Saturday, March 31, 2012

Professor of Economics at Purdue Explains Agricultural Land Values in the Northwest Indiana Times

The assessed values of farmland for property taxes have been rising. Mostly this is because of increases in the "base rate" per acre of farmland. But now, another element of the assessment calculation, the "soil productivity factors," might rise as well.

The assessed value of farmland starts with the base rate, a dollar value per acre for the whole state. The base rate will be $1,630 for taxes in 2013. That's up from $1,500 for 2012 taxes, and up from $880 for 2007 taxes. The base rate is rising because of high corn and soybean prices, and low interest rates.

The base rate is the same for all Indiana farmland. But some acreage is more valuable; some is less valuable. According to the 2011 Purdue Farmland Value Survey, in June 2011, the highest valued land in Indiana was in the west central region, with an average value for top land of $7,443 per acre. The lowest valued land in Indiana was in the southeast region, with poor land averaging $2,895 per acre.

The soil productivity factors introduce variation into farmland assessments. The factors measure productivity based on corn yields by soil type. Each acre of farmland in Indiana has been assigned a soil type, and the soil types have been assigned productivity factors. According to the Department of Local Government Finance 2011 assessment guidelines, these factors are based on properties of the soil, such as moisture-holding capacity, organic matter content and other properties that affect corn yields.

For years, the soil factors have varied from 0.5 to 1.28. For 2013 taxes, the base rate times the soil factor would vary from $815 per acre (0.5 x $1,630) to $2,086 per acre (1.28 x $1,630).

Indiana is undertaking a statewide reassessment for taxes in 2013. As part of this effort, the DLGF requested new soil productivity factors from the U.S. Department of Agriculture's Natural Resources Conservation Service. The range for the new factors is 0.5 to 1.66, so for 2013, taxes for the top soil would be valued at $2,706 per acre (1.66 x $1,630).

Average soil factors for 69 counties can be calculated with data provided by the Indiana Legislative Services Agency. Statewide, the average old soil factor is 0.96, while the average new soil factor is 1.20. That's an increase of about 25 percent. The LSA has estimated that the introduction of the new soil factors in pay-2013 would increase farmland property taxes by 18.5 percent in addition to the increase from the rise in the base rate.

In March, the Indiana General Assembly passed Senate Bill 19. Section 9 of this bill postpones the use of the new soil factors from taxes in 2013 to taxes in 2014. The governor signed the bill, so it's now Public Law 112. The effect of the new soil factors likely will be studied by one of the legislature's committees before the numbers are used.

What will be studied? One topic will be the increase in the average soil factors. If the base rate is meant to be the average assessed value of an acre of Indiana farmland, then the soil factors must average about one. The old factors appear to average a little less than one, so a small increase could be justified. The new factors average more than one, so the average assessed value of an acre would be greater than the base rate.

Corn yields per acre have increased over the years. The higher soil factors may reflect this rise. But rising yields also increase the base rate, so the rise in soil factors may double-count the yield increase.

If agriculture pays more of the tax levy, other taxpayers pay less. Higher total-assessed values mean that any amount of tax revenue can be raised with lower property tax rates. Farmland is a small share of assessed value statewide, so the impact on other taxpayers is small. The LSA estimates that average homeowner tax bills would fall 1.2 percent with the new soil factors. The effect on nonagricultural tax bills in rural areas would be bigger, because farmland is a bigger part of total assessed value in rural areas.

Issues of farmland assessment matter to agriculture. They matter to other property taxpayers, too.

Read more:

Two Appeals Scheduled for Hearing in April in the Tax Court

Orange County Assessor v. James E. Stout
Start Date: 4/13/2012 Start Time: 1:30 PM
End Date: 4/13/2012 End Time: 2:30 PM
Entry Description

In this appeal the Assessor challenges the IBTR's final determination lowering the assessed value of land to that of the prior year's agricultural land and the IBTR's construction of the applicability of Indiana Code 6-1.1-15-17 to this case.

State House, Room 413
Indianapolis, IN 46204

Howard County Assessor v. Kokomo Mall, LLC
Start Date: 4/19/2012 Start Time: 3:30 PM
End Date: 4/19/2012 End Time: 4:30 PM
Entry Description

Oral Argument. The Howard County Assessor challenges the IBTR's final determination that taxpayer's assessed value for the parcels constituting the Kokomo Mall were over-stated based on an appraisal.

Indiana University Maurer School of Law
Moot Courtroom - Room 123
211 S. Indiana Avenue
Bloomington, IN 47405

Appeals Filed with the Indiana Tax Court in March

Appeals to the Tax Court in March:

03/30/12 Sony DADC US, Inc. v. Indiana Dept. of State Revenue N/A 49T10-1203-TA-18
03/30/12 Fifth Third Bancorp and Subsidiaries v. Indiana Dept. of State Revenue N/A 49T10-1203-TA-16
03/30/12 Sony DADC US, Inc. v. Indiana Dept. of State Revenue N/A 49T10-1203-TA-17
03/15/12 Cook Incorporated (formerly Vance Products Inc. d/b/a Cook Urological Inc.) v. Ind. Dept. of State Revenue N/A 49T10-1203-TA-15
03/15/12 R.R. Donnelley & Sons Co. v. Indiana Dept. of State Revenue N/A 49T10-1203-TA-14
03/14/12 Brightpoint, Inc. and Subsidiaries v. Ind. Dept. of State Revenue N/A 49T10-1203-TA-13
03/08/12 Brightpoint, Inc. v. Indiana Dept. of State Revenue N/A 49T10-1203-TA-12

Farmers to See Higher Property Tax Bills in Allen County Due to the Increased Agricultural Land Value

From the Fort Wayne Journal Gazette:

Rising yields and crop prices mean more revenue for farmers, but they also mean higher taxes.

Farmers across Allen County will generally see a 16 percent jump in their property taxes this year thanks to changes in their property’s taxable value, which is driven by the land’s productivity.

While most homeowners should expect to see only marginal increases or decreases in their 2012 property tax bills, owners of farms can expect fairly large jumps.

“That puts a hurt on the farmers,” said Roger Hadley, president of the Allen County Farm Bureau. “Our other production costs are going way up, too.”

The reason for the increase in property tax bills is a steady climb in the taxable value of farmland, which is calculated by a state formula.

That formula considers land productivity, crop prices and farm expenses, according to Katrina Hall, tax and local government specialist with the Indiana Farm Bureau.

That base value has grown from $880 an acre for 2007 taxes to $1,290 last year and $1,500 an acre this year. The 16 percent jump in base land value this year means a 16 percent increase for property tax bills in much of Allen County because tax rates remained fairly flat. The land value has increased statewide, but its effect on tax bills will vary by area depending on changes in local tax rates.

“You come up with a value that has been increasing because commodity prices over the last two to three years have really escalated,” Hall said.

The final value of a farmer’s land includes the base value and other multipliers, such as soil type and whether the land is hilly or wooded.

Harold Kleine, who grows corn, beans and wheat in southern Allen County, said while revenues have increased for farmers, they haven’t kept up with the rising cost of equipment or fuel.

“The bad part is our cost always goes up,” said Kleine, who had to abandon raising cattle because it was costing him money.

One of Kleine’s farm parcels rose in taxable value from $35,100 to $49,100 this year, upping his tax bill by $225.

Hadley, who farms corn, soybeans and wheat in the Woodburn area, said he is concerned the value of farmland is rising higher that what it can produce in income. He said the value seems to instead be based on its potential sales price.

Hadley said farmland is now being bought as a real estate rather than an agricultural investment. “It’s getting to the point it’s burdensome,” he said of the taxes.

Hall said the state formula tries to account for the revenue generated by farmers and their expenses, but she acknowledged the data lag reality. This is a concern if farm incomes were to dip one year and farmers would be faced with higher taxes than their land could support.

Farmers should expect another increase next year when the base price per acre will rise to $1,630. Hall said it could have been even worse for farmers next year had the state changed its soil multiplier formula – increasing the possible taxable value for farmland.

The proposed multiplier change would have increased farm tax bills by 18.5 percent on top of the increase from the change in base rate. Hall said this would have meant an additional $57 million paid by farmers in property taxes next year.

Fortunately, Hall said, that change was delayed for a year for further study. She said she is still trying to determine the rationale behind it and whether it is appropriate.

Allen County Homeowners Will See Modest Changes in Property Tax Bills

From the Fort Wayne Journal Gazette:

Allen County homeowners should expect moderate changes on their tax bills in 2012, with a few areas such as Huntertown and Monroeville seeing spikes and drops of more than 5 percent.

Allen County Auditor Tera Klutz recently calculated tax bills. They show some homeowners’ bills dropping by up to 7 percent and some spiking by nearly 6 percent.

Most people, including those in Fort Wayne, will see only modest changes in their bills, however. Residents in Fort Wayne will generally see about a 2 percent increase in their property tax bills this year unless their taxes have already hit the state-imposed caps.

The state constitution prevents homeowners from paying more than 1 percent of their home’s value in property taxes. Voters approved the provision in 2010.

This means a $100,000 home has a maximum tax of $1,000. The cap is 2 percent for rental property and farmland and 3 percent for businesses.

Taxes went up in Fort Wayne partly because the taxable value of property fell by nearly 1 percent in the city. If the amount of money being collected remains the same – Fort Wayne government held its property tax revenues flat – but there is less property value to tax, the tax rate must be increased.

The auditor’s comparisons assume a property has retained its tax value.

The largest increase for city residents is for those living in Aboite Township, where homeowners can expect to see jumps of about 4 percent because of an increased levy from Southwest Allen County Schools, according to the auditor.

Residents in Monroeville can expect to pay 5.6 percent more in taxes this year – the highest increase in the county – because of two factors.

The value of CME Corp. dropped significantly, reducing the tax base and forcing other residents taxes’ up to compensate. In addition, the town increased its taxes by 7 percent.

This increase means an owner of a $100,000 home will now pay $927.45, which remains slightly less than the taxes paid in New Haven or Fort Wayne.

In contrast, residents in Huntertown and Perry Township can expect to see a nearly 7 percent dip in their property tax bills. The town and township both reduced their property taxes for 2012 at the same time the area saw a growth in its tax base.

Northwest Allen County Schools, the largest taxing unit in the area, kept its taxes relatively flat.

The state also changed its formula for distributing local property tax relief, which provided more money to residents in this area than had been received in the past. An owner of a $100,000 home in Huntertown will pay $811.83 this year.

Klutz said most business owners and rental complex owners should expect similar tax bills as seen in 2011 because of relatively flat tax rates across the county.

Property Tax Caps Create Winners and Losers in Allen County

From the Fort Wayne Journal Gazette:

State property tax caps will save Allen County property owners about the same amount of money this year as they did in 2011, but some individual governments will see large swings in the revenue lost to the caps.

These swings, which will cost Fort Wayne nearly $500,000 more in revenue this year, are partly due to a change in the state’s interpretation of how local property tax credits are distributed.

Taxpayers across the county will save $35.3 million this year thanks to the caps, meaning money that would have been historically collected by local governments is written off. This is less than a 1 percent increase from 2011.

State law caps the amount of property taxes a person can pay based on the property’s value. That cap is 1 percent for homeowners, 2 percent for rental homes and farmland and 3 percent for businesses.

Fort Wayne city government will lose nearly $14 million to the caps this year, up $467,656 from 2011 and up $900,000 from the city’s budget projections.

Controller Pat Roller said the caps are something all governments must deal with. She said the city must balance its revenue and expenses, and that is one of the reasons the mayor convened a panel of experts to help create a long-term fiscal policy.

“In the next five months, the city will be working with the City Council to discuss a variety of options through the fiscal policy group,” she said.

But with Allen County taxpayers’ overall savings unchanged from 2011, the city’s loss means someone else is gaining. The largest winner in 2012 is Northwest Allen County Schools, which will see its revenue losses from the tax caps fall by $556,998 this year.

There are several reasons for the drop for the district, which is collecting nearly the same amount of property taxes in 2012 as it did last year – $21.5 million.

Bill Mallers, district business manager, said there was a 5.2 percent increase in total property value in the district this year. In addition, other governments in the area, such as Perry Township and Huntertown, slightly reduced their property tax revenue, leaving more for the district to collect.

Allen County Auditor Tera Klutz said one of the main reasons for the school district’s gain was a change in how the state distributes local property tax relief.

A portion of the income taxes that county workers pay helps provide property tax relief. The money was historically distributed to governments based on a formula that excluded debt payments, essentially meaning areas with low property tax debt got more property tax relief.

Klutz said the state this year determined those local credits should be distributed uniformly across the county – a determination she believes is accurate and based on recent state law.

The change means areas with higher levels of debt, such as Northwest Allen, received a larger portion of the relief than they had previously. The district will receive nearly $450,000 more from the credit this year than it did last year, according to the calculations from the auditor’s office.

Klutz said because the majority of the homes in the school district had reached the 1 percent cap, the change in the local relief calculation won’t really affect homeowners’ bills. Instead, it will simply mean more money is going to their respective governments and schools and less is lost to the tax caps.

Friday, March 30, 2012

Revenue Finds Coatings Firm Liable for Use Taxes on Utilities, Packaging Supplies and Labeling Materials

Taxpayer applies liquid coatings to customer-owned steel and aluminum coils. This continuous process starts after the coil is unwound, cleaned, pretreated, coated, cured, and re-wound. Thereafter, coated coils are banded, covered, and placed on pallets for shipment back to its customers.

Pursuant to [an] audit, the Department determined that Taxpayer did not pay sales tax on certain purchases of tangible personal property, including, but not limited to, natural gas, water, packaging supplies, and labeling materials.

Taxpayer explained that it purchased natural gas and water from a supplier ("Vendor") – a company which previously owned the facility where Taxpayer operates. …  Taxpayer asserted that Vendor was a party in [a] case, in which the Indiana Utility Regulatory Commission determined that Vendor is a public utility pursuant to IC § 8-1-2-87.5.

Taxpayer's reliance is misplaced. Whether Vendor is a person engaged in transportation of gas and subject to Title 8 of the Indiana Code, Utilities and Transportation, is beyond the scope of this tax protest. Specifically, 45 IAC 2.2-4-11(d) and Information Bulletin 55 explain, in relevant part, that "public utilities" means any organization which is engaged in the furnishing or selling of natural gas or water, and "having the right of eminent domain or subject to government regulation in connection with the furnishing of public utility services."

Additionally, IC § 6-2.5-4-5(c)(3) is only applicable when a purchaser uses the utilities "in manufacturing, mining, production, refining, oil extraction, mineral extraction, irrigation, agriculture, or horticulture." Specifically, Information Bulletin 55 explains that "[t]o qualify for the exemption, the listed utility must be consumed as an essential and integral part of an integrated process which produces tangible personal property" and "[t]his exclusion does not apply to utilities used in processing another's product." Taxpayer, an industrial processor, applies coating materials to the customer-owned coils. Thus, the Department must respectfully decline Taxpayer's invitation to apply IC § 6-2.5-4-5(c)(3).

The Department's audit [also] assessed Taxpayer additional use tax on the purchases of packaging supplies for which Taxpayer did not pay sales tax at the time of its purchases.

IC § 6-2.5-5-9(d) states:  Sales of wrapping material and empty containers are exempt from the state gross retail tax if the person acquiring the material or containers acquires them for use as nonreturnable packages for selling the contents that he adds.

45 IAC 2.2-5-16[(d)(1)] explains:  To qualify for this exemption, nonreturnable wrapping materials and empty containers must be used by the purchaser in the following way:   (A) The purchaser must add contents to the containers purchased; and  (B) The purchaser must sell the contents added.

In this instance, Taxpayer acquired the steel and aluminum coils owned by its customers; Taxpayer provided industrial processing or servicing, including applying coatings on its customers' steel and aluminum coils; and Taxpayer transferred the steel and aluminum coils back to its customers to be sold by its customers. Thus, Taxpayer is an industrial processor pursuant to 45 IAC 2.2-5-10(a) and IC § 6-2.5-4-2(c). The statute specifically excludes an industrial processor from being considered as a retail merchant making a retail transaction when the three statutory requirements are met. Thus, the Department is not able to agree that "Taxpayer sells coatings which it applies to steel and aluminum coils on behalf of its customers."

In short, Taxpayer's purchases of packaging supplies were taxable. Since Taxpayer did not pay sales tax at the time of its purchases, use tax is properly imposed.

The Department's audit assessed use tax on Taxpayer's purchases of labeling materials, including items used for bar coding, paper for invoicing and packing slip information, and adhesive plastic folders used to hold the items mentioned.

45 IAC 2.2-5-10[(j)], in relevant part, states:  Machinery, tools, and equipment used in managerial sales, research and development or other nonoperational activities are not directly used in processing or refining and, therefore, are subject to tax. This category includes, but is not limited to machinery, tools, and equipment used in any of the following activities: management and administration; selling and marketing; exhibition of manufactured or processed products; safety or fire prevention, equipment which is not essential and integral to the production process; space heating; ventilation and cooling for general temperature control; illumination; heating equipment for general temperature control; and shipping and loading.

While the labeling materials may be considered essential to the conduct of Taxpayer's business because their use is required by practical necessity, but they do not have an immediate effect upon the tangible personal property being processed. The labeling materials thus were used for managerial purpose, i.e., inventory control, and/or other nonoperative activities, i.e., shipping. Therefore, the Department is not able to agree that Taxpayer is entitled to an exemption on its purchases of the labeling materials.

Since Taxpayer did not pay sales tax at the time of its purchases, use tax is properly imposed.

Lafayette Development by Faith Church Raises Question of Property Tax Exemption

From the Lafayette Journal Courier:

"Some West Lafayette City Council members showed reservations Thursday about Faith Church's planned development on Northwestern Avenue north of Lindberg Road.

Eddie VanBogaert pressed Faith Church Pastor Steve Viars on what portion of the planned development will be exempt from property taxes and what portion would pay property taxes.

"At this point, we can't answer the question because the assessor can't answer it for us," Viars responded. "We will fulfill an application with the assessor. But even if we fulfilled the application today, they would not be able to answer the question for us."

Viars said the Faith West development is following the planned development process and will comply with requirements regarding taxable versus tax-exempt space.

West Lafayette City Attorney Eric Burns said the use of the space in the Faith West development will determine what portion is taxable.

But Viars said what portion is taxable will be determined after the project is completed.

Other council members expressed support for the Faith West project. The Area Plan Commission recommended approving the planned development. The final decision lies with the city council."

Property Tax Bills for Vanderburgh County Available On-line

From the Evansville Courier Press:

"Property tax bills for Vanderburgh County residents are now available, and residents can view or pay them online, Treasurer Rick Davis announced Thursday.

"People clamor for information about their property tax bills," said Davis. "They want to know how much it's going to be."

The notice comes 43 days before the May 10 deadline, down from 57 days last year because of activity at the state house.

Davis said that he's still glad that people can see what they owe more than a month in advance, giving people time to prepare their budgets.

Physical bills should still hit mailboxes at least 15 days in advance, Davis said.

To view or pay, residents need to visit and follow the appropriate links.

Their is a 2.75 percent fee for debit or credit card transactions and a $3 fee for e-check transactions."

500 Properties up for Tax Sale in Howard County

From the Kokomo Tribune:

"There will be plenty of bargains available starting next week as Howard County conducts a certificate sale in the hopes of returning 455 properties to the tax rolls.

The sale of the properties will be two-fold, with a live auction set for Tuesday and then an online auction from April 5 to 13.

The live auction will start at 10 a.m. in room 338 of the Howard County Administration Center, 220 N. Main St.

A list of the properties available through the certificate sale is on the Howard County website,, and the SRI Inc. website,, the company conducting the sale.

The commissioners have set the price for the parcels at 10 percent of the amount owed or a minimum of $100.

Remaining taxes due are waived as a result of the sale."

University Housing Expected to Generate $300,000 in Property Tax for Delaware County

From the Muncie Star Press:

"The BZA unanimously approved the Campus Crest apartment project on 10.5 acres of grass on McGalliard Road between Oakwood Avenue and Scheumann Stadium. City council had rezoned the land earlier.

The complex north of Ball State University will house up to 584 tenants.

Scott Shockley, an attorney representing Campus Crest, estimated the "high-end student housing" project would generate $300,000 a year in property tax revenue for local government."

Two Day Commissioners' Sale Reaps $3.4 Million for Lake County

From the Northwest Indiana Times:

"Lake County Commissioners made a killing in real estate this week.

Their two-day auction of tax-delinquent properties, which ended late Thursday, racked in almost $3.4 million, Lake County Attorney John Dull said.

Dull praised Don Guernsey, owner of Valparaiso-based Onyx Electronics, for conducting the successful sale of 1,184 parcels of land throughout the county -- more than 20 percent of what was on offer to about 800 real estate speculators who packed the Sydney Garner Auditorium at the Lake County Government.

"Bidding was active and the amount of our sales exceeded our expectations," Dull said.

He said the auctions brought in $2.38 million in sales of property certificates -- tax liens that winning bidders can convert into ownership papers if the previous owners fail within 120 days to redeem their property by paying overdue taxes and fines.

Dull said the county reaped another $1 million from taxpayers who did redeem their properties before the sale began Wednesday.

He added the commissioners were so encouraged by this week that they intend to schedule another tax sale later this summer."

Read more:

Thursday, March 29, 2012

Jeffersonville Forced to Cut $3.5 Million from its 2012 Budget

From the News and Tribune:

Jeffersonville will have to cut its 2012 budget by $3.5 million due to state caps on how much it can collect in property taxes.

City officials received word of the mandated cuts Wednesday through a report from the Clark County Auditor’s office. The city budget will rely on $19.3 million in property taxes once cut. As it was passed last year, it relied on $22.8 million in property taxes.

One major budget discussion this year for Jeffersonville has been funding overtime for city firefighters. Department Chief Eric Hedrick has suggested hiring four new firefighters in order to ebb the need for overtime but the council has been reluctant to do so, specifically citing these property tax caps.

Considering the need to cut, “[making those hires now] is really going to be tough,” said Dennis Julius, a councilman.

While he admitted that the cut was a large one he said the council is prepared to deal with it.

“It’s big. One thing the council did last year is they put things in the budget expecting the [caps.]”

According to Julius, members of the council have already decided to put together a budget committee to address the issue.

As of yet no committee meetings have been scheduled. However, the full council does have meetings scheduled starting at 5:30 p.m. Monday, April 2, at Jeffersonville City Hall, 500 Quartermaster Court. Those are open to the public.

“I am confident that the administration and the city council will work quickly to resolve the shortfall,” said Harmon. “In this tough economy, municipalities have to tighten their belt just like everyone else.”

Zionsville Schools Seek Tax Increase by Referendum on May Ballot

From the Indianapolis Star:

"Zionsville voters once again will be asked to approve a higher tax on themselves in May as school officials continue to seek a way out of a budget crisis.

On the May 8 ballot is a request to raise the local school tax by 24.44 cents per $100 assessed value -- or about $239 for a $200,000 home.

A similar measure in November 2010 failed as voters rejected a 29.5 cent increase.

The rejection resulted in the layoff of 21 teaching and counseling positions.

Last year, the school district finally got a money-saving ballot measure passed when 74.5 percent approved a plan to refinance debt as a way to generate a few million dollars a year over the next three years. That money will be used to pay for transportation costs and building repairs."

The referendum tax rate, if passed, cannot exceed $0.2444 over the three years of the request. The Department of Local Government Finance has an excellent calculator on its website:"

Porter CountyTreasurer Plans Timely Mailing of Property Tax Bills

From the Northwest Indiana Times:

"Porter County Treasurer Mike Bucko said tax bills should begin going out in the mail Monday or Tuesday, marking the third year in a row for on-time billing.

Taxpayers should begin receiving the bills later that same week, at which time they will have several options for making payments by the May 10 and Nov. 13 deadlines, he said.

Cash or check payments may be made in person from 8:30 a.m. to 4:30 p.m. Monday through Friday at the county administration center at 155 Indiana Ave. in Valparaiso, Bucko said.

Checks also may be mailed to the Porter County Treasurer, P.O. Box 2150, Valparaiso, IN 46384-2150. Canceled checks will serve as receipts and payments may not be sent to the post office box via Federal Express, UPS or Express Mail, he said.

Taxpayers also may pay their bills online by clicking on the "Pay Your Tax Bill" link on the upper right corner of the county website at The E-check option is free, while credit or debit card payments will be charged a 2.5 percent fee, Bucko said.

Those who have not yet verified their homestead deduction again will receive a pink reminder form with their tax bills.

Porter County Auditor Bob Wichlinski said last week that nearly 26 percent of county property owners with the deduction are at risk of losing the tax break as a result of failing over the past couple of years to verify their eligibility.

At stake is both the $45,000 deduction from the assessed value and a corresponding supplemental deduction aimed at equalizing the net impact, Wichlinski said.

The county has not heard from 11,805 of the 46,252 property owners with homestead deductions, he said."

Read more:

The Indianapolis Business Journal Reports Tax Credits for Business Expansions in Bloomington and Carmel

From the Indianapolis Business Journal:

Bloomington-based Employment Plus Inc., a staffing, recruiting and human resources provider, announced on Wednesday morning that it plans to add 307 Indiana jobs by 2015 as part of a $1.2 million expansion.

"The company, which has more than 100 locations in 17 states, said the investment will go toward leasing and equipping a 21,400-square-foot facility as its new headquarters in Bloomington. The company moved to the location at 1801 S. Liberty Drive on March 2.

As part of the expansion, Employment Plus also has added branches in Elkhart, Fort Wayne, Goshen and Lafayette.

The company, which has roughly 170 employees at its 20 Indiana locations, already has begun hiring for positions at its headquarters and new branches.

The Indiana Economic Development Corp. said it will provide up to $1.35 million in performance-based tax credits and up to $200,000 in training grants based on the company’s job-creation plans. The city of Bloomington will consider additional property tax abatements."

"Carmel-based enVista LLC, an enterprise and supply chain consulting services firm, announced on Thursday morning that it plans to add 96 jobs by 2016 as part of a $1.2 million expansion.

The company said the investment will go toward expanding and renovating an additional 10,000 square feet of office space at its current headquarters at 11711 N. Meridian St.

enVista has 62 employees and has begun hiring for information technology, engineering, accounting and human resources positions.

The Indiana Economic Development Corp. said it will provide enVista up to $1 million in performance-based tax credits and up to $80,000 in training grants based on the company’s job-creation plans."

Wednesday, March 28, 2012

Revenue Issues Guidance on Sales Tax for Colleges and Universities

"Apart from technical, non-substantive changes, this version of the bulletin has been changed from the previous version to include separate treatment for colleges and universities that operate as nonprofit organizations and those that operate as governmental agencies."

$14.5 Million Budget Certified for Clark County

From the News and Tribune:

"Indiana’s Department of Local Government Finance returned Clark County’s certified budget order recently, matching the $14.5 million figure submitted by the Clark County Council.

There were a few minor changes, which included an alteration in the bond debt rate, made to the preliminary budget — called a 1782 notice — sent to the county earlier in the month.

Despite the county receiving the full amount it approved in October — down from the $20.7 million requested from various department heads — the expectation is that its spending will be at a minimum.

Outstanding expenses

In 2011, the DLGF returned a certified budget amount of $11.8 million to the county. Unable to cover expenses on the amount returned, the county was mandated to pay for court and the sheriff’s department operations, which added $3.2 million to the operational funds. Between the certified budget order and the mandates, the county operated off of $15 million in 2011, $500,000 more than what was approved this year.

Clark County Councilman Chuck Moore said he would not be surprised if the county had to issue another mandate this year to cover expenses.

“I doubt that it’s possible to operate off that $14.5 million,” he said. “I don’t feel bad about doing a mandate.”

Clark County Councilman Brian Lenfert said expenses that don’t fit within the $14.5 million budget include costs for county employee health insurance, jail operations, the Clark County prosecutor’s office, juvenile detention and the county’s building authority.

“There’s about $3 million additional expenses the county needs to fund,” he said.

Portions of the jail operating costs are likely to be covered by Local Option Income Tax funds and Department of Corrections funds, but will still leave about a $600,000 shortfall, Lenfert said. In addition, the county’s Economic Development Income Tax may be used to cover a portion of the Building Authority’s anticipated $860,000 in expenses, as well as other county expenses.

If there is a shortfall, Moore said he doesn’t think the county will have to mandate for the same amount it did last year.

“I think we can get by with one or the other,” he said.

Mandates again?

According to the certified budget order, the county was able to tax for $3.2 million associated with the two mandates issued by the county council to cover expenses for the Clark County Courts and Clark County Sheriff’s Department.

The bond debt rate related to the mandates was incorrect on the 1782 report. The amount included in the notice totaled only $1.18 million at a certified rate of 3 cents per $100 of assessed value. The amount approved on the certified budget allowed the county to levy for $3.2 million at a rate of 8 cents per $100 of assessed value.

The impact to a homeowner was an increase on their total county taxes — based on a home valued at $100,000 — of about $82. The total county tax rate for a resident is more than 35 cents per $100 of assessed value. For a $100,000 home, the county tax alone totals about $357. Without the mandate, it would total about $275.

Moore gave an estimate — if the mandate were needed — that it would be closer to $1.6 million.

Lenfert said the county needs about $18 million to cover all the county’s expenses. By adding together EDIT, LOIT, Riverboat funds and the county’s general fund, he said the county expects to receive about $17.6 million.

He added the $1.7 million surplus at the end of 2011 will do little to help cover expenses. In addition to going toward the aforementioned outstanding expenses, more than $200,000 has already been spent in encumbrances from 2011, $80,000 has gone to the prosecutor’s office and more than $300,000 is being reserved to pay back those who hit the property tax caps.

Who is hitting the caps

According to Micah Vincent, general counsel for the Department of Local Government Finance, last year about 27 percent of the parcels in the county hit the circuit breaker tax cap.

“I’m sure there’ll be more people that hit the cap [this year],” Lenfert said.

Of the surplus funding, he said the council is estimating a return $350,000 in tax caps.

“We’ve got to see what the circuit breakers are going to do to us,” Moore said.

But he added the DLGF has given the council conflicting reports in the past on how many residents are reaching the 1 percent tax cap.

According to the information provided by Vincent, in 2010, 1,465 residential parcels and 11,252 total parcels, or 19.6 percent, received a credit. Last year the number rose to 3,905 residential parcels and 15,583 total parcels, or 27.1 percent, that hit the tax credit."

Tax Caps Save Allen County Property Owners $35 Million

From the Fort Wayne News Sentinel:

"State-imposed caps will save Allen County property owners about $35.26 million this year – a number that will force further belt-tightening by officials but won't eliminate the possibility of tax increases, especially for owners of farmland.

Under legislation passed in 2006 and later added to the Indiana Constitution, residential property taxes are capped at 1 percent of the home's assessed value, at 2 percent on rental properties, and 3 percent on agricultural and commercial. As a result, Allen County Auditor Tera Klutz said, the city of Fort Wayne will collect about $13.58 million less than it otherwise would have. Allen County government will “lose” about $5.99 million, and the Fort Wayne Community Schools $5.22 million.

Taxes paid by many homeowners have already reached the cap, meaning their taxes cannot increase unless their property's assessed value also increases. But in areas where taxes have not reached the maximum, or where property values have dipped because of the recession, tax will be lower. This year's net tax rates have dipped by 7 percent in Eel River and Perry townships and Huntertown, for example, with rate increases of about 2 percent in many areas of Fort Wayne and in some areas served by the Southwest Allen County Schools, where voters approved spending increases that exceeded the cap. Taxes on rental and business properties are also expected to be flat this year.

Farmland is another story, according to Chief Deputy Auditor Nick Jordan.

Agricultural land has historically been assessed at about one-third of market value, but this year the base value was increased by to $1,500 per acre – meaning owners could see their tax bills increase by 16 percent.

Monroeville residents could also see larger-than-normal increases, Klutz said, in part because of the decreased value of the CME Corp.'s property. Taxes there could go up by 6 percent.

All told, the various governments operating in Allen County expect to operate on about $346.79 million in property taxes this year, with schools receiving 35 percent, cities and towns 33 percent, the county 19 percent, and the Allen County Public Library 8 percent, with other units receiving less.

Coupled with the recession's effect on sales and income taxes, the loss of more than $35 million in circuit-breaker funds -- that's $270,775 more than last year – could force governments to curb spending or tap cash reserves."

Tuesday, March 27, 2012

While Taxpayer Owed UST Fees for Sixteen Years, Revenue Finds Recovery of Most Barred by Three Year Statute of Limitations

Taxpayer operates a marina. The marina sells gasoline to its patrons. The gasoline is contained in an underground storage tank.

Because Taxpayer's tank was divided into three compartments, the IDEM concluded that Taxpayer should have paid three fees each year. The Department issued proposed assessments June 23, 2010, assessing two additional fee amounts for each of the years 1994 through 2009.

Taxpayer maintains that IDEM and the Department belatedly and improperly assessed the additional fees.  Taxpayer states that it had been told by IDEM personnel that it was only required to remit one fee each year. 

IC §13-23-12-1 imposes a fee on underground storage tanks. Although the IDEM regulates underground storage tanks for the State, IC § 13-23-12-4 mandates that the Department of Revenue collect and deposit the underground storage tank fees.

Because the fee is collected by the Department of Revenue (Department) and is a listed tax under IC § 6-8.1-1-1, the assessment of the fees is governed by IC § 6-8.1-5-2(a) which states:  Except as otherwise provided in this section, the department may not issue a proposed assessment under section 1 of this chapter more than three (3) years after the latest of the date the return is filed, or either of the following:  (1) The due date of the return.  (2) In the case of a return filed for the state gross retail or use tax, the gasoline tax, the special fuel tax, the motor carrier fuel tax, the oil inspection fee, or the petroleum severance tax, the end of the calendar year which contains the taxable period for which the return is filed.

The three-year statute of limitations applies in the absence of proof of fraud by clear and convincing evidence or a taxpayer's failure to file a return. See IC § 6-8.1-5-2(f).

Although IC § 13-23-12-1(c) plainly states that Taxpayer should have been paying the fee on three tanks, there is no "clear and convincing evidence" that Taxpayer intended to perpetrate a fraud when it reported that it owed one underground tank and that it paid one single fee each year. Therefore, the fees assessed for 1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, and 2006, are barred by the three-year statute of limitations because the fees due for 2006 were due at the end of the calendar year and because Taxpayer filed returns for each of these years. Nonetheless, because the proposed assessments were issued June 23, 2010, the Department was justified in issuing proposed assessments for 2009, 2008, and 2007. (It should be noted that if the situation were reversed – Taxpayer had for sixteen years been paying fees for three tanks when it in fact owned one – Taxpayer would be similarly barred from requesting a refund of the excess fees by the three-year statute of limitations under IC § 6-8.1-9-1(a)).

However, Taxpayer is admonished that if all the environmental fees are not paid in full, Taxpayer or any future owner will not be eligible for full payments from the Excess Liability Trust Fund (ELTF) in the event that there is a gasoline spill or other environmental problem resulting from Taxpayer's underground storage tanks.

River Ridge Development Authority Approves Property Tax Abatement for Proposed Amazon Distribution Center

From the Indianapolis Business Journal: Inc. announced on Tuesday morning that it will open a new distribution center in southern Indiana and create up to 1,050 jobs by 2015 as part of a $150 million expansion.

Indiana Economic Development Corp. said it will provide Amazon up to $2 million in performance-based tax credits and up to $300,000 in training grants based on the company's job-creation plans.

River Ridge Development Authority also has approved additional property-tax abatements and will support infrastructure improvements.

In January, state officials reached an agreement with to have the online retailer begin collecting Indiana’s 7-percent sales tax from customers in the state in 2014.

The deal could lead to Indiana bringing in at least $20 million more in annual sales tax revenue.

Linton Redevelopment LLC Awarded $6.5 Million in Rental Housing Tax Credits

From the Terre Haute Tribune Star:

Linton Mayor John Wilkes announced this week that Indiana Housing and Community Development Authority recently awarded Cine LP, a general partner of Linton Redevelopment LLC, more than $6.5 million in rental housing tax credits to help develop the Cine Senior Apartments. The tax credit award process was exceptionally competitive this year with only 14 projects receiving tax credit awards out of more than 60 applications. Cine LP’s proposal actually received the second-highest score of all the 2012 plans submitted.

“This is a very exciting time for Linton,” Jeff Doris, president, Linton Redevelopment stated in a news release issued Wednesday. “Developing the Cine Senior Apartments helps further our overall mission of revitalizing downtown to provide updated housing options and retail locations for Greene County residents. This is just the beginning of what’s to come for Linton.”

The proposed 41-unit Cine Senior Apartments will be at 155 N. Main St. in downtown Linton. This is the same block the historic Cine Theater called home from 1938 to 1982. The development will include studio, one- and two-bedroom apartments as well as an on-site leasing office and a variety of community spaces. Cine LP plans to restore the property’s Main Street fa├žade so new development maintains the charm of the original building’s storefront exterior.

“The Cine Senior Apartments provides a new housing choice for Greene County seniors with low and moderate incomes,” said Stan Palma, tax consultant and architect, Cine LP.

Cine LP plans to break ground on the Cine Senior Apartments this summer.

Barton Tower Project Moves Forward in Indianapolis with Approval to Sell Tax Credits

From the Indianapolis Business Journal:

The redevelopment of a key stretch of Massachusetts Avenue is expected to commence in the fall now that developers have won approval to sell tax credits to finance the project.

A partnership of Flaherty & Collins Properties and Insight Development Corp. earlier this month was awarded rental housing tax credits by the state that will be sold to finance construction of a 61-unit, $11.5 million apartment project at 555 Massachusetts Ave. The project is to include 5,000 square feet of retail space facing Massachusetts.

The site is now green space and parking that wraps around the Barton Tower apartments, a 21-story concrete structure built in 1967 that is operated by the Indianapolis Housing Agency.

StateImpact Indiana Reports the "Good News and Bad News" about Bill Outlawing Busing Fees

From StateImpact Indiana:

The Indiana General Assembly outlawed Franklin Township’s busing fees this session, but also passed a law providing relief for districts who lost more than 20 percent of their property tax revenues. 45 districts that cumulatively lost $136.9 million to the caps are now eligible to restructure their debt under the new law.

But that’s where we get to the bad news:
  • Consider Bourke’s refinancing analogy: Refinancing a 15-year loan to a 30-year loan will reduce your loan payments, but not by exactly half. You are, after all, still paying interest over 30 years, not 15. In districts that take advantage of the loan restructuring, taxpayers would ultimately bear that burden.

  • In enrollment terms, the damage from the busing fees may already be done for Franklin Township schools. “The school district did not provide for our poorest students,” parent Christine Bischoff, who pulled her children out of Franklin Township schools, told WXIN-TV. “In my opinion the people that sit on the school board have mishandled what happened.”

Monday, March 26, 2012

Department Issues Guidance on Agricultural Land Classification

"The Department provides this memorandum to offer guidance on land types that should be categorized as farmland under 50 IAC 26."

Legislation Delays Assessment Increases Due to Soil Productivity Adjustments

From the Richmond Palladium- Item:

Farm Notes

"The Indiana General Assembly approved two changes sought by the Indiana Farm Bureau in its 2012 session.

Elimination of the state inheritance tax and delaying the use of new soil productivity adjustments for property taxes provide immediate, tangible benefits for all Hoosier farm families, IFB President Don Villwock said. The property tax changes are estimated to save Indiana farmers about $57.4 million next year.

The application of new soil productivity factors that were announced by the Department of Local Government Finance in early February will be delayed. The productivity factors, used to adjust the base assessed value of farmland, have been consistent for more than a quarter century, Villwock said. The new factors would have significantly increased the assessed value of farmland in the state and the property taxes paid on that land, he said.

Senate Enrolled Act 293 will phase out Indiana's inheritance tax over a nine-year period beginning in 2013. The act also increases from $100,000 to $250,000 the amount that may be inherited by the deceased's children and their children's surviving spouses before the inheritance tax is assessed. The increased exemptions will be in effect for the estates of anyone who died on or after Jan. 1, 2012."

Indianapolis Star Editorial Challenges Wisdom of Inheritance Tax Phase-out

Editorial by Dan Carpenter from the Indianapolis Star:

"There are many reasons that a family business might not be passed down to the kids upon its owner's death; but the Indiana inheritance tax is probably not one of them.

The phase-out of the tax will cost a cash-strapped, budget-slashing state more than $1 billion over the next decade, by government estimates; while the main selling point for the change in law defies logic and mathematics.

"Never again, we hope, will a farm or a small business in our state have to change hands just because someone can't afford the inheritance tax," Gov. Mitch Daniels said in signing Senate Bill 293, a jewel of the Republican agenda which many Democrats were loath to oppose.

The "death tax," after all. How could the revenue raiders be allowed to continue robbing graves and driving businesses into dissolution and Hoosiers to Florida?

Actually, there's an easy answer: It's not happening.

At least, not on any significant scale. It's political lore, unsupported by data and, regrettably, pretty much unchallenged by the media.

It reminds one of the GOP claims that property taxes were evicting senior citizens from their homes, and employers were avoiding Indiana just because it lacked a "right to work" law. The death tax is one more good scary story.

Let's look at numbers.

Say the proprietor of a corner bookstore passes on, leaving an inheritance worth $250,000. His widow pays no tax at all. What if it goes to his two kids? Each gets a $100,000 exemption -- that's $100,000 -- off the top, and the remaining $50,000 is taxed at $250 plus 2 percent of its value over $25,000.

That's enough to cast off a business? Wow. Give me such a deal on my income taxes. It's far more likely the place would be crushed by Amazon, which continues to go free from collecting sales tax on its Indiana mail-order trade.

"Even with the existing system, it really wasn't that onerous a tax," says Erik Gonzalez, staff fiscal specialist for the ranking Democrat on the House Ways and Means Committee, Rep. William Crawford, who fought the bill. "We don't see it impacting small business. The real beneficiaries will be the super-wealthy."

It figures. Given the $100,000 exemption for sons and daughters and the 100 percent exemption for surviving spouses, many Hoosiers never even have to report inheritances, the Indiana Department of Revenue notes. It takes a rich family by any measure to see the kind of bill that would shock a middle-income family. Yet it's supposed to be for the little guy's sake that it's all going away. The consequence is one more dammed-up revenue stream for a state that slashes budgets for the poor. Without a replacement.

"We made over $1 billion in cuts for social services and education because of budget constraints," Gonzalez says, "And yet we have this gratuitous elimination, over time, of some $160 million a year. We have unmet needs."

For some constituencies, the 2012 legislature left few needs, or at least few wants, unmet. The Indiana Chamber of Commerce, in praising SB 293 on its website, describes the inheritance tax exemption as "currently very low," without mentioning the sum. And here we thought our leaders cared about folks who consider 100 grand real money."

New Albany School Corp Anticipates Lower Tax Bills

From the News and Tribune:

"The chief business officer for New Albany-Floyd County Consolidated School Corp. has a message for the county’s taxpayers: If their taxes go up, it’s not the fault of the district.

Fred McWhorter said according to his data from the Indiana Department of Local Government finance, the tax rate from the schools is expected to drop by about 10.4 percent — or about 12 cents for every $100 of assessed valuation on property taxes — at the district’s board of trustees meeting Tuesday night.

“Overall, I think it’s going to be good for the community,” McWhorter said. “We really are cognizant of how we impact the community as a whole as well.”

Trish Byrd, Floyd County assessor, said the final numbers on tax rates from the state have not come in to her office yet, but she expects them by the end of this month or early in April.

McWhorter said the reason for the expected decrease in tax rates from the district come from three sources — the payment of debt, a decrease in the district’s capital projects fund as well as its bus replacement fund.

According to a presentation Monday night, the district got $3,790,725 less in their capital projects fund — which goes to building and maintenance projects — than they initially advertised. McWhorter said that came from a change from a lawsuit from a school district against the DLGF for incorrectly calculating the CPF fund for districts in the past.

They also got $1,909,832 less in their bus replacement fund. McWhorter said that change was due to a cap placed on bus replacement funds by the state legislature.

But he said the district could have sought a $500,000 loan from the state to make up some of the difference in their CPF. He said they decided against that to help the taxpayers instead.

With all of that factored in, he said this has been the lowest tax rate from NA-FC schools since 2009."

Sunday, March 25, 2012

Supreme Court Reverses Trial Court Decision Setting Aside Tax Deed

“The Auditor was presented with a situation in which the Property was unimproved, bare land, and the owner could not be found. The notices mailed to the address provided by Sawmill were returned with no information as to a new forwarding address. And a search of the chain of title, the records of the Indiana Secretary of State, and the phonebook could not locate a new or alternative address. In fact, the search returned no results, other than the Property, for the entity Saw Creek. Valley Title thus provided the Auditor with the known addresses for the previous owner of record. Concluding that Saw Creek may have existed in name only for the purpose of holding the Property for Cloverleaf, the Auditor then sent notice to Cloverleaf as well as continuing the attempt to send notice to Sawmill.

Sawmill contends that the additional steps taken by the Auditor were inadequate and that the only reasonable step was to post notice on the Property. In this regard, Sawmill argues that because of the misnomer on the documents relating to the Property, there was only one method of providing notice that was reasonable when the mailed notice was returned. Or, in other words, that because the named owner of record did not exist and was thus untraceable, that the Auditor must post notice on the Property. We cannot agree for two reasons.

First, under the unique circumstances of this case, posting notice on the property was not a reasonable or practicable step for the Auditor to take, and in such circumstances due process does not require the government to do more. See Flowers, 547 U.S. at 234, 126 S. Ct. at 1718, 164 L. Ed. 2d at 430–31 ("[I]f there were no reasonable additional steps the government could have taken upon return of the unclaimed notice letter, it cannot be faulted for doing nothing."). The Auditor knew, from reviewing the tax records, that the Property was unimproved, bare land, thus making posting a suspect form of notice. See Greene, 456 U.S. at 452–53, 102 S. Ct. at 1879, 72 L. Ed. 2d at 257 (noting that the efficacy of posting notice is dependent upon the nature of the property posted).

Second, the notices for approximately 1,800 properties were returned to the Auditor in 2005 alone. The burden of posting notice on that many properties is significant.  In fact, the Auditor testified that it is not done because it is cost prohibitive: "Going to each of those properties, mapping them out, and getting the signage for each of those properties wouldn’t be really possible time wise or financially." Tr. at 94. Were we to accept Sawmill's contention that notice must be posted on the property when the owner of record cannot be located through any reasonable means, the Auditor would be placed in an untenable position. This we cannot do.

For the foregoing reasons the judgment of the trial court is reversed. Sawmill's motion to set aside the tax deed is denied."

East Chicago Looks to Privatize EMT Service to Reduce Budget Deficit

From the Northwest Indiana Times:

"Residents soon may see a privatized ambulance service responding to their medical emergencies as the city looks to deflate a bloated budget.

Mayor Anthony Copeland on Friday issued an executive order reducing staff and recommending outsourcing the Emergency Medical Services Department.

Copeland said in coming weeks the Board of Works will be reviewing proposals from outside EMS professionals, first to determine what is in the city's best interest. Outsourcing EMS could reduce a $3.7 million annual deficit by as much as $1.2 million, the mayor said.

"We are asking the (City Council) first to abolish the department. Only the council has that ability," Copeland said. "If the council doesn't do that, then we can zero-out the budget, doing it that way."

Copeland said council members are to meet Monday to discuss and possibly vote on the plan.

Copeland said one of the biggest issues bogging down the budget is that the city's payroll is too large to sustain. He said the city and the East Chicago Sanitary District employ 650 full-time workers, near the number of municipal employees in Hammond, though its neighboring city has more than twice its population.

Copeland said 14 full-time and two part-time employees were terminated Friday, during what he's calling the first phase of a continuing effort to make the city more solvent.

The mayor said additional layoffs are on the horizon.

Copeland said tax collections in the city are down to about 70 percent and when combined with losses from the property tax cap legislation, the city is dealing with a $15 million annual loss of revenue compared to just a few years ago."

Read more:

Saturday, March 24, 2012

Shelbyville Approves Tax Abatement for Drilling World

A California-based drill making business is expanding to Shelbyville.

The Shelbyville Common Council approved in a 7-0 vote at Monday's meeting a tax abatement on $420,500 worth of equipment for Drilling World, which is in the process of moving into the former Stanley Black & Decker building at 860 Elston Drive.

The company was founded in 1985 and has operations in North and South America and Europe.

Shelbyville's location will be the third location that builds tools for shale oil extraction, and will be a Midwest hub for those tools, said Stephen Huddleston, the attorney who represented the company at Monday's council meeting. ...

The council also voted unanimously to change the rules for the rainy day fund. The council passed a resolution to eliminate a date by which the rainy day funds must be transferred.

"From what I understand, the only change is that the ordinance hinders us from making changes after March 1, and there's no state law," council member Jason Brown said.

The resolution is a step in shoring up the budget, which will likely require moving funds from the utility fund and possibly Parks and Recreation Department and putting it into the rainy day fund. Then those funds can be moved into the general fund.

The Shelbyville Fire Department asked to move some money around in its department to pay for new tires. The department asked to move about $1,300 from the equipment fund to the tires and tubes fund. The council voted 7-0 to accept the request.

The fire department didn't ask for any new money from the council, but, like other city departments, is faced with a tight budget.

"We're probably going to be needing more money here coming up," Fire Chief Tony Logan said.

Legislature Delays Implementation of New Soil Productivity Factors

By Memo dated February 2, 2012:

"The Department of Local Government Finance ("the Department") recently requested and recieved updated Soil Productivity Factors from the Natural Resources Conservation Service of the United States Department of Agriculture ("USDA").  The updated Soil Productivity Factors are to be applied and used as a part of the March 1, 2012, general reassessment.

... The best soil productivity in the state is now approximately 1.66 (changed from 1.28), while the poorest remains .50."

On March 19, 2012, the Governor signed into law SEA 19, which provides as follows:

SECTION 9. IC 6-1.1-4-13 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE FEBRUARY 29, 2012 (RETROACTIVE)]: Sec. 13. (a) In assessing or reassessing land, the land shall be assessed as agricultural land only when it is devoted to agricultural use.
(b) The department of local government finance shall give written notice to each county assessor of:
(1) the availability of the United States Department of Agriculture's soil survey data; and
(2) the appropriate soil productivity factor for each type or classification of soil shown on the United States Department of Agriculture's soil survey map.
All assessing officials and the property tax assessment board of appeals shall use the data in determining the true tax value of agricultural land. However, notwithstanding the availability of new soil productivity factors and the department of local government finance's notice of the appropriate soil productivity factor for each type or classification of soil shown on the United States Department of Agriculture's soil survey map for the March 1, 2012, assessment date, the soil productivity factors used for the March 1, 2011, assessment date shall be used for the March 1, 2012, assessment date. New soil productivity factors shall be used for assessment dates occurring after March 1, 2012.
(c) The department of local government finance shall by rule provide for the method for determining the true tax value of each parcel of agricultural land.
(d) This section does not apply to land purchased for industrial, commercial, or residential uses.

Friday, March 23, 2012

Board Values Property in Excess of its Appraised Value based on Testimony of Taxpayer

Ms. Castleman offered a variety of evidence in an attempt to show that the subject property was assessed too high. Much of that evidence, however, lacks probative value. For example, while Ms. Castleman’s son pointed to various factors that he felt detracted from the subject property’s value, he did not attempt to quantify their effect or otherwise explain how those factors led to a particular value or range of values. Similarly, he did nothing to explain how his purportedly comparable sales from 2010 related to the subject property’s market value-in-use as of the January 1, 2007 valuation date at issue in this appeal.

Nonetheless, Ms. Castleman did offer Lance E. Krebs’s appraisal report, in which Mr. Krebs estimated the subject property’s market value-in-use at $390,000 and the subject lot’s value, as vacant, at $350,000. Mr. Krebs certified that he performed his appraisal in conformity with USPAP, and he used a generally accepted appraisal approach—the sales-comparison approach—to arrive at his valuation opinion.

Although Mr. Krebs estimated the property’s value as of March 1, 2008—more than a year after the relevant January 1, 2007 valuation date—he relied on sales from 2006 and 2007. Mr. Krebs’s valuation opinion therefore bears at least some relationship to the subject property’s value as of the relevant January 1, 2007 valuation date.

Thus, Mr. Krebs’s appraisal convinces the Board that the subject property’s assessment was wrong. If Ms. Castleman had asked the Board to lower the subject property’s assessment to match Mr. Krebs’s appraisal, the Board likely would do so. But Ms. Castleman asked for a land assessment of $473,928 on her Form 131 petition. And her sole witness reaffirmed that request at the Board’s hearing. Under those circumstances, the Board will not reduce the subject property’s assessment below the amount that Ms. Castleman requested.