The 2011 Real Property Assessment Manual (the Manual) proscribes the manner in which real property must be assessed. Real property is assessed at the place where it is situated and to the person liable for the taxes on such property, usually the owner of the property. The Manual requires assessing officials to determine the value of all classes of land including residential, commercial, industrial and agricultural homesites within their jurisdiction. Once an assessing official has determined the value of a property, the assessing official or the Property Tax Assessment Board of Appeals (“PTABOA”) must give notice to each taxpayer of the assessment.
Upon receipt of such notice, a taxpayer has the right to initiate an appeal of the current year’s valuation. The taxpayer’s first step is to provide written notification to the local assessing official. Taxpayers have 45 days after the date of the notice of assessment to initiate an appeal. The taxpayer and the assessing official then participate in an informal preliminary meeting. If the taxpayer and the assessing official do not agree on a resolution, the next step is a hearing before the PTABOA (Property Tax Assessment Board of Appeals). At the PTABOA hearing, the taxpayer may present reasons for disagreement with the assessment. If a taxpayer is not satisfied with the decision of the PTABOA, the taxpayer may appeal to the Indiana Board of Tax Review by filing a Form 131. The appeal process may continue to the Indiana Tax Court and then ultimately the Indiana Supreme Court.
A current problem plaguing the assessment of real property in Indiana stems from big-box retailers. A big-box retailer is a high-volume retail store that occupies a large amount of physical space and generally offers a wide variety of products to consumers. One of the many goals of Indiana assessing officials is to ensure that big-box retailers pay their fair share of taxes. To achieve this goal, big-box retailers (and those appraising their properties) should be prohibited from using vacant, abandoned stores (more commonly referred to as dark boxes) as comparables to vie for lower assessed values (AVs). Despite generating millions of dollars in annual sales, big-box retailers continue to use dark boxes to argue their fully functioning and successful properties are really not that valuable.
If this valuation scheme used by big-box retailers remains the norm in Indiana, a study commissioned by Indiana county officials found that the value of more than 17,000 commercial properties would drop by $3.5 billion. This drop in valuation would shift an approximately $120 million tax burden to other taxpayers including, but not limited to, working families, libraries, school districts, fire departments and airports. In a nutshell, lower AVs for big-box stores help big-box retailers and hurt everyone else.
About the Author
Sarah L. Schreiber, Associate Attorney
Haller & Colvin
sschreiber@hallercolvin.com
(260) 426-0444
hallercolvin.com
