The Indiana Tax Court recently reiterated its rules regarding the deference it gives to Indiana Board of Tax Review (IBTR) decisions, as well as clarifying how appraisal evidence is used.  In Howard County Assessor v. Kokomo Mall LLC, 14 N.E.3d 895 (Ind. Tax Ct. 2014), the Assessor appealed a decision of the IBTR finding in favor of the taxpayer, a regional shopping mall.  At the IBTR hearing, the taxpayer presented a USPAP-compliant appraisal performed by an MAI appraiser, as well as the testimony of that appraiser.  In response, the Assessor argued that the taxpayer’s evidence “was riddled with errors and therefore unreliable,” but did not present her own evidence.  The IBTR issued a final determination explaining that, despite certain errors, the taxpayer’s evidence was probative, and therefore the taxpayer had presented a prima facie case that the assessments were incorrect.

On appeal, the Assessor made two primary arguments. First, the Assessor argued that the IBTR did not “adequately scrutinize [the taxpayer's] unreliable evidence” and simply deferred to the appraiser’s testimony and adopted her appraisal even though the Assessor alleged that it did not comply with USPAP.  The Court noted that the Assessor simply restated many, if not all, of the same arguments that were presented to the IBTR.  The Court cited its rule that it may not reweigh the evidence or judge the credibility of witnesses before the IBTR and found that “[t]o the extent the Assessor has done nothing more than invite the Court to ignore this well-established rule under the guise that the [IBTR] ignored her arguments and simply adopted all of [the taxpayer's] evidence without attempting to gauge its probative value, the Court declines her invitation.”

Second, the Assessor asked the Court to reconsider its “policy” that the mere presentation of a USPAP-compliant appraisal establishes a prima facie case.  According to the Assessor, this policy “eviscerates the [IBTR's] discretion to assess the reliability of appraisals,” improperly shifts the burden of proof to assessing officials, and “effectively compels assessing officials to hire their own appraisers despite the prevailing financial constraints.”  The Court found instead that the decision to hire an appraiser or submit a USPAP-compliant appraisal “is more likely a litigation strategy, not the latent result of a purportedly inequitable policy.”  Indiana law provides that a taxpayer can rebut the correctness of an assessment by introducing relevant market data, such as evidence of actual construction costs, certain sales or assessment data, or any other data compiled in accordance with generally accepted appraisal principles.  Because the presentation of an appraisal is not the only way to rebut the presumption that an assessment is correct, it follows that the same type of evidence may be used to impeach the accuracy of an appraisal or lend support to the accuracy of an assessment.  Accordingly, the Court denied the Assessor’s request.