Boone County prevailed in a major tax case against Meijer Stores Ltd. which appealed the decision from October of 2019. File photo
On New Year’s Eve, Boone County officials received good news that they won the appeal of the tax case by Meijer Store Ltd. by the Indiana Tax Court on what is known as the dark box issue. The issue of assessed value is complicated but in the end, it saved Hoosier taxpayers statewide billions of dollars.
“The impact of this particular lawsuit is going to be wide reaching,” Boone County Commissioner Jeff Wolfe said in Monday’s meeting. “Not only across the State of Indiana but all the states around us that use this type of market value assessment were watching us as well in this process.”
This appeal has been in the works since October of 2019 when the Indiana Board of Tax Review issued a ruling on the matter which has caused a loophole in Indiana tax code that allows big box stores to appeal their assessment which is how property taxes are determined. Major retailers such as Meijer, Lowe’s and others were forcing counties to take them to court over the assessed value of their properties.
The Indiana Tax Court upheld the earlier ruling. Meijer has 30 days to appeal to the Indiana Supreme Court, but Boone County Assessor Lisa Garoffolo said it is unlikely.
“‘Cause the last couple of cases have not (gone to the state supreme court),” Garoffolo said. “Plus, the supreme court picks the cases they want to hear and they’ve never heard a black box case.”
Called the dark box theory, the appeals to the assessors of Indiana counties was based on the market value of the buildings if the retailers would try to sell them. Boone County argued that the assessment should be based on the cost of the building, not the resale value. Meijer refused to release the building costs until the court ordered it to do so.
Now, on the strength of the ruling, county officials from around the state, plus associations, will lobby the Indiana legislature to fix the loophole.
However, victory came at a price. The county has spent $744,000 on the case.
“That was the tough part of this is making the decision to really fight to win, because we had seen other counties lose,” Boone County Council member Elise Nieshalla said. “We decided to invest the money.”
Nieshalla said Whitestown contributed $150,000 to the case and the Indiana Association of Counties and the Indiana County Councils Association each added $25,000 to the fight. Boone County Attorney Bob Clutter said there is no way for the county to get its money back.
“It’s been a sacrifice to do this, but we really did it on behalf of all 92 counties,” Nieshalla said.
The tactic of appealing the assessments was already being used by other big box retailers and could have been used in manufacturing or warehouse sectors. Since municipalities determine their budgets to base a tax rate on, homeowners would have been forced to make up the difference. It’s called shifting the burden.
Since 2014, the new store in Whitestown has appealed its assessment saying the building was only worth $7 million against the $11 million the county assessor’s office determined. The difference in valuation means thousands of dollars in taxes due.
In the original case, the Indiana Board of Tax Review determined the building assessment was more than $11 million. Meijer was asking for a huge rebate for the last six years. Now it looks as though Meijer may owe the county tax money based on the increased assessment.
Wolfe said none of this is a reflection on the company or the store.
“Meijer is a fantastic store and a huge partner in Boone County,” Wolfe said. “This is a question of process. It’s not a question of whether they are a good company. They are a fantastic company and we were extremely excited when they came to Boone County and we’re really excited to keep them here.
“I think it was important to get involved in this and do it the right way,” Wolfe added. “The outcome is great for the citizens of Indiana. I think that moving forward it’s going to be great for everybody.”
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