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Penn Racquet Sports, Inc. v. Maricopa County

Court of Appeals of Arizona, First Division

December 10, 2013

PENN RACQUET SPORTS, INC., an Ohio corporation, Plaintiff/Appellant,
v.
MARICOPA COUNTY, a political subdivision of the State of Arizona; ARIZONA DEPARTMENT OF REVENUE, an Agency of the State of Arizona, Defendants/Appellees.

Not for Publication – Rule 111(c), Rules of the Arizona Supreme Court

Appeal from the Arizona Tax Court No. TX2011-000208 The Honorable Dean M. Fink, Judge

Daniel T. Garrett L.L.C., Mesa, Daniel T. Garrett Counsel for Plaintiff/Appellant

Maricopa County Attorney's Office, Kathleen A. Patterson, Peter Muthig Co-Counsel for Defendant/Appellee Maricopa County

Arizona Attorney General's Office, Phoenix By Jerry A. Fries, Kenneth J. Love Co-Counsel for Defendant/Appellee Arizona Department of Revenue

Presiding Judge Lawrence F. Winthrop delivered the decision of the Court, in which Judge Jon W. Thompson and Judge Diane M. Johnsen joined.

MEMORANDUM DECISION

WINTHROP, Presiding Judge

¶1 This is a personal property tax case. Penn Racquet Sports, Inc. ("Taxpayer") appeals from a summary judgment denying relief under the error correction statute for valuation of its plant property. Finding no legal error or genuine dispute of material fact, we affirm the judgment.

BACKGROUND

¶2 Taxpayer, an Ohio corporation, manufactures tennis and racquet balls in Phoenix. Taxpayer acquired manufacturing property (the "Property") subject to tax under class one of Arizona's personal property tax statutes. Tax years 2007 through 2009 are at issue in this appeal. See Ariz. Rev. Stat. ("A.R.S.") §§ 42-13352(C), 42-12001(10) (West 2013).[1]

¶3 The method for valuing class one property is set by A.R.S. § 42-13352(C), which directs county assessors to use "the result of acquisition costs less any appropriate depreciation as prescribed by the department [of revenue]. The taxable value shall not exceed market value."

¶4 To determine the Property's taxable value, the Maricopa County Assessor used the Arizona Department of Revenue's Personal Property Manual. In the Department's manual, the acquisition cost of manufacturing personal property is trended-up to reflect current replacement cost, and that value is depreciated using the percentages listed in the corresponding valuation tables. The Assessor computed the Property's taxable values as $6, 621, 497 in 2007, $6, 684, 369 in 2008, and $5, 435, 308 in 2009.

¶5 After receiving the Department's assessment notice, Taxpayer filed a notice of claim asserting a valuation or classification error and requesting additional obsolescence pursuant to A.R.S. § 42-16254(A)(1). Taxpayer subsequently obtained partial relief from the State Board of Equalization (the "Board"). The Board reduced the valuations for the 2007 and 2008 tax years to $6, 544, 720 and $6, 151, 535, respectively, and declined to reduce the valuation for the 2009 tax year. Taxpayer did not appeal these determinations.

¶6 Taxpayer then filed a second notice of claim for all three tax years, which the Assessor contested. After the Board dismissed the claim, Taxpayer filed an error correction complaint in ...


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