Court Opinion

ID: 9955276
Source: CourtListenerOpinion
Date Created: 2024-03-27 22:03:57.581863+00
Date Added: 2024-06-11T08:15:25.041667
License: Public Domain

ATTORNEY FOR PETITIONERS:                      ATTORNEY FOR RESPONDENT:
MARGARET L. SMITH                              MARILYN S. MEIGHEN
FROST BROWN TODD LLP                           ATTORNEY AT LAW
Indianapolis, IN                               Carmel, IN

                               IN THE
                         INDIANA TAX COURT

BRIAN J. SHAPIRO and                             )
SARAH K. SHAPIRO,                                )
                                                 )                                        FILED
       Petitioners,                              )                                  Mar 27 2024, 4:17 pm
                                                 )
                                                                                          CLERK
              v.                                 ) Cause No. 22T-TA-00006            Indiana Supreme Court
                                                                                        Court of Appeals
                                                 )                                        and Tax Court

HAMILTON COUNTY ASSESSOR,                        )
                                                 )
       Respondent.                               )

                   ON APPEAL FROM A FINAL DETERMINATION OF
                       THE INDIANA BOARD OF TAX REVIEW

                                   FOR PUBLICATION
                                     March 27, 2024

WENTWORTH, Senior Judge

       Brian J. Shapiro and Sarah K. Shapiro challenge the Indiana Board of Tax

Review’s final determination that found their Indiana property was ineligible for Indiana’s

homestead deduction during the 2017 through 2020 tax years. Upon review, the Court

affirms the Indiana Board’s final determination in part.

                         FACTS AND PROCEDURAL HISTORY

       In 1991, the Shapiros purchased a single-story residence situated on an acre of

land in the city of Zionsville, Hamilton County, Indiana (the “Indiana Property”). (See

Cert. Admin. R. at 43-45, 114.) This property was titled in both of the Shapiros’ names
as husband and wife and served as their martial residence. (See Cert. Admin. R. at 43,

110.) From 2017 through 2020, the Shapiros’ Indiana Property received Indiana’s

homestead deduction. (See, e.g., Cert. Admin. R. at 55-57, 63.)

       In June of 1996, Mrs. Shapiro purchased realty in Leelanau County, Omena,

Michigan (the “Michigan Property”), titling the property in her name alone. (See Cert.

Admin. R. at 39, 46-50, 114-15.) Mrs. Shapiro refinanced the Michigan Property in

January 2016 and executed a quitclaim deed to transfer title of the Michigan Property to

both of the Shapiros. (See Cert. Admin. R. at 40, 110.) That same year, the Shapiros

executed another quitclaim deed, restoring exclusive ownership of the Michigan

Property to Mrs. Shapiro. (See Cert. Admin. R. at 41, 110.) Subsequently, Mrs.

Shapiro applied for and received Michigan’s principal residence exemption (the

“Michigan PRE”) for the Michigan Property for the 2017 through 2020 tax years. (See

Cert. Admin. R. at 46-49, 114-15.)

       At some point in 2020, the Hamilton County Auditor contracted with Tax

Management Associates, a company “well versed in multiple states[’] laws and

residency-based benefits[,]” to review the county’s homestead deductions. (See Cert.

Admin. R. at 115.) Based on the information Tax Management Associates provided, the

Auditor sent a letter to the Shapiros in November 2020 to verify their eligibility for the

homestead deduction on their Indiana Property for 2017 through 2019. (See Cert.

Admin. R. at 50, 55-57, 114-15.) The next month, the Auditor notified the Shapiros that

she had removed their homestead deductions for those years because the Indiana

Property was not their principal place of residence during that time. (See Cert. Admin.

R. at 58.) The Assessor also advised the Shapiros that they owed $12,319.57 in

                                              2
additional property taxes and penalties on the Indiana Property that they must remit

before January 13, 2021. (See Cert. Admin. R. at 58-62.) Subsequently, the Auditor

also removed the homestead deduction from their Indiana Property for the 2020 tax

year. 1 (See, e.g., Cert. Admin. R. at 3-4, 6-7, 109.)

       Believing the Auditor erred by removing their Indiana homestead deductions, the

Shapiros sought review, first with the Hamilton County Property Tax Assessment Board

of Appeals and then with the Indiana Board. (See Cert. Admin. R. at 1-29.) The

Shapiros elected to have their Indiana Board proceedings conducted under the Indiana

Board’s small claim procedures. (See, e.g., Cert. Admin. R. at 1-2, 108.)

       On October 19, 2021, the Indiana Board held a hearing on the matter during

which Mr. Shapiro appeared on behalf of the Shapiros. (See Cert. Admin. R. at 108-

10.) Mr. Shapiro testified that he and his wife have been married since 1989, have

continuously resided in Indiana to operate Shapiro’s Delicatessen in Indianapolis, and

have always paid their Indiana property and income taxes. (See Cert. Admin. R. at 110-

12.) Mr. Shapiro further explained that his wife had lived in Michigan since 2016, where

she has voted, paid taxes, maintained a driver’s license, and currently “lives . . . [for]

over 200 days a year.”2 (See Cert. Admin. R. at 110-11.) The Shapiros maintained that

1
 The certified administrative record contains few details regarding the removal of the 2020
homestead deduction from the Indiana Property. (See Cert. Admin. R. at 1-123.)
2
   Mr. Shapiro requested that the parties be permitted to file a “legal brief” 30 days after the
hearing to ensure that the undisputed facts were properly applied to the “confusing” Indiana and
Michigan laws. (See Cert. Admin. R. at 112, 119-21.) The administrative law judge presiding
over the hearing granted Mr. Shapiro’s request, explaining that the parties’ briefs “may not . . .
include any new factual information that was[ not] submitted during the hearing either through
testimony or exhibits[.]” (See Cert. Admin. R. at 120, 122.) Despite this warning, the Shapiros’
post-hearing brief contained new factual assertions and citations to new evidence. (Compare
Cert. Admin. R. at R. Contents (listing the documentary evidence) and 107-23 (hearing
transcript) with 85-86, 89, 92-94 (portions of the Shapiros’ brief).)
                                                3
they were eligible for Indiana’s homestead deduction between 2017 and 2020 because

the Michigan PRE, which Mrs. Shapiro received for her Michigan Property, was not

“equivalent” to the homestead deduction under Indiana Code § 6-1.1-12-37(f)

(“Subsection F”). 3 (See Cert. Admin. R. at 85-94.)

       The Hamilton County Assessor responded that the Shapiro’s Indiana Property

was not eligible, however, for Indiana’s homestead deduction under Indiana Code § 6-

1.1-12-37(n) (“Subsection N”) because the Michigan PRE and Indiana’s homestead

deduction are “substantially similar” – each “exempt[ing] a principal residence from

property taxes based upon the value of that residence.” (See Cert. Admin. R. at 121-

22.) (See also Cert. Admin. R. at 81-82 (stating both are residency based and remove

part of the home’s value from taxation so property taxes are lowered).) Moreover, the

Assessor acknowledged that “spouses may have separate principal places of residence

but [to be eligible for Indiana’s homestead deduction,] neither spouse can have an

ownership interest in the other spouse’s residence[, as here.]” (See Cert. Admin. R. at

81.)

       On February 17, 2022, the Indiana Board issued its final determination, finding

first that the Indiana Property was not eligible for the homestead deduction under

Subsection N because Mrs. Shapiro had an ownership interest in both the Indiana

Property and the Michigan Property during the years at issue. (See Cert. Admin. R. at

105 ¶ 14.) The Indiana Board then found the Shapiros’ Indiana Property ineligible for

3 The Shapiros also claimed, among other things, that Michigan’s homestead property tax credit

did not support the removal of Indiana’s homestead deduction because 1) it primarily involves
income taxes and 2) Mrs. Shapiro did not receive the credit between 2017 and 2020. (See Cert.
Admin. R. at 90-91.) The Assessor ultimately agreed that Michigan’s homestead property tax
credit was not relevant to resolving the issues in this case. (See Cert. Admin. R. at 82.)
                                              4
the homestead deduction under Subsection F on the basis that Mrs. Shapiro’s Michigan

Property received the Michigan PRE, an exemption “equivalent” to Indiana’s homestead

deduction. (See Cert. Admin. R. at 105 ¶ 14.) The Indiana Board clarified that the

Legislature used the word “equivalent” to mean “substantially similar” because if

“equivalent” meant “identical,” Indiana’s homestead deduction “would never be applied.”

(See Cert. Admin. R. at 105 ¶ 14.)

       On March 31, 2022, the Shapiros initiated this original tax appeal. The Court

took the case under advisement on December 8, 2022. Additional facts will be supplied

when necessary.

                                 STANDARD OF REVIEW

       The party seeking to reverse an Indiana Board final determination bears the

burden of demonstrating its invalidity. Lowe’s Home Ctrs., Inc. v. Monroe Cnty.

Assessor, 160 N.E.3d 263, 268 (Ind. Tax Ct. 2020). Consequently, the Shapiros must

demonstrate to the Court that the Indiana Board’s final determination in this matter is

arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

contrary to constitutional right, power, privilege, or immunity; in excess of or short of

statutory jurisdiction, authority, or limitations; without observance of the procedur

required by law; or unsupported by substantial or reliable evidence. IND. CODE § 33-26-

6-6(e)(1)-(5) (2024).

                                            LAW

       All real property in Indiana is subject to assessment and taxation on the

statutorily prescribed assessment date. See IND. CODE § 6-1.1-2-1 (2017). During the

                                              5
years at issue, “a homestead 4 [was] eligible for a standard deduction from the assessed

value of the homestead” on the annual January 1 assessment date. See IND. CODE § 6-

1.1-12-37(b) (2017) (footnote added); IND. CODE § 6-1.1-2-1.5(a)(2) (2017). The

homestead deduction removed the amount of property tax liability attributable to the

homestead’s assessed value up to $45,000. See I.C. § 6-1.1-12-37(b)-(c). Subsections

F and N detail specific circumstances under which individuals or married couples

become ineligible for a homestead deduction.

       The version of Subsection F effective for the 2017 assessment date states:

           If an individual who is receiving the deduction provided by this
           section or who otherwise qualifies property for a deduction under
           this section:

                                             *****

               (2) is no longer eligible for a deduction under this section on
               another parcel of property because:

                  (A) the individual would otherwise receive the benefit
                  of more than one (1) deduction under this chapter; or

                  (B) the individual maintains the individual’s principal
                  place of residence with another individual who
                  receives a deduction under this section;

           the individual must file a certified statement with the auditor of the
           county, notifying the auditor of the change of use, not more than
           sixty (60) days after the date of that change.

I.C. § 6-1.1-12-37(f).

       Several amendments to Subsection F followed, which newly included the word

“equivalent” as a standard for determining eligibility. The versions of Subsection F that

4
  The word “homestead” was statutorily defined as an individual’s principal place of residence in
Indiana, “consist[ing] of a dwelling and the real estate, not exceeding one (1) acre, that
immediately surround[ed] that dwelling.” IND. CODE § 6-1.1-12-37(a)(2) (2017).
                                                6
were effective during the 2018 through 2020 tax years all stated the following:

          Except as provided in subsection (n), if a person who is receiving,
          or seeks to receive, the deduction provided by this section in the
          person’s name:

                                           *****

             (2) is not eligible for a deduction under this section because
             the person is already receiving:

                 (A) a deduction under this section in the person’s name
                 as an individual or a spouse; or

                 (B) a deduction under the law of another state that is
                 equivalent to the deduction provided by this section;

           the person must file a certified statement with the auditor of the
           county, notifying the auditor of the person’s ineligibility, not more
           than sixty (60) days after the date of the change in eligibility.

See, e.g., Pub. L. No. 255-2017, § 13 (eff. July 1, 2017) (emphasis added).

      While indicating that generally only one homestead deduction is available to a

married couple, Subsection N specifies an exception that would allow each spouse to

claim a separate homestead deduction on different properties:

          A county auditor shall grant an individual a deduction under this
          section regardless of whether the individual and the individual’s
          spouse claim a deduction on two (2) different applications and each
          application claims a deduction for different property if the property
          owned by the individual’s spouse is located outside Indiana and the
          individual files an affidavit with the county auditor containing the
          following information:

             (1) The names of the county and state in which the
             individual’s spouse claims a deduction substantially similar
             to the deduction allowed by this section.

             (2) A statement made under penalty of perjury that the
             following are true:

                 (A) That the individual and the individual’s spouse
                 maintain separate principal places of residence.

                                              7
                   (B) That neither the individual nor the individual’s
                   spouse has an ownership interest in the other’s
                   principal place of residence.

                   (C) That neither the individual nor the individual’s
                   spouse has, for that same year, claimed a standard or
                   substantially similar deduction for any property other
                   than the property maintained as a principal place of
                   residence by the respective individuals.

I.C. § 6-1.1-12-37(n) (emphases added).

                                           ANALYSIS

       On appeal, the Shapiros contend that the Indiana Board’s final determination that

found them ineligible for Indiana’s homestead deduction in 2017 through 2020 must be

reversed because it is arbitrary and capricious and contrary to law. (See, e.g., Pet’rs’

Br. at 33.) The Shapiros explain that the Indiana Board contravened several rules of

statutory construction and the separation of powers doctrine by treating two

“irreconcilably incompatible” terms (i.e., “equivalent” as used in Subsection F and

“substantially similar” as used in Subsection N) as if they were interchangeable and

imposed the same requirements. (See Pet’rs’ Br. at 21-33.) The Shapiros further

maintain that as a result of this misinterpretation, the Indiana Board ignored critical

differences between Indiana’s homestead deduction and the Michigan PRE, thereby

failing to consider the dispositive evidence 5 that Indiana’s homestead deduction and the

5
  The Shapiros’ briefs refer to various facts and evidence that are not included in the certified
administrative record. (Compare Pet’rs’ Br. at 5-36 with Cert. Admin. R. at 1-123.) The Court
will not consider any facts or evidence outside the certified administrative record in resolving this
appeal. See, e.g., Idris v. Marion Cnty. Assessor, 12 N.E.3d 331, 333 n.7 (Ind. Tax Ct. 2014)
(declining to consider newly presented exhibits that were not admitted into evidence during the
administrative proceedings).
                                                 8
Michigan PRE are not equivalent. 6 (See, e.g., Pet’rs’ Br. at 27-28; Pet’rs’ Reply Br. at 4-

18.)

       In response, the Assessor does not attempt to refute the Shapiros’ claim that the

Indiana Board misconstrued the term “equivalent” used in Subsection F. (See Resp’t

Br. at 5-14.) Instead, the Assessor argues that the Shapiros did not meet their burden

to show that Indiana’s homestead deduction and the Michigan PRE are not equivalent,

stating that “[t]he Indiana Board’s application of the law in this case was reasonable and

should be affirmed.”7 (See Resp’t Br. at 9-14.)

       The parties agree that Subsection F, which uses the word “equivalent” as the

standard for comparison in 2018 through 2020, controls the resolution of this case. The

outcome for those tax years therefore depends on the meaning of the word “equivalent”

as it is used in Subsection F. (Compare, e.g., Pet’rs’ Br. at 27-33 with Resp’t Br. at 12-

14.)

       For the January 1, 2017 assessment date, however, Subsection F did not include

the word “equivalent” as the standard for eligibility. The amendment to Subsection F

enacted by Public Law 255-2017 § 13 was effective on July 1, 2017; therefore, the

“equivalent” standard applies only to the 2018 through the 2020 assessment dates, not

6
  The Shapiros also claimed that they were entitled to the homestead deduction between 2017
and 2020 because Indiana’s homestead deduction and Michigan’s homestead property tax
credit were not equivalent. (See Pet’rs’ Br. at 11-15, 33-34.) The Court does not consider this
claim because Michigan’s homestead property tax credit had no bearing on the Indiana Board’s
final determination. (See Cert. Admin. R. at 102-06.) See also supra note 3 (providing that
during the administrative proceedings, the parties agreed that the Michigan homestead property
tax credit was not relevant to the resolution of this case).
7
  As is the case with the Shapiros’ brief, the Court will not consider the portions of the
Assessor’s brief that refer to evidence that is not included in the certified administrative record.
(Compare Resp’t Br. at 7, 12 with Cert. Admin. R. at 1-123.)
                                                  9
the January 1, 2017 assessment date. See Pub. L. No. 255-2017, § 13; see also Izaak

Walton League of Am. v. Lake Cnty. Prop. Tax Assessment Bd. of Appeals, 881 N.E.2d

737, 741 (Ind. Tax Ct. 2008) (providing that “[s]tatutes and statutory amendments are to

be given prospective effect only, unless the legislature has unambiguously and

unequivocally intended retroactive effect as well”) (citation omitted). Consequently, the

determination for 2017 will consider the plain language of the homestead deduction

statute as it stood on the January 1, 2017, assessment date, without regard to the

language of the subsequent amendments to Subsection F.

                             The 2017 homestead deduction

       For the 2017 assessment date, Subsection F states, among other things, the

general rules that an individual is not eligible for multiple homestead deductions and

cannot receive a separate homestead deduction if the individual’s principal place of

residence is with another who already receives one. I.C. § 6-1.1-12-37(f)(2).

Subsection N provides a narrow exception to Subsection F, allowing a homestead

deduction on an individual’s Indiana principal residence when the individual’s spouse

has a substantially similar deduction on an out-of-state principal residence, providing

certain conditions are met. See I.C. § 6-1.1-12-37(n). Specifically, an individual must

file an affidavit with the county auditor that attests, among other things, “[t]hat neither

the individual nor the individual’s spouse has an ownership interest in the other’s

principal place of residence.” I.C. § 6-1.1-12-37(n)(2)(B). The certified administrative

record reveals that the Shapiros did not file an affidavit for any of the years at issue, nor

could they have done so because Mrs. Shapiro had an ownership interest in both the

Indiana Property and the Michigan Property in 2017. (See Cert. Admin. R. at 41, 43,

                                              10
92-94, 110.) Accordingly, the Shapiros were ineligible for the homestead deduction

during the 2017 tax year.

                    The 2018 through 2020 homestead deductions

       The Court agrees with the parties that the meaning of the word “equivalent,” as

used in Subsection F in 2018 through 2020, controls the resolution of the appeal for

those years. (Compare, e.g., Pet’rs’ Br. at 27-33 with Resp’t Br. at 12-14.) The

Shapiros claim it means “virtually identical,” while the Assessor maintains that it means

“substantially similar.” (Compare, e.g., Pet’rs’ Br. at 27-33 with Resp’t Br. at 12-14.)

The Court first will construe the meaning of the word “equivalent” as used in Subsection

F and then compare whether the Michigan PRE and Indiana’s homestead deduction are

“equivalent.”

                       Meaning of “Equivalent” in Subsection F

       Interpreting the meaning of a statute is a pure question of law that the Court

reviews de novo without deferring to the Indiana Board’s legal conclusions. See

Ingredion, Inc. v. Marion Cnty. Assessor, 184 N.E.3d at 739, 741-42 (Ind. Tax Ct. 2022),

review denied; Marion Cnty. Assessor v. Kohl’s Indiana, LP, 179 N.E.3d 1, 7 (Ind. Tax

Ct. 2021), review denied. The Court’s primary function when confronted with a question

of statutory construction, as here, is therefore to determine and implement the intent of

the Legislature, which is best ascertained from the actual language of the statute itself.

Johnson Cnty. Farm Bureau Coop. Ass’n v. Indiana Dep’t of State Revenue, 568 N.E.2d

578, 580-81 (Ind. Tax Ct. 1991), aff’d, 585 N.E.2d 1336 (Ind. 1992).

       The General Assembly instructs that a statute’s “[w]ords and phrases be taken in

their plain, or ordinary and usual, sense[,]” unless the construction is contrary to the

                                             11
intent of the Legislature or the context of the statute. IND. CODE § 1-1-4-1 (2017).

Accordingly, the Court will determine the plain, ordinary, and usual meaning of the

undefined statutory term “equivalent” by consulting English language dictionaries. See,

e.g., Moriarity v. Indiana Dep’t of Nat. Res., 113 N.E.3d 614, 621 (Ind. 2019); Buckeye

Hosp. Dupont, LLC v. O’Day, 144 N.E.3d 850, 856 (Ind. Tax Ct. 2020).

        Webster’s Dictionary defines “equivalent” as “equal in force or amount[,]” “like in

signification or import[,]” and “corresponding or virtually identical esp[ecially] in effect or

function[.]” WEBSTER’S THIRD NEW INT’L DICTIONARY 769 (2002 ed.). In Black’s Law

Dictionary the word “equivalent” is defined as: “1. Equal in value, force, amount, effect,

or significance. 2. Corresponding in effect or function; nearly equal; virtually identical.”

BLACK’S LAW DICTIONARY 682 (11th ed. 2019). Importantly, neither authority defines the

word “equivalent” to mean “identical.”

        The same dictionaries do not define the phrase “substantially similar,” but do

define each word individually. Webster’s Dictionary defines the word “substantial” as

“considerable in amount, value, or worth” and the word “substantially” as “in a

substantial manner” or “so as to be substantial[.]” WEBSTER’S THIRD NEW INT’L

DICTIONARY 2280. See also BLACK’S LAW DICTIONARY at 1728 (defining “substantial” as

“[c]onsiderable in extent, amount, or value; large in volume or number”). The word

“similar” is defined as two or more items that “hav[e] characteristics in common[, are]

“very much alike[,]” or are “comparable[.]” WEBSTER’S THIRD NEW INT’L DICTIONARY at

2120.

        These dictionary definitions of the word “equivalent” and the phrase “substantially

similar” suggest a kinship between them because both are used as standards for

                                              12
comparison. But just as clearly, the definitions are distinct and do not overlap,

indicating that they do not have the same or identical meaning. The Legislature chose

the word “equivalent” as the standard for comparison in Subsection F, and it chose a

different term, “substantially similar,” as the standard for comparison in Subsection N. It

could have used the same word or term in each subsection to indicate the same level of

relationship was required in both, but it did not. The Legislature’s use of two distinct

terms in different sections of the same statute directs the Court to conclude that the

Legislature did not intend them to have the same meaning. See, e.g., Hutcherson v.

Ward, 2 N.E.3d 138, 142 (Ind. Tax Ct. 2013) (providing that the Court may not expand

or contract the meaning of a statute by either reading into it language to correct

supposed omissions or defects or substituting language that it feels the Legislature may

have intended). Consequently, the word “equivalent” as used in Subsection F means

“virtually identical,” not “identical” or “substantially similar.”

      Are the Michigan PRE and Indiana’s Homestead Deduction “Equivalent”

       The Shapiros contend that the Michigan PRE and Indiana’s homestead

deduction are not “equivalent.” They explain that unlike Indiana’s homestead deduction,

the Michigan PRE: (1) is an exemption; (2) has “the limited purpose of exempting a

principal residence ‘from [just] the [very specific school] tax levied by a local school

district[,]’” and (3) “does not affect the amount of state property taxes paid[,] the

assessed value of property[,]” or the equalization process for real property in Michigan.

(See Pet’rs’ Br. at 5-6, 15-17 (emphasis omitted), 34-36; Pet’rs’ Reply Br. at 6, 14-16.)

They also allege that a finding that the homestead deduction and the Michigan PRE are

not virtually identical would further sound public policy because “allowing Hoosiers to

                                                13
claim the homestead deduction on [their] Indiana property[,] unless they are claiming

the identical deduction” on an out-of-state property, encourages home ownership within

the State, fills the State’s coffers with revenue from property, income, and sales taxes,

and levels the playing field for married and non-married persons. (See, e.g., Pet’rs’

Reply Br. at 6-7, 16-18.)

       Upon examination, however, the Shapiros’ arguments demonstrate merely that

the Michigan PRE and Indiana’s homestead deduction are not identical, failing to

provide a factual basis that shows they are not equivalent, i.e., not virtually identical.

Indeed, each of the comparisons urged by the Shapiros reveals the Michigan PRE and

Indiana’s homestead deduction are virtually identical in both effect and function.

       First, the Shapiros argue that an exemption is different than a deduction, and

therefore, Indiana’s homestead deduction and the Michigan PRE are not equivalent.

While it is true that an exemption and a deduction are not identical, the plain language

of each statute demonstrates that each functions in a virtually identical manner by

granting property tax relief to the owner’s principal place of residence within each state.

See I.C. § 6-1.1-12-37(a)-(c); MCL § 211.7cc(1), (4) (2018) (amended 2018). Compare

also, e.g., Schiffler v. Marion Cnty. Assessor, 184 N.E.3d 726, 728 (Ind. Tax Ct. 2022)

(indicating that the homestead deduction typically removes the first $45,000 of a primary

residence’s assessed value from property taxation), review denied; Kellam v. Fountain

Cnty. Assessor, 999 N.E.2d 120, 122 (Ind. Tax Ct. 2013) (defining “principal place of

residence”), review denied; 50 IND. ADMIN. CODE 24-2-5 (2018) (defining “principal place

of residence”) with MCL § 380.1211(1) (2018) (indicating that the Michigan PRE

                                             14
reduces the tax liability on a home by lowering the mills8); MCL § 211.7dd(c) (2018)

(defining “principal residence” for the Michigan PRE).

       Second, the Shapiros claim that the Michigan PRE is not equivalent to Indiana’s

homestead deduction because it is limited to removing liability for very specific school

taxes levied by local school districts. Indiana’s homestead deduction is broad in scope

because it impacts the revenues of all of the taxing units within a county, i.e., the

entities that have the power to impose ad valorem property taxes. See REAL PROPERTY

ASSESSMENT GUIDELINES FOR 2011 (“Guidelines”) (incorporated by reference at 50 IND.

ADMIN. CODE 2.4-1-2 (2018) (amended 2020)), Glossary at 22 (defining “taxing district”).

In contrast, the Michigan PRE is more limited in scope because it affects the revenues

of just one type of taxing unit, the local school districts in each taxing jurisdiction. See

MCL § 211.7cc(1), (4); MCL § 380.1211(1). This distinction shows that the two are not

identical, but does not demonstrate that they are not equivalent because they both

affect local school funding. See Gary Cmty. Sch. Corp. v. Indiana Dep’t of Loc. Gov’t

Fin., 15 N.E.3d 1141 (Ind. Tax Ct. 2014); S. Bend. Cmty. Sch. Corp. v. Lucas, 881

N.E.2d 30, 36 (Ind. Ct. App. 2008) (Riley, dissenting), trans. denied (both indicating that

varying aspects of Indiana’s public schools are funded through property taxes).

       Third, the Shapiros argue that the Michigan PRE is not equivalent to Indiana’s

homestead deduction because the Michigan PRE “does not affect the amount of state

property taxes paid[,] the assessed value of property[,]” or the equalization process for

8 A “mill rate” or “millage rate” is “[a] tax applied to real property whereby each mill represents $1

of tax assessment per $1,000 of the property’s assessed value <the mill rate for taxes in this
county is 10 mills, so for a home valued at $100,000, the owner will pay $1,000 in property taxes>.”
BLACK’S LAW DICTIONARY 1190 (11th ed. 2019). (See also Cert. Admin. R. at 52-53 (regarding
mills and millage rates in Michigan).)
                                                 15
real property in Michigan. (See Pet’rs’ Br. at 5-6, 15 (emphasis omitted).) These

claims, however, are red herrings. Indiana’s property tax is not a state property tax that

is centrally assessed and collected, but is a locally assessed and collected tax like

Michigan’s PRE. See Guidelines, Glossary at 3 (providing that Indiana’s county and

township “assessors” are the administrators charged with assessing property for ad

valorem taxes); MCL § 211.10(1) (2018) (requiring Michigan’s local assessing officials

to determine the assessed value of all taxable real property). Furthermore, Indiana’s

homestead deduction does not change a property’s assessed value, but like the

Michigan PRE, as discussed above, it does ultimately lower property tax liability related

to a certain amount of assessed value. Moreover, neither the homestead deduction nor

the Michigan PRE affects either states’ equalization process9 because the equalization

process generally occurs before property tax bills are calculated and issued to property

owners. See e.g., IND. CODE §§ 6-1.1-14-4 to -12 (2024) and MCL §§ 211.34 to -34e

(2024) (regarding each state’s property tax equalization process).

       The Shapiros finally urge the Court to find Indiana’s homestead deduction and

the Michigan PRE are not equivalent to further the public policy of encouraging home

ownership in Indiana, increasing tax revenue, and leveling the playing field for married

and non-married persons. The Shapiros not only fail to cite any authority that relates

9
 “Equalization of assessments is the process of ensuring all property is, on the average,
accurately and uniformly assessed. The equalization process can be accomplished in two
ways[:] through the application of factors to correct the accuracy and through reassessment to
correct non-uniformity.” 2011 REAL PROPERTY ASSESSMENT MANUAL (incorporated by reference
at 50 IND. ADMIN. CODE 2.4-1-2 (2018) (amended 2020)) at 15. See also Piotrowski BK #5643,
LLC v. Shelby Cnty. Assessor, 177 N.E.3d 127, 134 (Ind. Tax Ct. 2021) and Allied
Supermarkets, Inc. v. City of Detroit, 216 N.W.2d 755, 758 (Mich. 1974) (indicating that each
state’s equalization process is designed to enhance the goal of uniformity and equality in
property assessments).
                                              16
this public policy to Indiana’s homestead deduction, but also disregard Subsection N

that levels the playing field for married and unmarried individuals upon complying with

its terms.

       Comparing those aspects of the Michigan PRE and Indiana’s homestead

deduction urged by the Shapiros is not the sole basis for finding they are equivalent.

Other fundamental characteristics of each also support this conclusion. For example,

how one obtains, retains, or becomes ineligible for either the Michigan PRE or Indiana’s

homestead deduction 10 indicates that they are virtually identical because all of these

actions function to lower property taxes of owners with a principal place of residence in

each respective state and have the effect of limiting the benefit solely to that population.

       From 2018 to 2020, Mrs. Shapiro had a Michigan PRE on her Michigan principal

residence, but she also had a homestead deduction on her home in Indiana as her

principal residence. Subsection F prohibits a homestead deduction in this circumstance

10
    To obtain the Michigan PRE, a person must file an affidavit with the local tax collecting unit
on a form prescribed by the Michigan Department of Treasury, which attests “that the property is
owned and occupied as a principal residence by that owner of the property on the date that the
affidavit is signed” and “that the owner has not claimed a substantially similar exemption,
deduction, or credit on property in another state.” See MCL § 211.7cc(2) (2018); Campbell v.
Dep’t of Treasury, 984 N.W.2d 13, 16-18 (Mich. 2022). The Michigan PRE remains on the
property for succeeding years as long as the person that claimed the Michigan PRE remains
eligible for the exemption. See MCL § 211.7cc(2). A person may become ineligible for the
Michigan PRE if the person or the person’s spouse owns a home in another state for which they
claim an exemption, deduction, or credit that is substantially similar to the Michigan PRE. See
MCL § 211.7cc(3)(a)-(b); see also, e.g., Campbell, 984 N.W.2d at 16-18.
          To obtain Indiana’s homestead deduction, a property owner must file a certified
statement with a county auditor on a form prescribed by the Department of Local Government
Finance, which applies to “any succeeding year for which the deduction is allowed.” See I.C. §
6-1.1-12-37(e). The property owner must file another certified statement with the county auditor
in the event that all or a part of the property becomes ineligible for the homestead deduction due
to (1) a change in the use of the property, (2) the person already receiving a homestead
deduction in the person’s name as an individual or spouse, or (3) the person already receiving a
deduction under the law of another state that is equivalent to the homestead deduction. I.C. §
6-1.1-12-36(f).
                                               17
if the Michigan PRE and Indiana’s homestead deduction are equivalent. Having

compared the provisions of Indiana’s homestead deduction to the Michigan PRE and

their respective function and effect, the Court finds that although they are not identical,

they are virtually identical or equivalent. Accordingly, the Shapiros were ineligible for

Indiana’s homestead deduction on their Indiana Property during the 2018 through 2020

tax years.

                                      CONCLUSION

       For the foregoing reasons, the Indiana Board’s conclusion that the terms

“equivalent” in Subsection F and “substantially similar” in Subsection N are

interchangeable is contrary to law. That said, the removal of the homestead deduction

from the Shapiros’ Indiana Property between 2017 and 2020 is not arbitrary and

capricious or contrary to law despite the Indiana Board’s misinterpretation of

Subsections F and N of Indiana Code § 6-1.1-12-37. Consequently, the Indiana

Board’s final determination is REVERSED in part and AFFIRMED in part.

                                             18