ultimately denied Ingredion’s claim for refund.

On appeal, the Indiana Board of Tax Review issued its final determination granting summary judgment to the assessor after finding that Ingredion had not filed the requisite amended return.

Meanwhile, a fight over Ingredion’s 2012 and 2013 years was also underway in Ingredion, Incorporated v. Marion County Assessor, 20T-TA-6, (Ingredion I). There, the Indiana board issued a final determination finding the 2012 and 2013 audit assessments were timely and granting summary judgment to the assessor.

The Indiana board concluded that Ingredion’s inaccurate returns did not substantially comply “to the extent necessary to assure the reasonable objectives of the [statute and] regulation” were met, and that it lacked the authority to order the assessor to offset any underpayment of taxes owed for 2012 and 2013 by the amount of any overpaid taxes for 2011.

But the Indiana Tax Court reversed for Ingredion in Ingredion I, concluding that the Indiana board’s final determination that Ingredion’s 2012 and 2013 personal property tax returns were not in substantial compliance was “contrary to law and arbitrary and capricious.”

It remanded to the Indiana board to instruct the assessor to reinstate the values reported by Ingredion on its original returns for the 2012 and 2013 tax years.

As for Ingredion I’s companion case, the Tax Court affirmed, holding that Ingredion had not shown that the Indiana board acted contrary to law by denying its claim for refund.

“Here, the record shows that Ingredion’s 2011 personal property tax return has facts similar to the 2012 and 2013 tax returns in Ingredion I,” Judge Martha Blood Wentworth wrote.For example, Ingredion’s 2011 return lists the address where its property was located and discloses the value (albeit inaccurately) of its personal property. Thus, Ingredion’s 2011 return, like its 2012 and 2013 returns in Ingredion I, ‘substantially complies’ because it does not ‘substantially undermine[ ] the objectives of the property] statutes and regulations.'”

It therefore concluded that because Ingredion’s 2011 return substantially complied, the five-month limitation applies, barring the assessor from changing the assessed value Ingredion claimed on its original 2011 return.

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