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Wednesday, December 28, 2011

Ind. Decisions - Tax Court posts two this week

In Lyle Lacey v. Indiana Dept. of State Revenue, a 10-page, Dec. 28, 2011 opinion, Judge Wentworth awards the State attorneys' fees:

On February 3, 2011, Lyle Lacey initiated an original tax appeal claiming that his 2008 income was not subject to Indiana adjusted gross income tax (AGIT). On August 31, 2011, the Court dismissed his appeal for failure to state a claim on which relief could be granted. Lacey v. Indiana Dep’t of State Revenue (Lacey III), 954 N.E.2d 536, 538 (Ind. Tax Ct. 2011). The Indiana Department of State Revenue (Department) now seeks to recover its attorney fees under Indiana Code § 34-52-1-1. * * *

One issue in this case is dispositive: whether an award of attorneys’ fees is warranted under Indiana Code § 34-52-1-1 because Lacey continued to litigate his 2008 AGIT claim after it clearly became frivolous? * * *

While Indiana’s “legal process ‘must invite, not inhibit, the presentation of new and creative argument’ to enable the law to grow and evolve[,]” the General Assembly enacted Indiana Code § 34-52-1-1 in order to discourage needless litigation. Mitchell, 695 N.E.2d at 925 (citation omitted) (emphases added). Given the totality of the facts in this case, the Court must conclude that Lacey continued to pursue his claim when any reasonable attorney would have understood that the claim was frivolous.

Furthermore, all three of Lacey’s original tax appeals have advanced classic tax protestor arguments. Indeed, this Court has heard and disposed of many of these arguments in prior cases. Moreover, other courts have found tax protestor arguments frivolous, reasoning that their proponents did not make good faith, rational arguments for an extension, reversal, or modification of existing law. ... Consequently, tax protestors are often subject to court sanctions for needlessly draining the resources of their adversaries and the judicial system. Because Lacey failed to make a good faith or rational argument for the extension, modification, or reversal of existing law with respect to his 2008 AGIT claim, the Court finds that an award of attorney fees under Indiana Code § 34-52-1-1(b)(2) is proper. * * *

The Court finds that an award of $1,600 of attorneys’ fees is appropriate.

In Metropolitan School District of Pike Township v. Indiana Department of Local Government Finance, a 9-page, Dec. 27, 2011 opinion, Judge Wentworth writes:
The Metropolitan School District of Pike Township (the School District) appeals the Department of Local Government Finance’s (DLGF) final determination recalculating its capital projects fund (“CPF”) levy property tax rate for 2011. The appeal presents one issue for this Court to decide: whether the DLGF’s recalculation was correct. * * *

This Court previously held that steps two and four of the above formula require the use of a zero value when there is no increase in a school district’s assessed value from one year to the next. See DeKalb Cnty. E. Cmty. Sch. Dist. v. Dep’t of Local Gov’t Fin., 930 N.E.2d 1257, 1260-61 (Ind. Tax Ct. 2010). Likewise, steps two and four require the use of a zero value, as opposed to a negative value, when a school district’s assessed value actually decreases. * * *

[W]hen a judicial opinion rendered in a civil case makes a pronouncement of the law, that pronouncement has not only prospective effect, but also retrospective effect. Don Medow Motors, Inc. v. Grauman, 446 N.E.2d 651, 654 (Ind. Ct. App. 1983) (citing Center Sch. Twp. v. State ex rel. Bd. of Sch. Comm’rs, 49 N.E. 961, 963 (Ind. 1898)). This is so because, in theory, “the law has not changed; the last judicial decision is said to have enunciated the law as it has always existed.” Id. (emphasis added) (citations omitted). Thus, when the 2010 DeKalb decision explained why steps two and four of the formula contained in Indiana Code § 6-1.1-18-12(e) required zero values as opposed to negative values, that meant that the DLGF should have been using those zero values since 2007 when Indiana Code § 6-1.1-18-12(e) first became applicable to public school corporations. * * *

For the foregoing reasons, the DLGF’s final determination in this matter is REVERSED. The matter is REMANDED to the DLGF with instructions to recalculate the School District’s CPF levy property tax rates for 2007 through 2010 by using zero values instead of negative values in steps two and four of the formula contained in Indiana Code § 6-1.1-18-12(e). These corrections will result in both a step one and a step seven value for 2011 of 0.3100.

Posted by Marcia Oddi on December 28, 2011 12:30 PM
Posted to Ind. Tax Ct. Decisions