Fred Weber Inc. v. Thomas Ruhl, Assessor Ralls County

July 11th, 2016

STATE TAX COMMISSION OF MISSOURI

 

FRED WEBER, INC. )  
  )  
Complainant )  
  )  
v. ) Appeal No. 14-81001 & 15-81000
  ) (Account 0102916)
THOMAS RUHL, ASSESSOR )  
RALLS COUNTY, MISSOURI, )  
  )  
Respondent. )  

 

ORDER AFFIRMING HEARING OFFICER DECISION

            On July 11, 2016, Hearing Officer Maureen Monaghan issued her Decision and Order affirming in part and setting aside in part the value placed upon the subject property by the Ralls County Board of Equalization.  Complainant filed an Application for Review of the Decision.  Complainant filed a Response.

Standard Upon Review

A party subject to a Decision and Order of a Hearing Officer with the State Tax Commission may file an application requesting the case be reviewed by the Commission.  The Commission may then summarily allow or deny their request.  The Commission may affirm, modify, reverse or set aside the decision.  The Commission may take any additional evidence and conduct further hearings.

Respondent’s Application for Review

Respondents filed a three page document that was treated as an Application for Review, which consisted of a cover page, a page setting forth the three issues to be raised, and a page containing nine lines of assertions and propositions.  Attached to the Application for Review were documents that Respondent asserts support his position, which, he admits, his attorney failed to present at the Evidentiary Hearing or to file with the Commission during the 30-day post-hearing timeframe allowed by the Hearing Officer.  Respondent now requests the Commission to consider the documents as evidence to support his opinion of the value of Complainant’s property.

DISCUSSION AND RULING

Respondent’s Points on Review

            In his Application for Review, Respondent claims that:

  • The federal Modified Accelerated Cost Recover System (MACRS) Table class life of 15 years should have been utilized because the business personal property at issue was involved in the production of cement (versus concrete) in that the “quarried limestone makes up the largest single component of dry cement”;

 

  • The Hot Line Costing Guide should be utilized to value rolling stock, heavy mobile equipment and or special mobile equipment pursuant to Section 137.122.4 RSMo.; and

 

  • The MACRS Table should not be required to be utilized for business personal property placed in service prior to January 2, 2006.

 

Decision

 

The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact. Black v. Lombardi, 970 S.W.2d 378 (Mo. App. E.D. 1998); Lowe v. Lombardi, 957 S.W.2d 808 (Mo. App. W.D. 1997); Forms World, Inc. v. Labor and Industrial Relations Com’n, 935 S.W.2d 680 (Mo. App. W.D. 1996); Evangelical Retirement Homes v. STC, 669 S.W.2d 548 (Mo. 1984); Pulitzer Pub. Co. v. Labor and Indus. Relations Commission, 596 S.W.2d 413 (Mo. 1980); St. Louis County v. STC, 562 S.W.2d 334 (Mo. 1978); St. Louis County v. STC, 406 S.W.2d 644 (Mo. 1966).

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled.  The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization.  Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).   It places the burden of going forward with some substantial and persuasive evidence squarely on the Complainant.  Respondent has no burden to fulfill.  The presumption of correct assessment is rebutted if the taxpayer presents substantial and persuasive evidence to establish that the Board’s valuation is erroneous and what the fair market value should have been placed on the property. Hermel, supra; Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).

Section 137.122[1] provides a statutory standardized methodology for valuing business personal property placed in service on or after January 2, 2006.  A property is “placed in service” when it is ready and available for a specific use, whether or not actually in use.  The methodology presented by Section 137.122 is a cost approach to value with more than straight line (normal) depreciation.  The statute requires the use of the federal MACRS life tables to determine the appropriate “class life” of depreciable tangible personal property used in a trade or business or for production of income in order “to establish uniformity in the assessment of depreciable tangible personal property . . . .”  First, the assessor determines the appropriate class life and recovery period.  Second, the assessor references the depreciation schedule as set forth in Section 137.122 for application of the percentage of depreciation to the original cost of the property:

YEAR 3 YR % 5 YR % 7 YR % 10 YR % 15 YR % 20 YR %
1 75.00 85.00 89.29 92.50 95.00 96.25
2 37.50 59.50 70.16 78.62 85.50 89.03
3 12.50 41.65 55.13 66.83 76.95 82.35
4 5.00 24.99 42.88 56.81 69.25 76.18
5 5.00 10.00 30.63 48.07 62.32 70.46
6 5.00 10.00 18.38 39.33 56.09 65.18
7 5.00 10.00 10.00 30.59 50.19 60.29
8 5.00 10.00 10.00 21.85 44.29 55.77
9 5.00 10.00 10.00 15.00 38.38 51.31
10 5.00 10.00 10.00 15.00 32.48 46.85
11 5.00 10.00 10.00 15.00 26.57 42.38
12 5.00 10.00 10.00 15.00 20.67 37.92
13 5.00 10.00 10.00 15.00 15.00 33.46
14 5.00 10.00 10.00 15.00 15.00 29.00
15 5.00 10.00 10.00 15.00 15.00 24.54
16 5.00 10.00 10.00 15.00 15.00 20.08
17 + 5.00 10.00 10.00 15.00 15.00 20.00

 

In her decision, the Hearing Officer found that:

[t]he personal property subject to this appeal was used in mining limestone.  Access slopes and loops are part of the mining process.  The use of the limestone once excavated does not drive the determination of the asset class.  The personal property is in Asset Class 10.0 with [a] 7 year recovery period according to the IRS [P]ublication 946.  For the property placed in service on or after January 2, 2006, this methodology is presumed to be correct.  Neither party presented substantial and persuasive evidence to rebut this presumption.  For property placed in service on or after January 2, 2006, valuation under Section 137.122 RSMo is presumed to be correct but can be  ‘ . . . disproved by substantial and persuasive evidence of the true value in money under any method determined by the state tax commission to be correct . . .’  For property placed in service prior to January 2, 2006, Section 137.122 RSMo states that there is no presumption the methodology is correct, although assessors are not precluded from using such a methodology.

 

In his first point, Respondent argues that the business personal property placed in service on or after January 2, 2006, should be placed in Asset Class 32.2 with a 15-year recovery period because the “quarried limestone makes up the largest single component of dry cement.”  We disagree.

IRS Publication 946, Asset Class 32.2, Manufacture of Cement, includes “assets used in the production of cement, but does not include assets used in the manufacture of concrete or concrete products nor in any mining or extraction process.”  (Emphasis added.)  The plain language of IRS Publication 946 specifically excludes assets used in mining or extraction from Asset Class 32.2.  Moreover, it is unreasonable to conclude that the use of the mined or extracted substance, limestone, after it is mined or excavated should drive the determination of the asset class of the business personal property.  Rather, it is the use of the business personal property, i.e., use of the depreciable assets, that drives the determination of the asset class.  IRS Publication 946 describes depreciable assets included in Asset Class 10.0 as “assets used in the mining and quarrying of metallic and nonmetallic minerals (including sand, gravel, stone and clay) and the milling, beneficiation and other primary preparation of such materials.”  The evidence presented at the evidentiary hearing established that the business personal property at issue was used to construct “the mine access slope and the ventilation loop plus excavation of the material excavated from the ventilation raise.”  (Complainant’s Exhibit A)  Consequently, the Hearing Officer correctly found that the business personal property at issue fell into Asset Class 10.0.  Respondent’s first point is denied.

In his second point, Respondent argues that the Hot Line Costing Guide, which he submitted along with his Application for Review, should be utilized pursuant to Section 137.122.4 to value the business personal property at issue:

Such estimate of value determined under this section shall be presumed to be correct for the purpose of determining the true value in money of the depreciable tangible personal property, but such estimation may be disproved by substantial and persuasive evidence of the true value in money under any method determined by the state tax commission to be correct, including, but not limited to, an appraisal of the tangible personal property specifically utilizing generally accepted appraisal techniques, and contained in a narrative appraisal report in accordance with the Uniform Standards of Professional Appraisal Practice or by proof of economic or functional obsolescence or evidence of excessive physical deterioration. For purposes of appeal of the provisions of this section, the salvage or scrap value of depreciable tangible personal property may only be considered if the property is not in use as of the assessment date.

 

In her decision, the Hearing Officer specifically found that “[n]either party presented substantial and persuasive evidence to rebut [the aforementioned statutory] presumption.”  Although he filed the Hotline Costing Guide with his Application for Review, Respondent did not present the Hotline Costing Guide at the Evidentiary Hearing or prior to the Hearing Officer’s decision as substantial and persuasive evidence to disprove the BOE’s valuation.  However, even if the guide had been timely presented, the Hearing Officer was not required to find it substantial and persuasive.  No foundational evidence was offered that the publications utilized by Respondent are authoritative, which is a prerequisite to properly consider whether the publications constitute substantial and persuasive evidence to rebut the presumption under Section 137.122 RSMo.  Respondent’s second point is denied.

Finally, regarding Respondent’s third point, the Hearing Officer made no determination that the MACRS Table from Section 137.122 is required to be used to value business personal property placed in service prior to January 2, 2006.  The Hearing Officer affirmed the valuations of the Board of Equalization regarding the business personal property placed in service prior to January 2, 2006, on the ground that neither party presented substantial persuasive evidence as to the market value of the property as of January 1, 2014, or January 1, 2015.  Consequently, Respondent’s third point is denied as moot.

ORDER

The Decision and Order of the Hearing Officer, including the findings of fact and conclusions of law is AFFIRMED. It is incorporated by reference, as if set forth herein verbatim, in full, in this final decision of the Commission.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the mailing date set forth in the Certificate of Service for this Order.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.

If no judicial review is made within thirty days, this decision and order is deemed final and the Collector of Ralls County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.

SO ORDERED this 20th day of December, 2016.

 

 

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Victor Callahan, Commissioner

 

 

Certificate of Service

 

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 20th day of December, 2016, to: Complainants(s) counsel and/or Complainants, the county Assessor and/or Counsel for Respondent and county Collector.

 

Jacklyn Wood

Legal Coordinator

 

Contact Information for State Tax Commission:

Missouri State Tax Commission

301 W. High Street, Room 840

P.O. Box 146

Jefferson City, MO 65102-0146

573-751-2414

573-751-1341 Fax

 

 

 

[1] 137.122. 1. As used in this section, the following terms mean:

(1) “Business personal property”, tangible personal property which is used in a trade or business or used for production of income and which has a determinable life of longer than one year except that supplies used by a business shall also be considered business personal property, but shall not include livestock, farm machinery, grain and other agricultural crops in an unmanufactured condition, property subject to the motor vehicle registration provisions of chapter 301, property assessed under section 137.078, the property of rural electric cooperatives under chapter 394, or property assessed by the state tax commission under chapters 151, 153, and 155, section 137.022, and sections 137.1000 to 137.1030;

(2) “Class life”, the class life of property as set out in the federal Modified Accelerated Cost Recovery System life tables or their successors under the Internal Revenue Code as amended;

(3) “Economic or functional obsolescence”, a loss in value of personal property above and beyond physical deterioration and age of the property. Such loss may be the result of economic or functional obsolescence or both;

(4) “Original cost”, the price the current owner, the taxpayer, paid for the item without freight, installation, or sales or use tax. In the case of acquisition of items of personal property as part of an acquisition of an entity, the original cost shall be the historical cost of those assets remaining in place and in use and the placed-in-service date shall be the date of acquisition by the entity being acquired;

(5) “Placed in service”, property is placed in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. Even if the property is not being used, the property is in service when it is ready and available for its specific use;

(6) “Recovery period”, the period over which the original cost of depreciable tangible personal property shall be depreciated for property tax purposes and shall be the same as the recovery period allowed for such property under the Internal Revenue Code.

  1. To establish uniformity in the assessment of depreciable tangible personal property, each assessor shall use the standardized schedule of depreciation in this section to determine the assessed valuation of depreciable tangible personal property for the purpose of estimating the value of such property subject to taxation under this chapter.
  2. For purposes of this section, and to estimate the value of depreciable tangible personal property for mass appraisal purposes, each assessor shall value depreciable tangible personal property by applying the class life and recovery period to the original cost of the property according to the following depreciation schedule. The percentage shown for the first year shall be the percentage of the original cost used for January first of the year following the year of acquisition of the property, and the percentage shown for each succeeding year shall be the percentage of the original cost used for January first of the respective succeeding year as follows:

Year Recovery Period in Years

YEAR 3 YR % 5 YR % 7 YR % 10 YR % 15 YR % 20 YR %
1 75.00 85.00 89.29 92.50 95.00 96.25
2 37.50 59.50 70.16 78.62 85.50 89.03
3 12.50 41.65 55.13 66.83 76.95 82.35
4 5.00 24.99 42.88 56.81 69.25 76.18
5 5.00 10.00 30.63 48.07 62.32 70.46
6 5.00 10.00 18.38 39.33 56.09 65.18
7 5.00 10.00 10.00 30.59 50.19 60.29
8 5.00 10.00 10.00 21.85 44.29 55.77
9 5.00 10.00 10.00 15.00 38.38 51.31
10 5.00 10.00 10.00 15.00 32.48 46.85
11 5.00 10.00 10.00 15.00 26.57 42.38
12 5.00 10.00 10.00 15.00 20.67 37.92
13 5.00 10.00 10.00 15.00 15.00 33.46
14 5.00 10.00 10.00 15.00 15.00 29.00
15 5.00 10.00 10.00 15.00 15.00 24.54
16 5.00 10.00 10.00 15.00 15.00 20.08
17 + 5.00 10.00 10.00 15.00 15.00 20.00

 

Depreciable tangible personal property in all recovery periods shall continue in subsequent years to have the depreciation factor last listed in the appropriate column so long as it is owned or held by the taxpayer. The state tax commission shall study and analyze the values established by this method of assessment and in every odd-numbered year make recommendations to the joint committee on tax policy pertaining to any changes in this methodology, if any, that are warranted.

  1. Such estimate of value determined under this section shall be presumed to be correct for the purpose of determining the true value in money of the depreciable tangible personal property, but such estimation may be disproved by substantial and persuasive evidence of the true value in money under any method determined by the state tax commission to be correct, including, but not limited to, an appraisal of the tangible personal property specifically utilizing generally accepted appraisal techniques, and contained in a narrative appraisal report in accordance with the Uniform Standards of Professional Appraisal Practice or by proof of economic or functional obsolescence or evidence of excessive physical deterioration. For purposes of appeal of the provisions of this section, the salvage or scrap value of depreciable tangible personal property may only be considered if the property is not in use as of the assessment date.
  2. This section shall not apply to business personal property placed in service before January 2, 2006. Nothing in this section shall create a presumption as to the proper method of determining the assessed valuation of business personal property placed in service before January 2, 2006.
  3. The provisions of this section are not intended to modify the definition of tangible personal property as defined in section137.010.

 

 

State Tax Commission of Missouri

 

FRED WEBER, INC, )  
Complainant, )  
  )  
v. ) Appeal No. 14-81001
  )  & 15-81000
THOMAS RUHL, ASSESSOR ) Account 0102916
RALLS CO., MISSOURI, )  
  )  
Respondent. )  

 

DECISION AND ORDER

HOLDING

 

The assessment made by the Board of Equalization of Ralls County (BOE) is AFFIRMED in part and SET ASIDE in part.  Assessed value in money for the subject properties for tax years 2014 is set at $768,862 and 2015 is set at $572,951, personal property.

Complainant appeared by attorney Patrick Keefe.

Respondent Thomas Ruhl, Assessor of Ralls County, appeared in person and by attorney Rodney Rodenbaugh, County Counselor.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

Complainant appealed on the grounds of overvaluation, misclassification, discrimination, and misapplication of Section 137.122 RSMo.  Respondent set the true value of the property at $4,505,820 in 2014 and $3,116,340 in 2015.  The BOE sustained Respondent’s valuation.  The Commission takes this appeal to determine the true value in money of the subject property on January 1, 2014, and January 1, 2015.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

FINDINGS OF FACT

  1. Jurisdiction. Jurisdiction over this appeal is proper.  Complainant timely appealed to the State Tax Commission.
  2. Evidentiary Hearing. The evidentiary hearing was held on April 7, 2016, at the Ralls County Courthouse.
  3. Identification of Subject Property. The subject property is identified by account number 0102916.  It is business personal property of Fred Weber, Inc located in Ralls County, Missouri.
  4. Description of Subject Property. The subject property consists of large vehicles and assorted large equipment.  Companies use such property in mining operations, cement production, and construction.

Continental Cement Company, LLC (Continental) has an underground limestone mine in Hannibal, Ralls County, Missouri.  The limestone mined is used for the production of cement.  In 2012, Continental needed an access slope and ventilation loop for the underground mine.  Fred Weber, Inc, (FWI), acting by and through Bluff City Minerals, LLC was hired to excavate and construct the slope and loop for mining.  FWI’s personal property was used for excavation and construction of the slope and loop until April 2014.  In April 2014, the personal property was used for extraction and production of limestone for use in the creation of cement.

  1. Assessment. Respondent set a true market value (TMV) of $4,505,820 in 2014 and $3,116,340 in 2015.
  2. Board of Equalization. The BOE sustained Respondent’s TMV of the subject property.
  3. Complainant’s Evidence.
Exhibit Description
A Agreement between Continental and FWI 2012
B FWI Account Statement from Assessor
C Internal Revenue Service Publication 946
D FWI Property Valuation Summary (5 Year)
E FWI Property Valuation Summary (7 Year)
F Caterpillar 988H manufacturer’s specification sheet
G Caterpillar 262C manufacturer’s specification sheet
H Fletcher 3035 manufacturer’s specification sheet
I Caterpillar 740 manufacturer’s specification sheet
J Oldenburg DPH 2 manufacturer’s specification sheet
K Gradall XL 4100 manufacturer’s specification sheet
L Oldenburg Cannon Drill manufacturer’s specification sheet
M Oldenburg ANFO Pump Truck photographs
N Caterpillar 972G manufacturer’s specification sheet
O Caterpillar 966F manufacturer’s specification sheet
P Caterpillar 966D manufacturer’s specification sheet
Q Caterpillar 12G manufacturer’s specification sheet
R Ralls County, MO  business personal property declaration form
S FWI BOE appeal form
T BOE Decision Dated July 21, 2014
U Ralls County BOE Decision date August 20, 2015
V FWI’s 2015 vehicle list and 2015 property valuation (7 year)
W 2012 CAT 988H manufacturer’s specification sheet
X 2009 CAT 773F End Dump manufacturer’s specification sheet
Y 2001 CAT 988 H Wheel Loader manufacturer’s specification sheet
Z 2003 CAT 773E End Dump manufacturer’s specification sheet
AA Underground Mining Agreement between FWI and Continental Cement dated December 10, 2012
BB Written Direct Testimony of Roger Gagliano
CC Supplemental Written Direct Testimony of Roger Gagliano
DD Written Direct Testimony of Jill Rensing
EE Supplemental Written Direct Testimony of Jill Rensing

 

  1. Respondent’s Evidence. Respondent offered the testimony of Thomas Ruhl, the Ralls County Assessor.  The assessor testified that he valued the personal property of FWI in the following manner:
  2. Valuation methodology set forth in Section 137.115 RSMo using the October issue of the NADA for vehicles;
  3. Valuation methodology set forth in Section 137.122 RSMo for other items of personal property;

(1)  Acquisition costs were provided by FWI;

(2) MACRs Asset Class 32.2 (cement production) which provides for a 15 year recovery period;

(3) Depreciation as set forth in Section 137.122 RSMo.

YEAR 15 YR %
1 95.00
2 85.50
3 76.95
4 69.25
5 62.32
6 56.09
7 50.19
8 44.29
9 38.38
10 32.48
11 26.57
12 20.67
13 15.00
14 15.00
15 15.00
16 15.00
17 + 15.00

 

 

  1. Hotline[1] and internet auction sites for valuation of “heavy equipment”, “rolling stock” and “specialty equipment.”.
  2. For items placed in service prior to 2006, applied a depreciation factor of 30% to the acquisition cost.
  3. Stipulation of the Parties. After the hearing, the parties filed a summary spreadsheet listing the property belonging to FWI.  The property was separated into undisputed assessed valuation and disputed assessed valuation.

Undisputed Assessed Valuation – 2014

Property Description Agreed Assessed Value
Ventilated Lockers $2,454
12” Hardwood Benches $360
Television $161
Camera $204
2009 Ford Truck F250 Super Duty $9,590
2007 Ford Truck F250 Super Duty $7,080
2006 Ford Truck F250 Super Duty $5,790
Total $25,638

 

Disputed Valuation 2014

Exhibit Description Acquisi-tion Date Cost Assessor’s AV FWI’s AV
J 2011 CAT 262 C Skid Steer Loader 2013 $21,268 $14,890 $6,026
B Grindex Sludge Pump 2013 $7,317 $2,090 $2,073
B Personnel Basket 2013 $5,155 $1,470 $1,461
D 72” 200 HP Fan 2013 $68,000 $19,380 $19,267
I 2012 CAT 988 H Wheel Loader 2012 $736,032 $217,140 $145,980
K 2010 Fletcher 3035 Roof Bolter 2012 $400,289 $79,980 $79,391
L 2007 CAT 740 Articulator Truck 2011 $283,579 $119,470 $39,370
M 2007 CAT 740 Articulator Truck 2011 $283,579 $119,470 $39,370
N 2007 Oldenburg DPH 2 Boom Drill 2011 $352,590 $46,970 $48,951
P 2007 CAT 740 Articulator Truck 2011 $273,470 $119,470 $37,967
E 2007 CAT XQ30 Diesel Gen Set 2010 $10,500 $2,420 $875
F 72” Diesel Powered Fan 2008 $42,974 $8,030 $1,432
Q 2007 Gradall Mine Sealer 2007 $708,396 $283,360 $23,613
G 2007 Amida 4000 Light Tower 2007 $9,164 $1,530 $305
U 2004 Oldenburg Cannon Drill 2006 $138,683 $28,050 $4,623
H Mine Ventilation Fan 2006 $68,394 $10,100 $2,280
R 2003 Oldenburg Anfo Pump Truck 2004 $262,000 $34,510 $26,200
C Diesel Powered Fan 2004 $24,351 $2,434 $2,435
T 1997 CAT 966F Wheel Loader 2003 $118,332 $39,520 $16,187
C 2001I/R 450 Compressor 2001 $30,868 $3,084 $3,087
S 1999 CAT 972G Wheel Loader 1999 $256,572 $29,100 $25,658
C Mechanic Utility Box 1996 $1,810 $181 $181
U 1987 CAT 966D Wheel Loader 1990 $82,467 $27,540 $8,247
V 1985 CAT 12G Motor Grader 1987 $75,911 $25,350 $7,591
        $1,235,539 $542,569

 

Undisputed Assessed Valuation – 2015

Property Description Agreed Assessed Value
Ventilated Lockers $1,928
12” Hardwood Benches $283
Television $127
Camera $160
2010 Ford Truck Explorer $4,570
2007 Ford Truck F250 Super Duty $5,910
2006 Ford Truck F250 Super Duty $5,400
2008 Ford F550 $7,960
Total $26,338

 

Disputed Valuation 2015

Exhibit Description Acquisition Date Cost Assessor’s AV FWI’s AV
A Welder 2014 $7,705 $2,290 $2,293
A Shark Electric Hot Press 2014 $4,563 $1,360 $1,358
A Grease Pump 2014 $1,161 $350 $346
A UG Radio Communications 2014 $20,582 $6130 $6126
C 2011 CAT 262 C Skid Steer Loader 2013 $21,268 $13,210 $4,974
B Grindex Sludge Pump 2013 $7,317 $2,090 $1711
B Personnel Basket 2013 $5,155 $1,470 $1,206
B 72” 200 HP Fan 2013 $68,000 $19,380 $15,903
E 2012 CAT 988 H Wheel Loader 2012 $736,032 $191,640 $135,258
F 2010 Fletcher 3035 Roof Bolter 2012 $400,289 $71,980 $73,560
I 2007 CAT 740 Articulator Truck 2011 $283,579 $129,160 $40,533
J 2007 Oldenburg DPH 2 Boom Drill 2011 $352,590 $132,530 $50,397
D 2007 CAT XQ30 Diesel Gen Set 2010 $10,500 $2,180 $1072
D 2007 CAT XQ30 Diesel Gen Set 2010 $11,471 $11,471 $1171
H 2007 CAT 988H Wheel Loader 2010 $110,994 $130480 $11,332
G 2009 CAT 733F End Dump 2009 $100,242 $65500 $6141
R 72” Diesel Powered Fan 2008 $42,974 $7180 $1,432
K 2007 Gradall Mine Sealer 2007 $708,398 $50,400 $23,613
P 2007 Amida 4000 Light Tower 2007 $9,164 $310 $305
N 2001 CAT 966G Wheel Loader 2007 $210,535 $32,290 $7018
L 2003 Oldenburg Anfo Pump Truck 2004 $262,000 $31060 $26,200
M 2003 CAT 773 E End Dump 2003 $493,709 $129,705 $49371
Q Pump 2” BJM R1500 2001 $752 $100 $75
        $1,032,266 $461,395

 

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious, including the application of any abatement.  The Senior Hearing Officer shall issue a decision and order affirming, modifying or reversing the determination of the Board of Equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.  Article X, Section 14, Mo. Const. of 1945; Sections 138.430, 138.431, 138.431.4, RSMo (2000) as amended.

Basis of Assessment

The Constitution mandates that real property and tangible personal property be assessed at its value or such percentage of its value as may be fixed by law for each class and for each subclass.  Article X, Sections 4(a) and 4(b), Mo. Const. of 1945.  The constitutional mandate is to find the true value in money for the property under appeal.  By statute, real property and tangible personal property are assessed at set percentages of true value in money:  residential property at 19%; commercial property at 32%; agricultural property at 12%; and personal property at 33 1/3%.  Section 137.115.5 RSMo.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule, or method in determining true value in money and is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled.  The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide.  St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

Complainant’s Burden of Proof

A presumption exists that the assessed value fixed by the BOE is correct.  Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008);. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978) “Substantial and persuasive controverting evidence is required to rebut the presumption, with the burden of proof resting on the taxpayer.” Cohen, 251 S.W.3d at 348.  Substantial evidence can be defined as such relevant evidence that a reasonable mind might accept as adequate to support a conclusion.  Cupples Hesse Corp. v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959).  Persuasive evidence is evidence that has sufficient weight and probative value to convince the trier of fact.  Cupples Hesse Corp., 329 S.W.2d at 702.  The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief.   Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975). See also, Westwood Partnership v. Gogarty, 103 S.W.3d 152 (Mo. App. E.D. 2003); Daly v. P. D. George Co., 77 S.W.3d 645 (Mo. App. E.D. 2002); Reeves v. Snider, 115 S.W.3d 375 (Mo. App. S.D. 2003).

Methods of Valuation

Section 137.122 RSMo[1]. provides a statutory standardized methodology for valuing business personal property.  Said section applies to business personal property placed in service on or after January 2, 2006.  A property is “placed in service” when it is ready and available for a specific use, whether or not actually in use.  The methodology presented by Section 137.122 RSMo is a cost approach to value, with more than straight line (normal) depreciation.  The statute requires the use of the federal Modified Accelerated Cost Recovery System (MACRS) life tables to determine the appropriate “class life” of depreciable tangible personal property used in a trade or business or for production of income “to establish uniformity in the assessment of depreciable tangible personal property.. . .”  Once the assessor determines the appropriate class life and recovery period, the assessor references the depreciation schedule as set forth in Section 137.122 RSMo for application to the original cost of the property.

YEAR 3 YR % 5 YR % 7 YR % 10 YR % 15 YR % 20 YR %
1 75.00 85.00 89.29 92.50 95.00 96.25
2 37.50 59.50 70.16 78.62 85.50 89.03
3 12.50 41.65 55.13 66.83 76.95 82.35
4 5.00 24.99 42.88 56.81 69.25 76.18
5 5.00 10.00 30.63 48.07 62.32 70.46
6 5.00 10.00 18.38 39.33 56.09 65.18
7 5.00 10.00 10.00 30.59 50.19 60.29
8 5.00 10.00 10.00 21.85 44.29 55.77
9 5.00 10.00 10.00 15.00 38.38 51.31
10 5.00 10.00 10.00 15.00 32.48 46.85
11 5.00 10.00 10.00 15.00 26.57 42.38
12 5.00 10.00 10.00 15.00 20.67 37.92
13 5.00 10.00 10.00 15.00 15.00 33.46
14 5.00 10.00 10.00 15.00 15.00 29.00
15 5.00 10.00 10.00 15.00 15.00 24.54
16 5.00 10.00 10.00 15.00 15.00 20.08
17 + 5.00 10.00 10.00 15.00 15.00 20.00

 

For property placed in service on or after January 2, 2006, valuation under Section 137.122 RSMo is presumed to be correct but can be  “ . . .disproved by substantial and persuasive evidence of the true value in money under any method determined by the state tax commission to be correct . . .”  For property placed in service prior to January 2, 2006, Section 137.122 RSMo states that there is no presumption the methodology is correct, although assessors are not precluded from using such a methodology.

The property subject to this appeal may be used in construction, mining, or cement production.  Construction personal property is in Asset Class 15.0 with 5 year recovery period.  IRS publication 946 describes them as “assets used in construction by general building, special trade, heavy and marine construction contractors, operative and investment builders, real estate subdividers and developers, and others except railroads.” Mining personal property is in Asset Class 10.0 with 7 year recovery period.  IRS publication 946 describes them as “assets used in the mining and quarrying of metallic and nonmetallic minerals (including sand, gravel, stone and glass) and the milling, beneficiation, and other primary preparation of such materials. Manufacture of Cement is in Asset Class 32.2 with a 15 year recovery period.  IRS publication 946 describes them as “assets used in the production of cement, but does not include assets used in the manufacture of concrete or concrete products nor in any mining or extraction process.”

FWI argued that the personal property was construction property in 2014 and mining property in 2015.  The Assessor advocated that the property was used in cement production.  The personal property subject to this appeal was used in mining limestone.  Access slopes and loops are part of the mining process.  The use of the limestone once excavated does not drive the determination of the asset class.  The personal property is in Asset Class 10.0 with 7 year recovery period according to the IRS publication 946. For the property placed in service on or after January 2, 2006, this methodology is presumed to be correct.  Neither party presented substantial and persuasive evidence to rebut this presumption.  The personal property placed in service on or after January 2, 2006 should be valued using the 7 year class life for mining property and applying the depreciation found in the depreciation table in Section 137.122 RSMo to the original costs.

The personal property placed in service prior to January 2, 2006, is not subject to the methodology in Section 137.122.  Since the property is not subject to the methodology set forth in Section 137.122 RSMo, the BOE’s value is presumed to be true unless substantial and persuasive evidence of market value is presented.  Neither party presented such evidence, therefore, the BOE’s valuation is sustained.

Recommended Guide for Automobile Valuation

Pursuant to Section 137.115.9 RSMo., the assessor of each county and each city not within a county shall use the trade-in value published in the October issue of the National Automobile Dealers’ Association Official Used Car Guide, or its successor publication, as the recommended guide of information for determining the true value of motor vehicles described in such publication.  In the absence of a listing for a particular motor vehicle in such publication, the assessor shall use such information or publications which in the assessor’s judgment will fairly estimate the true value in money of the motor vehicle.  The NADA guide is only the recommended guide.  In an appeal before the Commission, the taxpayer or the Assessor may present evidence from other recognized valuation sources.

The parties agreed to the valuation of the vehicles subject to this appeal.

Discrimination

In order to obtain a reduction in assessed value based upon discrimination, the Complainants must (1) prove the true value in money of their property on the tax date; and (2) show an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction.   Koplar v. State Tax Commission, 321 S.W.2d 686, 690, 695 (Mo. 1959).   Substantial evidence must show that all other property in the same class, generally, is actually undervalued.   State ex rel. Plantz v. State Tax Commission, 384 S.W.2d 565, 568 (Mo. 1964).   The difference in the assessment ratio of the subject property and the average assessment ratio in the subject county must be shown to be grossly excessive.  Savage v. State Tax Commission of Missouri, 722 S.W.2d 72, 79 (Mo. banc 1986). No other methodology is sufficient to establish discrimination.  Cupples-Hesse, supra.

Complainants’ discrimination claim fails because they failed to present substantial and persuasive evidence that there was an intentional plan of discrimination by the assessing officials resulting in an assessment of that property at a greater percentage of value than other property, generally, within the same class within the same taxing jurisdiction or that the difference in the assessment ratio of the subject property and the average assessment ratio in the county is grossly excessive.

 

ORDER

Assessed value in money for the subject property for tax years 2014 is set at $768,862 and 2015 is set at $572,951.  The value determinations are based upon (1) the agreed assessed values, (2) the application of Section 137.122 RSMo methodology as applied to mining personal property placed in service on or after January 2, 2006, and (3) the BOE’s valuation determination for property placed in service before January 2, 2006, as neither party presented substantial and persuasive evidence as to the market value of the property as of January 1, 2014, or January 1, 2015.

The Complainant did not present substantial and persuasive evidence as to any other ground of appeal.

Assessed Valuation – 2014

  Agreed Assessed Values
  Property Description Assessed Value
  Ventilated Lockers $2,454
  12” Hardwood Benches $360
  Television $161
  Camera $204
  2009 Ford Truck F250 Super Duty $9,590
  2007 Ford Truck F250 Super Duty $7,080
  2006 Ford Truck F250 Super Duty $5,790
  7 Year Recovery
Description Assessed Value  
7 Year Recovery  
2011 CAT 262 C Skid Steer Loader $6330  
Grindex Sludge Pump $2180  
Personnel Basket $1530  
72” 200 HP Fan $20,240  
2012 CAT 988 H Wheel Loader $172,120  
2010 Fletcher 3035 Roof Bolter $93,600  
2007 CAT 740 Articulator Truck $52,110  
2007 CAT 740 Articulator Truck $52,110  
2007 Oldenburg DPH 2 Boom Drill $64,790  
2007 CAT 740 Articulator Truck $50,250  
2007 CAT XQ30 Diesel Gen Set $1500  
72” Diesel Powered Fan $2630  
2007 Gradall Mine Sealer $23,610  
2007 Amida 4000 Light Tower $310  
Affirm Board of Equalization  
Description Assessed Value  
2004 Oldenburg Cannon Drill $28,050  
Mine Ventilation Fan $10,100  
2003 Oldenburg Anfo Pump Truck $34,510  
Diesel Powered Fan $2,434  
1997 CAT 966F Wheel Loader $39,520  
2001I/R 450 Compressor $3,084  
1999 CAT 972G Wheel Loader $29,100  
Mechanic Utility Box $181  
1987 CAT 966D Wheel Loader $27,540  
1985 CAT 12G Motor Grader $25,350  
TOTAL $768,862  

 

Assessed Valuation – 2015

  Agreed Assessed Values
  Property Description Assessed Value
  Ventilated Lockers $1,928
  12” Hardwood Benches $283
  Television $127
  Camera $160
  2010 Ford Truck Explorer $4,570
  2007 Ford Truck F250 Super Duty $5,910
  2006 Ford Truck F250 Super Duty $5,400
  2008 Ford F550 $7,960
  7 Year Recovery
Description Assessed Value  
Welder $2,290.00  
Shark Electric Hot Press $1,360.00  
Grease Pump $350.00  
UG Radio Communications $6,130.00  
2011 CAT 262 C Skid Steer Loader $4,970.00  
Grindex Sludge Pump $1,710.00  
Personnel Basket $1,210.00  
72” 200 HP Fan $15,900.00  
2012 CAT 988 H Wheel Loader $135,240.00  
2010 Fletcher 3035 Roof Bolter $73,550.00  
2007 CAT 740 Articulator Truck $40,530.00  
2007 Oldenburg DPH 2 Boom Drill $50,390.00  
2007 CAT XQ30 Diesel Gen Set $1,070.00  
2007 CAT XQ30 Diesel Gen Set $1,170.00  
72” Diesel Powered Fan $1,430.00  
2007 Gradall Mine Sealer $23,610.00  
2007 Amida 4000 Light Tower $310.00  
2007 CAT 988H Wheel Loader $11,330.00  
2009 CAT 733F End Dump $6,140.00  
2001 CAT 966G Wheel Loader $7,020.00  
BOE Affirmed  
2003 Oldenburg Anfo Pump Truck $31,060  
2003 CAT 773 E End Dump $129,705  
Pump 2” BJM R1500 $100  
TOTAL $572,951  

 

Application for Review

A party may file with the Commission an application for review of this decision within thirty days of the mailing date set forth in the Certificate of Service for this Decision.  The application shall contain specific facts or law as grounds upon which it is claimed the decision is erroneous.  Said application must be in writing addressed to the State Tax Commission of Missouri, P.O. Box 146, Jefferson City, MO 65102-0146, and a copy of said application must be sent to each person at the address listed below in the certificate of service.

            Failure to state specific facts or law upon which the application for review is based will result in summary denial. Section 138.432, RSMo

Disputed Taxes

The Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall continue to hold the disputed taxes pending the possible filing of an Application for Review, unless said taxes have been disbursed pursuant to a court order under the provisions of Section 139.031.8, RSMo.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.  Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED July 11, 2016.

STATE TAX COMMISSION OF MISSOURI

Maureen Monaghan

Hearing Officer

 

Certificate of Service

 

I hereby certify that a copy of the foregoing has been electronically mailed or sent by U.S. Mail on this 11 day of July, 2016, to:

 

 

Jacklyn Wood

Legal Coordinator