Tax Court partially reverses tax board’s dismissal of HOAs’ common area claims

A final decision by the Indiana Board of Tax Review that dismissed claims from three homeowners associations was partially reversed by the Indiana Tax Court in a Monday decision.

Muir Woods Section One Association Inc., Muir Woods Inc., Spruce Knoll Homeowners Association Inc., and Oakmont Homeowners Association Inc. challenged the Indiana Board of Tax Review’s final determination dismissing their appeal that challenged the assessments of their common area land for the 2001 through 2003 tax years.

The HOAs, which are planned unit development homeowners associations that own residential property in Marion County, filed 141 “Petitions for Correction of An Error” with the Marion County Auditor in 2014. All of those Forms 133 asserted that the 2001, 2002, and 2003 property tax assessments of and resulting liabilities on the HOAs’ common area land were illegal as a matter of law because that land was so encumbered by restrictions that it had no value.

When the Marion County Property Tax Assessment Board of Appeals denied all of the Forms 133, the HOAs received leave from the Indiana Board to file one Form 133 consolidating all the previous forms that were denied by the PTABOA.

Their arguments remained the same, with the addition of two new arguments stating that the common area land assessments had been levied against the wrong persons and that the resulting property tax liabilities had been charged more than once in the same year.

After the HOAs amended their complaint three years later, the Indiana Board grant the assessor’s motion to dismiss the amended Form 133 for failure to state a claim upon which relief can be granted in a final determination. It dismissed the HOAs’ original claims, including the claim that its common areas were not subject to tax under the exemption statute, stating that like the others, this claim failed to present an error capable of correction via a Form 133.

But the Indiana Tax Court reversed in part the Indiana Board’s final determination dismissing the HOAs’ claim that their common area land had been taxed more than once in each of the years at issue.

“The resolution of this claim may involve an error that could be corrected by observing an objective fact. For example, a review of the property record cards and tax bills of the individual homeowners within each HOA community may reveal that an objective error was made. Accordingly, the HOAs’ claim that the tax was paid more than once, accepted as true, is capable of correction using a Form 133,” Judge Martha Wentworth wrote for the Tax Court.

“Because an administrative hearing was never conducted on the HOAs’ Amended Form 133, they were not able to present evidence to demonstrate that their common areas were taxed more than once. As a result, the Court remands that issue instructing the Indiana Board to allow the parties the opportunity to present evidence,” it continued.

The Tax Court affirmed, however, the Indiana Board’s final determination dismissing the HOAs’ claims that their common area property was exempt from property tax under the exemption statute and that the assessed values of their common areas did not include the proper discount prescribed in the land order and the assessment guidelines.

The case is Muir Woods Section One Assn., Inc., Muir Woods, Inc.; Spruce Knoll Homeowners Assoc., Inc.; and Oakmont Homeowners Assoc., Inc. v. Marion County Assessor, Joseph P. O’Connor, 19T-TA-25.