Tax Court upholds higher assessments after untimely challenges

IL file photo

After a series of back-and-forth decisions, a higher assessment will remain in place for land owned by a Bartholomew County couple whose challenge to that higher assessment for two tax years was untimely.

The case began in 2017, when Mark Elwood reached out to Jeffrey Bush, the manager of Carr Road Development LLC, about purchasing four lakefront lots to construct his primary residence. Carr Road Development owned land in an area that became the Tipton Lakes subdivision.

Elwood and Bush reached a verbal agreement for Elwood to purchase the lots, with Bush agreeing to oversee the replatting of the four lots into two before closing. However, their agreement was never put in writing.

Elwood and his wife, Wendy, later found an existing home they wanted to purchase as their primary residence, so Elwood tried to pull out of the sale with Bush. Bush said he intended to move forward with the sale, and the Elwoods ultimately agreed to purchase the lots, intending to resell them later.

The sale of Lots 8 and 9 was completed on Dec. 11, 2017, with the Wendy H Elwood Trust paying $1.55 million.

At the time of the sale, the lots were receiving a “developer’s discount” that resulted in assessments of $1,900 for Lot 8 and $2,000 for Lot 9. But those assessments shot up in 2018, when the Bartholomew County assessor removed the developer’s discount. That year, Lots 8 and 9 were assessed at $729,100 and $705,600, respectively, although those assessments dropped to around $400,000 the following year.

Then in May 2020, the trust challenged the removal of the developer’s discount for the 2018-2020 tax years, and the Bartholomew County Property Tax Assessment Board of Appeals retroactively reinstated the developer’s discount in July 2021. But the assessor appealed that decision, and the Indiana Board of Tax Review ruled in the assessor’s favor as to the 2018 and 2019 tax years.

“Specifically, the Indiana Board determined that the Trust’s 2018 and 2019 appeals were untimely because ascertaining a taxpayer’s eligibility for the developer’s discount depends on the application of subjective judgment. As a result, the Indiana Board found that the PTABOA had no authority to reinstate the developer’s discount for those years, and the Assessor’s request to increase the 2018 and 2019 assessments was time-barred,” Indiana Tax Court Judge Martha Blood Wentworth wrote in a Monday opinion.

The trust appealed to the Tax Court, but Wentworth upheld the review board’s judgment. She pointed to Indiana Code 6-1.1-15-1.1, which provides that an appeal must be initiated “not later than three (3) years after the taxes were first due,” as long as only objective errors are being corrected. The statute also includes shorter deadlines for appeals involving subjective errors.

“The Trust admits that even though a determination of the Elwoods’ eligibility for the developer’s discount would generally require subjective judgment, it does not in this case. Instead, it claims that the unique facts of this case dictate a purely objective ‘yes or no’ judgment, rendering its 2018 and 2019 appeals eligible for the three-year limitation period under Indiana Code § 6-1.1-15-1.1(b). Specifically, the Trust argues that because the Elwoods were well-known in the community and to the members of the PTABOA, the facts as presented were a certainty, eliminating the need for any subjective analysis,” Wentworth wrote.

“… The Trust’s argument is unique, but well-known facts to individuals on an administrative board or within a community do not convert a subjective issue into an objective one,” she continued. “An analysis of the facts must still occur to consider the views of each of the opposing litigants.”

Wentworth also pointed to the Developer’s Discount Statute, which “defines a ‘land developer’ as ‘a person that holds land for sale in the ordinary course of the person’s trade or business[,]’ a threshold requirement for eligibility for the developer’s discount.”

“While the record shows that the Elwoods did have the land replatted to better market it for resale, the record also shows that only Carr Road Development did any ‘development’ of the land,” the judge wrote. “Moreover, the Trust did not present any direct evidence showing that the Elwoods were in the trade business or business of land development. This juxtaposition of facts indicates that subjective analysis is required to determine whether the Elwoods were indeed land developers that had the four lots in inventory.

“Deciding which of these facts, if any, are dispositive in determining whether the Elwoods were land developers eligible for the developer’s discount requires subject analysis: interpreting relevance and importance of the objective facts and evaluating one’s intent involves subjectivity. Consequently, the Trust has not demonstrated that the Indiana Board abused its discretion and that its final determination must be reversed.”

The case is Wendy H Elwood Trust v. Bartholomew County Assessor, 23T-TA-00002.