Cemetery Association’s petition to enjoin collection of property tax was dismissed as premature.
On May 9, 2014, the Indiana Tax Court dismissed two petitions to enjoin collection of tax, in one property tax exemption appeal and one valuation appeal, as premature, because the Taxpayers had not yet initiated original tax appeals.
A longstanding exemption is denied. In Washington Park Cemetery Association, Inc. v. Marion County Assess et al., Cause No. 49T10-1404-TA-10, the non-profit Association owned a cemetery, mausoleum and crematory complex in Indianapolis. The Association’s entire complex had received an exemption for many years. But the exemption was removed for the complex’s Community Life Center as of the March 1, 2012, assessment date, because the property was used for special events such as weddings and no burials were held at that location.
The Association files two appeals. In response, the Association filed both a Form 133 petition for correction of error locally and a Form 132 petition with the Indiana Board. The Marion County Property Tax Assessment Board of Appeals (PTABOA) denied the Form 133 petition, which the Association appealed to the Indiana Board. As of April 14, 2014, the Indiana Board had not scheduled hearings for either of the Association’s appeals, so the Association filed its petition to enjoin collection of the tax.
Tax Court lacked subject matter jurisdiction. The Court explains that “Jurisdiction of the subject matter involves the power of the court to hear and determine a general class of cases to which the proceedings belong.” Slip Op. at 3 (emphasis removed, quotation omitted). The Tax Court by statute has jurisdiction over an “original tax appeal,” which is a case that (1) arises under Indiana’s tax laws and (2) is an initial appeal of a final determination of the Indiana Department of Revenue or the Indiana Board. Slip Op. at 3 (citing Ind. Code § 33-26-3-1). To obtain an injunction, a taxpayer must file a petition with the Tax Court. Slip Op. at 3 (citing Ind. Code § 33-26-6-2(b).) The petition must explain the issues the petitioner will raise in the original tax appeal and the equitable considerations supporting the request to enjoin collection. Id. After a hearing, the Court may enjoin collection of the tax if it finds that the issues raised are substantial, the taxpayer has a “reasonable opportunity to prevail” on the merits, and the equitable considerations favor enjoining collection. Slip Op. at 3-4 (citing Ind. Code § 33-26-6-2(c).)
At the time the Association had filed its injunction petition, the Indiana Board had issued no final determination in either of the Association’s appeals. The Association, consequently, “admits that its case is not yet ripe to file a petition for an original tax appeal.” Slip Op. at 4. The Association argued that the Court had jurisdiction to hear its petition to enjoin collection, because the statutory appeals scheme treated petitions to initiate original tax appeals different than petitions to enjoin collection of tax. Moreover, an injunction petition requires a taxpayer to discuss the issues it “will raise” in an original tax appeal – not the issues it has already raised. The legislature did not intend to require that a taxpayer have an original tax appeal petition on file in order to file a petition to enjoin collection of tax, the Association asserted.
No power to hear the injunction petition. The Court disagreed, explaining that in filing an injunction petition “it is assumed that an original tax appeal has been initiated.” Slip Op. at 6. The legislature permits an injunction “pending the original tax appeal”; the “use of the word ‘pending’ together with the definite article ‘the’ strongly suggests that injunctive relief is proper only when an original tax appeal has been commenced.” Slip op. at 6 (emphasis in original, citations omitted). And the Court’s reasoning was supported further by Tax Court Rule 3(F), which states that a taxpayer must include a petition to enjoin collection “with the original tax appeal.” Slip Op. at 6 (emphasis in original). The legislature’s use of the phrase “will raise” did “not mean that injunctive relief can be granted before an original tax appeal has been initiated.” Slip Op. at 6. The Tax Court could not “exert power where it has none.” Slip Op. at 7.
The Court acknowledged that a 1990 Tax Court decision supported the Association’s position, but the Court declined to follow it. The Tax Court dismissed the Association’s cause of action. Slip Op. at 7-8.
In West Ohio II, LLC v. Marion County Assessor et al, Cause No. 49T10-1404-TA-9, the Owner challenged the assessed value assigned to its office building for the March 1, 2013, assessment date. The appeal was pending before the PTABOA when Owner filed its petition to enjoin collection of the tax. Owner raised the same arguments, and the Tax Court applied the same reasoning to reach the same result as in the Washington Park Cemetery Association decision.