Consolidated Systems, Inc. v. Department of Local Government Finance

ATTORNEYS FOR PETITIONER:    ATTORNEYS FOR RESPONDENT:
B. KEITH SHAKE    STEVE CARTER    
ROBERT L. HARTLEY, JR.    ATTORNEY GENERAL OF INDIANA
MICHAEL R. HARPRING    Indianapolis, IN
HENDERSON DAILY WITHROW & DEVOE     
Indianapolis, IN     JOEL SCHIFF
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
_____________________________________________________________________
    IN THE INDIANA TAX COURT _____________________________________________________________________

CONSOLIDATED SYSTEMS, INC., ) ) Petitioner, ) ) v. ) Cause No. 49T10-9704-TA-149 ) DEPARTMENT OF LOCAL ) GOVERNMENT FINANCE, See footnote )     )
    Respondent.            )    
_____________________________________________________________________
ORDER ON PARTIES' CROSS-MOTIONS
FOR SUMMARY JUDGMENT
NOT FOR PUBLICATION
May 28, 2004
FISHER, J.
    Consolidated Systems, Inc. (Consolidated) appeals the State Board of Tax Commissioners' (State Board) final determination denying it an enterprise zone inventory credit See footnote (EZ credit) for the 1995 and 1996 assessment years (years at issue). The matter is currently before the Court on the parties' cross-motions for summary judgment. The issue for the Court to decide is whether the State Board erred in denying Consolidated's application for the EZ credit.
FACTS AND PROCEDURAL HISTORY
    The material facts as they relate to this case are undisputed. Consolidated is a South Carolina corporation with its principal offices in Columbia, South Carolina. Consolidated owns and operates a warehouse/distribution facility in Gary, Indiana, which is in the Gary Urban Enterprise Zone. On October 10 and November 1, 1996, Consolidated filed Enterprise Zone Business Personal Property Tax Credit applications (Forms EZ-1) with the Lake County Auditor (Auditor) for the years at issue. The Auditor denied the applications because they were not timely filed.See footnote Consolidated appealed to the State Board. The State Board also denied Consolidated's appeal.
    Consolidated subsequently filed an original tax appeal on April 28, 1997. On December 4, 1997, this Court issued an order staying Consolidated's cause pending the outcome of Graybar Electric Company, Incorporated v. State Board of Tax Commissioners, Cause No. 49T10-9603-TA-22. This Court issued its opinion in Graybar on February 2, 2000, finding that the timely filing of a Form EZ-1 was not a condition precedent to actually receiving the credit. See footnote Graybar Elec. Co., Inc. v. State Bd. of Tax Comm'rs, 723 N.E.2d 491, 495 (Ind. Tax Ct. 2000).
    Consolidated filed a motion for summary judgment on September 28, 2000. The State Board requested a remand on January 29, 2001. The Court conducted a hearing on the State Board's request on February 22, 2001; the Court granted the State Board's request on March 13, 2001. In its remand order, the Court instructed the State Board to consider Consolidated's Forms EZ-1 on their merits, in light of its decision in Graybar. The State Board reviewed Consolidated's Forms EZ-1 and, on June 4, 2001, issued another final determination again denying Consolidated's applications. More specifically, the State Board determined that Consolidated's failure to timely file its Forms EZ-1 did not meet any of the factors it used to determine whether or not it should consider late filed economic revitalization area (ERA) deduction applications. In addition, the State Board determined that Consolidated failed to include the required Enterprise Zone Business Registration forms (Form EZB-R) with its Forms EZ-1.
    Consolidated filed an amended and supplemental petition for an original tax appeal on July 17, 2001, and reasserted its motion for summary judgment on February 5, 2002. The State Board filed a cross-motion for summary judgment on March 21, 2002. See footnote The Court conducted a hearing on the parties' motions on June 17, 2002. Additional facts will be supplied as necessary.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to the final determinations of the State Board when it acts within the scope of its authority. Hamstra Builders, Inc. v. Dep't of Local Gov't Fin., 783 N.E.2d 387, 390 (Ind. Tax Ct. 2003). Thus, this Court will reverse a final determination of the State Board only when its findings are unsupported by substantial evidence, arbitrary, capricious, constitute an abuse of discretion, or exceed statutory authority. Id.
In addition, a motion for summary judgment will be granted only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). Cross motions for summary judgment do not alter this standard. Matonovich v. State Bd. of Tax Comm'rs, 705 N.E.2d 1093, 1096 (Ind. Tax Ct. 1999), review denied.
 
Discussion
    In its remand order, this Court directed the State Board to "consider the merits" of Consolidated's Forms EZ-1. Consolidated asserts that the State Board failed to consider its Forms EZ-1 on the merits when, instead, it based its final determination on the seven factors it uses to determine whether it should consider untimely ERA deduction applications. See footnote The State Board claims, however, that it "followed the express instruction of the Remand Order in review[ing Consolidated's Forms EZ-1]. . . . [I]t was required to review the application under the factors set out in Graybar and it did." (Resp't Resp. to Mot. for Summ. J. and Cross-Mot. for Summ. J. at 11-12.)
This Court's remand order stated, in relevant part, that:
[t]he [State Board's] Request for Remand states ‘This cause should be remanded to the State Board to review[] with the same factors applied to the late-filed EZ credit application used in Graybar.

The Court finds that the request should be GRANTED. As this Court in Graybar used the language in ordering a remand that the Court of Appeals did in State Board of Tax Commissioners of Indiana v. New Energy Company of Indiana, 585 N.E.2d 38 (Ind. Ct. App. 1992), trans. denied., the Court now REMANDS this cause. On remand, the State Board is directed to consider the merits of Consolidated Systems [applications].

(Cert. Admin. R. at 4-5.) The State Board erroneously incorporates the Court's recitation of its request for remand with its actual order: the Court unambiguously ordered the State Board to consider the merits of Consolidated's applications. Graybar merely held that the State Board had jurisdiction to consider late filed EZ credit applications (consistent with the decision of the Indiana Court of Appeals in New Energy holding that the State Board could consider late filed ERA deduction applications). See Graybar, 723 N.E.2d at 496 n.7. Graybar did not hold that the State Board may or must utilize the factors it adopted to consider late filed ERA deduction applications in considering late filed EZ credit applications. Therefore, the State Board erred in using the seven factors designated to consider late filed ERA deduction applications when considering Consolidated's Forms EZ-1.
Nevertheless, the State Board ultimately considered Consolidated's Forms EZ-1 on the merits; it determined that they were incomplete because Consolidated failed to file a Form EZB-R. (Cert. Admin. R. at 26.) In claiming that Consolidated's Forms EZ-1 were incomplete, the State Board relies on Indiana Code § 6-1.1-20.8-2(c), which states that "[c]ompliance with this chapter does not exempt a person from compliance with IC 4-4-6.1-2.5." Ind. Code Ann. § 6-1.1-20.8-2(c) (West 1996) (repealed 2001). See footnote Under Indiana Code § 4-4-6.1-2.5, "a zone business that claims any of the incentives available to zone businesses shall . . . submit to the board . . . a verified summary [Form EZB-R] concerning the amount of tax credits and exemptions claimed by the business in the preceding year[.]" Ind. Code Ann. § 4-4-6.1-2.5(a) (West 1995) (amended 2002). Furthermore, "[i]f a zone business fails to comply with [this requirement] before July 16 and does not pay any penalty [for filing late] . . . the zone business[] is denied all of the tax credit and exemption incentives available to a zone business . . . for that year." A.I.C. § 4-4-6.1-2.5 (e). The State Board argues that by failing to timely file a Form EZB-R, Consolidated waived its right to receive the inventory tax credit. Essentially, the State Board concluded that Consolidated must be a "zone business" in order to receive the EZ credit.
Consolidated claims, however, that it was not required to comply with Indiana Code chapter 6.1 because it was not a "zone business," nor was it required to be a "zone business" in order to receive the EZ credit. For the years at issue, a "zone business" was defined as "any entity that accesses at least one (1) tax credit or exemption incentive available under this chapter." Ind. Code Ann. § 4-4-6.1-1.1 (West 1995) (amended 2002). Consolidated asserts that since it "is not seeking any of the zone business incentives or credits available under Chapter 6.1[,]" it was not required to file a Form EZB-R. (Pet'r Reply in Supp. of its Mot. for Summ. J. and Resp. to Resp't Cross-Mot. for Summ. J. at 5.) Consolidated is correct.
For the years at issue, no statute mandated that a taxpayer claiming an EZ credit under Indiana Code chapter 20.8 must be a "zone business" subject to the requirements of Indiana Code chapter 6.1. See footnote Therefore, the State Board could not require Consolidated to file a Form EZB-R in order to receive the EZ credit. Consequently, the State Board erred when it determined that Consolidated's Forms EZ-1 were incomplete because it did not provide proof that it timely filed the Form EZB-R. ( See Cert. Admin. R. at 26.) Accordingly, the Court finds that Consolidated was entitled to the EZ credit for the years at issue.
CONCLUSION
For the aforementioned reasons, the Court DENIES the State Board's motion for summary judgment and GRANTS summary judgment in favor of Consolidated. Therefore, the Court REVERSES the final determination of the State Board, REMANDING it to the Indiana Board of Tax Review (Indiana Board) See footnote to instruct the local assessing officials to award Consolidated the EZ credit for the 1995 and 1996 assessment years.
SO ORDERED this 28th day of May 2004.
 

_____________________________
         Thomas G. Fisher, Judge
     Indiana Tax Court
 

 
Distribution
 
B. Keith Shake
Robert L. Hartley, Jr.
Michael R. Harpring
HENDERSON DAILY WITHROW & DEVOE
2600 One Indiana Square
Indianapolis, IN 46204

Steve Carter
Attorney General of Indiana
By: Joel Schiff
Deputy Attorney General
Indiana Government Center South, Fifth Floor
402 West Washington Street
Indianapolis, Indiana 46204-2770

Indiana Board of Tax Review
100 N. Senate Ave.
Room N-1058 (A)
Indianapolis, IN 46204

Footnote: The State Board of Tax Commissioners (State Board) was originally the Respondent in this appeal. However, the legislature abolished the State Board as of December 31, 2001. 2001 Ind. Acts 198 § 119(b)(2). Effective January 1, 2002, the legislature created the Department of Local Government Finance (DLGF), see Indiana Code Annotated § 6-1.1-30-1.1 (West Supp. 2003)(eff. 1-1-02); 2001 Ind. Acts 198 § 66, and the Indiana Board of Tax Review (Indiana Board). Ind. Code Ann. § 6-1.5-1-3 (West Supp. 2003)(eff. 1-1-02); 2001 Ind. Acts 198 § 95. Pursuant to Indiana Code Annotated § 6-1.5-5-8, the DLGF is substituted for the State Board in appeals from final determinations of the State Board that were issued before January 1, 2002. Ind. Code Ann. § 6-1.5-5-8 (West Supp. 2003)(eff. 1-1-02); 2001 Ind. Acts 198 § 95. Nevertheless, the law in effect prior to January 1, 2002 applies to those appeals. A.I.C. § 6-1.5-5-8. See also 2001 Ind. Acts 198 § 117. Although the DLGF has been substituted as the Respondent, this Court will still reference the State Board throughout this opinion.
Footnote: "A person is entitled to a credit against his property tax liability under IC 6-1.1-2 for a particular year in the amount of his property tax liability . . . on enterprise zone inventory for that year." Ind. Code Ann. § 6-1.1-20.8-1(a) (West 1995) (amended 2003). "Enterprise zone inventory" is defined as "inventory, as defined in IC 6-1.1-3-11, that is located within an enterprise zone created under IC 4-4-6.1[.]" A.I.C. § 6-1.1-20.8-1(b).
Footnote: Indiana Code § 6-1.1-20.8-2 provides that "a person [who] timely files a personal property return . . . for an assessment year must file the [Form EZ-1] between March 1 and May 15 of that year in order to obtain the credit in the following year." Ind. Code Ann. § 6-1.1-20.8-2 (West 1995) (amended 1996) (repealed 2001).
 
Footnote: Indeed, this Court held that the State Board had jurisdiction to consider, on the merits, a taxpayer's untimely Form EZ-1, as the statutory language "[a person] must file the application between March 1 and May 15 of [the assessment] year in order to obtain the credit in the following year" was meant to inform taxpayers that the credit would be applied in the following year. Graybar Elec. Co., Inc. v. State Bd. of Tax Comm'rs, 723 N.E.2d 491, 495-496 (Ind. Tax Ct. 2000). But see Dalton Foundaries, Inc. v. State Bd. of Tax Comm'rs, 653 N.E.2d 548, 554-555 (Ind. Tax Ct. 1995) (finding that the township assessor had discretion to deny an untimely RRS deduction application because the statutory language "the person must file the statement between March 1 and May 10, inclusive, of the assessment year . . . [to obtain the deduction in that year]" would be rendered meaningless to interpret it otherwise).
Footnote: As referenced in footnote one, supra, the State Board was abolished as of December 31, 2001. Consequently, the DLGF actually filed the motion to dismiss. For continuity purposes, however, this opinion will refer to the DLGF's motion to dismiss as the State Board's.
Footnote: Indiana Administrative Code title 50, rule 10-4-2(b) provides that:
In exercising its discretion [to consider a late-filed application for the economic revitalization area deduction application], the state board shall consider the totality of the facts and circumstances in determining whether or not to approve a late-filed deduction application. Such consideration may be based on one (1) or more of the following factors:

Whether the failure to timely file the deduction application resulted from an act of God, or from the death or serious illness of the person principally responsible for the filing of the deduction application.

Whether the approval of the late-filed deduction application would result in the loss of property tax revenues to the taxing units affected by the deduction.

Whether a public official gave misleading information to the taxpayer that was the proximate cause of the late-filing, and whether it was reasonable for the taxpayer to rely on that misleading information.

Whether the lapse between the filing deadline and the date on which the deduction application was actually filed would have prevented local officials from accurately determining the assessed value for budget, rate, and levy purposes.

Whether there is substantial evidence that local officials support the approval of the late-filed application, even if such approval would result in a loss in tax revenues.

Whether the late-filing was not due to the taxpayer's negligence.

Any other factor that the state board considers relevant.
 
Ind. Admin. Code tit. 50, r. 10-4-2(b) (Supp. 2001) (eff. 1996).
Footnote: Indiana Code § 6-1.1-20.8-2(c) was not enacted until 1996, and therefore applies only to one of the years at issue. Nonetheless, it is not dispositive in this Court's analysis on the issues raised in this case.
Footnote: In 2000, the legislature broadened the definition of "zone business" to include any entity seeking a tax credit under chapter 20.8. See Ind. Code Ann. § 4-4-6.1-1.1 (West 2000) (amended 2002). Thus, beginning January 1, 2000, a taxpayer would statutorily be required to file a Form EZB-R under chapter 6.1 in order to receive the EZ credit.
Footnote: All cases that would have been remanded to the State Board are now remanded to the Indiana Board of Tax Review (Indiana Board). Ind. Code Ann. § 6-1.1-15-8 (West Supp. 2003). Final determinations made by the Indiana Board are subject to review by this Court pursuant to Indiana Code § 6-1.1-15. Ind. Code Ann. §§ 6-1.5-5-7, 3-33-5-2 (West Supp. 2003).