ViJon Inc v. Jake Zimmerman, Assessor St. Louis County

March 28th, 2017

State Tax Commission of Missouri

 

ViJON INC )
)
Complainant, )
)
v. ) Appeal Number 15-15989
)
JAKE ZIMMERMAN, ASSESSOR, )
ST. LOUIS COUNTY, MISSOURI, )
)
Respondent. )

 

 

DECISION AND ORDER

 

HOLDING

 

The decision of the St. Louis County Board of Equalization (BOE) sustaining the assessment made by Jake Zimmerman, Assessor, St. Louis County, Missouri, (Respondent) is SET ASIDE.  Complainant presented substantial and persuasive evidence to rebut the presumption of correct assessment by the Board of Equalization.

Complainant appeared by counsel Thomas Campbell.

Respondent appeared by counsel Ed Corrigan.

Case heard and decided by Hearing Officer Maureen Monaghan.

ISSUE

The Commission takes this appeal to determine the true value in money for business and manufacturing personal property on January 1, 2015.

 

SUMMARY

The Complainant submitted a personal property declaration on March 25, 2015 to the Respondent of approximately 45 pages estimating total assessed values of $1,826,800.  Complainant’s full declaration contains 1,757 lines of personal property.  At the hearing, the parties narrowed the issue to 19 items of personal property.  Complainant alleges the historical cost of the items provided to the Respondent include installation costs which should not be considered in the original cost of the business personal property as set out in Section 137.122 RSMo.

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 from the decision of the BOE.
  2. Evidentiary Hearing. The issue of overvaluation was presented at an evidentiary hearing on December 16, 2015 at the St. Louis County Government Building, 41 South Central Avenue, St. Louis County, Missouri.
  3. Identification of Subject Property.  The subject property is identified by account number M00197043.  The property is business and manufacturing personal property located at 8515 Page Avenue on January 1, 2015.
  4. Description of Subject Property.  Although the personal property is in excess of 1750 items, the parties narrowed the issue to 19 line items.

 

LINE SYS# DESCRIPTION
1691 4304 Mo Batch Flexibility Miscellaneous Materials
1735 4406 Mo-purple line materials
1706 4467 ICC-07 Semi bulk materials
1746 4477 Mo-Install Surfacant Tanks
1676 4282 Batching Mnfld Enhancement Miscellaneous Materials
1666 4261 MO-ICC batch tank miscellaneous materials
1710 4322 MO Boiler system
1743 4457 ICC-01 CIP system
1680 4293 Mo Energy Recovery
1715 4330 MO-2 10,000 gal batch tanks
1724 4358 MO-ICC-09 upgrade
1745 4472 ICC-06 sanitizer
1741 4447 ICC-05 batch tank
1744 4461 ICC-10 batching manifold mat
1699 4312 Update blending control
1739 4442 ICC-03 batch flexibility
1742 4450 ICC-08 update
1705 4476-A MO install tank
1705 4476-B MO install tank

 

  1. Assessment. The Respondent determined the assessed value of all Complainant’s property at $1,826,790.  The BOE sustained the assessment.
  2. Complainant’s Evidence. [1]
Exhibit Description
A Amended Declaration 2015
B Amended Asset List
D Written Direct Testimony of Dean Swaller
E Invoices

 

Exhibit A is an amended declaration setting forth a total original cost of all business personal property at $20,223,229, assessed value of $1,324,060.

Exhibit B is an amended asset list.  The list is a ledger compiled by the Complainant of their personal property as of January 1, 2015, the historical costs and the Complainant’s proposed taxable costs.  The list contains: line number, system number, description, year of acquisition, historical costs, non-tax costs, taxable costs and comments.  Exhibit B is 48 pages of 1757 assets, listing historical costs of $27,314,450, non-tax costs of $7,091,221, and taxable original costs of $20,223,229.

Exhibit D is the written direct testimony of Witness Dean Swaller who is the Vice President of Manufacturing at Vi-Jon.  In his written direct testimony and oral testimony, the witness detailed his familiarity with the plant and equipment including the purchase, installation, improvement, and upgrade of machinery and equipment utilized by the company.

The witness testified that installation costs were inadvertently included in the original personal property declaration filed with St. Louis County.   The witness reviewed the ledger to explain the costs which were related to the installation.  During the course of testimony, additional ledger information and statements were provided.  The items were designated Exhibit E.  The costs set forth in Exhibit E are:

System # 4261 – the total costs were $30,925 all of which were related to installation;

System # 4282 – the total costs were $93,744 all of which were related to installation;

System # 4293 – the total costs were $49,796, of which $5,786 was related to installation;

System # 4304 – the total costs were $168,758, of which $149,455 was related to installation;

System # 4312 – the total costs were $22,070, all of which were related to installation;

System # 4322 – the total costs were $289,269, all of which $51,423 was related to installation;

System # 4330 – the total costs were $102,582, all of which $87,597 were related to installation;

System # 4358 – the total costs were $52,985, all of which were related to installation;

System # 4406 – the total costs were $53,042, all of which were related to installation;

System # 4442 – the total costs were $13,084, all of which were related to installation;

System # 4447 – the total costs were $29,716, all of which were related to installation,

System # 4450 – the total costs were $9,131, all of which were related to installation;

System # 4457 – the total costs were $342,656, of which $185,060 were related to installation;

System # 4461 – the total costs were $35,180, all of which were related to installation;

System # 4467 – the total costs were $186,700, of which $118,795 was related to installation;

System # 4472 – the total costs were $506,515, of which $234,071 was related to installation;

System # 4476 – the total costs were $417,517, of which $174,309 was related to installation and $53,278 was related to a tank located outside of the state and therefore has no tax situs in St.    Louis County; and

System # 4477 – the total costs were $426,582, of which $351,629 wase related to installation;

 

Total “original costs”, cost excluding installation and items without tax situs in St. Louis County, of the nineteen items is $1,095,089

 

  1. Respondent’s Evidence.
Exhibit Description
1 Written Direct Testimony of Michael Suddarth
2 Personal Property Declaration
3 BOE On-Line Property
4 BOE Decision
5 Complaint for Review of Assessment
6 Valuation with Invoices

 

Exhibit 1 is the written direct testimony of Michael Suddarth.  He testified that the true market value of the Complainant’s property was $4,666,430, the assessed value was $1,713,190.  Witness Suddarth testified that he had not conducted a site visit to view or inventory the property in 2015.  He further testified that the business personal property declaration was accepted as filed by the Complainant.

Exhibit 2 is the business personal property declaration originally filed by the Complainant.

Exhibit 3 is the documentation of appeal filed by the Complainant to the BOE.

Exhibit 4 is the BOE Decision.

Exhibit 5 is the Complaint for Review of Assessment filed with the STC.

Exhibit 6 is pages from the Complainant’s ledger and copies of invoices of Complainant.

  1. Joint Exhibit.   The parties submitted a Joint Exhibit which was simply marked as “Joint Exhibit”. The exhibit is a chart listing 19 line items of personal property including the system number, description, line number, age, Complainant’s proposed historical costs as set out in Exhibit B (CHC), and Respondent’s proposed historical costs as set out in Complainant’s declaration (RHC).
LINE SYS# DESCRIPTION CHC RHC
1691 4304 Mo Batch Flexibility Miscellaneous Materials $19,303 $168,758
1735 4406 Mo-purple line materials $0 $53,402
1706 4467 ICC-07 Semi bulk materials $87,522 $186,700
1746 4477 Mo-Install Surfacant Tanks $45,659 $346,072
1676 4282 Batching Mnfld Enhancement Miscellaneous Materials $0 $93,744
1666 4261 MO-ICC batch tank miscellaneous materials $0 $30,925
1710 4322 MO Boiler system $278,269 $289,269
1743 4457 ICC-01 CIP system $172,654 $342,654
1680 4293 Mo Energy Recovery $0 $49,796
1715 4330 MO-2 10,000 gal batch tanks $27,424 $102,582
1724 4358 MO-ICC-09 upgrade $0 $52,958
1745 4472 ICC-06 sanitizer $341,515 $506,515
1741 4447 ICC-05 batch tank $10,036 $29,716
1744 4461 ICC-10 batching manifold mat $8837 $35,180
1699 4312 Update blending control $0 $22,070
1739 4442 ICC-03 batch flexibility $6,101 $13,084
1742 4450 ICC-08 update $0 $9131
1705 4476-A MO install tank $318,632 $417,517
1705 4476-B MO install tank
Total $1,315,952 $2,750,073

 

  1. Value Established. The evidence presented by Complainant was substantial and persuasive to establish “original cost” as defined in Section 137.122 RSMo of the 19 line items of business personal property at $1,095,089.

 

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.  The 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

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 and tangible personal property are assessed at set percentages of true value in money. Section 137.115.5, RSMo.

Presumption In Appeal

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).   The presumption is not evidence of value.  The presumption of correct assessment is rebutted when 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).

Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse, supra.   Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact.  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).

Complainants’ Burden of Proof

 

In order to prevail, Complainants must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2015.  Hermel, supra.   There is no presumption that the taxpayer’s opinion is correct. The taxpayer in a Commission appeal still bears the burden of proof.  The taxpayer is the moving party seeking affirmative relief.   Therefore, the Complainant bears the burden of proving the vital elements of the case, i.e., the assessment was “unlawful, unfair, improper, arbitrary or capricious.”  See, 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); Industrial Development Authority of Kansas City v. State Tax Commission of Missouri, 804 S.W.2d 387, 392 (Mo. App. 1991).  A valuation which does not reflect the fair market value (true value in money) of the property under appeal is an unlawful, unfair and improper assessment.

 

Owner’s Opinion of Value

The owner of property is generally held competent to testify to its reasonable market value.   Rigali v. Kensington Place Homeowners’ Ass’n, 103 S.W.3d 839, 846 (Mo. App. E.D. 2003); Boten v. Brecklein, 452 S.W.2d 86, 95 (Sup. 1970).   The owner’s opinion is without probative value; however, where it is shown to have been based upon improper elements or an improper foundation.  Cohen v. Bushmeyer, 251 S.W.3d 345, (Mo. App. E.D., March 25, 2008); Carmel Energy, Inc. v. Fritter, 827 S.W.2d 780, 783 (Mo. App. W.D. 1992); State, ex rel. Missouri Hwy & Transp. Com’n v. Pracht, 801 S.W.2d 90, 94 (Mo. App. E.D. 1990); Shelby County R-4 School District v. Hermann, 392 S.W.2d 609, 613 (Sup. 1965).

Weight to be Given Evidence

            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).

Business Personal Property

Section 137.122, RSMo

 

To establish uniformity in the valuation of personal property, Section 137.122 RSMo was enacted.  For purposes of this section, and to estimate the value of depreciable tangible personal property for mass appraisal purposes, each assessor values depreciable tangible personal property by applying the class life and recovery period to the original cost of the property according to the depreciation schedule set forth in the statute.  “Original cost” is defined as the price paid for the item without freight, installation, or sales or use tax.  The valuation by this method presumed to be correct for the purpose of determining the true value in money of the depreciable tangible personal property.  There is no dispute as to class life period or depreciation.

The Complainant filed a business personal property list with the Respondent in tax year 2015.   The Complainant certified that the list was true and correct.  Respondent conducted no inspection or inventory of Complainant’s property in 2015.  Respondent relied upon the sworn, certified list to set value for the personal property.   However, the business personal property list filed by Complainant, even though certified by the Complainant as being true and correct, was not accurate.  Due to the Complainant not acting with due diligence and providing a list to which the Complainant swore was accurate, the county was unable to correctly value the personal property.  Since the basis of the assessment was an inaccurate listing of personal property original cost, the presumption of correct assessment is rebutted.

Complainant’s witness, Witness Swaller, was familiar with all property present at the property.  He is the plant manager and therefore oversees all operations at the plant.  He is familiar with all the equipment, its maintenance, installation, costs, and so on.  Witness Swaller reviewed the ledgers and personal property declarations to determine if the original costs were declared correctly. He determined the original costs were incorrectly reported. He testified as to the labor and material costs to install many of the items on the inaccurate declaration form.  He was able to identify invoices for the costs in order to remove those expenses for an accurate reporting of “original costs”.  Using his knowledge and familiarity of the plant, a detailed and accurate inventory of the property and their original costs was developed.

Complainant possesses over 1,750 items of personal property with tax situs in St. Louis.   During the hearing, the parties narrowed the issue to 19 items of personal property and their “original cost.”

Upon review of all testimony and exhibits, the “original costs” as defined under Section 137.122 RSMo of the nineteen items are:

 

            LINE SYS# DESCRIPTION Cost
1666 4261 MO-ICC batch tank miscellaneous materials $0
1676 4282 Batching Mnfld Enhancement Miscellaneous Materials $0
1680 4293 Mo Energy Recovery $44,010
1691 4304 Mo Batch Flexibility Miscellaneous Materials $19,303
1699 4312 Update blending control $11,379
1710 4322 MO Boiler system $237,846
1715 4330 MO-2 10,000 gal batch tanks $14,986
1724 4358 MO-ICC-09 upgrade $0
1735 4406 Mo-purple line materials $1290
1739 4442 ICC-03 batch flexibility $0
1741 4447 ICC-05 batch tank $0
1742 4450 ICC-08 update $0
1743 4457 ICC-01 CIP system $157,596
1744 4461 ICC-10 batching manifold mat $0
1706 4467 ICC-07 Semi bulk materials $71,362
1745 4472 ICC-06 sanitizer $272,444
1705 4476-A MO install tank $189,930
4476-B MO install tank
1746 4477 Mo-Install Surfacant Tanks $74,943
Total $1,095,089

 

 

ORDER

The “original costs” for the subject property as determined by the Assessor and sustained by the Board of Equalization for St. Louis County for the subject tax day is SET ASIDE.  The “original costs” for the 19 items in dispute are set as follows:

            LINE SYS# DESCRIPTION Cost
1666 4261 MO-ICC batch tank miscellaneous materials $0
1676 4282 Batching Mnfld Enhancement Miscellaneous Materials $0
1680 4293 Mo Energy Recovery $44,010
1691 4304 Mo Batch Flexibility Miscellaneous Materials $19,303
1699 4312 Update blending control $11,379
1710 4322 MO Boiler system $237,846
1715 4330 MO-2 10,000 gal batch tanks $14,986
1724 4358 MO-ICC-09 upgrade $0
1735 4406 Mo-purple line materials $1290
1739 4442 ICC-03 batch flexibility $0
1741 4447 ICC-05 batch tank $0
1742 4450 ICC-08 update $0
1743 4457 ICC-01 CIP system $157,596
1744 4461 ICC-10 batching manifold mat $0
1706 4467 ICC-07 Semi bulk materials $71,362
1745 4472 ICC-06 sanitizer $272,444
1705 4476-A MO install tank $189,930
4476-B MO install tank
1746 4477 Mo-Install Surfacant Tanks $74,943
Total $1,095,089

 

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 this 28th day of March, 2017.

STATE TAX COMMISSION OF MISSOURI

 

Maureen Monaghan

Hearing Officer

 

Certificate of Service

I hereby certify that a copy of the foregoing has been sent electronically or mailed postage prepaid this 28th day of March, 2017, to:

Ed Corrigan: ECorrigan@stlouisco.com; Jake Zimmerman, Assessor, syoutzy@stlouisco.com

Mark Devore, Collector, MDevore@stlouisco.com;

 

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] Exhibit C was withdrawn by the Complainant prior to hearing.