Indiana’s burden-shifting statute doesn’t apply to uniformity claims, the Tax Court ruled in a recent decision in which it also held the Owner failed to show that the assessment of his home was non-uniform with those of other homes in the community.   In Thorsness v. Porter County Assessor, Cause No. 49T10-1102-TA-14 (Jan. 23, 2014), Owner bought a home on January 31, 2007, for $1.65 Million, in Dune Acres.  Located on the southern shore of Lake Michigan, Dune Acres included approximately 155 homes.  For the March 1, 2007 assessment, the Assessor assigned a value of $1,647,800 to the property.

Owner’s constitutional challenge.  Before the Indiana Board of Tax Review, Owner argued that the assessment of his property – at almost 100% of its purchase price – violated Indiana’s constitutional mandate under Article X, Section 1, for uniform and equality of assessments, because six other homes in the community were on average assessed at 79.5% of their recent sales prices.  Owner supported his claim with a one-page spreadsheet that showed the addresses, sales dates, sales prices, assessed values, and sales-to-assessed value ratios for the six properties.  Owner requested an assessment of $1,311,750 for his property, reflecting 79.5% of its purchase price.  The Indiana Board rejected his claim, reasoning that Owner’s ratio analysis was not demonstrably sophisticated or reliable enough to prove his claims.

Owner had the burden of proof.  Under Indiana’s burden-shifting rule, the Assessor has the burden of proof in appeals where the assessed value of the property under appeal increased by more than 5% over its prior year’s value.  (The version of the statute effective at the time of Owner’s 2010 administrative hearing has been repealed and replaced with a similar, yet broader, version found at Ind. Code § 6-1.1-15-17.2.)  While the home’s assessment had increased by more than 5% over its 2006 assessed value, the Tax Court concluded that, based on its plain language, the burden-shifting statute “(and it progeny) applies only to valuation challenges, not to uniform and equal constitutional challenges.”  Slip op. at 7 (emphasis added).  The statute applies only when a taxpayer claims his property’s assessment doesn’t reflect its market value-in-use, not when a taxpayer such as Owner seeks to reduce an “otherwise correct property assessment . . . so that it is on par with the assessment to market value ratios of other properties” in the community.  Slip op. at 8.

Ratio study relevant, but not probative.  Owner claimed his ratio study supported a reduction because it contained virtually every sale in Dune Acres for the two years preceding the 2007 assessment date, was therefore statistically reliable, and proved that residential properties in the community were systematically under-assessed.  The Court noted that Indiana’s agency overseeing the administration of property taxes, the Department of Local Government Finance (DLGF), had incorporated into law the International Association of Assessing Officers’ Standard on Ratio Studies, which states that a “valid assessment ratio study must be based on data that has been both appropriately stratified and statistically analyzed.”  Slip op. at 9.  A “statistical measurement of assessment uniformity must be calculated for the entire taxing district and each stratum therein.” Id.  According to the DLGF, the “coefficient of dispersion [is] the yardstick by which assessment uniformity is measured in Indiana’s townships.”  Slip op. at 10.  Owner’s evidence was “no doubt relevant,” the Court explained.  Id.  Nevertheless, the Indiana Board did not err in finding that the study “was not probative in demonstrating that [Owner’s] property was assessed and taxed at a level that exceeded the common level” within the property’s township overall.  Id.