Indiana Law Review Recent Developments in Indiana Taxation Lawrence A. Jegen, nr Meredith A. Devlin** Tom D. Conley*** Introduction—Some Abbreviation references This Article highlights the major tax developments that occurred through the calendar year of 2007. l Whenever the term "GA" is used in this Article, such term refers only to the 115th Indiana General Assembly. Whenever the term "Governor" is used in this Article, such term refers only to the Governor of Indiana who was serving in office during the 1 15th Indiana General Assembly. Whenever the term "Tax Court" is referred to in this Article, such term refers only to the Indiana Tax Court. Whenever the term "DLGF" is used in this Article, such term refers only to the Indiana Department of Local Government Finance. Whenever the term "BTR" is used in this Article, such term refers only to the Indiana Board of Tax Review. Whenever the term "SBTC" is used in this Article, such term refers only to the Indiana State Board of Tax Commissioners. Whenever the term "DOSR" is used in this Article, such term refers only to the Indiana State Department of Revenue. Whenever the term "I.C." is used in the text of this Article, such term refers only to the Indiana Code which is in effect at time of the publication of this Article. Whenever the term "ERA" is used in this Article, such term refers only to an Indiana Economic Revitalization Area. Whenever the term "CAGIT" is used in this Article, such term refers only to the Indiana County Adjusted Gross Income Tax. Whenever the term "COIT" is used in this Article, such term refers only to the Indiana County Option Income Tax. Whenever the term "EDC" is used in this Article, such term refers only to the Indiana Economic Development Corporation. Whenever the term "CDC" is used in this Article, such term refers only to the Indiana Community Development Corporation. Whenever the term "CEDIT" is used in this Article, such term refers only to the Indiana County Economic Development Income Taxes. Whenever the term "EDIT" is used in this Article, such term refers only to the Indiana Economic Development Income Tax. Whenever the term "BMV" is used in this Article, such term refers only to the Indiana Bureau of Motor Vehicles. Whenever the term "IRC" is used in this Article, such term refers only to the * Thomas F. Sheehan Professor of Tax Law and Policy, Indiana University School Law—Indianapolis; B.A., Beloit College; M.B.A., J.D., University ofMichigan; L.L.M., New York University. ** Indiana University; M.S.W., 2000, Indiana University; J.D. Candidate, 2008, Indiana University School of Law—Indianapolis. *** Deputy Director of Tax Policy, Indiana Department of State Revenue. 1. For comprehensive information concerning the Indiana Tax Court, the Indiana Department of State Revenue, the Indiana Board of Tax Review, the Indiana Department of Local Government Finance, and a variety of other tax-related information, visit Professor Jegen' s Taxsite at http://www.iupui.edu/~taxsite and the State of Indiana's official website at http://www.state. in.us. 1272 INDIANA LAW REVIEW [Vol. 41 : 1271 Internal Revenue Code which is in effect at the time of the publication of this Article. Whenever the term "AOPA" is used in this Article, such term refers only to the Indiana Administrative Orders and Procedures Act. Whenever the term "CBTCPR" is used in this Article, such term refers only to the County Board of Tax and Capital Projects. Whenever the term "PTABOA" is used in this Article, such term refers only to a Property Tax Assessment Board of Appeals. I. Indiana General Assembly Legislation The 1 15th GA passed several pieces of legislation affecting various areas of state and local taxation, e.g., state income taxes, county property taxes, sales and use taxes, and local taxes. The most significant changes occurred in the area of property tax appeal procedures. However, most of the amendments to the property tax laws are very technical ones, and it takes a fairly knowledgeable individual about property taxes to fully understand theses amendments. A. Property Tax 2 The GA enacted a variety of changes to property tax legislation. For 2007 taxes payable in 2008, the GA amended the statute to keep the standard deduction for the homestead credit at $45,000, the same amount allowable for the previous tax year. 3 The GA also amended the provision that would reduce the standard deduction to $35,000 starting in the 2007 assessment year to a gradually declining schedule beginning in the 2008 assessment year for taxes payable in 2009 and future years. 4 The standard deduction is to gradually be reduced annually by $ 1 000 until 20 1 2 when the deduction levels off at $40,000. 5 Counties continue to have the option to authorize a "circuit breaker" that limits residential property taxes. The GA amended the "circuit breaker" provision to provide that for 2008 and 2009, the credit for taxes greater than 2% applies to "homestead property" instead of "qualified residential property." 6 Further, after 2009, the circuit breaker credit for taxes greater than 2% applies to homestead property while a circuit breaker credit for taxes greater than 3% applies to property other than homestead property. 7 The GA also removed tuition support levies from the circuit breaker calculations, 8 removed the ability of the Property Tax Replacement Fund Board to raise the percentage of the homestead 2. For an additional list of the property tax provisions enacted by the GA in 2007, see Memorandum from Ind. Dep't of Local Gov't Fin. to Political Subdivisions, County Auditors, Assessors, and Treasurers, and Twp. and Tr. Assessors (June 2007), available at http://www.in. gov/dlgf/memos/pdfs/memos/LegislationMemoJune2007.pdf. 3. Ind. Code § 6-1.1-12-37 (Supp. 2007) (as amended by 2007 Ind. Acts 3870-71). 4. Id. 5. Id. 6. Id. § 6-1.1-20.6-6.5 (as amended by 2007 Ind. Acts 3918-19). 7. Id. § 6-1.1-20.6-7 (as amended by 2007 Ind. Acts 3919-21). 8. Id. 2008] TAX LAW 1273 credit, 9 and amended I.C. § 6-1.1-21.2-15 to prohibit the inclusion of a tax increment replacement tax in the calculation of the circuit breaker credit. 10 After December 31, 2008, the County Board of Tax Adjustment is to be abolished. 11 Beginning January 1, 2009, a CBTCPR is to be established in each county. 12 Each CBTCPR is to consist of nine members, all of whom are to be voting members. 13 The county auditor will make any necessary tie-breaking vote. 14 Depending on the number of municipalities and school corporations within a county, there are to be four alternative membership formulations for the CBTCPR. 15 However, all appointed members must be elected officials serving on the fiscal body of a taxing unit or group of taxing units except for two county residents that are to be separately elected to the CBTCPR by the voters. 16 A petitioning political subdivision is required to submit a proposed financial plan to the CBTCPR. 17 The CBTCPR may: (1) increase the threshold at which the circuit breaker credit applies to a person's property tax liability; or (2) provide for a uniform percentage reduction to circuit breaker credits otherwise provided in the county; if the governing boards of all political subdivisions in the county agree to that plan. 18 The GA also amended I.C. § 6-1. 1-10- 16(d) to extend the period of time when property tax exemptions apply to vacant land which is intended to be developed in order to erect exempt structures. 19 The provision was also amended to provide for a property tax recapture if certain exempt property is sold within four years of its purchase. 20 As stated above, the majority of changes to property tax legislation occurred in the area of property tax appeal procedures. 21 The GA made significant changes to the procedures at both the local and state levels. The GA made the following changes to local procedure. The changes affect review notices filed after June 30, 2007, and later proceedings connected with 9. Id. § 6-1.1-20.9-2 (as amended by 2007 Ind. Acts 3921-23). 10. 2007 Ind. Acts 3923-24. 11. Ind. Code § 6-1.1-29-1 (Supp. 2007) (as amended by 2007 Ind. Acts 3924). 12. Id. § 6-1.1-29-1.5 (as added by 2007 Ind. Acts 3924-27). 13. Id. 14. Id. 15. Id. 16. Id. 17. TeresaLubbers, 2007 SummaryofNewLaws: FirstRegular Session ofthe 1 15th Indiana General Assembly 2007, at 1 14, available at http://www.in.gov/legislative/senate_ republicans/homepages/newlaws/2007/Lubbers.pdf (citing Ind. Code § 6-1.1-29.5 (Supp. 2007) (as added by 2007 Ind. Acts 3933-39)). 18. Id. 19. 2007 Ind. Acts 2825-29. 20. Id. 21. A majority of the information provided for this section was provided by the BTR. 1 274 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 those notices. 22 First, taxpayers are no longer required to request a preliminary conference with the local official (usually the township assessor) to initiate a property tax appeal. 23 Taxpayers are now only required to file written notice with the official who made the assessment being challenged. 24 The GA also clarified and provided uniformity to portions of I.C. §6-1.1-15- 1 regarding the filing deadlines that determine the effective date of an appeal. 25 The deadlines are separated into two broad categories: appeals where a notice of assessment or change of assessment was issued and appeals without such notice. 26 When such notice has been issued, the taxpayer can appeal the assessment for the date specified in the assessment notice by filing a written request for review within forty-five days after the notice was given. 27 If no notice was issued, then the filing deadline differs based upon the assessment date challenged. If the assessment date is before 2009, then the taxpayer must file a request for review on or before May 10.28 If the assessment date is after 2008, then the taxpayer must file a request either before May 10 or forty-five days after the date the county auditor mails the statement as required by I.C. § 6-1 . l-17-3(b), whichever is later. 29 The deadlines for county boards to act upon taxpayers' written requests for review under I.C. § 6-1.1-15-1 also changed. County boards now have 180 days to conduct a hearing and 120 days to issue a determination. 30 The deadlines are no longer based upon the county's population or the year of appeal. Taxpayers were also given recourse if a county board fails to act within the designated deadlines. Taxpayers can now appeal to the BTR without any action by the county board if the county board does not meet its deadline for holding a hearing or issuing a determination. 31 The following changes were made to the property tax appeal procedures at the state level under I.C. § 6.1.1-15-3. Most of these changes only apply to petitions to the BTR based on county board determinations issued after June 30, 2007, and later proceedings connected with those petitions. 32 First, taxpayers seeking review of a county board determination must now file the request directly with the BTR instead of the county assessor. 33 Previously, taxpayers were 22. Ind. Code § 6-1.1-15-1 (Supp. 2007) (as amended by 2007 Ind. Acts 3779-80). 23. Id. (as amended by 2007 Ind. Acts 361 1-17). Taxpayers are not precluded, however, from continuing to request this hearing. Id. Once a hearing is requested by a taxpayer, the official is required to meet with the taxpayer. Id. 24. Id. 25. See 2007 Ind. Acts 361 1-17. 26. Id. 27. Id. 28. Id. 29. Id. 30. Id. 31. Id. 32. Id. at 3779-80. 33. Mat 3617-19. 2008] TAX LAW 1275 required to file such requests with the county assessor who forwarded the request to the BTR. Further, the person who files the petition, and not the county assessor, must now serve the opposing party with a copy of the petition, which is similar to court proceedings. 34 Taxpayers also have more time for filing a review petition. The GA amended the deadline from thirty days to forty-five days to make the requirement more uniform with other appeal statutes. 35 The GA also changed the requirements for the named government party in BTR proceedings. An amendment to I.C. § 6- 1.15-3 now provides that the county assessor is the party responsible for defending the county board's determination, regardless of who made the original assessment. 36 Additionally, if the county assessor dissented from the county board's determination, then the county assessor also may petition the BTR for review of the decision. 37 The GA also clarified what evidence the BTR may use to base its decisions as well as the required content of BTR written decisions. First, the BTR must base its final determinations in appeals from DLGF decisions on the preponderance of the evidence. 38 Moreover, the BTR's written determinations regarding those appeals must include findings of fact and be based exclusively on "the evidence on the record in the proceedings," and "matters officially noticed in the proceeding." 39 The GA also made changes to the procedures for obtaining judicial review of BTR final determinations. The changes discussed only affect petitions based on BTR determinations issued after June 30, 2007, and later proceedings connected with those petitions. 40 Most importantly, taxpayers are no longer required to comply with AOPA in filing a Tax Court petition and filing the administrative record with the Tax Court. 41 Instead, the revised provision provides that taxpayers must file a petition with the Tax Court; serve a copy of the petition to the county assessor, attorney general, and any entities that have filed amicus curiae briefs with the BTR; and notify the BTR in writing of the intent to seek judicial review. 42 Similar to the change made at the BTR review level, the GA also changed the named party in a petition for judicial review to the county assessor instead of the assessing official that made the original assessment determination. 43 Lastly, changes were also made to the deadlines for initiating judicial review. Taxpayers now have forty-five days to appeal BTR 34. Id. 35. Id. 36. Id. 37. Id. 38. Ind. Code § 6-1.1-15-4 (Supp. 2007) (as amended by 2007 Ind. Acts 3619-23). 39. Id. § 6-1.5-5-4 (as amended by 2007 Ind. Acts 3685-86). 40. Id. § 6-1.1-15-5 (as amended by 2007 Ind. Acts 3779-80). 41. See id. § 6-1.1-15-5 (as amended by 2007 Ind. Acts 3623-25). 42. Id. 43. Id. 1 276 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 determinations, whether or not the determinations were issued on a rehearing. 44 B. Utility Receipts Tax The GA passed legislation clarifying and expanding portions of the utility receipts tax. First, the GA expanded the definitions of an "affiliated group" and a "controlled group" under I.C. §§ 6-2.3-1-2 and 6-2.3-1-2.5, respectively, to be consistent with the IRC definitions of these terms. 45 The GA then added I.C. § 6-2.3-4-6, which provides that gross receipts from the sale of utility services between members of a controlled group of corporations are exempt from the utility receipts tax if the seller is the producer of the utility service, and the purchaser is the end user, and the seller and user exist in the same or adjacent locations. 46 The GA clarified I.C. § 6-2.3-5-3 when it amended it to provide that the resource recovery tax deduction allowed for the utility receipts tax shall be disallowed if the taxpayer is convicted of a criminal violation under I.C. § 13 (environmental law). 47 Finally, the GA amended I.C. § 6-2.3-6-1 to increase the threshold for the annual unpaid utility receipts tax liability from $1000 to $2500 before quarterly estimated payments are required to be made and reduce the threshold for electronic funds transfer ("EFT") payments from $10,000 to $5000 for taxable years beginning after December 15, 2007. 48 C. Sales and Use Tax Indiana is a full member of the Streamlined Sales and Use Tax ("SST") Agreement. Thus, some of the changes made to Indiana sales tax law were made to make the law consistent with the SST Agreement. 1. Telecommunications Services.—One area that received attention this year was telecommunications services. Several definitions were added to provide clarification in this area. First, effective January 1, 2008, the term "telecommunications services" is defined as the "electronic transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point, or between or among points."49 "The term includes a transmission ... in which computer processing applications are used to act on the form, code, or protocol of the content for purposes of transmission . . . whether the service: (1) is referred to as voice over internet protocol services; or (2) is classified by the [FCC] as enhanced or value added." 50 However, the term does not include: 44. id. 45. 2007 Ind. Acts 978. 46. Id. 47. 2007 Ind. Acts 1936-37. 48. 2007 Ind. Acts 3025-27. 49. Ind. Code § 6-2.5-1-27.5 (Supp. 2007) (as added by 2007 Ind. Acts 2179-80). 50. Id. 2008] TAX LAW 1277 (1) Data processing and information services that allow data to be generated, acquired, stored, processed, or retrieved and delivered by an electronic transmission to a purchaser . . . [;] (2) Installation or maintenance of wiring or equipment on a customer's premises[;] (3) Tangible personal property[;] (4) Advertising, including but not limited to directory advertising!;] Billing and collection services provided to third parties[;] (6) Internet access service[;] (7) Radio and television audio and video programming services, regardless of the medium ...[,] including] cable service . . . and audio and video programming services delivered by commercial mobile radio service providers ...[;] (8) Ancillary services [; or] (9) Digital products delivered electronically including ... [A] Software, [B] Music, [C] Video, [D] Reading materials, and [E] Ring tones. 51 Further, the term "intrastate telecommunications service" is defined as telecommunications service that originates and terminates in Indiana. 52 The GA also added definitions to coincide with the definitions in the SST Agreement. All of these definitions are effective as of January 1, 2008. The GA added a definition of telecommunications "ancillary services" to I.C. § 6-2.5-1- 11.3. 53 This term is defined to include detailed telecommunications billing, directory assistance, vertical services, and voice mail services. 54 "Prepaid wireless calling service" is now defined in I.C. §§ 6-2.5-1-22.4 and 6-2.5-12-1 1 .5 as "a telecommunications service that provides the right to use mobile wireless services . . . [that] must be paid for in advance [] and are sold in predetermined units or dollars, the balance of which declines with use." 55 Further, the definition of "post paid calling service" was amended to exclude "a prepaid wireless calling service" for purposes of sourcing telecommunications. 56 Additionally, I.C. § 6- 2.5-1-29 defines "value added nonvoice data service" to mean "a service that otherwise meets the definition of telecommunications services in which computer processing applications are used to act on the form, content, code, or protocol of the information or data primarily for a purpose other than transmission, conveyance, or routing." 57 The GA also modified the perimeters for what is considered to be a telecommunications retail transaction. The GA amended I.C. § 6-2.5-4-6 to provide that as of January 1, 2008, a person is making a retail transaction when the person sells an intrastate telecommunications service and receives gross retail income from billings or statements rendered to customers. 58 In contrast, a person 51. id. 52. Id. § 6-2.5-1-20.3 (as added by 2007 Ind. Acts 2178). 53. 2007 Ind. Acts 2178. 54. Id. 55. Id. at 2178-79, 2185. 56. Ind. Code § 6-2.5-12-10 (Supp. 2007) (as amended by 2007 Ind. Acts 2185). 57. 2007 Ind. Acts 2180. 58. Id. at 2180-81. 1278 INDIANA LAW REVIEW [Vol. 41:1271 is not providing telecommunications services when "the person furnishes telecommunications services to another person who is providing prepaid calling services or prepaid wireless calling services in a retail transaction to customers who access the services through the use of an access number," the person "sells telecommunications services to a public utility, the person furnishes intrastate mobile telecommunications service ... to a customer with a place of primary use that is not located in Indiana," or the person "sells value added nonvoice data services in a retail transaction to a customer." 59 Changes were also made to the general sourcing provisions regarding telecommunications services. The GA amended I.C. § 6-2.5-12-16 to determine the manner of sourcing for prepaid wireless calling services 60 and I.C. § 6-2.5-13-1 to provide that Internet access services and ancillary services are to be sourced in accordance with the telecommunications sourcing provisions. 61 Finally, the GA repealed I.C. § 6-2.5- 13-2, which provided for the multiple point of use exemption provision in regards to sourcing of digital goods and computer software delivered electronically. 62 2. Exemptions.—Select sales tax exemption provisions were also amended. A few of these modifications concern aircraft exemptions. The GA amended I.C. § 6-2.5-3-2 to provide a limited use tax exemption for an aircraft that is titled or registered in another state and is temporarily brought to Indiana to be repaired, refurbished, remanufactured, or subjected to a pre-purchase evaluation. 63 The GA amended I.C. § 6-2.5-5-8 to provide that an aircraft acquired by a person for rental or leasing is not exempt from the sales tax unless the person establishes that the annual amount of the lease revenue derived from leasing the aircraft is equal to or greater than 10% of the cost of the aircraft if the cost was less than $1,000,000 or 7.5% if the cost is equal to or greater than $1,000,000. 64 This section was also amended to provide that the provision concerning aircraft purchased exempt from the sales tax for leasing and required to meet certain financial thresholds to be considered engaged in leasing does not take effect until July 1, 2008 instead of July 1, 2007. 65 The GA also added I.C. § 6-2.5-5-42, which provides that effective July 1 , 2007, an aircraft is exempt from the sales tax if the purchaser is a nonresident and the purchaser takes the aircraft outside of Indiana within thirty days after accepting delivery or a repair, refurbishment, or remanufacture of the aircraft is completed. 66 The purchaser is required to supply the seller with a copy of the purchaser' s registration or title for the state where the aircraft is registered or titled within sixty days. 67 The GA also eliminated the exemption for exporting an aircraft from Indiana within thirty days and then 59. Id. 60. Id. at 2185-87. 61. Mat 2187-91. 62. Id. at 2191. 63. 2007 Ind. Acts 3030-31. 64. Id. 65. 2007 Ind. Acts 3089. 66. 2007 Ind. Acts 3033-34. 67. Id. 2008] TAX LAW 1279 reinstated it in I.C. § 6-2.5-5-42. 68 Other sales tax exemption changes include the addition of a sales tax exemption for purchases of tangible personal property related to collection plant and expenses; system pumping plant and expenses; treatment and disposal plant and expenses; and the purchases made by a public utility or a person who contracts with a municipality for the collection, treatment, or processing of wastewater. 69 This new provision replaced the wording contained in I.C. § 6-2.5- 5-12 and subsequently deleted the provision which provided a sales tax exemption for public utilities that operate wastewater treatment plants. 70 The GA also amended I.C. § 6-2.5-5-3 to clarify that distribution equipment and transmission equipment of a public utility engaged in generating electricity is not exempt from the sales tax as equipment directly used in direct production of electricity. 71 An amendment to I.C. § 6-2.5-5-35 clarifies that electricity, gas, water, and steam are not considered a consumable exempt from the sales tax if used by restaurants or hotels. 72 Furthermore, the GA added a provision to I.C. § 6-2.5-3-7 providing that as of July 1, 2007, a purchaser purchasing tangible personal property for use in public transportation may verify the purchaser's exemption by providing the purchaser' s name, address, and motor carrier number; USDOT number; or any other identifying number authorized by the DOSR.73 Finally, the sales tax exemption for the low-income home energy assistance program was extended until July 1, 2009. 74 3. Miscellaneous Sales Tax Changes.—The GA amended I.C. § 6-2.5-4-14 to provide that the department of administration and universities are required to provide a list to the DOSR of every person desiring to sell tangible personal property to the state or to a university, and to eliminate the provision requiring that a person providing services be included on the list. 75 The DOSR is also required to notify the department of administration or the university if the person is not a registered retail merchant or is delinquent in remitting sales tax. 76 The GA reduced the threshold for remitting the sales tax by EFT from $10,000 to $5000. 77 The collection allowance provided by the state to retailers in I.C. § 6-2.5-6-10 also changed. 78 The allowance remains at 0.83% on the first $60,000 in sales tax liability accrued, but changes to 0.6% on the sales tax liability between $60,001 and $600,000, and for sales tax remittances greater than 68. Id. at 3032-33. 69. IND. Code § 6-2.5-5-12.5 (Supp. 2007) (as added by 2007 Ind. Acts 1364-67). 70. 2007 Ind. Acts 1364. 71. 2007 Ind. Acts 3029-30. 72. Id. at 3031. 73. Id. at 3028-29. 74. Ind. Code § 6-2.5-5-16.5 (Supp. 2007) (as amended by 2007 Ind. Acts 1 128). 75. 2007 Ind. Acts 3029. 76. Id. 11. Ind. Code § 6-2.5-6-1 (Supp. 2007) (as amended by 2007 Ind. Acts 3034-36). 78. See 2007 Ind. Acts 3036-37. 1 280 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 $600,000, the collection allowance is now 0.3%. 79 The following changes were also made to the E85 sales tax deduction. The E85 sales tax deduction may now be claimed until June 30, 2020.80 Additionally, the amount of the E85 sales tax deduction was increased from $.10 to $.18 per gallon, and the total amount of sales tax deductions that are available to all retail merchants for all years was reduced from $2,000,000 to $1,000,000. 81 The GA added a provision that provides that to the extent that funds are available from the corn market development account, the $1,000,000 cap for the E85 sales tax deduction does not apply. 82 The DOSR is required to annually publish in the Indiana Register a notice of the amount of funds available for the reimbursement required from the corn market development fund for the E85 deduction. 83 Beginning January 1, 2008, 1.C. § 6-2.5-8-8 provides "[a] seller that accepts an incomplete exemption certificate ... is not relieved of the duty to collect gross retail ... tax on the sale unless the seller obtains a fully completed exemption certificate within ninety (90) days after the sale." 84 "If the seller has accepted an incomplete exemption certificate," then the DOSR is to request the seller to "substantiate the exemption," and the seller is to have 120 days to provide a completed exemption certificate or prove by other means that the transaction was an exempt transaction. The GA also amended I.C. § 6-2.5-1 1-10 to provide that a certified service provider ("CSP") or "a seller using a certified automated system that obtains a certification from the [DOSR] is not liable for sales ... tax collection errors that result from reliance on the [DOSR's] certification." 86 "The [CSP] or the seller using a certified automated system must revise the incorrect classification within ten (10) days after receiving notice of the determination from the [DOSR]." 87 If the error is not corrected within ten days, then the CSP or the seller using a certified automated system is liable for failure to collect the correct amount of sales tax due. 88 A new provision, I.C. § 6-2.5-1 1-11, was also added to provide that a purchaser is relieved from liability for penalties for failure to pay the amount of tax due if the purchaser's seller, a purchaser with a direct pay permit, or a purchaser relied on information provided by the DOSR regarding tax rates or the taxability matrix. 89 A purchaser is also relieved from liability and interest for failure to pay the correct amount of sales tax due. 90 79. Id. 80. IND. CODE § 6-2.5-7-5 (Supp. 2007) (as amended by 2007 Ind. Acts 2647-49). 81. Id. 82. Id. § 6-2.5-7-5.5 (as added by 2007 Ind. Acts 2990-91). 83. Id. 84. 2007 Ind. Acts 2181-82. 85. Id. 86. Id. at 2182-83. 87. Id. 88. Id. 89. Id. at 2183-84. 90. Id. 2008] TAX LAW 1281 The GA also passed the following miscellaneous sales tax provisions. Effective January 1, 2008, I.C. § 6-2.5-8-1 provides the county assessor shall receive the information related to new sales tax registrations if the duties of the township assessor are transferred to the county assessor. 91 Further, I.C. § 6-2.5-8- 7 was amended to stipulate that the DOSR shall revoke a registered retail merchant after five days notice to the retail merchant if the DOSR finds in a public hearing that the holder of the permit has violated any of the professional gambling statutes. 92 This requirement is eliminated with the adoption of the memorandum of understanding with the gaming commission. The GA also appropriated one hundred twenty-five thousandths of one percent to the public mass transportation fund from the deposits of the sales tax in the general fund. 93 Lastly, the GA repealed I.C. § 6-2.5-8-10, which required a person to register as a retail merchant even if they were not located in Indiana, but solicited business, sold property to the state or a university, or was closely related to another entity that maintained a place of business in Indiana. 94 D. Adjusted Gross Income Tax During 2007, the GA clarified many provisions regarding military income. A new provision, I.C. § 6-3-1-34, defines "qualified military income" as wages paid to a member of the reserve component of the armed forces or the National Guard for full-time service on involuntary orders, the period during which the member is mobilized and deployed, or the period during which the person's National Guard unit is federalized. 95 Effective January 1, 2008, I.C. § 6-3-1-3.5 provides that qualified military income that was included in federal adjusted gross income is deducted for purposes of determining Indiana adjusted gross income. 96 The military pay and military retirement income tax deduction in I.C. § 6-3-2-4 shall also increase from $2000 to $5000 in 2008. 97 Adjusted gross income tax legislation in 2007 also addressed patents. One new addition is a modification to adjusted gross income to provide a subtract-off for patent income that is included in federal adjusted gross income or federal taxable income for corporations. 98 The GA added an exemption from income for "qualified patents" in I.C. § 6-3-2-21.7 effective January 1, 2008. 99 A "qualified patent" is a "utility patent" or a "plant patent" issued after December 31, 2007, "for an invention resulting from a development process conducted in Indiana." 100 91. 2007 Ind. Acts 3686-88. 92. 2007 Ind. Acts 4129-31. 93. Ind. Code § 6-2.5-10-1 (Supp. 2007) (as amended by 2007 Ind. Acts 4455-70). 94. 2007 Ind. Acts 3089. 95. 2007 Ind. Acts 2163. 96. Id. at 2155-63. 97. Id. 98. Ind. Code § 6-3-1-3.5 (Supp. 2007) (as amended by 2007 Ind. Acts 3841-49). 99. 2007 Ind. Acts 3849. 100. Id. 1 282 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 The "term does not include a design patent." 101 A "qualified taxpayer" is an individual or corporation with less than 500 employees or a nonprofit organization, which is in either case domiciled in Indiana. 102 The exemption includes "[licensing fees or other income received for the use of a qualified patent, [royalties received for the infringement, receipts from the sale of a qualified patent, and income from the taxpayer's own use of the taxpayer's qualified patent to produce the claimed invention." 103 However, the total amount of exemptions claimed by a taxpayer in a taxable year may not exceed $5,000,000, and it may not be claimed for more than ten years. 104 For the first five years, 50% of the amount of income received from the patent is exempt, and the percentage declines by 10% each year starting in the sixth year that the exemption is claimed. 105 The taxpayer is required to claim the exemption on the qualified taxpayer's state tax return and is to submit all information the DOSR determines necessary for the determination of the exemption. 106 Additionally, the GA passed the following miscellaneous provisions. The GA amended I.C. § 6-3-1-3.5 to require corporations to add back any deduction for dividends paid to shareholders of a captive real estate investment trust. 107 A new provision, I.C. § 6-3-1-34.5, defines a "captive real estate investment trust" as a corporation, a trust, or an association: (1) that is considered a real estate investment trust for the taxable year under Section 856 of the IRC; (2) that is not regularly traded on an established securities market; and (3) in which more than fifty percent (50%) of the: (A) voting power; (B) beneficial interests; or (C) shares; are owned or controlled ... by a single entity. 108 A retroactive amendment to I.C. § 6-3-3-12 provides that an owner of a college choice 529 education savings plan that makes a non-qualified withdrawal must repay all or part of the credit in the taxable year in which the non-qualified withdrawal was made. 109 The amount the taxpayer must repay is equal to the lesser of: (1) twenty percent (20%) of the total amount of non-qualified withdrawals made during the taxable year from the account; or (2) the excess of . . . the cumulative amount of all credits provided by this section that are claimed by a taxpayer with respect to the taxpayer's contributions to the account 101. Id. 102. Id. 103. Id. 104. Id. 105. Id. 106. Id. 107. 2007 Ind. Acts 3037-45. 108. Id. at 3045-46. 109. Id. at 3051-53. 2008] TAX LAW 1283 for all taxable years beginning on or after January 1, 2007. no Any required repayment shall be made "on the account owner's annual income tax return for any taxable year in which a non-qualified withdrawal is made." 111 The GA added I.C. § 6-3-4-1 .5 to provide that if a professional preparer files more than 100 tax returns in a calendar year for individuals, then the paid preparer is to file returns for individuals in an electronic format for the subsequent year as specified by the DOSR. 112 The following amendments concern estimated payments. An amendment to I.C. § 6-3-4-4.1 provides that if an individual's annual unpaid liability is less than $1000, the taxpayer is not required to file quarterly estimated payments. 113 The previous amount was $400. 114 A corporation for taxable years beginning after December 15, 2007, is also not required to file quarterly estimated payments if its annual unpaid liability is less than $2500. 115 The previous limitation was $1000. 116 Corporations required to make quarterly estimated payments are permitted to use "the annualized income installment calculated in the manner provided by section 6655(e) of the Internal Revenue Code as applied to the corporation's liability for adjusted gross income tax." 117 Furthermore, this section also reduces the filing threshold for EFT payments for corporate estimated taxes from $10,000 to $5000. 118 The GA changed the requirement for monthly withholding taxes to be remitted by EFT from $10,000 to $5000. 119 Partnerships that have nonresident partners are also required to file a composite return which includes all nonresident partners. 120 A nonresident is not prohibited from being part of the composite return if they have other income from Indiana. 121 S corporations that have nonresident shareholders are also required to file a composite return for all nonresident shareholders, including nonresident shareholders that have no other income from Indiana. 122 The GA also updated the definition of "adjusted gross income" in I.C. § 6-3- 1-11 to correspond to the federal definition of "adjusted gross income" which is contained in the IRC. 123 Provisions that are incorporated into the definition of 110. Id. 111. id. 112. Mat 3053. 113. Mat 3053-55. 114. Id. 115. Id. 116. Id. 117. Id. 118. Id. 1 19. IND. Code § 6-3-4-8.1 (Supp. 2007) (as amended by 2007 Ind. Acts 3055-56). 120. Id. § 6-3-4-12 (as amended by 2007 Ind. Acts 3057-58). 121. Id. 122. Id. § 6-3-4-13 (as amended by 2007 Ind. Acts 3059-61). 123. 2007 Ind. Acts 4613-14. 1 284 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 adjusted gross income include an extension of the deduction for higher education expenses, a temporary extension of the deduction for teachers' classroom expenses, a deduction for environmental remediation expenses, and depreciation of leasehold and restaurant improvements. 124 E. Tax Credits The GA created the following new tax credits in 2007. One new retroactive tax credit contained in I.C. § 6-3.1-31 rewards employers offering health benefit plans. 125 An employer that did not provide health insurance to its employees prior to January 1, 2007, and makes health insurance available to the employees is entitled to a credit for the first two years in which the taxpayer makes the plan available if the employer provides that participation is at the employee's election. The employee may have the premiums withheld from his paycheck. 126 The amount of the credit is the lesser of $2500 or $50 multiplied by the number of employees enrolled in the health benefit plan. 127 A taxpayer is to claim the credit on the taxpayer's state tax return, and the taxpayer is required to make health insurance available to the employer's employees for at least two years after the taxable year for which the employer first offers the health benefit plan. 128 The GA also added I.C. § 6-3.1-31.2, which creates a small employer qualified wellness program tax credit that is retroactive. 129 A "small employer" is "an employer that: (1) is actively engaged in business; and (2) . . . employed at least two (2) but not more than one hundred (100), eligible employees, the majority of whom work in Indiana." 130 A small employer is entitled to a tax credit "equal to fifty percent (50%) of the costs incurred by the [employer] during the taxable year for providing a qualified wellness program for the [employer's] employees during the taxable year." 131 The credit can be carried forward but cannot be carried back or refunded. 132 To receive the credit the employer must provide a copy of the certificate received from the State Department of Health and claim the credit on the taxpayer's state income tax return. 133 The provision also contains reporting provisions for the DOSR. 134 Another new tax credit passed concerns expenditures on energy star heating and cooling equipment incurred by taxpayers. 135 The tax credit effective January 124. Id. 125. See 2007 Ind. Acts 3491-94. 126. Id. 127. Id. 128. Id. 129. Id. at 3494-96. 130. Id. 131. Id. 132. Id. 133. Id. 134. Id. 135. See Ind. Code § 6-3.1-31.5 (Supp. 2007) (as added by 2007 Ind. Acts 2578-80). 2008] TAX LAW 1285 1, 2008, is "equal to the lesser of ... (1) twenty percent (20%) of the amount of expenditures for energy star heating and cooling equipment incurred by the taxpayer in a taxable year[] or (2) one hundred dollars ($100)." 136 A pass through entity is also eligible for the credit, and the credit may not exceed the taxpayer's tax liability. 137 There is no carry back, carry forward, or refund of any unused credit, and the total amount of tax credits may not exceed $ 1 ,000,000 in a state fiscal year. 138 Further, the credit may not be awarded to a taxpayer for taxable years beginning after December 31, 20 10. 139 The GA also passed a new retroactive tax credit for alternative fuel manufacturers. 140 This new tax credit provides a credit of up to 15% of the "qualified investment." 141 A "qualified investment" includes "the purchase of new telecommunications, production, manufacturing, fabrication, assembly, finishing, distribution, transportation, or logistical distribution equipment." 142 The term also includes computer equipment, "costs associated with modernization" ofequipment and facilities, "onsite infrastructure improvements," construction of new manufacturing facilities, retooling existing machinery and equipment, and costs associated with the construction of special purpose buildings that are certified by the EDC as being eligible for the credit. 143 An "alternative fuel vehicle" is any vehicle designed to operate using methanol, denatured ethanol, E85, natural gas, liquefied petroleum gas, hydrogen, coal derived liquid fuels, non-alcohol fuels derived from biological material, P-Series fuels, or electricity. 144 The EDC may make credit awards to foster job creation, reduce dependency on foreign oil, and reduce air pollution. 145 A taxpayer may carry forward an unused credit for nine years. 146 A person that proposes a project to manufacture or assemble alternative fuel vehicles may apply to the EDC before the qualified investment is made. 147 After receipt of the application, the EDC may enter into an agreement with the applicant. 148 A taxpayer claiming the credit is required to submit a copy of the certificate of verification from the EDC. 149 If a taxpayer does not comply with the agreement, then after notification from the EDC, the DOSR may make an assessment against the taxpayer up to the amount 136. Id. 137. Id. 138. Id 139. Id. § 6-3.1-31.5-13 (as amended by 2007 Ind. Acts 3061) 140. See id. § 6-3.1-31.9 (as added by 2007 Ind. Acts 3852). 141. Id. 142. Id. 143. Id. 144. Id. 145. Id. 146. Id. 147. Id. 148. Id. 149. Id. 1 286 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 of previously allowed credits. 150 The EDC may not award any credits for qualified investments made after December 31, 2012. 151 Moreover, the GA amended I.C. § 6-3.1-1-3 to include this tax credit as one that the taxpayer cannot claim multiple credits for the same project. 152 The GA created a new tax credit to provide $20,000,000 for all taxable years for all taxpayers who produce at least 20,000,000 gallons of cellulosic ethanol in a taxable year. 153 The credit may only be applied against the state tax liability attributable to business activity taking place at the Indiana facility at which the cellulosic ethanol was produced. 154 The GA amended I.C. § 6-3.1-27-9.5 to clarify that the credit created for cellulosic ethanol is not included in the $50,000,000 cap for biodiesel production and blending and for ethanol production. 155 Further, under I.C. § 6-3. 1-28-9 ethanol production credit may not be sold, assigned, conveyed, or otherwise transferred. 156 The GA made the following changes to other fuel-related credits. The GA amended I.C. § 6-3.1-29-6 to state that the coal gasification tax credit includes a facility that is located in Indiana and that converts coal into synthesis gas that can be used as a substitute for natural gas. 157 Additionally, I.C. § 6-3.1-29-15 now provides that the coal gasification tax credit shall be awarded for the development of a facility that will serve gas utility consumers, in addition to electric utility consumers that are already allowed for in the statute. 158 A new provision, I.C. § 6-3.1-29-20.5, provides that all or part of the integrated coal gasification power plant tax credit to which a taxpayer is entitled is assignable to one or more utilities if the assignment has been approved by the utility regulatory commission and provides for the purchase of electricity or substitute natural gas by the utility from the taxpayer. 159 If the credit is assigned, then the credit must be taken in twenty annual installments. 160 The total amount of credit that may be assigned is the total credit awarded divided by twenty and then multiplied by the percentage of Indiana coal used in the taxpayer's integrated coal gasification power plant. 161 The GA also amended I.C. § 6-3.1-24-9 to extend the time period for which investments must be made to claim the venture capital investment tax credit for providing qualified investment capital from January 1, 2009, to January 1, 2013. 162 150. Id. 151. id. 152. 2007 Ind. Acts 3858-62. 153. See Ind. Code § 6-3.1-28-1 1 (Supp. 2007) (as added by 2007 Ind. Acts 2573-74). 154. Id. 155. 2007 Ind. Acts 2573. 156. Id. 157. Id. at 2574-75. 158. Id. at 2575. 159. Id. at 2577 -78. 160. Id. 161. Id. 162. 2007 Ind. Acts 3061. 2008] TAX LAW 1287 F. Local Taxation 1. County Adjusted Gross Income Tax ("CAGIT").—The GA amended several dates for county ordinances seeking to impose or adjust the CAGIT. First, a county wishing to impose CAGIT must adopt an ordinance after March 3 1 and before August 1 of a particular year. 163 The ordinance shall then take effect on October l. 164 Similarly, an ordinance to rescind CAGIT must be adopted after March 31 and before August 1 to be effective on October 1 of the year the ordinance is adopted. 165 Ordinances to increase 166 or decrease 167 CAGIT must also be adopted after March 3 1 and before August 1 to be effective on October 1 of the year the ordinance is adopted. Counties may also adopt an ordinance by August 1 to impose an additional CAGIT effective on October l. 168 The additional rate that is determined is effective for two years. 169 A county may not decrease or rescind the tax rate once it is imposed. 170 One-half of the revenue from the tax rate imposed is to be deposited in the county stabilization fund. The maximum rate that a county may impose under this section to replace property tax levy growth is 1%. 171 A county may also now impose an additional CAGIT rate of up to 1% imposed at increments of 0.05% to be used for property tax replacement credits for all property, homestead credits, or property tax replacement credits for qualified residential property. 172 The rate is in addition to any other rate imposed. 173 A county is not required to impose any other tax before imposing a tax rate under this section. 174 The rate is to be imposed, rescinded, increased, or decreased in the same manner and at the same time as required under I.C. § 6-3.5-1 . 1-24. 175 Additionally, if a county has imposed a tax rate under I.C. § 6-3.5-1.1-24 for property tax replacement credits and I.C. § 6- 3.5-1.1-26 for property tax relief, then the county may adopt an ordinance to provide an additional tax rate for public safety. 176 The maximum tax rate is the lesser of 0.25% or the rate imposed under I.C. § 6-3.5-1 . 1-26. 177 The tax rate may be imposed or rescinded by adopting an ordinance by August 1 of a year to be 163. Ind. Code § 6-3.5-1.1-2 (Supp. 2007) (as amended by 2007 Ind. Acts 3940-41). 164. Id. 165. Id. § 6-3.5-1.1-4 (as amended by 2007 Ind. Acts 3947-48). 166. Id. § 6-3.5-1.1-3 (as amended by 2007 Ind. Acts 3945). 167. Id. § 6-3.5-1.1-3.1 (as amended by 2007 Ind. Acts 3945-46). 168. Id. § 6-3.5-1.1-24 (as amended by 2007 Ind. Acts 3955-59). 169. Id. 170. Id. 171. Id. 172. Id. § 6-3.5-1.1-26 (as amended by 2007 Ind. Acts 3962-64). 173. Id. 174. Id. 175. Id. 176. Id. § 6-3.5-1.1-25 (as amended by 2007 Ind. Acts 3960-62). 177. Id. 1 288 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 effective on October 1 of the same year. 178 The GA also passed the following county-specific CAGIT provisions. The GA amended I.C. § 6-3.5-1.1-2.3 to provide that if Jasper County desires to increase CAGIT to fund a jail, then the ordinance must be adopted before August 1 to be effective on October 1 of the year of adoption. 179 If the ordinance is adopted after August 1, then the increased tax rate shall not be effective until October 1 of the subsequent year. 180 Further, the I.C. § 6-3.5-1.1-2.6 was added to provide that Parke County may adopt an ordinance to impose additional CAGIT up to 0.25% for the cost of a capital trial. 181 2. Levy Freeze Limits.—The GA added I.C. § 6-3.5-1.5, which requires the DOSR to be involved with the DLGF in determining the levy freeze limits that are created. 182 3. County Wheel Tax.—Effective July 1, 2007, an owner of a commercial motor vehicle paying an apportioned registration under the International Registration Plan that is required to pay a wheel tax must now pay an apportioned wheel tax based on Indiana miles compared to total miles. 183 The apportioned wheel tax must be paid at the same time and in the same manner as the commercial motor vehicle excise tax. 184 This provision only applies to a wheel tax adopted after June 30, 2007. 185 A voucher from the DOSR showing proof of payment may be accepted by the BMV in lieu of the payment. 186 If a wheel tax for a commercial vehicle is collected directly by the DOSR, then the DOSR is to remit the wheel tax, file a wheel tax collections report with the appropriate county treasurer, and file a wheel tax collections report with the county auditor by the tenth day of the month following the month in which the wheel tax was collected. 187 4. County Option Income Tax ( "COIT").—Similar to the CAGIT, the GA amended the dates when counties have to impose or adjust the COIT. First, a county imposing COIT must adopt an ordinance after March 31 and before August 1 to be effective on October l. 188 Counties must also adopt ordinances increasing, 189 decreasing, 190 freezing, 191 or rescinding 192 the COIT between March 178. Id. 179. 2007 Ind. Acts 3941-44. 180. Id. 181. Id. at 3944-45. 182. Mat 3965-67. 183. Ind. Code § 6-3.5-5-9.5 (Supp. 2007) (as added by 2007 Ind. Acts 3062). 184. Id. 185. Id. 186. Id. 187. Id. § 6-3.5-5-13 (as added by 2007 Ind. Acts 3063). 188. Ind. Code § 6-3.5-6-8 (Supp. 2007) (as amended by 2007 Ind. Acts 3967-68). 1 89. Id. § 6-3.5-6-9 (as amended by 2007 Ind. Acts 3968). 190. Id. § 6-3.5-6-12.5 (as amended by 2007 Ind. Acts 3970). 191 . Id. § 6-3.5-6-1 1 (as amended by 2007 Ind. Acts 3968-69). 192. Id. § 6-3.5-6-12 (as amended by 2007 Ind. Acts 3969-70). 2008] TAX LAW 1289 3 1 and August 1 to be effective on October 1 . The GA also added provisions allowing counties to impose additional COIT rates. A county can impose an additional COIT rate of up to 1 % with the additional funds to be used partially for homestead credits and partially to be deposited into the county stabilization fund (one-third of the tax revenue for Marion County and 50% of the tax revenue in all other counties). 193 A county may also impose an additional COIT rate for public safety. 194 The additional rate for public safety in Marion County may be imposed at a rate of up to 0.5% if Marion County imposed the additional rate provided for in I.C. § 6-3.5-6-30. 195 In all other counties, each county can impose an additional rate for public safety of up to 0.25% or the tax rate imposed under I.C. § 6-3.5-6-32, whichever is less. 196 All counties other than Marion County must impose an additional rate under I.C. § 6-3.5-6-30 and I.C. § 6-3.5-6-32 before they are eligible to impose the additional rate for public safety. 197 Furthermore, a county may impose an additional COIT rate of up to 1 % to be used to provide property tax relief. 198 A county is not required to adopt any other tax before imposing a tax rate under this section. 199 Finally, the GA amended I.C. § 6-3.5-6-18 to prohibit the use of the additional COIT revenues provided by these new provisions to finance a qualified economic development tax project under I.C. § 36-7-27. 200 The GA also passed the following county-specific provisions. The GA amended I.C. § 6-3.5-6-28 to provide that, effective retroactively, Howard County's additional COIT that was previously authorized to be imposed at 0.25% may now be imposed at any increment up to 0.25%.201 This section also requires the DOSR to separately designate a tax rate imposed under this section in any tax form as the Howard County jail operating and maintenance income tax.202 The GA also amended I.C. § 6-3.5-6-29 to provide that Scott County has until July 3 1 to adopt an ordinance to impose the additional COIT authorized for a county jail revenue fund to be imposed on October l. 203 The GA added I.C. § 6-3.5-6-33, which authorizes Monroe County to impose an additional COIT rate of up to 0.25% for a juvenile detention center. 204 5. County Economic Development Income Tax ("CEDIT").—To provide uniformity, the GA amended I.C. § 6-3.5-7-5 to change the dates for adopting an 193. Id. § 6-3.5-6-30 (as added by 2007 Ind. Acts 3980-85). 194. Id. § 6-3.5-6-31 (as added by 2007 Ind. Acts 3985-88). 195. Id. 196. Id. 197. Id. 198. Ind. Code § 6-3.5-6-32 (Supp. 2007) (as added by 2007 Ind. Acts 3988-91). 199. Id. 200. 2007 Ind. Acts 3974-76. 201. Id. at 3976-78. 202. Id. 203. Mat 3978-80. 204. Mat 3991-93. 1 290 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 ordinance to impose, increase, decrease, or rescind the CEDIT. 205 An ordinance must be adopted after March 3 1 and before August 1 to be effective on October l. 206 The GA also added I.C. § 6-3.5-7-28, which authorizes a county that is a member of a regional development authority to adopt an ordinance to increase the county's CEDIT rate by 0.05% and requires the revenue to be deposited in the county regional development authority fund. 207 G. Inheritance Tax The GA clarified I.C. § 6-4.1-10-1, providing that if an inheritance tax payment that was "erroneously or illegally collected is not refunded within ninety (90) days after the date on which the refund claim is riled," then interest accrues at 6% per annum from the date the claim was filed until the refund is paid.208 H. Financial Institutions Tax The GA added a modification to the financial institutions tax to provide a subtract-off for patent income that is included in adjusted gross income for financial institutions. 209 The GA also changed I.C. § 6-5.5-6-3 to provide that a taxpayer subject to the financial institutions tax is not required to make quarterly estimated tax payments if the annual tax liability is less than $2500 instead of the previous amount of $1000. 210 This section also reduces the threshold for filing EFT payments from $10,000 to $5000.211 /. Motor Fuel and Vehicle Excise Taxes 1. Gasoline Tax.—The GA reduced the threshold for making EFT payments in regard to gasoline and special fuel taxes from $10,000 to $5000. 212 2. Special Fuel Tax.—The GA passed a new exemption from the special fuel tax for special fuel that has a nominal biodiesel content of at least 20%, is only used for personal use, and the individual using the special fuel produced the special fuel. 213 The maximum number of gallons that the person may claim exempt is equal to 2000 gallons divided by "the average percentage volume of biodiesel in each gallon used by the individual." 214 3. Motor Carrier Fuel Tax.—The GA amended I.C. § 6-6-4.1-2 to provide an exemption from the motor carrier fuel tax for a pickup truck that is modified 205. Id. at 3993-98. 206. Id. 207. 2007 Ind. Acts 4215-17. 208. 2007 Ind. Acts 3063. 209. Ind. Code § 6-5.5-1-2 (Supp. 2007) (as amended by 2007 Ind. Acts 4215-17). 210. 2007 Ind. Acts 3063-64. 211. Id. 212. Ind. Code § 6-6-1.1-502 (Supp. 2007) (as amended by 2007 Ind. Acts 3063-64). 213. Id. § 6-6-2.5-30.5 (as added by 2007 Ind. Acts 1 130-31). 214. Id. 2008] TAX LAW 1291 to include a third free rotating axle where the gross vehicle weight is less than 26,000 pounds and the vehicle is operated for personal and not commercial use. 215 4. Aircraft License Excise Tax.—The GA amended I.C. § 6-6-6.5-1 to define a "repair station" to be "a person who holds a repair station certificate that was issued to the person by the Federal Aviation Administration under 14 CFR Part 145."216 Additionally, the GA amended I.C. § 6-6-6.5-2 to provide that if a nonresident bases an aircraft in Indiana with a repair station solely for repairing, remodeling, or refurbishing the aircraft, then the nonresident is not required to register the aircraft with the DOSR.217 The repair station is required to report quarterly to the DOSR the "N" number of the aircraft that were based in the State at the end of each calendar quarter. 218 J. Tobacco Taxes Effective July 1, 2007, the cigarette tax increased from $.555 to $.995 per pack. 219 The tax on other tobacco products increased from 18% to 24% of the wholesale price of the other tobacco products. 220 The discount that cigarette distributors are allowed to retain also increased from two-thirds of a cent per pack to one and two-tenths cents per pack. 221 Distribution of the cigarette tax also changed. Starting August 1, 2007, 27.05% of the money is deposited in the Indiana check-up plan trust fund, 2.46% is deposited in the state general fund to pay for Medicaid provider reimbursements, 4.1% is deposited in the state general fund to be used to pay for any appropriation for a health initiative, and 2.46% is used to reimburse the general fund for the income tax credit for offering health benefit plans. 222 All funds currently receiving cigarette tax funding shall have their percentage of distribution reduced. 223 Also effective August 1, 2007, 25% of the taxes, fees, fines, or penalties relating to the other tobacco products are to be transferred to the affordable housing and community development fund. 224 The GA added a new provision allowing a bad debt deduction if a cigarette distributor fails to collect from a retailer the cigarette tax for cigarettes that the distributor has distributed to the retailer. 225 A bad debt deduction is also allowed if another tobacco products distributor fails to collect from a retailer the other tobacco products tax for the other tobacco products that the distributor has 215. 2007 Ind. Acts 1004-05. 216. Id. at 1005-07. 217. Id. at 1007. 218. Id. 219. Ind. Code § 6-7-1-12 (Supp. 2007) (as amended by 2007 Ind. Acts 3488-89). 220. Id. § 6-7-2-7 (as amended by 2007 Ind. Acts 4723). 221. Id. § 6-7-1-17 (as amended by 2007 Ind. Acts 3065-66). 222. Id. § 6-7-1-28.1 (as amended by 2007 Ind. Acts 3490-91). 223. Id. 224. Id. § 6-7-2-17 (as amended by 2007 Ind. Acts 4723-24). 225. Id. § 6-7-1-17.5 (as added by 2007 Ind. Acts 3066-68). 1 292 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 delivered to the retailer. 226 K. Tax Administration 1. Collection.—The GA added a new provision, I.C. § 6-8.1-8-8.7, which requires the DOSR to operate a data match system with each financial institution doing business in Indiana. 227 Each financial institution doing business in Indiana must provide information to the DOSR regarding all account holders on a quarterly basis. 228 The information must be supplied by comparing records maintained by the financial institution with records provided by the DOSR or by having the Child Support Bureau make its reports available to the DOSR.229 When there is a determination that a match has been made, the DOSR shall provide a notice of the match if action is to be initiated to levy the account. 230 The DOSR or the collection agency is then required to pay the financial institution performing the data match a fee established by the DOSR of at least five dollars for each data match. 231 2. Refunds.—The GA amended I.C. § 6-8.1-9-1 to require the DOSR to hold a hearing if the taxpayer requests a hearing concerning a claim for refund by changing the discretionary language of "may" to "shall." 232 The GA also amended both I.C. §§ 6-8.1-9-14 and 6-8.1-9.5-10 to provide that the DOSR "may not assess a fee to a state agency or a custodial parent for seeking a setoff to a state ... tax refund for past due child support." 233 3. Penalties and Interest.—A retroactive amendment to I.C. § 6-8.1-10-1 provides that the interest rate that the DOSR charges on a tax deficiency and the interest rate that the DOSR pays on an excess tax payment shall be the same. Further, this amendment requires the treasurer of state to notify the commissioner on or before October 1 of the average investment yield of the State for the previous fiscal year. 234 Further, starting January 1, 2008, a penalty of $500 shall be imposed under I.C. § 6-8.1-10-2.1 for a partnership or S corporation that fails to file a composite return for all nonresident shareholders. 235 4. Miscellaneous.—Under I.C. § 6-8.1-3-2.5 the DOSR may adopt production quotas or goals for employees, but it is still prohibited from basing an employee evaluation on the amount of revenue collected or tax liability assessed. 236 226. Id. § 6-7-2-14.5 (as added by 2007 Ind. Acts 3068-70). 227. 2007 Ind. Acts 4070-72. 228. Id. 229. Id. 230. Id. 231. Id. 232. 2007 Ind. Acts 3072-73. 233. 2007 Ind. Acts 1678-80. 234. 2007 Ind. Acts 3073-74. 235. Id. at 3074-76. 236. Id. at 3071. 2008] TAX LAW 1293 The GA amended I.C. § 6-8.1-6-3 to state that an electronic payment shall be considered timely "on the date the taxpayer issues the payment order for the electronic funds transfer, instead of current law which provides that the payment is considered timely on the date the taxpayer's bank account is charged. 237 The GA amended I.C. § 6-8.1-1-1 to include the slot machine wagering tax as a listed tax for purposes of tax administration by the DOSR.238 The GA added a new provision that requires the DOSR to enter into "a memorandum of understanding with the Indiana gaming commission authorizing the commission's unlawful gaming enforcement division to conduct actions to revoke retail merchant certificates" in the manner specified in the memorandum of understanding. 239 The GA amended I.C. § 6-8.1-7-1 to provide that the county assessor is included along with the township assessor as an office that can receive the name and address of retail merchants. 240 L. Innkeepers ' and Food and Beverage Taxes Effective January 1, 2008, the Lake County innkeepers' tax distribution method changes to reflect increases in the various distributions. 241 Starting July 1, 2007, Vanderburgh County may increase its maximum innkeepers' tax rate from 6% to 8%.242 Additionally, from July 1, 2007 through December 31, 2009, the Vanderburgh County treasurer is to deposit in the tourism capital improvement fund the amount of revenue generated from a 3.5% rate, and from January 1, 2010, the fund is to receive the amount of tax generated fromarateof4.5%. 243 Allen County may also increase its innkeepers' tax starting July 1, 2007, from 6% to 7% to provide grants to the convention and visitor bureau. 244 M. Motor Carrier Services Definitions of "freight forwarders," "brokers," and "leasing companies" are now included in I.C. §§ 8-2.1-17-2, 8-2.1-17-7.5, and 8-2. 1-17-9. 1. 245 Under revised I.C. § 8-2.1-20-4, the freight forwarders, brokers, and leasing companies are all subject to regulation by the DOSR if they hold themselves out as a provider of transportation or property for compensation. 246 A new retroactive provision added to I.C. § 8-2.1-20-9 clarifies that if there 237. Mat 3071-72. 238. 2007 Ind. Acts 4303-04. 239. IND. CODE § 6-8.1-3-20 (Supp. 2007) (as added by 2007 Ind. Acts 4131). 240. 2007 Ind. Acts 3688-90. 241. Ind. Code § 6-9-2-2 (Supp. 2007) (as amended by 2007 Ind. Acts 3076-80). 242. Id. § 6-9^2.5-6 (as amended by 2007 Ind. Acts 4008-09). 243. Id. § 6-9-2.5-7.5 (as amended by 2007 Ind. Acts 4009-10). 244. Id. § 6-9-9-3 (as amended by 2007 Ind. Acts 4010-1 1). 245. 2007 Ind. Acts 1190-91. 246. Mat 1191. 1294 INDIANA LAW REVIEW [Vol. 41:1271 is a conflict between Indiana law and the unified carrier registration system and the regulations adopted by the United States Secretary of Transportation, then the federal statute and regulations control. 247 Another retroactive provision provides that household movers, transporters of non-liquid bulk fertilizers, trucks transporting chemicals for snow removal, and aggregate transporters whose trucks weigh less than 46,000 pounds shall be subject to the statutes regulating motor carriers that operate intrastate. 248 The GA amended I.C. § 8-2.1-24-4 to provide that the DOSR may certify a motor carrier transporting passengers and may regulate and supervise safety, insurance, methods, and hours of operation of a motor carrier providing transportation of passengers. The GA amended I.C. § 8-2.1-24-21 to specify that a motor carrier must display a United States Department of Transportation number on each motor vehicle that the motor carrier operates. 250 Finally, the GA amended I.C. § 8-2. 1 -24- 1 8 to incorporate federal regulations concerning drug and alcohol testing, consumer protection regulations for interstate household movers, and special training requirements for longer combination vehicles into the motor carrier laws. 251 The amendment also provides that a person engaged in the construction business is not required to have a commercial driver' s license. 252 N. Miscellaneous Provisions To help the effort to secure Indianapolis a bid for Super Bowl XLV, the GA enacted I.C. § 6-8-12, which adds a new chapter to provide the NFL and all of the NFL's affiliates with an exemption from all taxes for property owned, revenues received, and expenditures and transactions of the entities. 253 This chapter also provides that the sales of tickets for the Super Bowl are not to be subject to the admissions tax. 254 The GA also added I.C. § 4-33-19, which creates the license control division within the gaming commission. 255 The division is established to conduct administrative enforcement actions against licensed entities engaged in unlawful gambling. 256 A licensed entity includes a holder of a retail merchant's certificate. 257 The division shall conduct a license revocation hearing on behalf 247. Id. at 1192. 248. Ind. Code § 8-2.1-24-3 (Supp. 2007) (as amended by 2007 Ind. Acts 1194-95). 249. 2007 Ind. Acts 1195-96. 250. Mat 1196-97. 251. 2007 Ind. Acts 991-95. 252. Id. 253. 2007 Ind. Acts 3070-71. 254. Id. 255. 2007 Ind. Acts 41 16-18. 256. Id. 257. Id. 2008] TAX LAW 1295 of the DOSR.258 A memorandum of understanding between the commission and the DOSR is required to authorize the division's license revocation actions.259 The memorandum of understanding must be completed before January 1, 2008, and must describe the responsibilities of each participating agency. 260 The GA added I.C. § 4-35-8-1 to create the slot machine wagering tax and require the tax to be remitted to the DOSR on a daily basis.261 The deposit must be made by the close of the business day following the day the wagers were made. 262 Further, the DOSR may require the payments to be made by electronic funds transfer and allows the licensee to file a monthly report to reconcile the amounts remitted to the DOSR.263 The payment of the tax is to be accompanied by a form prescribed by the DOSR, and the money from the slot machine tax is to be deposited by the DOSR in the property tax reduction trust fund. 264 The GA amended I.C. § 5-22-16-4 to eliminate the provision that a person selling services to the state must get a tax clearance from the DOSR.265 However, the clearance is still required for a person selling tangible personal property. 266 The GA amended I.C. § 9-28-4-6 to clarify the due date for vehicles registered under the International Registration Plan to be due within fifteen days after the mailing date on the bill. 267 The GA repealed the annual $2.00 renewal fee for a permanent semitrailer registration. 268 The GA amended I.C. § 15-4-10-24.5 to provide that the corn market development account shall reimburse the state for the E85 sales tax deduction. 269 Annually beginning on July 1, 2008, the budget agency shall transfer from the corn market development account an amount equal to the lesser of 25% of the amount in the account or the sum of all deductions allowed for the E85 sales tax deduction. 270 O. Noncode Provisions Public Law 3-2007, Section 1 extends the nursing home quality care assessment fee from August 1, 2007 until August 1, 2009. 271 258. Id. 259. Id. 260. Id. 261. 2007 Ind. Acts 4266-4302. 262. Id. 263. Id. 264. Id. 265. 2007 Ind. Acts 3023-24. 266. Id. 267. 2007 Ind. Acts 1197-98. 268. Ind. Code § 9-29-5-6 (Supp. 2007) (as amended by 2007 Ind. Acts 1283). 269. 2007 Ind. Acts 2999-3000. 270. Id. 271. 2007 Ind. Acts 951-55. 1296 INDIANA LAW REVIEW [Vol. 41:1271 Public Law 2 1 1 -2007, Section 54 retroactively provides that a retail merchant that accepted Form ST- 135 as a sales tax exemption certificate for a person engaged in transportation can request a refund for taxes, penalties, and interest paid to the DOSR or request the DOSR to satisfy any outstanding liabilities. 272 These options are available until December 31, 2008. 273 Public Law 145-2007, Section 17 was added to provide that the Governor and DOSR Commissioner "shall take the steps necessary for Indiana to become an associate member of the Multistate Tax Commission." 274 Public Law 16-2007, Section 4 provides that the exemption provided in I.C. § 6-2.3-4-6 (Utility Receipts Tax) does not mean that the gross receipts were taxable before the enactment of this exemption. 275 Public Law 224-2007, Section 142 provides that any ordinance adopted between January 1 , 2007 and April 1 , 2007, concerning CAGIT, COIT, or CEDIT that was to be effective on July 1, 2007, is to now be effective on October 1, 2007. 276 Public Law 224-2007, Section 145 provides that if Monroe County adopts an ordinance to impose the additional COIT authorized, then the tax is to take effect on July 1, 2007, or fifteen days after the DOSR receives a notice that the ordinance was adopted, whichever is later. 277 Public Law 224-2007, Section 146 provides that an ordinance adopted before April 29, 2007, by Howard County that provided for a rate that was less than 0.25% is legalized and validated.278 Public Law 218-2007, Section 54 provides that revenue stamps paid for before July 1, 2007, and in the possession of a distributor may be used if the full amount of the tax increase is remitted to the DOSR.279 Public Law 42-2007, Section 20 is retroactive and repeals I.C. § 8-2.1-21 which regulated armored car companies that are now regulated under I.C. § 8-2. 1 - 24-18. 280 II. Indiana Tax Court Decisions The Tax Court rendered a variety of opinions from January 1, 2007 to December 3 1 , 2007. Specifically, the Tax Court issued eleven published opinions and decisions: six of which concerned the Indiana real property tax, one of which concerned the Indiana inheritance tax, two of which concerned Indiana sales and use tax, one of which concerned the controlled substance excise tax, and one of 272. 2007 Ind. Acts 3089-90. 273. Id. 21A. 2007 Ind. Acts 2191. 275. 2007 Ind. Acts 978-79. 276. 2007 Ind. Acts 4048. 277. Id. at 4050. 278. Id. at 4051. 279. 2007 Ind. Acts 3561-62. 280. 2007 Ind. Acts 1198. 2008] TAX LAW 1297 which concerned several state and local taxation issues. The Tax Court also issued twenty-three unpublished opinions: twenty of which concerned Indiana real property tax, one of which concerned Indiana personal property tax, and two of which concerned Indiana corporate income tax. A summary of each opinion and decision appears below. A. Real Property Tax 1. Westfield Golf Practice Center, LLC v. Washington Township Assessor. 281—Westfield Golf Practice Center, LLC ("Westfield") initiated this action on July 7, 2005, appealing the 2002 assessment of fifteen acres of land it owns in Hamilton County, Indiana, used to operate a commercial driving range. 282 The Hamilton County Property Tax Board of Appeals assessed the land at $403,800, classifying it as "usable undeveloped." 283 The rate per acre was $35,100. 284 Westfield sought review by the BTR because Westfield thought that the assessment was too high and violated article X, section I of the Indiana Constitution. 285 This appeal followed the BTR's final determination that upheld the assessment. 286 Westfield argued that the assessment violated the article X, section I requirement that assessments be uniform and equal, because its property was not assessed the same as comparable Hamilton County properties. 287 To support its argument, Westfield provided evidence in the form of property cards for five other driving ranges. 288 Westfield, however, "'duffed' the proverbial ball." 289 Indiana real property is assessed according to its market value-in-use. 290 The focus of this assessment method "is to measure a property's value using objectively verifiable data." 291 "[Market value-in-use] may be thought of as the ask price of property by its owner[.]" 292 Assessment guidelines are used, but they are only a starting point for an assessor's determination of the property's market value-in-use. 293 While it is required that a uniform and equal rate of assessment be used, uniform procedures are not required to arrive at the rate. 294 Westfield' s 281. 859 N.E.2d 396 (Ind. Tax Ct. 2007). 282. Mat 396-97. 283. Id. at 397. 284. Id. 285. Id. 286. Id. 287. Id. 288. Id. 289. Mat 398. 290. Id. at 399. 291. Id. 292. Id. at 399 n.2 (alteration in original) (quoting Ind. TaxComm'rs, 2002 RealProperty Assessment Manual 2 (2002)). 293. Id. sit 399. 294. Id. (citing State ex rel. Att'y Gen. v. Lake Superior Court, 820 N.E.2d 1240, 1250 (Ind. 2005)). 1 298 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 sole argument was that the methodology used by the assessor was not uniform and equal. 295 Westfield failed to offer evidence regarding the property's market value-in-use and the market value-in-use of comparable properties, which resulted in Westfield' s failure to prove that its assessment was unconstitutional under article X, section I. 296 2. Methodist Hospitals, Inc. v. Lake County Property Tax Assessment Board of Appeals. 297—Methodist Hospitals ("Methodist") initiated this action on November 2, 2004, appealing the denial of a charitable purposes exemption for the 2000 tax year for two medical offices it owns and operates. 298 Methodist is a nonprofit corporation, which is recognized by the Internal Revenue Service as a 501(c)(3) organization. 299 In addition to owning and operating two acute care hospitals, Methodist owns and operates two Primary Care Associates ("PCA") medical offices. 300 These PCA offices are located in Griffith, Indiana and Merrillville, Indiana. 301 Methodist employees staffPCA and perform many of the administrative functions such as billing and collections. 302 PCA offices offer medical services to the general public. 303 Physicians at PCA may admit their patients to Methodist's acute care hospitals, but patients are not sent to PCA from Methodist. 304 Methodist applied for a charitable purposes exemption in May 2000 for both PCA sites. 305 The application was denied by the Lake County PTABOA and the BTR.306 Methodist argued that PCA qualified for the exemption for three reasons: "(1) because it uses the PCAs to provide traditional medical services, (2) because the PCAs provide medical services as a part of Methodist's 'overall continuum of care[,]' and (3) because the PCA physicians do not use the offices 'for personal gain.'" 307 The Tax Court noted that mere ownership of other property by an exempt hospital does not automatically entitle the other property to a charitable purposes exemption. 308 To make a prima facie case that PCA is entitled to a charitable purposes exemption, Methodist was required to show that PCA was "substantially related to or supportive of 295. Id. 296. Id. 297. 862 N.E.2d 335 (Ind. Tax. Ct), review denied, 869 N.E.2d 456 (Ind. 2007). 298. Mat 336-37. 299. Id. at 336. 300. id. 301. Id. 302. Id. 303. Id. 304. Id. 305. Id. 306. Id. at 336-37. 307. Id. at 339 (alteration in original) (quoting and citing Cert. Admin. R. at 465-66; Oral Argument Transcript at \\, Methodist Hospitals, 862 N.E.2d 335; Petitioner's Brief at 7-9, 12-14, Methodist Hospitals, 862 N.E.2d 335)). 308. Id. at 338. 2008] TAX LAW 1299 Methodist's inpatient facilities." 309 The term "inpatient" defined by I.C. § 6-1.1 - 10- 16(h) includes only that portion of the hospital that provides meals and services to admitted patients. 310 Further, the phrase "substantially related to or supportive of "means that the other property is associated, to a considerable degree, to a hospital's inpatient facility or that the other property provides considerable aid to, or promotes to a considerable degree, the interests of a hospital's inpatient facility." 311 The evidence provided by Methodist regarding the employment of PCA staff and the administrative functions provided to PCA failed to demonstrate what relationship the inpatient facilities had to PCA and how the interests of the inpatient facilities were promoted by PCA.312 In addition, Methodist did not demonstrate how merely offering the services at PCA resulted in PCA being "substantially related to or supportive of the inpatient facilities. 313 It "will not [be] presume[d] that a substantial relationship or supportive network arises merely because two entities are engaged in the same type of business activity." 314 Methodist failed to establish the prima facie case and the denial of the charitable purposes exemption for PCA was affirmed.315 3. French Lick Township Trustee Assessor v. Kimball International, Inc. 316—The township assessor initiated an appeal of the BTR's final determination of the value of Kimball's real property in 2002 on April 27, 2006. 317 The assessment concerned Kimball's vacant industrial plant located in French Lick Township, Orange County, Indiana. 318 Kimball appealed the original assessment conducted by the assessor, which valued the plant at $2,912,300, to the Orange County PTABOA claiming the property's market value-in-use was not accurately reflected by the assessment. 319 The PTABOA ultimately reduced the assessed value to $2,595,200, but Kimball petitioned the BTR for a further reduction. 320 The BTR further reduced the assessment to $1,685,000.321 During the administrative hearing, Kimball provided evidence of the property's market value-in-use by presenting an appraisal, along with letters from its realty company that supported a valuation of $1,685,000. 322 The appraiser used three approaches to estimate the property's value: the cost approach, the income 309. Id. 310. Id. at 338-39. 311. Id. at 339. 312. Id. 313. Id. (emphasis added). 314. Id. at 339-40 (emphasis added). 315. Mat 340. 316. 865 N.E.2d 732 (Ind. Tax Ct. 2007). 317. Id. at 734. 318. Id. 319. Id. 320. Id. 321. Id. 322. Id. at 736. 1300 INDIANA LAW REVIEW [Vol. 41:1271 approach, and the sales comparison approach. 323 The realty company letters which were provided discussed Kimball's 2002 asking price of $2,500,000 and how the property would be difficult or not possible to sell at that price, as well as Kimball's decision in 2004 to reduce the price. 324 The reliability of the appraisal was questioned at the hearing by the assessor. 325 The BTR agreed with the assessor's concerns about Kimball's application of the income approach, but found the other methods provided the necessary probative evidence of the property's market value-in-use. 326 In contrast, the assessor did not provide any evidence to contradict Kimball's evidence of the property's market value-in- 327 use. The assessor argued the BTR's final determination was not supported by substantial evidence. 328 The assessor asserted that Kimball failed to make a prima facie case, citing Tax Court cases holding a prima facie case was not established because the taxpayer did not provide a thorough presentation of its evidence and because the BTR accepted Kimball's appraisal "at face value" without considering its reliability. 329 However, the cases cited by the assessor are applicable in circumstances when the BTR determines the taxpayer did not establish a prima facie case. 330 For evidence presented to the BTR to be considered probative, taxpayers must ensure the BTR understands the evidence.331 In contrast, BTR's determination that a taxpayer established a prima facie case is not to be overturned unless there has been an abuse of discretion if the BTR understands the evidence and finds it has probative value. 332 Because the assessor challenged the BTR's final determination, the assessor had the burden to demonstrate the determination was invalid. 333 The assessor did not satisfy this burden. 334 The assessor's evidence was not sufficient to rebut evidence presented by Kimball regarding the property's market value-in-use, and the assessor did not contradict Kimball's evidence with its own market value-in-use evidence. 335 "[Assessing officials should be prepared to defend their assessments by providing their own evidence of value at the administrative level, rather than counting on a taxpayer's failure to make a prima facie case." 336 Therefore, the 323. Id. 324. Id. at 737. 325. Id. 326. Id. at 738. 327. Id. 328. Id. 329. Id. at 738-39 (citing Petitioner's Brief at 6-7, 13, French Lick, 865 N.E.2d 732). 330. Id. at 739. 331. Id. 332. Id. 333. Id. 334. Id. 335. Id. 336. Mat739n.l3. 2008] TAX LAW 1301 BTR's final determination was affirmed. 337 4. Shoot v. Anderson Township Assessor. 338—The Shoots initiated an appeal on August 2, 2006, challenging the BTR's dismissal of forty-five property assessment appeals challenging the 2002 assessments for its property located in Madison County, Indiana. 339 The BTR dismissed the appeals on the ground that they were not timely filed. 340 The Tax Court agreed with the BTR's determination that the appeals were not timely filed. 341 The Shoots originally challenged the assessments on approximately seventy parcels of land to the Madison County PTABOA. The PTABOA denied all the appeals and mailed its determination to the Shoots on March 29 or March 30, 2004. 342 The BTR claimed the Shoots' appeals were required to be filed with the Madison County Assessor by May 3, 2004, but were not received by the assessor's office until May 6, 2004.343 The Shoots, on the other hand, contended they delivered the appeals to the assessor's office on May 3, 2004, but did not have a receipt to collaborate this contention. 344 The administrative record showed that all of the Shoots' appeals had two file stamps: one that stated the appeals were received May 6, 2004 and another that stated the appeals were received May 28, 2004 and contained the BTR's name.345 The BTR had prima facie evidence the appeals were not filed until May 6, 2004.346 The Shoots had the burden to rebut the evidence of the May 6, 2004 date with probative evidence the appeals were actually filed on May 3, 2004.347 The Shoots provided no probative evidence to support their assertion that the appeals were filed May 3, 2004, and the BTR's final determination was affirmed. 348 5. Lakes of the Four Seasons Property Owners' Ass'n v. Department of Local Government Finance.349—Lake of the Four Seasons Property Owners' Association, Inc. ("LOFS") initiated this appeal concerning the 2002 real property 337. Id. at 739. 338. 868 N.E.2d 79 (Ind. Tax Ct. 2007). 339. Id. at 79. 340. Id. 341. Mat 82. 342. Id. at 79. 343. Id. The Indiana Code requires that appeals must be filed with the county assessor within thirty days after the taxpayer receives notice of the PTABOA action. Id. at 80 n.l (citing Ind. Code. Ann. § 6-l.l-15-3(c) (West 2004)). "Because the Shoots received notice of the PTABOA' s final determinations through the mail, another three days was added to the thirty-day period." Id. (citing 52 Ind. Admin. Code § 2-3- 1(e) (2004)). The due date fell on a weekend date, so the appeals were not due until the next business day. Id. (citing 52 Ind. Admin. Code § 2-3-1 -(b)). 344. Mat 81. 345. Mat 80-81. 346. Mat 81. 347. Id. 348. Mat 81-82. 349. 875 N.E.2d 833 (Ind. Tax Ct. 2007). 1 302 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 assessment of its streets on June 22, 2006. 350 LOFS property is a private, gated community that consists of approximately 2500 residences and 26 miles (or 107.6 acres) of streets in Lake County, Indiana. 351 In 2002, the streets were valued at $70,290 utilizing the Neighborhood Valuation Form. 352 The assessed base rate was reduced from $6,534.00 per acre to $650.00 after a 90% negative influence factor was applied. 353 LOFS appealed the assessment to the BTR alleging that the streets should have been valued at zero, because the streets had no value due to the fact they were so encumbered by easements and restrictions. 354 The BTR upheld the DLGF assessment.355 LOFS argued the BTR's determination was not supported by substantial evidence, because the BTR ignored the LOFS' s evidence that demonstrated the streets had no value. 356 During the hearing, LOFS provided evidence that many jurisdictions have acknowledged that a "common area property" can be rendered valueless if it is burdened by too many restrictions, the streets are owned only for the homeowners' benefit, the streets cannot be sold or conveyed to another party, and LOFS pays at least $200,000 a year to maintain the streets but LOFS cannot charge for use of the streets. 357 In contrast, the DLGF argued that LOFS claim that the streets had zero value was merely a conclusory statement and had no merit without an appraisal. 358 The Tax Court disagreed with the DLGF and found that LOFS did provide sufficient evidence to support its prima facie case that the assessment was incorrect. 359 The evidence LOFS provided was objective, factually-based, and supported its opinion that the streets had no value. 360 "It is well settled in Indiana that an owner's testimony as to the value of his or her property will carry probative force if it is based upon facts and not speculation." 361 The DLGF failed to rebut LOFS's evidence.362 Instead of establishing that its assessment was an accurate reflection of the property's market value-in-use, the DLGF merely explained how it computed the assessed value of the property. 363 It could not, therefore, be said that the BTR's final determination was supported by the evidence, and its determination was subsequently reversed. 6. Brothers of Holy Cross, Inc. v. St. Joseph County Property Tax 350. Id. at 833-34. 351. Id. at 833. 352. Id. at 834. 353. Id. 354. Id. 355. Id. 356. Id. at 836. 357. Id. 358. Id. 359. Id. 360. Id. 361. Id. (citing Court View Ctr., LLC v. Witt, 753 N.E.2d 75, 82 (Ind. Ct. App. 2001)). 362. Id. at 837. 363. Id. 2008] TAX LAW 1303 Assessment Board of Appeals. 364—The Brothers of Holy Cross, Inc. ("BCH") initiated this appeal on July 20, 2005, challenging the BTR's final determination which upheld the St. Joseph County PTABOA decision to only allow a 17% charitable purposes real property tax exemption in 2002 for BCH's retirement community located in Notre Dame, Indiana. 365 BCH was only granted the exemption for its administrative center and the retirement community's underlying land. 366 BCH argued that the BTR's decision regarding the 2002 exemption was erroneous, because BCH provided probative evidence at the administrative hearing demonstrating that the retirement community was predominately used for a charitable purpose. 367 The evidence provided primarily consisted of copies of the community's "2003-2005 monthly newsletters and activity calendars, summaries of the services and activities offered to the [community] residents, and lists of residents that had utilized some of those services and activities." 368 However, the Tax Court upheld the BTR determination, finding BHC failed to establish that during the year at issue the retirement community was "owned, occupied, and used for a charitable purpose." 369 The evidence was clear regarding the services and activities available to community residents in 2003-2005, but the evidence did not have the requisite probative value for 2002, the year at issue, because the evidence did not establish what activities and services were available to residents during that time period. 370 In contrast, much of the evidence established that many of the activities and services BHC claimed demonstrated its charitable purpose were not available until some time after the 2002 tax year. 371 Thus, the BTR's final determination -379 was not erroneous. 7. Krooswyk Brothers, LLC v. North Township Assessor.373—Krooswyk Brothers, LLC ("Krooswyk") initiated this appeal of the 2000 assessment of its real property on May 24, 2002.374 Krooswyk' s land is located in Highland, Indiana, and has an improvement on the land that is used as an office/light storage facility. 375 The North Township Assessor ("assessor") used both the General Commercial Mercantile ("GCM") and the General Commercial Industrial ("GO") pricing schedules to value the improvement. Krooswyk appealed the assessment arguing that the GCK model should have been used to price two 364. 878 N.E.2d 548 (Ind. Tax Ct. 2007). 365. Mat 549. 366. Id. 367. Mat 550-51. 368. Id. at 551 (citing Cert. Admin. R. at 202-317). 369. Mat 553. 370. Mat 552. 371. Id. 372. Id. at 553. 373. No. 49T10-0205-TA-55, 2007 WL 34903 (Ind. Tax Ct. Jan. 5, 2007) (unpublished table decision). 374. Mat*l. 375. Id. 1304 INDIANA LAW REVIEW [Vol. 41:1271 sections of the improvement. 376 This appeal follows the BTR's final determination that upheld the assessment. 377 The party challenging a final determination of the BTR must submit probative evidence regarding the alleged error in the assessment to make a prima facie case. 378 The regulations in effect at the time of Krooswyk's assessment explained that the GCK pricing schedule should be used for '"valuing preengineered and predesigned pole buildings which are used for commercial and industrial purposes."' 379 However, the GCK pricing schedule cannot be used for buildings "classified as a special purpose design[.]" 380 Even though there is little guidance in the regulation as to when improvements qualify for the GCK schedule, taxpayers have been instructed by the Tax Court that a link must be shown between the components in the taxpayer' s improvement and the components listed in the regulation. 381 Krooswyk first argued that section "D" of its improvement was entitled to GCK pricing, because the improvement contained z-channels, x-bracing, and metal walls. 382 In spite of the fact the improvement contained these characteristics, the GCK schedule did not overall contemplate a section "D" improvement, and section "D" improvements are not priced under the GCK schedule.383 The BTR's final determination regarding the section "D" improvement was affirmed. 384 Krooswyk also argued that section "E" of its improvement was entitled to the GCK schedule, because the improvement is a pre-engineered Armco building that is finished without heat, contains tapered ceiling beams, z-channels, x-bracing wall girts, and a tapered beam. 385 In contrast to the section "D" improvement, the BTR's final determination that the section "E" improvement should not be priced under GCK scheduled was reversed. 386 The BTR's determination that Krooswyk's evidence "lack[ed] basic facts" was based on a preference for different evidence, not features that would result in disqualification from the GCK pricing schedule.387 By basing the denial on this preference, the BTR did not deal with Krooswyk's evidence in a meaningful manner. 388 376. Id. 377. Id. Krooswyk's administrative hearing was originally conducted with the SBTC on May 17, 2001; however, the BTR issued the final determination, because the legislature abolished the SBTC on December, 31, 2001, and created the BTR as its "successor." Id. at *1 & n.2. 378. Id. at *1 (citing Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 468 (Ind. Tax Ct. 2005)). 379. Id. at *2 (quoting 50 Ind. Admin. CODE § 2.2- 10-6. 1(a)(1)(D) (1996)). 380. Id. (alteration in original) (quoting 50 IND. ADMIN. CODE § 2.2- 10-6. 1(a)(1)(D)). 381. Id. 382. Id. at *2-3. 383. Id. at *3. 384. Id. 385. Id. 386. Id. 387. Id. 388. Id. 2008] TAX LAW 1305 8. Coller v. Perry Township Assessor. 389—Coller initiated this action on January 23, 2006, challenging the 2002 assessment of his residential real property located in Monroe County, Indiana. 390 In 1995, Coller purchased the property and subsequently completely demolished the existing house on the property and built a new house that measured over 8 100 square feet. 391 The neighborhood where the house is located in Perry Township is considered to be very desirable. 392 The Perry Township Assessor ("assessor") assessed the house at $1,543,200 and applied a 1 .60 neighborhood factor to arrive at that value. 393 This neighborhood factor was applied to the other properties in the surrounding neighborhood as well. 394 Coller challenged the assessment with the Monroe County PTABOA on the basis that the assessed value exceeded the property's replacement cost. 395 The PTABOA disagreed and sustained the assessment.396 Coller challenged the PTABOA finding to the BTR claiming that the application of the 1.60 neighborhood factor is what resulted in the property's assessed value exceeding that of the improvement's replacement cost. 397 This appeal followed the BTR's final determination that denied Coller relief. 398 Coller argued his house should be classified as its own neighborhood and the neighborhood factor applied to this neighborhood should be 1.00 because his property was '"dramatically newer, bigger, and more expensive' than the other homes in the surrounding neighborhood." 399 Indiana real property is assessed based on its "true tax value," which is based on '"[t]he market value-in-use of a property for its current use, as reflected by the utility received by the owner or a similar user, from the property[.]'" 400 A taxpayer cannot merely challenge a property assessment based on the misapplication of the regulations, rather evidence that demonstrates the property's actual market value-in-use is required. 401 Coller' s evidence consisted solely of an affidavit in which he stated the property cost $956,000 to build in 1995. 402 This sole piece of evidence provided by Coller, which contained only one sentence, was not sufficient probative evidence regarding the property's 389. No. 49T10-0601-TA-10, 2007 WL 106491 (Ind. Tax Ct. Jan. 17, 2007) (unpublished table decision). 390. Id. at n. 391. Id. 392. Id. 393. Id. 394. Id. 395. Id. 396. Id. 397. Id. 398. Id. 399. Id. at *3 (quoting Cert. Admin. R. at 84-91). 400. Id. at *2 (alteration in original) (quoting 2002 Real Property Assessment Manual 2 (2004)). 401. Id. at*3. 402. Id. 1306 INDIANA LAW REVIEW [Vol. 41:1271 market value-in-use. 403 Coller provided no documentation of the construction costs to support the figure in his affidavit nor did he attempt to subsequently explain the figure. 404 Because Coller did not demonstrate that his property's market value-in-use was not accurately reflected by the assessment, the BTR's final determination was affirmed. 405 9. Johnston v. Gerard. 406—The Johnstons initiated this action on June 26, 2002, appealing the 1996 and 1997 real property assessments of their apartment complex located in Center Township, Vanderburgh County, Indiana. 407 The Johnstons claimed that the Center Township Assessor ("assessor") applied the wrong obsolescence depreciation adjustment. 408 The assessor valued the property at $452,330 with a 5% obsolescence adjustment.409 The Johnstons appealed the Vanderburgh County Board of Review's decision to uphold the 5% obsolescence adjustment to the BTR, which denied the Johnstons' request for a 67.5% obsolescence adjustment. 410 The apartment complex at issue contained a total of thirteen buildings, twelve of which were constructed between 1979 and 1983 and one constructed in 1996. 411 It was discovered after the last building was constructed that problems existed with the land beneath the buildings. 412 Prior to the complex' s original construction, the property' s site was not properly prepared, because the fill used to help lay the buildings' foundations was not properly drained and compacted. 413 This failure to properly prepare the site resulted in the fill, which was made up of debris, soil, and trees, to decay and rot over time, ultimately resulting in the fill becoming soft and causing the foundations to begin collapsing. 414 During the BTR hearing, the Johnstons provided the following evidence to support their request for the 67.5% adjustment. 415 First, the study and testimony of a geotechnical engineer was presented. 416 The engineer used a standard preparation test, an unconfined compressive strength test, and natural moisture content test to investigate the property. 417 Based on the results of these tests, the engineer testified why the soil was soft and concluded, '"[T]he site 403. Id. at*4. 404. Id. 405. Id. 406. No. 82T10-0206-TA-80, 2007 WL 106493 (Ind. Tax Ct. Jan. 17, 2007) (unpublished table decision). 407. Mat*l. 408. Id. 409. Id. 410. Id. 411. Id. 412. Id. 413. Id. 414. Id. 415. Id. at*3. 416. Id. 417. Id. at*3&n.2. 2008] TAX LAW 1307 [was] properly prepped prior to [the] construction of the buildings."' 418 He concluded that the installation of a "mini-pile" system would be the most economical method to stabilize the property and cure the problem with the complex. 419 Next, the Johnstons also provided evidence of the approximate cost to install a "mini-pile" system with the testimony of an estimator, project manager, and vice-president of a construction company. 420 This expert witness testified that a "very conservative" estimate would be $936,000 to install the system, not including remedial repairs necessary after installation. 421 The final evidence provided by the Johnstons concerned an appraisal, incorporating both the geotechnical investigation and estimated remedy, conducted by a licensed appraiser in which the appraiser concluded that "the poor site preparation of the property was functional obsolescence, which causes severe physical depreciation, and that '[t]he buildings simply [cannot] function as they were designed.'" 422 The appraiser also stated that property's marketability is decreased because of the loss of value caused by the defect and that no one would be willing to buy the property with the defect, and if a person did buy the property, the sale price would have to be reduced to account for the cost to fix the problem. 423 The amount of obsolescence was subsequently quantified by a cost to cure method. 424 A taxpayer seeking to make an obsolescence claim must meet the following two-pronged test: 1) the cause of the alleged obsolescence must be identified and 2) the amount of obsolescence to be applied to the improvement(s) must be quantified. 425 Both prongs require "a connection to an actual loss in property value." 426 The BTR's determination that the Johnstons were not entitled to the additional obsolescence depreciation adjustment, because the property's deficiency was part of the land and thus not functional obsolescence 427 was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with 418. Id. at *3 (alteration in original) (quoting Cert. Admin. R. at 308-09). 419. Id. 420. Id. at *4. 421. Id. 422. Id. (alteration in original) (footnote omitted) (quoting Cert. Admin. R. at 177; 333-34). 423. Id. 424. Id. The 67.5% obsolescence figure was determined by the following method: [The appraiser] took the cost of the existing improvements as determined by the Marshal and Swift Valuation Handbook ($1,981,540) less the estimated physical depreciation of all buildings (30%, or $594,462) to arrive at the value after physical depreciation ($1,387,078). [The appraiser] then divided [the construction company witness'] estimated cost to cure the functional obsolescence ($936,000) by the value after physical depreciation ($1,387,078) to arrive at a 67.5% obsolescence depreciation adjustment. Id. (citations and footnote omitted) (citing Cert. Admin. R. at 182; 341-42). 425. Id. at *2 (citing Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1238, 1241 (Ind. TaxCt. 1998)). 426. Id. (citing Clark, 694 N.E.2d at 1238). 427. Id. at*5. 1 308 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 the law." 428 Indiana's assessment regulations provide that site preparation is priced as part of a property's improvement. 429 The BTR also should not have ignored the appraiser's 67.5% quantification simply because it was not computed from a firm quote. 430 The appraiser stated that the estimate was "very conservative" and did not even include work that might need to be done after the system was installed. 431 Therefore, the Johnstons established a prima facie case that their property was entitled to the 67.5% functional depreciation adjustment, and the assessor failed to rebut the Johnstons' evidence with its own evidence or alternate calculations. 432 The BTR's final determination, therefore, was reversed. 433 10. Bank of Highland Trust 13-3085 v. Department of Local Government Finance. 434—Bank of Highland Trust 13-3085 ("BOHT") initiated this appeal on June 2, 2006, appealing its 2002 real property assessments for two commercial parcels located in Lake County, Indiana. 435 The two parcels consisted of a 4269 square foot parking lot and a 9500 square lot containing a two-story office building. 436 BOHT believed the DLGF's assessments of the two parcels was too high and appealed the assessments to the BTR, which denied BOHT relief. 437 During the BTR hearing, BOHT presented evidence in the form of four property appraisals and two realtor statements regarding the property' s estimated value and asking price. 438 The appraisals and statements both valued the property during the following years: 1988, 1990, 1996, 1997, and 2005. 439 This documentation valued the property between $250,000 and $540,000 during those years. 440 To overturn a BTR final determination, "the party seeking reversal must have submitted, during the administrative hearing process, probative evidence regarding the alleged assessment error." 441 Real property in Indiana is assessed 428. Id. at *6. 429. Id. at *5 (citing 50 Ind. Admin. Code 2.2- 10-6. 1(a)(3)(A) (1996) (repealed 2002)). 430. Id. The Tax Court cited Canal Square Limited Partnership v. State Board of Tax Commissioners, 694 N.E.2d 801, 805 (Ind. Tax Ct. 1998), for the proposition that the BTR must deal with a taxpayer's probative evidence in a meaningful manner when it is offered and cannot simply ignore the evidence. Id. 431. Id. 432. Id. at *6. 433. Id. 434. No. 49T10-0606-TA-52, 2007 WL 247813 (Ind. Tax Ct. May 18, 2007) (unpublished table decision), trans, denied, 869 N.E.2d (Ind. 2007). 435. W. at*l. 436. Id. 437. Id. The parking lot was assessed at $33,700 and the lot containing the office building was assessed at $572,000. Id. 438. Id. at *2. 439. Id. 440. Id. 441. Id. at *1 (citing Osolo Twp. Assessor v. Elkhart Maple Lane Assocs., 789 N.E.2d 109, 1 1 1 (Ind. Tax Ct. 2003)). 2008] TAX LAW 1309 based on its "true tax value," which is determined by the property's market value- in-use for its current use. 442 Even if an assessor errs in applying the promulgated guidelines, the assessment is not to be invalidated unless it is an inaccurate reflection of the property's market value-in-use. 443 Therefore, the taxpayer challenging an assessment must provide evidence that the property's assessed value is not an accurate reflection of its market value-in-use. 444 BOHT failed to meet its burden because the evidence that BOHT provided did not reflect the property's market value-in-use as of January 1, 1999. 445 "Indiana's assessment regulations provide that a 2002 general assessment is to reflect a property's market value-in-use as of January 1, 1999." 446 Without explaining how the evidence regarding the years presented by BOHT relate to the January 1, 1999 value, the evidence BOHT provided means nothing.447 The line graph submitted by BOHT charting the trend of the appraisals and estimates of value is only a "guesstimate" of the property's 1999 value and does not specify the property's market value-in-use for January 1, 1999, even if it does indicate a downward trend. 448 The Tax Court affirmed the BTR's final determination.449 11. Scherwood Golf Concessions, Inc. v. Department of Local Government Finance. 450—Scherwood Golf Concessions, Inc. ("Scherwood") initiated this action on February 21, 2006, appealing the 2002 assessment of two of its parcels which were located in Lake County, Indiana. 451 One of the parcels contained an eighteen hole golf course on forty acres and the other parcel contained a commercial clubhouse and parking lot on 5.85 acres. 452 Scherwood appealed the DLGF's assessments of the parcels based on the belief that the assessed values were too high. 453 This appeal follows the BTR's final determination that upheld the DLGF's assessment.454 Scherwood argued that the BTR's determination was erroneous, because that determination, which was established during the administrative hearing meant that golf courses in the township were not "assessed in a uniform, equal or consistent manner." 455 Scherwood' s argument was based on the fact that a nearby "nicer and newer" golf course had a lower assessed 442. Id. at *2 (citing 2002 Real Property Assessment Manual 2 (2004)). 443. Id. 444. Id. 445. Id. 446. Id. (citing 2002 Real Property Assessment Manual 4 (2004)). 447. Id. 448. Id. at*3. 449. Id. 450. No. 49T10-0602-TA-18, 2007 WL 247809 (Ind. Tax Ct. Jan. 30, 2007) (unpublished table decision). 451. Id. at*l. 452. Id. 453. Id. The golf course was assessed with a total value of $860,500 and the clubhouse and parking lot were assessed with a total value of $574,100. Id. 454. Id 455. Id. 1310 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 value. 456 To support its argument, Scherwood provided evidence in the form of property records cards for the "nicer and newer" golf course and the testimony of its attorney representative regarding both of the courses' characteristics. 457 No market value-in-use evidence was offered. 458 Article X, section 1 of the Indiana Constitution "has long been held to require: (1) uniformity and equality in assessment, (2) uniformity and equality as to the rate of taxation, and (3) a just valuation for taxation of all property." 459 Prior to 2002, the uniformity and equality of assessments was determined by looking at how the regulations were applied to comparable properties. 460 However, the Indiana property tax assessment system changed in 2002, and a new system was developed that could objectively determine the true tax value of property through its market value-in- use. 461 Now, there is a presumption that the assessment process accurately measures a property's market value-in-use. 462 If a taxpayer offers relevant evidence of the property' s market value-in-use, then this presumption may be rebutted. 463 There is no requirement that uniform procedures be used to arrive at a "uniform and equal rate" of assessment. 464 Scherwood did not provide evidence that its assessment was erroneous or that it was assessed in a "non-uniform manner" with the other township golf courses, because Scherwood did not demonstrate the market value-in-use of its golf course or the comparable golf course. 465 The BTR's final determination was affirmed.466 12. Indianapolis Racquet Club, Inc. v. Lawrence Township (Marion County) Assessor. 467—Indianapolis Racquet Club, Inc. ("IRC") initiated three tax appeals on December 12, 2003, appealing the 1989, 1991, and 1995 property assessments of its tennis facility improvement located in Marion County, Indiana. 468 IRC's tennis facility consisted of eight indoor tennis courts. 469 IRC s tennis facility was assessed during the years at issue with the General Commercial Industrial ("GO") light warehouse cost schedule and the forty-year life expectancy table by the Lawrence Township Assessor ("assessor"). 470 This appeal followed the 456. Id. 457. Id. at *2. 458. Id. 459. Id. (citing Indianapolis Historic Partners v. 1228 (Ind. TaxCt. 1998)). 460. Id, State Bd. of Tax Comm'rs, 694 N.E.2d 1224, 461. id. 462. Id. 463. Id. 464. Id. at *3. 465. Id. 466. Id. 467. No. 49T10-0312-TA-59, table decision). 468. Id. at*l. 2007 WL 772936 (Ind. Tax Ct. Mar. 15, 2007) (unpublished 469. Id. 470. Id. 2008] TAX LAW 1311 BTR's determination that upheld the assessment. 471 "IRC maintained] that it [was] entitled to: 1) a grade factor reduction equivalent to 50% of the tennis facility's reproduction cost for the 1989 tax year; 2) a kit building adjustment for the 1991 tax year; and 3) application of the [general commercial kit] cost schedule for the 1995 tax year," 472 because it "prima facie established that its tennis facility is a light, pre-engineered building that qualified as a kit building." 473 The Tax Court consolidated the several issues raised by IRC into one issue: whether or not IRC's tennis facility is eligible for a reduction in its property's assessed value for the years at issue because the improvement is a light, pre-engineered building. 474 To support its argument, IRC's president presented evidence in the forms of oral and written testimony and photographs demonstrating the characteristics of the building. 475 The evidence IRC provided "demonstrate[ed] that the tennis facility's columns, roof supports, and other features are consistent with the features that qualify light, pre-engineered buildings for the kit building adjustment." 476 In contrast, the evidence that the assessor provided, which the BTR used to support its holding that the building was something other than an economical kit building, only pointed to features that would not necessarily disqualify the improvement for the kit building qualification, such as the fact that the facility had a block concrete foundation, two of the walls were concrete block or brick, and the roof pitch was well above what is seen in a typical kit building. 477 "[Assessing officials must quantify the effect of the subject improvement's deviations from the basic kit model in order 471. Id. 472. Id. at*3. 473. Id. 414. Id. at *\. 475. Id. at *3. The photographs showed the following building attributes: (1) a rigid beam steel framing system; (2) cold form open "Z" channels; (3) two "H" columns; (4) "X" bracing; (5) 26-28 gauge metal sidewalls and roof; (6) 14-16 gauge steel purlins and girders; (7) a 120' width; (8) a 20' eave height; (9) 25' uniform bay spacing between its rigid frame components; (10) no concrete floor; (11) no load bearing walls or interior poles; (12) no columns or roof beams; (13) no foundation, and (14) a three row, concrete block sealant surrounding its perimeter. Id. (citing 1989 Cert Admin R. at 33-42, 399-416; 1991 Cert. Admin R. at 33-42, 393-410; 1993 Cert. Admin R. at 32-41, 397-414). 476. Id. (citing Hamstra Builders, Inc. v. Dep't of Local Gov't Fin., 783 N.E.2d 387, 390-91 (Ind. Tax Ct. 2003)). The property tax assessment regulations were amended in 1995 to include a General Commercial Kit ("GCK") cost schedule for valuing kit buildings, but the regulations do not provide much detail concerning what constitutes the essential characteristics of a kit building. Id. at *2. Therefore, even though Instructional Bulletin 91-8 was issued prior to the new regulations, it continues to offer valuable guidance in determining when a building may be assessed under the GCK schedule, because the bulletin provides information concerning the types of light, pre-engineered buildings that qualify for a kit adjustment. Id. 477. Id. at *3 (citing 1989 Cert. Admin. R.; 1991 Cert. Admin. R.; 1995 Cert. Admin. R.). 1312 INDIANA LAW REVIEW [Vol. 4 1 : 1 27 1 to determine whether those deviations rendered it no longer economical." 478 The Tax Court determined that the BTR's final determination was not "supported by substantial evidence," and therefore, the Tax Court reversed the BTR's final determination, because the assessor did not rebut the prima facie case which IRC established. 479 13. Caldwell v. Department of Local Government Finance. 480—Caldwell initiated this original tax appeal on April 17, 2006, to challenge the DLGF's denial of its October 2005 objection to the Union County/College Corner Joint School District's ("School District") 2006 budget. 481 The School District fixed its 2006 budget in September 2005 after the requisite public hearings. 482 Union County taxpayers were informed of the proposed tax rates necessary to fund the School District' s budget by the county auditor through public notice. 483 Caldwell objected to the tax rate increase. 484 On appeal, Caldwell argued the proposed tax rates were unfairly burdensome to the county taxpayers and that there should not be levies for the School District to "1) provide health insurance benefits to its school board members; and 2) make payments on its [guaranteed energy savings account] from the capital projects fund." 485 The Tax Court first considered the health insurance issue. Caldwell argued that school board members should not be provided health insurance benefits because I.C. § 20-26-4-7 limits annual compensation for school board members to $2000 per year plus a per diem. 486 The Tax Court rejected this argument and affirmed the DLGF's final determination regarding this issue. 487 The crucial consideration was the definition of the word "compensation." Caldwell's argument was "based on the premise that the term 'compensation' includes both 'salary' and 'fringe benefits.'" 488 While "salary" and "fringe benefits" can be considered categories or types of compensation, legislative intent revealed when reviewing the whole statute that the term "compensation" in I.C. § 20-26-4-7 was meant to have a more restricted meaning. 489 The language of the statute, which defines "compensation" as '"a reasonable amount for service . . . not to exceed . . . $2,000[] per year[] and [] a per diem,'" 490 leads to the conclusion that the statute was only referring to 478. Id. (citing Barker v. State Bd. of Tax Comm'rs, 712 N.E.2d 563, 571 (Ind. Tax Ct. 1999)). 479. Id. at *4. 480. No. 49T10-0604-TA-41, 2007 WL 731336 (Ind. Tax Ct. Mar. 12, 2007) (unpublished table decision). 481. Id. at *1. 482. Id. 483. Id. 484. Id. 485. Id. 486. Id. 487. Id. at *3. 488. Id. at *2 (emphasis added). 489. Id. at *2-3. 490. Id. at *3 (quoting Ind. Code Ann. § 20-26-4-7 (West 2005)). 2008] TAX LAW 1313 "salary" because the amount is fixed and is paid at stated intervals and because there is a relation between the time worked or service provided. 491 In contrast, providing health insurance is a "fringe benefit." 492 Fringe benefits are a distinct form of compensation, separate from and supplemental to salary. 493 The School District did not violate Indiana law when it paid a portion of the school board members' health insurance premiums because salary does not include fringe benefits. 494 Next, the Tax Court considered the issue regarding the School District's use of its capital funds project for payment on its government energy savings account ("GESC"). 495 The School District had two contracts with Honeywell for energy saving projects. 496 One of the contracts covered a five-year period, and the other contract covered a ten-year period, but the two were eventually combined sometime between October 2000 and January 2002. 497 Caldwell stated the remaining contract had "approximately eight [more] years at $46,880 per year[.]" 498 Caldwell argued the School District should be "punished" for not having to date any documentation regarding the savings resulting from GESC, because at the end of the contract term there would be no method to determine whether Honeywell was required to reimburse the School District. 499 The "punishment" suggested by Caldwell was to require the School District to make any remaining GESC payments to Honeywell from the general fund instead of the capital projects fund. 500 The Tax Court disagreed with Caldwell's request for "punishment," because the Tax Court determined that "the School District has done nothing yet for which it should be punished." 501 When a School District's 491. Id. 492. Id. 493. Id. 494. Id. 495. Id. The Tax Court described a GESC as follows: Essentially, a GESC is a method by which a school corporation can finance the implementation of certain conservation energy methods. More specifically, a school corporation contracts with a "qualified provider" to make some type of facility alteration or technological upgrade designed to reduce the school's energy, water, wastewater, or other operating costs. As part of the contract, however, the qualified provider must make two "guarantees." First, it must guarantee that the savings resulting from the conservation measures ("guaranteed savings") will cover the costs of implementing those measures. Second, the qualified provider must guarantee that if the actual savings resulting from the conservation measures are less than the guaranteed savings, it will reimburse the school corporation for the difference. Id. (citations and footnotes omitted). 496. Id.atH. 497. Id. 498. Id. (quoting Petitioner's Brief at 2, Caldwell, 2007 WL 731336). 499. Id. 500. Id. 501. Id. at*4-5. 1314 INDIANA LAW REVIEW [Vol. 41:1271 actual savings from a GESC are less than the savings guaranteed, the School District can be reimbursed by the qualified provider pursuant to I.C. § 36-1-12.5- 5. 502 However, the entire contract term must expire before such a determination can be made. 503 Because the School District's GESC contract term had not yet expired, the School District was not yet required to document actual savings during the GESC term.504 Therefore, the DLGF's final determination rejecting Caldwell's request for "punishment" was affirmed. 505 14. Beta Steel Corp. v. Scott. 506—Beta Steel Corporation ("BSC") initiated this action on November 1, 2002, appealing the denial of an obsolescence adjustment for the 1999 assessment year. 507 BSC is an Indiana corporation that "owns and operates a steel manufacturing plant located in Porter County, Indiana." 508 The plant's primary facility was the manufacturing facility, constructed in the early 1990s which housed a hot rolling mill. 509 This primary facility was expanded in 1995 when an electric arc furnace and various satellite buildings were added. 510 BSC's plant was valued at $5,474,270 by the Portage Township Assessor ("assessor"), and no obsolescence adjustment was assigned to the facility. 511 BSC's requests for an obsolescence adjustment were denied by the Porter County PTABOA and the BTR.512 During the administrative hearing, BSC argued that BSC was entitled to a 75% obsolescence adjustment for both economic and functional obsolescence present in its primary facility. 513 BSC believed that BSC was entitled to a functional obsolescence adjustment, because the primary facility had been "designed to accommodate 'obsolete' production equipment and it was overbuilt." 514 BSC also believed that economic obsolescence was present, because "'the U.S. [steel] market' has been negatively affected by foreign steel imports, technological advances, the Clean Air Act, and the fact that 'newer [steel] mills are built with shorter life spans[.]'" 515 To establish a prima facie case for its requested obsolescence adjustment, BSC provided evidence in the form of an Obsolescence Analysis that had been 502. Id. at *4 (citing Ind. Code Ann. § 36-l-12.5-5(d)(2)(B) (West 2005)). 503. Id. (citing Ind. Code Ann. § 36-l-12.5-5(d)(2)(B)). 504. Id. at *5. 505. Id. 506. No. 71T10-021 l-TA-127, 2007 WL 778863 (Ind. Tax Ct. Mar. 16, 2007) (unpublished table decision). 507. Id. at *1. 508. Id. (footnote omitted). 509. Id. 510. Id. 511. Id. 512. Id. 513. Id. 514. Id. at *3 (footnotes omitted) (alteration in original) (citing Cert. Admin. R. at 606, 608, 616-18). 515. Id. (internal quotation marks omitted) (alteration in original) (quoting Cert. Admin. R. at 331, 662-65). 2008] TAX LAW 1315 presented by a certified Member of the Appraisal Institute.516 The analysis showed the 75% figure was computed by comparing the sales prices and replacement costs of six other steel manufacturing plants located outside Indiana, all of which had been sold within the past eight years. 517 The amount of obsolescence in those six facilities was attributed to the differences between the sales prices and replacement costs. 518 The appraiser's conclusion was that BSC's property had 75% obsolescence, because the range of obsolescence in those six facilities was between 62.03% and 87.8%. 519 This evidence, however, failed to prima facie establish BSC was entitled to an obsolescence adjustment.520 Indiana real property is assessed based on its "true tax value." 521 During the year at issue, 1999, "a property's true tax value was not its fair market value, but rather the value as determined under Indiana' s assessment regulations." 522 Additionally, the assessment regulations in 1999 defined obsolescence as either a property's functional or economic loss of value. 523 To obtain an obsolescence adjustment, a taxpayer must first identify the obsolescence causes and then quantify the obsolescence amount, connecting both "to an actual loss of value to its property." 524 If the obsolescence is quantified using a comparable sales approach, then similar forms of functional obsolescence should exist in the comparable properties. 525 However, BSC did not demonstrate the comparable facilities had similar obsolescence causes. 526 Further, BSC did not even "attempt to identify what kind(s) of obsolescence caused six other facilities to lose value." 527 Instead, BSC's analysis was based on the assumption that obsolescence caused the discrepancies in sales prices and replacement costs. 528 Not only did BSC fail to demonstrate its facility experienced a loss in value similar to the reasons the other facilities experienced this loss, but BSC also failed to demonstrate its facility could be compared to the other facilities. 529 BSC failed to establish comparability with its assertions that similarities existed between its facility and the others, because all of the facilities were used to manufacture steel and one of the facilities was similarly constructed. 530 Because BSC did not establish a prima facie case 516. Id. 517. Id. 518. Id. 519. Id. 520. Id. 521. Id. at *2 (citing Ind. Code Ann. § 6-1. 1-31 -6(c) (West 2007)). 522. Id. (citing Ind. Code Ann. § 6-l.l-31-6(c) (West 1999)). 523. Id. (citing Ind. Admin. Code § 2.2-10-7(e) (1996) (repealed 2002)). 524. Id. "In other words, the taxpayer must show how these factors are causing an actual loss of value to its property." Id. 525. Id. at *3 (citing Cert. Admin. R. at 49). 526. Id. 527. Id. 528. Id. 529. Id. at *3-4. 530. Mat*4. 1316 INDIANA LAW REVIEW [Vol. 41:1271 for its requested obsolescence adjustment, the BTR's final determination was affirmed. 531 75. Washington Township Assessor (Washington County, Indiana) v. Kimball International, Inc. 532—The Washington Township Assessor ("assessor") initiated this action on April 27, 2006, appealing the BTR's final determination which reduced Kimball International' s ("Kimball") 2002 real property assessment from $8,004,000 to $4,500,000. 533 Kimball's real property consisted of an industrial plant located in Washington County, Indiana. 534 Kimball appealed the 2002 assessment to the Washington County PTABOA, claiming the incorrect amount of accrued depreciation had been applied to the improvements resulting in an inaccurate reflection of the property's market value-in-use. 535 The PTABOA denied Kimball's request, and Kimball subsequently appealed the decision to the BTR. 536 To support its claim, Kimball presented evidence at the BTR hearing of the property's market value-in-use in the form of both a cost approach analysis and a sales comparison analysis. 537 The true tax value of the property was computed under the cost approach "by reducing the replacement cost new of the improvements (RCN), as determined by the Assessor, by the improvements' accrued depreciation." 538 Depreciation was computed based on calculations of depreciation from eleven properties that were alleged to be comparable and were sold between 1996 and 2002. 539 The sales comparison analysis used the same comparable properties. 540 This method accounted for the differences between the comparable properties and Kimball's property through the adjustment of the sales prices, as well as the sales prices were adjusted to their 1999 values based on the Consumer Price Index. 541 The two approaches were then compared and reconciled, which resulted in a final estimate of Kimball's property. 542 The assessor argued the BTR's final determination was not supported by substantial evidence due to Kimball's failure to make a prima facie case, "because Kimball did not properly explain/establish the comparability of the properties used in its cost and sales comparison approaches, nor did it establish the validity of its accrued depreciation calculation." 543 However, the assessor 531. Id. 532. No. 49T10-0604-TA-43, 2007 WL 1289623 (Ind. Tax Ct. May 3, 2007) (unpublished table decision). 533. Id. at *1. 534. Id. 535. Id. 536. Id. 537. Id. at *2. 538. Id. 539. Id. 540. Id. 541. Id. at*3. 542. Id. 543. Id. (citing Petitioner's Brief at 4-8, Kimball Int'l, 2007 WL 1289623). 2008] TAX LAW 1317 failed to meet its burden and the BTR's final determination was affirmed. 544 The Tax Court noted that a BTR determination that a taxpayer established a prima facie case will not typically be overturned unless it finds an abuse of discretion. 545 The assessor presented claims during its rebuttal at the administrative hearing, but never substantiated those claims. 546 The assessor only challenged Kimball's evidence without offering any contradictory market value-in-use evidence. 547 Further, the assessor did rebut the calculations Kimball presented. 548 "Here, the Assessor has done nothing more than raise open-ended questions concerning Kimball's evidence." 549 The assessor bore the burden of demonstrating the invalidity of the BTR's final determination as the party challenging the determination. 550 16. The Pedcor Investments Cases. 551—The Pedcor Investments cases consisted of four separately issued unpublished opinions, all of which were issued on the same day and all of which addressed the following issue: the BTR's denial of Pedcor Investments' ("Pedcor") claim for an obsolescence depreciation adjustment for its low-income housing projects. 552 In all of the cases, Pedcor argued that Pedcor presented its prima facie case during the administrative hearings, and because the township assessors did not rebut Pedcor' s evidence, the BTR's determinations were invalid because the determinations were not supported by substantial evidence. 553 Further, in all of the cases, Pedcor claimed that Pedcor was entitled to economic obsolescence adjustments for the apartment complexes, because the rental restrictions had a negative impact on the complexes' ability to generate income. 554 Pedcor initiated the action in Pedcor I on June 4, 2002, appealing the 544. A/. at*4. 545. Id. 546. Id. at*3. 547. /