Thursday, May 31, 2012

Revenue Publishes Commissioner's Directive on Procedures for Claiming Refunds on Sales Taxes Paid for Utilities

SUBJECT: Claim for Refund Procedures
EFFECTIVE DATE: July 1, 2012
DIGEST OF CHANGES: Allows three years to file claim for refund for sales tax paid for utilities used in manufacturing, agriculture, and processing. Prior law limited statute of limitations to 18 months. Eliminates the requirement that taxpayer must file claim in Tax Court within 3 years of filing claim for refund.
This directive sets forth the procedures that are to be followed by all taxpayers who file a claim for refund pursuant to IC 6-8.1-9-1 and outlines the proper manner in which the Indiana Department of Revenue will discharge its duties under the statute.

More on Toll Road Lease Continues to Court Controversy

John Krull, director of Franklin College's Pulliam School of Journalism, in the Evansville Courier and Press:

I will admit that, from the start, I haven't been a big fan of leasing the toll road.

Initially, my objection focused on the length of the lease. If we were going to remove an asset as valuable as the toll road from the control not just of my children, but likely my grandchildren and great-grandchildren — and possibly even my great-great-grandchildren — then I would have liked to have seen a little less giddiness and a lot more sobriety accompanying the decision-making process. Instead, as soon as word of the $3.8 billion bid came in, the Daniels administration behaved — and continues to behave — as if Christmas came early.

As I have thought about it more, though, my real objection to the toll road lease is that it is a perfect example of the disingenuousness (at best) and outright dishonesty (at the worst) that is at the heart of our current political dialogue.

The argument for leasing the toll road was as follows: The state can't run the toll road in a way that will make it profitable so it would be better to let the private sector do it and get some money in return so we can fix a few of our other roads.

That argument always was circular. A large part of the reason the state couldn't run the toll road profitably was that legislators — primarily Republicans — called toll hikes tax increases and wouldn't vote for them. In their world view, government is always the problem and taxes are always evil.

To get around the trap they created for themselves with their own rhetoric, the state's politicians leased the toll road to a private company, which then hiked the tolls. Apparently, rate hikes imposed on taxpayers cease to be a political problem for office holders once those office holders have outsourced the tax increase.

But there is a cost to such slithering.

In a self-governing society, taxes are supposed to be something a free people pay to themselves — an investment in building the infrastructure that supports them all. When government runs a budget surplus, it is a savings account that we can draw upon to build things that will benefit everyone — or return the funds to the individual taxpayers. When government runs a deficit, it is, by and large, a debt we owe to ourselves.

Either way, the choices remain ours, because we're supposed to control the process through our votes — and the votes of the people we elect to represent us.

In this case, if the state had hiked the tolls, the funds for the next 70 years would have gone to helping the people of this state.

Instead, the hikes that will come for the next three to four generations will benefit the shareholders and employees of the company that holds the lease. That's a good deal for the company — but less so for the rest of us.

An earlier post on this issue can be found here:

Automotive Climate Control Offered Incentives for Expansion in Elkhart

From the Elkhart Truth:

Automotive Climate Control, Inc., has secured a pair of incentive packages from both Elkhart County and the state of Indiana to help with an expansion of its local headquarters.

The company, which supplies components to the automotive and specialty vehicle industries, plans to invest $4.99 million to purchase metal fabrication equipment for its 75,000-square-foot facility at 22428 Elkhart East Boulevard.

Also, ACC expects the expansion to create up to 40 new jobs by 2015 and has already begun hiring additional supervisory, engineering and production associates. Currently the company has 51 full-time employees in Indiana.

The Indiana Economic Development Corp. offered Automotive Climate Control up to $200,000 in conditional tax credits and up to $100,000 in training grants based on the job creation plans. The Elkhart County Council approved an eight-year tax abatement.

Johnson County Sheriff Looks to Fees to Close Budget Shortage

From the Johnson County Daily Journal:

Expect to pay more if the Johnson County Sheriff’s Office has your car towed or you are in a wreck.

Next could come a fee if your business has too many false alarms. Or the cost to add that new room to your house could inch up.

The towing fee is the first of many that the sheriff’s office and other county offices are considering as a way to make up for declines in tax revenue, commissioner Tom Kite said.

The sheriff’s office plans to charge a fee when it has to call a tow truck because you left your vehicle on the side of the road when it died, it was totaled after a car crash or if you are arrested. That could be just the start of new fees the county is considering.

Delaware County Debates Return to Five Day Work Week

From the Muncie Star-Press:

County officials took turns talking about the preference of their employees and whether they wanted three hours of pay restored in exchange for returning to work on Fridays. Some said their employees wanted the schedule to stay the way it is.

But council member Mike Jones said he had been told the county didn't have the funds to restore the old five-day schedule.

Citing conflicting figures for how much it would cost to restore pay and the old schedule to county employees, council members asked auditor's deputies for figures. The answer: It would cost $562,500 to restore pay and return to the old schedule. That amount only counts pay cuts under the general fund and not departments outside it, such as the health department.

Some officials said they thought having the county building closed on Fridays was a disservice
to the public. Commissioner Todd Donati -- who said the commissioners would open the building on Fridays if council approved the restored pay -- noted that the public overwhelmingly voted to make property tax caps part of the Indiana constitution.

Costs facing the county -- including funding health insurance for county employees -- were also noted, prompting some attending the meeting to wonder why council would consider restoring pay if the county couldn't meet its current obligations.

After council members said there was a "misconception" that the county's financial shape was poor, auditor's deputies noted that the county was operating financially only from tax draw to tax draw.

"We're spending quicker than it's coming in," Deputy Auditor Donna Patterson said.

More on Fort Wayne Reviews its Tax Abatement Policies

From the Fort Wayne News-Sentinel:

Proponents of generous tax abatement policies consider the incentives a key selling point for companies deciding where to locate and a sure-fire way to produce new tax revenue on otherwise dormant property.

Critics, meanwhile, are skeptical of whether companies follow through on all their promises of investment and job creation after getting the tax breaks.

According to city data, 31 projects got tax phase-ins last year, producing more than $75 million of investment in property and equipment and a projected 370 jobs. More than 3,800 jobs also were retained, according to the data.

City and Allen County officials also have said the two local governments need to more closely align their abatement policies and set up common standards.

“The closer aligned the city council and county council are to each other on their abatement policies, the better off we all are as a community,” County Council President Larry Brown said.

One glaring difference in the city and county policies is the fact that Fort Wayne sometimes grants tax phase-ins for retail and professional developments such as car dealerships and doctor's offices, while the county does not.

Overall, tax abatement accounted for only a sliver of local tax incentives in 2011, according to city figures. Homestead tax deductions comprised the vast majority of incentives that were awarded, according to the data.

An earlier post on this issue:

Editorial Calls for Abatement Enforcement in Fort Wayne

From the Fort Wayne Journal-Gazette:

The City Council’s discussion of property tax breaks for businesses Tuesday was a healthy review of economic development incentives that have been taken for granted too long. While opinions vary widely about which businesses should be eligible, council members appeared to rightly be headed toward consensus on one element of tax abatements: Businesses that fall short of expectations on the number of jobs added and the amount of investment should not get a free ride.

At the very least, Fort Wayne and Allen County officials – and indeed, other local government officials in Indiana – should establish policies to formally review whether companies are fulfilling their projections on jobs and investments. Such a review should come long before the expiration of tax abatements – typically 10 years for buildings and five years to 10 years for equipment.

Indiana law makes clear that local governments have that option but can only move to end an abatement if “the failure to substantially comply was not caused by factors beyond the control of the property owner (such as declines in demand for the property owner’s products or services).” If the company is not in compliance, the local government can schedule a hearing and act to revoke the tax break.

Companies already have to submit annual reports on their progress. Reviewing compliance at the halfway point would make sense. Because businesses receive the highest tax breaks at the beginning of an abatement period and the lowest at the end, they would have already received most of the tax break, yet cities and counties still would have a recourse to end it.

Some Indiana cities have become even more aggressive. Abatement agreements are a contract between a company and a governmental unit, and some Indiana cities have set tougher standards. Indianapolis, for example, has “clawback” provisions, which allow the city not only to end the tax break but force a company that fails to live up to agreements to return the money that had been deducted from its property tax bills.

In 2009, Navistar said it would close its Indianapolis diesel engine plant, costing the 1,800 jobs it promised to keep when gaining an $18 million tax abatement. Though the city did not recover the full amount, it reached a settlement with the company to return $5 million.

The city of Portage – where the Port of Indiana is located – is even more aggressive, writing abatement contracts that allow for a clawback up to five years after the abatement period ends.

Some experts, though, say the clawback applies only if a company closes and, under a provision in the law, “obtained the deduction by intentionally providing false information concerning the property owner’s plans to continue operations at the facility.”

No one in a mayoral administration or on a City Council wants to earn an image of being against economic development, and governments are facing so much competition that many officials prefer to err on the aide of granting tax breaks to virtually any business that wants them. But giving away tax revenue is a serious step, one that should carry obligations for those who benefit.

At a minimum, the new city-county panel borne out of Tuesday’s City Council meeting should guide officials toward tougher enforcement of abatement agreements.

Tax Court Hearings Scheduled for June

[TAX] Utilimaster Corporation v. Indiana Department of State Revenue (View)
Monday, June 04, 2012 10:00 AM - 11:00 AM

This is a hearing on Petitioner's Partial Motion for Summary Judgment.

For a description on the merits of the case see the Tax Summaries at

State House, Room 413
Indianapolis, IN 46204 

[TAX] Jacklin Idris and Dariana Kamenova v. Marion County Assessor (View)
Monday, June 11, 2012 10:00 AM - 11:00 AM

Taxpayers challenge the Indiana Board's final determination that they failed to make a prima facie case for a change in their downtown condominium's assessed value.

State House, Room 413
Indianapolis, IN 46204

[TAX] The City of Greenfield and The Greenfield Fire Protection Territory v. Indiana Department of Local Government Finance (View)
Monday, June 18, 2012 10:00 AM - 11:00 AM

The City and Territory challenge the DLGF's final determination denying certain increases to the maximum levies for the incorporated and unincorporated areas in the fire protection territory.

State House, Room 413
Indianapolis, IN 46204

Wednesday, May 30, 2012

Revenue Publishes Commissioner's Directive on Inheritance Tax Phaseout


Several provisions in the Indiana Code related to the inheritance tax were enacted during the 2012 legislative
session. These enactments include an increase in the Class A exemption amount, an expansion of the Class A exemption, the inclusion of individuals holding a beneficial or ownership interest in an entity as transferees when a transferor makes a transfer to the entity, as well as a phase-out of the inheritance tax. This directive details these new changes. For more general information related to inheritance tax, please refer to Inheritance Tax Notes, the monthly newsletter published by the Inheritance Tax Administrator. You can contact the Inheritance Tax section via telephone at 317- 232-2154.


Effective Jan. 1, 2012, the definition of Class A transferees has been expanded to include a spouse, widow, or
widower of a child or stepchild of the transferor for deaths that occur after Dec. 31, 2011. Under the previous law, a spouse, widow, or widower of a natural child of the decedent was classified as a Class B transferee entitled to a $500 exemption amount, and a spouse, widow, or widower of a stepchild was classified as a Class C transferee entitled to a $100 exemption amount.

Effective Jan. 1, 2012, the Class A exemption amount has been increased to $250,000 for deaths that occur after Dec. 31, 2011. Under the previous law, the Class A exemption amount was $100,000.

Effective July 1, 2012, a definition is added for an "entity." An entity is defined as a partnership, a limited
partnership, a limited liability partnership, an association, a corporation, a limited liability company, a trust, or a similar entity.

Effective July 1, 2012, the definition of a "transferee" has been expanded to include an individual holding a
beneficial or ownership interest in an entity when a transferor makes a transfer to the entity subject to the
inheritance tax. The individual is liable for the same percentage of the inheritance tax as the individual's
percentage of beneficial or ownership interest in the entity. However, under the old law, if a transferor made a
transfer to an entity, the entity was considered a Class C transferee. Under this new provision, if a spouse is a
33% owner of the entity, 33% of the transfer will be exempt from inheritance tax. The rest of the owners will be
subject to inheritance tax based on their relationships to the decedent, such as Class A, Class B, or Class C.

Effective Jan. 1, 2013, a credit is available to transferees against the amount of inheritance tax due for deaths that occur after Dec. 31, 2012. The credit, which may be claimed at the time of payment, is 10% in 2013 and
increases by 10% per year through 2021. By 2022, the inheritance tax will be phased out completely. For deaths that occur after Dec. 31, 2021, there is no inheritance tax imposed on the decedent's transfer of property interests. The percentages of the credit available for deaths occurring in each calendar year are as follows:


Effective July 1, 2012, a phase-out of the local county inheritance tax replacement enacted in 1997 will begin at a rate of 9% per year. This phase-out is related to the increase in the exemption for Class A transferees under the new law. The replacement amount for each county will be based on the inheritance tax replacement amount distributed to the county for the state fiscal year that began on July 1, 2011, multiplied by the following percentages:

91%–FY beginning July 1, 2012
82%–FY beginning July 1, 2013
73%–FY beginning July 1, 2014
64%–FY beginning July 1, 2015
55%–FY beginning July 1, 2016
45%–FY beginning July 1, 2017
36%–FY beginning July 1, 2018
27%–FY beginning July 1, 2019
18%–FY beginning July 1, 2020
9%–FY beginning July 1, 2021

For fiscal years beginning after June 30, 2022, a county is not entitled to an inheritance tax replacement.

Lafayette School Corp Expects $1.2 Million Loss from Property Tax Caps

From the Lafayette Journal and Courier:

In other business, chief financial officer Eric Rody updated the board on the anticipated loss of revenue due to property tax caps.

It is estimated LSC will lose $1,217,399 this year due to the caps that restrict schools and other government entities from collecting property tax amounts higher than a certain percentage of each parcel’s assessed value.

Rody said that amount will be broken down proportionately between the district’s four property tax-supported funds: about $608,000 from the debt service fund, about $353,000 from the capital projects fund, about $187,000 from the transportation fund and about $55,000 from the bus replacement fund.

Editorial Makes the Case for Faith West Bond Issuance in Lafayette

From the Lafayette Journal and Courier:

There might be second thoughts brewing on the West Lafayette City Council about giving a blessing on tax-exempt municipal bonding authority totaling $7 million for a $12 million project Faith Church wants to building on Northwestern Avenue.

Earlier this month, the city council voted 6-1 in favor of at least keeping the idea alive. As a 501(c)3 organization, Faith Ministries’ array of student housing, fitness center, counseling and more would qualify for the tax-exempt bonds, provided it can get the municipality to sign off on it. West Lafayette wouldn’t be on the hook for the Faith West bonds – a point Faith Church officials have been stressing as the project goes from concept to neighborhood meetings to zoning approval to this bonding authority request.

But since that vote on the first Monday in May, there have been growing questions from some in the community. The skepticism, outlined last week during a West Lafayette Economic Development Commission public hearing, came as a mix of those who tend to disagree with at least some part of Faith Church’s ministry (read: the stance on gay/lesbian issues) or who doubt whether a project that will add 17 or 18 jobs will provide the kind of economic development worth the city sanctioning $7 million in bond authority.

There even has been the implied threat of a First Amendment-based, church-state lawsuit if the city signs off on the request on a final vote scheduled for June 4.

Faith Church used similar bonding authority six years ago to build its Faith Community Center east of Lafayette. The Tippecanoe County commissioners gave the OK on that one. For Faith West, quite a sum of interest savings is on the line this time – more than $50,000 a year to start, a church official said, on a 20-year loan.

In Faith West’s corner is Mayor John Dennis, who sees the project as a good way to put a blighted piece of property back to use. Also in the project’s favor is that tax-exempt municipals bond for similar projects have become fairly common. It would be difficult for the West Lafayette City Council to get sucked into a fear of a lawsuit on this one.

The church didn’t help its cause last week when the bond attorney boldly stated that a negative vote would amount to bias against Baptists. That was an unfortunate statement that didn’t help Faith Church’s cause.

But this really comes down to a question of economic development and finally finding a project that fixes a troubled lot. Faith West meets those tests.

Here are links to some earlier posts on this issue:

Whayne Supply Offered Tax Incentives for Expansion in Evansville

From the Evansville Courier & Press:

A heavy construction equipment dealer announced plans Wednesday to build a new facility in Evansville, creating about 50 jobs.

Monty Boyd, president and chief executive officer of Whayne Supply, said his company will invest $2.45 million to outfit a 79,730 square-foot facility next to its current Evansville location at 2504 Lynch Road.

The new location, which will support the company's expansion into the mining equipment industry, will house re-manufacturing of mining equipment and distribution operations. Work on the North Side facility should commence this summer, Boyd said.

Whayne Supply, which currently employs 140 people at its local facility and another 1,400 worldwide, plans to begin hiring new management, manufacturing and distribution associates to coincide with facility renovations and improvements. The average hourly wage will be $21 when the operation is in full swing in about four years.

Debbie Dewey, president of GAGE, said Whayne Supply already is located within the Evansville Urban enterprise Zone, which qualifies it for a deduction of real and personal property tax for the increased value of the investment. The estimated gross and present value of the 10-year investment deduction has an approximate value of $305,000 for real property and $80,000 for personal property.

Dewey also said the city also offered Whayne a $20,000 training grant, providing about $500 per employee.

The Indiana Economic Development Corporation offered Whayne Supply Company up to $400,000 in conditional tax credits and up to $50,000 in training grants based on the company's job creation plans. These tax credits are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives.

Editorial Credits Portage for More Access to Government Information On-Line

From the Northwest Indiana Times:

Portage Clerk-Treasurer Chris Stidham has begun what other municipal clerks should be doing — putting city records from the past four years online so they're more accessible to the public.

The website for the clerk-treasurer's office includes financial reports, fee schedules and newly approved ordinances and resolutions.

Also on the the website are appropriations reports, fund reports, revenue reports and claim dockets presented twice a month to the Board of Works.

"This shows every check written by the city and can give a quick snapshot of spending," Stidham said.

That's the kind of information residents will find useful if they want to question where their tax money is going.

Claims handled by the Redevelopment Commission and Park Board will be added as well, along with vendor reports that reveal everyone who has received a check from the city — except employees.

Stidham said posting all this information online serves two purposes: convenience for the public and convenience for his staff.

"Every time someone requests the documents, we have to spend time gathering the information, printing it, sometimes mailing it," he said.

A side benefit for the city, Stidham believes, will be fewer visits and calls to the clerk-treasurer's office seeking that information. That's good. Use that extra time to put even more information online.

The Indiana Transparency Portal offers comprehensive data for state government and is beginning to offer local government information as well.

That's what government needs to be like in the 21st century. Public access to government should be available at the click of a mouse, not just a visit to a government office.

Welcome to Government 2.0.

Now make this happen at all units of local government in Northwest Indiana.

Merrillville Residents Seek Other Solutions to Police Budget Issue than Tax Hike

From the Northwest Indiana Times:

A property tax increase is the only option Merrillville has to put more police officers on the streets, Clerk-Treasurer Eugene Guernsey said.

But some residents disagreed with Guernsey on Tuesday, suggesting the town could use reserve officers or host a fundraiser to boost the police force. They responded Tuesday at a public forum held to discuss the town's proposal for a property tax referendum.

Police Chief Joseph Petruch said Merrillville can't get enough volunteers to serve as reserve officers. The town's Police Department currently has 48 officers.

Guernsey said he had thought of having fundraisers, but there was no guarantee the town could generate enough funding each year to support a staff increase for the police force.

Guernsey, Town Councilwoman Carol Miano and Town Councilman Don Spann have proposed a referendum to ask Merrillville voters to support a tax increase to hire 10 more police officers.

For an owner of a home assessed at $150,000, property taxes would increase by about $53 a year.

The referendum could be on the ballot in November.

Michael Deppe, an attorney providing free legal services for the referendum, said even if voters approve the proposal, the state's Department of Local Government Finance would have to authorize the increase.

Guernsey said Merrillville doesn't have enough money in its budget to hire more officers because of the levy freeze in Lake County. To improve safety in Merrillville, "we need more police officers," Petruch said.

Tuesday, May 29, 2012

Board Finds Assessor Failed to Rebut Taxpayer's Appraisal

Here, the Brownings ... offered Mr. Kruse’s professional valuation opinion that the subject property’s market value was $136,000 as of January 1, 2006—the valuation date that applied to the March 1, 2007 assessments at issue in the Brownings’ appeals.  Mr. Kruse, who is a certified appraiser with experience in the local market, certified that he performed his appraisal in conformance with USPAP.  He considered all three traditional approaches to value and developed an estimate under one of them—the sales-comparison approach.  In light of Mr. Kruse’s appraisal, the Brownings made a prima facie case that the subject property’s assessment was wrong and that the property’s true tax value was $136,000.

The burden therefore shifted to the Assessor to impeach or rebut Mr. Kruse’s valuation opinion.  While she attempted to do both, she succeeded in doing neither. 

In an effort to impeach Mr. Kruse’s appraisal, Ms. Olinger pointed to Mr. Kruse’s decision to use the first sale of the Deller property instead of the second sale, which had a significantly higher sale price.  But the only evidence that Ms. Olinger pointed to in support of her position that the Deller property actually sold twice in 2005 was the property’s record card, which simply lists two transfers and sale prices from that year.  The card, however, includes little other information about either transaction.  Under those circumstances, Mr. Kruse was more than justified in using the first sale, which unlike the later sale, was listed in MLS, exposed to the market for 158 days, and verified as an arm’s length transaction.

Ms. Olinger also attempted to support the subject property’s assessment by pointing to what she described as comparable land sales.  But she did little to explain how most of the properties involved in those sales compared to the subject property or to explain how any differences may have affected the properties’ relative values.  Thus, Ms. Olinger’s analysis was too superficial to be probative of the subject property’s market value-in-use.  See Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 471-72 (Ind. Tax Ct. 2005)(holding that sales data lacked probative value where taxpayers failed to explain how the characteristics of their property compared to the characteristics of purportedly comparable properties or how any differences between the properties affected their relative market values-in-use)... 

Thus, Mr. Kruse’s valuation opinion is the only persuasive evidence of the subject property’s January 1, 2006 market value-in-use.  The subject property’s assessment therefore must be reduced to $136,000—the amount that Mr. Kruse estimated in his appraisal.

Court in Clark County Orders Relief from Tax Sale Fees for Developer

From the Jeffersonville News and Tribune:

A court order has allowed residential real estate developer Robert Lynn Co. Inc. off the hook for thousands in fees that it would have owed to Clark County after falling behind on tax bills.

Treasurer David Reinhardt said he believes the developer is getting special treatment and said the move cost the county. He said it was frustrating that one taxpayer got that kind of relief when no one else did.

“I had a lot of taxpayers complain about it and I said, ‘it’s the law,’” Reinhardt said.

Judge Dan Moore granted Robert Lynn Co. relief on about $22,000 in tax sale fees.

When a landowner doesn’t pay their taxes for three billing cycles, or about a year and a half, the delinquent property is sent to a tax sale so the county can collect what it’s owed. A $110 tax sale fee is assessed to cover the cost of inventorying land, advertising and to pay the contractor — in this case SRI Inc. — to handle the sale.

The land in question was vacant and developers are given a discount on taxes under Indiana law. Robert Lynn Co. attorney Alan Applegate explained that because of the developer discount, the company only owed $2,200 in taxes but had to pay tax sale fees of $22,000.

Based on that discrepancy, Applegate argued in a filing dated Sept. 28, 2011 — days before the tax sale — that “requiring the payment of the tax sale fee prior to the sale of the delinquent properties at public sale is unconscionable and constitutes a penalty against [the company] with no corresponding benefit to Clark County.”

Moore ruled in favor of the company, saying in an order that same day that “requiring the petitioner to pay the $110 tax sale fee for each of the properties would be unfair, unjust and unduly burdensome.”

Reinhardt filed a motion to reconsider, but that was dismissed by the court last month. The treasurer was given an opportunity to testify on the matter at a hearing on that motion.

In the end, Robert Lynn Co. paid the taxes, sans the fee, and the land never went to the tax sale.

He noted there were other delinquent properties owned by the company for which the fee wasn’t waived. The tax sale vendor, SRI, is paid $70 for each parcel only if the tax sale fee is collected. Because it wasn’t in this case, the county did not have to pay SRI for any work it did on the Lynn land.

Regardless, Reinhardt said, the matter still cost his staff in man hours and the legal advertisement space.

Reinhardt points out that Robert Lynn Co. was the only taxpayer to have the fee waived this time. However, Lockard — who has represented the county on the tax sale for several years — said it’s not the first time it has ever happened.

“These aren’t the first fees to get waived,” Lockard said. “The judge has discretion in awarding those fees or not. The important part was the county collected the taxes.”

Wind Farm Seeks Tax Abatement from Howard County

From the Kokomo Tribune:

Howard County officials are being asked to consider a 10-year tax abatement for the proposed wind farm in the eastern portions of the county.

E-on Climate & Renewables has proposed expanding the Wildcat Wind Farm project into Howard County. Currently, work is taking place on phase one of the project in Madison and Tipton counties, where 10-year abatements have been approved.

The Howard County Council Tuesday passed a preliminary economic revitalization designation for the project. A public hearing has been set for 4 p.m. June 26.

If approved, the tax abatement would cover both real estate and personal property.

Andy Melka, project manager for E-on, said the two phases in Howard County will result in a $250 million to $300 million investment in Howard County.

The agreement with E-on contains language that makes sure the assessment base is protected, said Jamie Shepherd, Howard County assessor.

“We asked E-on not to file depreciation of the wind turbines, which would lower the assessed value,” she said. “We don’t want them to add bonus depreciation for federal tax purposes, which would lower the value of the turbines.”

Shepherd said E-on has agreed that if it files for the additional appreciation, the company will make a payment in lieu of taxes to the county in the amount of the difference in the tax collection.

The payment in lieu of taxes will be distributed to all the impacted government entities, she said.
Council President Richard Miller said there are specific start dates for the two phases of the wind energy project in Howard County.

If those start dates are not met, the agreements between E-on and Howard County will expire, he said.

Monday, May 28, 2012

Revenue Finds Taxpayer Failed to Show Personal Property Incorporated into Real Estate Not Subject to Tax

The Department imposed use tax on several transactions on which Taxpayer did not pay sales tax at the time of the retail transactions. Taxpayer maintains that it engaged a contractor, on a lump sum basis, to perform a number of projects through the audit periods which Taxpayer considered improvements to realty.

[T]he fact that tangible personal property was incorporated into real property does not relieve a taxpayer of its obligation to pay sales or use tax. A contractor may convert tangible personal property into realty under a "lump sum contract" or under a "time and materials contract." Sales Tax Information Bulletin 60 (July 2006), 20060823 Ind. Reg. 045060287NRA, defines a "lump sum contract" as "a contract in which all of charges are quoted as a single price. A construction contractor may furnish a breakdown of the charges for labor, material and other items without changing the nature of the lump sum contract." A "time and materials contract" is defined as "a contract in which all charges for labor, construction materials and other items are separately stated." Id. Generally, in a lump sum contract between a taxpayer and its contractor, the contractor bears responsibility for paying the tax on the construction materials. In a time and materials contract between a taxpayer and its contractor, the contractor acts as a retail merchant and sales or use tax is due from the contractor's customers on the cost of the materials.

The Department's audit report contains several line items from various transactions with the contractor in question. The Department's audit report made notations where the information indicated the amount was for materials only and subjected the amount to tax. The Department's audit report made notations where the information indicated that the amount was for labor only and did not subject the amount to tax. The Department's audit report also made notations that described transactions that would not appear to be considered improvements to realty and subjected those amounts to tax. Lastly, the Department's audit report, on one occasion, made a notation stating that the information indicated that that billing was under a lump sum contract and did not subject that amount to tax.

Taxpayer asserts that the Department's determination, that the materials only line item amounts are subject to tax, was not correct. During the protest, Taxpayer's representative was asked to provide documentation–i.e., invoices, contracts, and/or statements from the contractor–establishing the nature of these transactions. However, Taxpayer's representative did not provide any additional documentation for these transactions. Since Taxpayer failed to provide documentation to support its assertions, Taxpayer has failed to meet its burden to show that the assessment was incorrect under IC § 6-8.1-5-1. Therefore, the Department finds no reason to disagree with the audit's conclusion that these materials are subject to use tax.

Revenue Finds Storage Racks Not Eligible for Manufacturing Exemption But Finds Replacement Parts Not Subject to Tax


Taxpayer asserts that since it uses the "Pro-Lift racks" to store work-in-process, the racks qualify for the manufacturing equipment exemption. Specifically, Taxpayer states:

Taxpayer uses the racks to store all parts that [Taxpayer] has inspected to meet their customer's specifications. If the product does not meet specifications, [Taxpayer] either reworks the parts or must scrap the parts. The parts that [Taxpayer] inspects are not finished goods as they have not been packaged as required by [Taxpayer's] customers.

In the instant case, Taxpayer is inspecting its product after production is complete. This is not the type of testing and inspecting that is considered part of the manufacturing process. Testing and inspecting completed products to see if it meets customer specifications is a marketing activity. Unlike the "quality control testing equipment" in the example, provided in the regulation, that has a functional interrelationship with the machinery on the product line and the product flowing in production; Taxpayer's production process is not changed as a result of the testing. In fact, as a result of the testing, Taxpayer's product is either shipped to the customer or rejected. Therefore, the storage of the product after production to be tested for marketing purposes is not the storage of work-in-process.

Taxpayer asserts that various items purchased from "Columbus Industrial Equipment," "Arrow Industries," and numerous other vendors are all "repair parts" used to repair production equipment. Taxpayer maintains, "[it] purchased the parts and charged them to an account that [it] uses to track [its] space parts inventory." Taxpayer states that the Department's audit most likely subjected these items to tax because the items were in an account entitled "Maintenance–Tool Crib."

Pursuant to 45 IAC 2.2-5-8(h)(2), "[r]eplacement parts, used to replace worn, broken, inoperative, or missing parts or accessories on exempt machinery and equipment, are exempt from tax." Accordingly, a part purchased for the equipment would be tax exempt to the extent that the equipment is exempt.

Therefore, Taxpayer's protest to the imposition of use tax on "repair parts" is sustained in part subject to the results of a supplemental audit.

Taxpayer asserts that the payments made for the quarterly service contract covering the coolant water system and the boiler water system qualify for exemption under 45 IAC 2.2-5-8. In effect, Taxpayer asserts that the property furnished under the maintenance agreement would be considered a repair or replacement part for the coolant water system and/or boiler water system.

Taxpayer has provided sufficient information to establish the maintenance agreement would be exempt to the extent that the "Coolant Water System and Boiler Water System" are exempt from sales and use tax.

Editorial Calls for Openness in Tax Policy

From John Ketzenberger, President of the Indiana Fiscal Policy Institute, in the Indianapolis Star:

Is it possible to bring about a complete levy-equals-spending understanding of the tax system? No, but I challenge the candidates for governor to set a good example for all who wield the power to tax-and-spend during this campaign. Here's how:

Acknowledge that Indiana, compared with other states, already is a low-tax state. The Tax Foundation, for instance, ranks Indiana's tax climate the 10th-most favorable. Just this year the General Assembly reduced the corporate income tax and started a process to eliminate the inheritance tax.

Any tax cuts should be accompanied by a clear explanation of what services the state/local government will reduce or no longer provide as a result of less tax revenue.

If, in the unlikely event a proposed tax increase occurs, a similar explanation for spending the additional revenue is expected.

Circumstance No. 3 is more likely to happen at the local level because state tax policy has reduced property tax revenue in many places.

Take a holistic view of the system and explain clearly how any proposed changes will affect other parts of the tax code.

Keep all fiscal policy options open. Ignore Grover Norquist's no-tax pledge.

Realize we're all in this together. The point is not to game the system, but to create one that is fair to all people who live, work or play in Indiana.

This is why it is important for politicians to be straightforward about their tax proposals. Good public finance is not as simple as merely raising or cutting taxes or cutting or increasing spending. It's a balanced equation that takes into account the public's needs and desires, and its willingness to pay for them.

Fort Wayne City Council to Reexamine Tax Abatements

From a lengthy article in the Fort Wayne Journal-Gazette:

Four years and one City Council later, property tax abatements are back in the cross hairs of Fort Wayne’s legislators.

Tuesday, the council will conduct a special session dedicated to determining how and which businesses should receive tax breaks in return for investing in the community.

Based on the council’s history and its current members’ comments, it is more likely the discussion will push toward making the tax breaks more restrictive instead of less.

The issue received initial scrutiny this month as the council debated the merits of granting a tax break to a proposed dentist office that also needed to be annexed. That proposal received some strong opposition, while several other members said it might be appropriate to change abatement policy but not to punish this development for its timing.

The council’s examination comes almost exactly four years after the previous council conducted a similar meeting. That council met in April 2008 to discuss tax abatements, prompted largely by a number of retail businesses that qualified for the benefits.

Discussions in 2008 led to a revised abatement-grading scale that ranked requests based on merit, meaning some companies would be eligible for more of a benefit than others. The criteria for the ranking included money invested or jobs created.

The last council in December also approved new “super abatements” that extend the time companies can avoid paying any property taxes on new investments. The policy will allow companies to avoid paying any property taxes on a project for the first five years.

Sunday, May 27, 2012

Board Finds Taxpayers Failed to Rebut Appraised Value with Evidence of Unsuccessful Attempts to Sell Property

The Campbell Appraisal is evidence that the value of the subject property was $82,000 as of March 4, 2010. The slight difference from the required valuation date is insignificant. Although it is a little less than the current assessment, the Respondent’s evidence substantially supports a valuation of $82,000.

The Petitioners attempted to challenge the credibility of this appraisal, but not very effectively. They pointed out that only one of the four comparable sales was in Hardinsburg where the subject property is located and the other three were in Palmyra. For that reason, according to the Petitioners, they are not good comparables. But such bald conclusory statements are not probative evidence. They actually do nothing to rebut or impeach the appraisal. See Whitley Products , Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1119 (Ind. Tax Ct. 1998). Similarly, the Petitioners attempted to establish that the appraised value is too high because the appraisal was for a bank loan. According to Mr. Miller, “you know and I know that that‘s the reason why the government is in trouble today is because banks ‘overloaned’ … people on mortgages. Again, this kind of unsubstantiated conclusory statement is not probative evidence and does nothing to rebut or impeach the appraisal. Id.

Part of the Petitioners’ case, however, provides some evidence that perhaps the appraisal’s valuation is too high. Undisputed testimony established that since early 2010 the Petitioners have tried to sell the property, but they have been unsuccessful. For a short time in March 2010 they attempted to sell it themselves and were asking $84,000. Then they listed it with a realtor with an asking price of $79,000. Subsequently the asking price was reduced four times, eventually down to $65,000. During all this time they got no offers. The lack of detail and lack of supporting documentation diminishes the impact of this evidence, but the point has some relevance and probative value. Nevertheless, a history of price reductions and unsuccessful marketing is not enough to convince the Board to disregard the value indicated by the Campbell Appraisal. In this case, that appraisal is ultimately the more credible evidence.

The Petitioners did not present substantial, probative evidence to support their claim for an assessment of $60,000 and they failed to rebut the value proved by the Campbell Appraisal.

Public Transit Faces Funding Crisis in Indiana

Morton Marcus, writer and speaker formerly with the IU Kelley School of Business, in the Bloomington Herald-Times:

What do you care if the Hammond buses stop running? Hammond is up there in the northwest corner of the most northwest county in the state. In fact, what do you care if all the public bus routes in the state were closed down?

Will it hurt you if Indianapolis, Bloomington, or Evansville called a halt to bus service by the end of June? Does your employment depend on the buses running in South Bend, Fort Wayne or Lafayette? If your answer to either question is NO, then why would you want to see the buses in those cities continue to run along with those in Terre Haute and Gary?

Hammond is likely to see its buses stop on June 30 because there is neither the political will nor the political courage in Lake County to keep them running. The Hammond buses are operated by the RBA (Regional Bus Authority), which runs out of money in just a few weeks. Hammond doesn’t want to support its own buses. The Lake County Council sees no reason to raise taxes or fees to support public transit.

The standard argument of public transit opponents is “the fare box ought to cover cost of service.” That’s a great proposition which happens to work for only limited services over high density routes for middle- and upper-income riders. Routes that serve the standard community and meet the needs of lower income riders require subsidies.

It does not matter if we help people get to work or to school, to shopping or medical appointments, public transit is expensive. But it is a bargain. Do we have a more prosperous society if the poor cannot get to their jobs? Do we have a healthier society if the sick cannot keep their appointments? Is our future brighter if students are closed out from attending classes because the buses do not provide service?

More money for public transit does require more accountability by transit operators. It’s time to look hard at feather-bedding and costly work rules. But first comes the money, and there is little time to deliver before the last bus closes its doors in Hammond.

See the entire editorial here:

Faith West Bond Issue Continues to Court Controversy in Lafayette

From a lengthy story in the Lafayette Journal and Courier:

Be sure of several things about Faith West, Faith Church’s proposed community center and student housing plan for a neglected West Lafayette plot that once was home to the Family Inn.

First, Mayor John Dennis and his administration, after going through at least two aborted plans for commercial development at that 6.4-acre lot on Northwestern Avenue, is down with the Lafayette church’s plans to branch into West Lafayette with a $12 million project that includes apartments, a fitness center and more.

Second, the $7 million in tax-exempt municipal bonds Faith Church leaders are asking the city to help issue would save some considerable cash over the life of the Faith West repayment schedule.

Third, if you take them at face value, Faith Church leaders seriously did not see this controversy coming on a bonding tactic that has been used in hundreds of cases of nonprofit construction in hundreds of cities — and featuring quite a few faith-based projects along the way. Since the West Lafayette City Council, on a 6-1 vote earlier this month, gave initial approval of serving as the go-between on the municipal bonds, a drumbeat has grown more steadily with questions about the city’s role in picking religious organizations to get tax help — even if that tax help won’t cost the city a dime.

Members of the West Lafayette Economic Development Commission tried to downplay any precedent-making in the Faith West case. But that’s where the city stands on a project that even Viars can envision setting a tone for projects to come. Seriously, if this goes through, nonprofit groups of all shades would be fools to pass up the tax-free bonding help.

See the full analysis of the Faith West Bond Issue here:

Indiana Toll Road Lease - Still Controversial Six Years Later

Adam Horst, Director of the Indiana Office of Management and Budget, in the Fort Wayne Journal-Gazette:

Even though most Hoosiers and countless outside observers long ago figured out what a spectacular success the lease of the Indiana Toll Road has been, a confusing story and editorial in The Journal Gazette left a different impression. They suggested that the state is not in a strong “financial position,” and that the transaction will leave the next governor with a problem he would not have otherwise had.

That’s exactly backward. First, with a balanced budget, AAA credit rating (better than the federal government), the lowest debt and pension burdens in the nation, and nearly $2 billion in reserves, Indiana has one of the strongest financial positions anywhere.

The story didn’t really mean to deal with our “financial condition” but rather with the totally separate matter of long-term highway construction and the dedicated gas tax that funds it. It’s a national problem that the gas tax no longer comes close to meeting the modern needs of the 50 states for infrastructure. All over the nation, virtually everywhere except Indiana, roads and bridges are crumbling and states are struggling just to patch potholes in the roads they have. Here and here alone, a record building boom is under way. Plus we got a vastly better Toll Road – with electronic tolling, more state trooper patrols, and new lanes for less congestion – in the bargain.

The story tried to make the point that, when the lease’s proceeds have all been reinvested, Indiana will rejoin the other 49 states in the dilemma of inadequate gas tax receipts. But Indiana will do so with more than 200 new road projects that otherwise never would have been built, with at least a third of our bridges rebuilt, and with a permanent half-billion dollar trust fund that will continue to generate earnings to augment future highway budgets. Other states can only dream of such a situation.

Rep. Win Moses added to the distortion by saying the “state mortgaged the future.” He knows that’s nonsense. The Toll Road proceeds paid off the mortgage, the more than $200 million of debt that still burdened the Toll Road after 50 years of political-patronage operation. And remember, the road was losing money; there was no “future” to mortgage.

The May 17 editorial said “the state essentially burned through 75 years’ worth of highway project money in less than 10.” The upfront $3.8 billion payment was money the state never would have had and was always intended to be promptly turned into new, long-needed public assets such as the Fort to Port and Hoosier Heartland Highways as quickly as possible. Surely The Journal Gazette is not suggesting that we’d have been better off without them and the Next Generation Trust Fund?

This administration has brought a host of major changes to Indiana and most, such as leaner government, lower taxes, ethics and education reforms, or right to work, are subject to honest debate. But what is not open to debate is that Indiana is in uniquely strong fiscal shape and our future is vastly better with the Toll Road transaction than without it.

Here is the editorial from the May 17, 2012, Journal-Gazette:

Six years after state lawmakers approved Gov. Mitch Daniels’ controversial plan to privatize the Indiana Toll Road through a long-term lease, both advocates and opponents can find evidence to support the views they expressed in 2006.

Proceeds from the lease have unquestionably improved the state’s highways. By the end of this year, the state will have added 375 miles of new roads, improved pavement on more than 5,000 miles and replaced or rehabilitated more than 700 bridges.

Two key Major Moves projects, financed largely by the lease, directly aid economic development efforts for the Fort Wayne area. The last segment of the Hoosier Heartland Corridor – offering a four-lane highway from Fort Wayne to Lafayette – will be completed. Indiana will also complete its part of the Fort to Port project – offering four lanes from Fort Wayne to Toledo.

And the lease injected hundreds of millions of dollars into the economy at a time when Hoosiers really needed it. Highway and bridge projects have employed hundreds of laborers, providing evidence that the labor interests who broke with Democrats and supported the lease were correct about creating jobs.


The consortium that leased the road for $3.8 billion has to make money, and that money comes from people who drive the Indiana Toll Road – many of them Hoosiers.

Already, for automobile drivers paying cash, the rate for the 157-mile length of the road has nearly doubled in six years, from $4.65 to $9. For a five-axle truck, the increase has been greater – from $14.55 when the lease was approved to $36.20 today.

The strongest argument from opponents was that the 75-year term of the lease is exorbitantly long. And, if such a lengthy lease is in any way justified, it was worth more than the state received.

Consider how cars and trucks and roads changed from 1931 to 2006. No one knows how leisure and business travel will change through 2081, much less transportation of freight, but many aspects will be different – perhaps radically so. Consider: When the lease hits its halfway point, Mitch Daniels will be 94.

Indeed, as Niki Kelly’s Sunday story explained, by the time the next governor takes office, little to no money will remain for new state road projects, though counties that the Toll Road runs through are still sitting on piles of cash. The state essentially burned through 75 years’ worth of highway project money in less than 10. And while the state has doubtless benefited from the projects, the new roads add to the miles of highways the state must maintain for the next 69 years.

As State Rep. Win Moses noted: “We have built some important roads. But we did so by mortgaging heavily the future and allowing the tolls to go up quickly.”

How will Hoosiers of 2081 judge the decisions made in 2006? Will they consider the lease a huge win for the state? Will the Toll Road consortium still exist, or will economics and energy resources make cars and trucks little-used luxuries or obsolete relics?

For the short term, the next governor will still be responsible for maintaining highways and building new projects.

He will have to do that without the billions of dollars the lease brought to Indiana, and that could well mean an increase in the state’s 18-cent-per gallon tax on gasoline.

Merrillville Proposes November Referendum for Police Budget

From the Northwest Indiana Times:

Clerk-Treasurer Eugene Guernsey, Town Councilwoman Carol Miano and Councilman Don Spann will have a 5 p.m. meeting Tuesday to discuss a proposed property tax referendum.

The meeting will be at Town Hall, 7820 Broadway.

The referendum would ask Merrillville voters if they would raise their property taxes to support hiring 10 more police officers.

For an owner of a home assessed at $150,000, property taxes would increase by about $53 a year if the increase is approved, according to town officials.

The referendum could be on the ballot in November.

Effects of Tax Caps are Spreading in Lake County

From the Northwest Indiana Times:

The effects of tax caps on municipal government are spreading, as low collection rates and reductions in assessed value make it more than just Gary's problem.

"As the policy of tax caps matures, its impact is becoming more and more apparent," said Michael Griffin, Town of Highland clerk/treasurer.

Communities like Merrillville and Lake Station have now felt the pinch, and local governments across the region are looking for ways to cut costs further, Griffin said.

The city of Whiting decided to forgo building a new wastewater treatment plant in favor of using Hammond's system, Griffin said. Highland and other communities are participating in the Indiana Association of Cities and Towns health insurance medical trust, an insurance pool giving communities more buying power and limiting premium increases.

Lake County communities are actually subject to a "double" tax cap, Griffin said. Localities in the county operate under both the Constitutional amendment limiting homeowners' property taxes to 1 percent of assessed value and a legislative mandate for Lake County only that caps local property tax levies at 2007 levels.

New Albany-Floyd County Parks Board Chair Supports Development of "Parks District"

From the Jeffersonville News and Tribune:

Mayor Jeff Gahan’s veto of a new parks deal between the city and county was upheld earlier this month by the New Albany City Council. While the Floyd County Council agreed to still pay an additional $100,000 toward the parks department for the remainder of the year, the city and county remain under a prior agreement that led to funding discrepancies in the past.

According to the Gahan administration, the city paid about $4 million more to the parks department than the county since 2004. Under the terms of the contract, the city and county were to evenly fund the department based on population, which has been nearly equal over that span.

“The city of New Albany will continue to honor our agreements and fully fund the parks department,” Gahan said when he announced his veto. “It is time for the county to do the same for the betterment of all Floyd County.”

But Klink said there were several misconceptions surrounding the history of parks funding. One of the main misapprehensions was that the city was owed money by the county for the shortfalls, Klink said.

Though the city serves as the financial entity in the agreement, Klink said the shortfall was in the parks department, not the New Albany general fund. Thus the parks would be owed any financial settlement, and Klink said the department isn’t looking to collect.

[T]he idea of a parks district was brought before the state General Assembly in 2011, with Floyd County serving as the sample for the proposal. With a district in place, the parks department could collect its own taxes without budget approval from the city and county.

The bill was amended, discussed thoroughly in Indianapolis and ultimately passed the House before stalling and dying in committee in the Senate.

A parks district “would provide consistent funding across the entire county, including those in New Albany,” he said. “So it’s a consistent tax levy that eliminates this city-county funding agreement.”

The parks board voted to pursue the district in 2011 in support of Clere’s bill.

DLGF Publishes OMB Memorandum Regarding Procedures for Receiving a State General Fund Loan

"The purpose of this memorandum is to inform the fiscal body of all taxing units of the procedures for receiving a loan from the state general fund under I.C. 6-1.1-18-12.5."

Read the full memorandum here:

Friday, May 25, 2012

Park 41 in Evansville Designated an "Industrial Recovery Site"

From the Evansville Courier and Press:

On Thursday, GAGE announced that Evansville's former Whirlpool plant, now called Park 41, has been designated as an Industrial Recovery Site. The informal term for such sites is dinosaur buildings.

The program, administered by the Indiana Economic Development Corp., provides tax credits of up to 25 percent of the cost of remodeling, repair or improvements to a Dinosaur Building.

"It's a way to revitalize the entire facility," said Katelyn Hancock, spokeswoman for the Indiana Economic Development Corp.

Companies located in a Dinosaur Building must apply to the state development corporation to receive the tax credit, Hancock said.

To qualify, a building must have been in service for at least 15 years, with at least 50,000 square feet and must have been at least 75 percent vacant for a year or longer.

Whirlpool shut down its refrigerator plant in 2010. The Kunkel Group, an Evansville developer, purchased the building in April 2011.

The 1.5 million-square-foot building currently has nine tenants.

Vigo County Companies Seek Tax Abatements for Expansion Projects

From the Terre Haute Tribune Star:

Two Vigo County companies are seeking tax abatements for expansion projects, one of which is included as part of a county incentive package.

Applied Extrusion Technologies Inc. plans to invest an estimated $8 million for new equipment for metalizing and slitting oriented polypropolene packaging materials, including a winder, packout and upgrades for large diameter rolls.

The company plans to add 13 new employees with an annual payroll of $545,00, said Lou Britton, attorney for the company told the special projects committee of the Vigo County Council Wednesday.

AET currently employs 450 workers with an payroll payroll of $28 million. This figure does not include an additional 30 part-time workers, Britton said.

The company is seeking a 10-year personal property tax abatement.

The tax abatement phases in taxes over a 10-year period, with no taxes paid in the first year, then 10 percent of taxes paid, with 90 percent abated, in the second year. The amount paid increases annually until the end of the abatement. The company will pay $57,000 in new property taxes over the span of the abatement, Britton said.

The special projects committee approved the abatement to be presented to the full Vigo County Council to vote on a preliminary approval vote at its June 12 meeting. The council will vote on a final approval in July.

The committee also heard a request for a 10-year real property and 10-year personal property tax abatement for ThyssenKrupp Presta Terre Haute LLC. The tax abatements are part of a previously announced county incentive package for the company to construct a 73,600 square foot addition to its facility in the Vigo County Industrial Park, south of Terre Haute. The company will also add three new assembly lines.

ThyssenKrupp Presta currently has 188 employees with an annual payroll of more than $2.44 million.

By the end of 2013, ThyssenKrupp Presta will add 120 new workers with an annual payroll of $4,487,435, in excess of $17 per hour, said Steve Witt, president of the Terre Haute Economic Development Corp.

“Vigo County competed for this expansion with several other ThyssenKrupp facilities in the U.S. and Mexico,” Witt said. “To win this project for our community, we provided a local incentive offer that included 10-year real and personal property tax abatement as well as a $200,000 reimbursement to the company for project-related expenses associated with the expansion,” Witt told the council committee.

The company’s real property investment will be $5.1 million, while new equipment will be an investment of $16.7 million, Witt said. The company will pay $547,010 for real property taxes with the abatement, a savings to the company of $536,180 over the length of the abatement, Witt said.

ThyssenKrupp Presta will pay $498,696 in personal property taxes over the 10-year period, a savings of $742,724. The company’s total new taxes, both personal and real property, over the 10-year abatement period is $1,045,706, Witt said.

In addition, the Indiana Economic Development Corp. has offered an incentive package of $1.075 million from the state’s Skills Enhancement Fund for job training and $875,000 in Economic Development for a Growing Economy (EDGE) tax credits for a 10-year period.

The committee voted to send the tax abatement, plus a $200,000 appropriation from the county’s Economic Development Income Tax (EDIT) fund for the incentive package, to the full council. The council will vote on a preliminary approval vote at its June 12 meeting. The council will vote on a final approval in July.

In other business, the committee sent eight tax abatements onto to the full council for review in June. The council reviews abatements annually. Committee chairman Brad Anderson, R-4th, said some companies are not up to their full employment, but “in this business climate” it could be difficult for a company to meet full employment.

Councilman Mark Bird, D-at large, said the abatements are “substantially in compliance,” adding companies cannot control a downturn in the economy. The abatements were for Ginovus; Marion Tool & Die Inc.; CSN, LLC; Staples; Certainteed Corp.; NIPSCO; ADVICS: and Danisco USA Inc.

Lake County Proposes New Taxing District for Consolidated 911 Dispatchers

From the Northwest Indiana Times:

Lake County public safety officials are proposing a new county taxing district to pay for the infrastructure of consolidating 911 police dispatchers.

Hammond Police Chief Brian Miller, chairman of a panel of police, fire and civilian officials recommending communications reforms, said Thursday they will ask the Lake County Council for authority to form a taxing district to raise local money for the project.

The panel already has recommended replacing the current network of 18 municipal police and fire dispatch locations with two proposed centers in East Chicago and Hobart at a cost of more than $10 million.

Lake County commissioners said last month the county cannot finance building and operating two centers with current revenue. They have hired a fiscal consultant to work out a solution.

Miller said Thursday public safety officials strongly believe two centers are needed in case a natural disaster wiped out any single center. "With no radio communications, we're done," he told the Lakeshore Chamber of Commerce.

Lake officials recently declared their opposition to a local income tax on county residents and workers to save public transportation provided by the Regional Busing Authority.

Earlier taxing proposals to repair county roads or replace property taxes lost to state-mandated government reforms also have failed to gain enough votes in the County Council to overcome tax vetoes by county commissioners.

Indiana Law Blog Post: Long Reuters article examines increasing use of Tax Courts by the various states

The ILB entry links to a Reuters article on the increasing use of Tax Courts by states. From the article:

Their structures vary from state to state, but generally these tribunals offer a place where taxpayers can challenge the decisions of tax authorities, from individual and corporate income taxes to sales and property taxes.

States without an independent court generally rely on administrative hearing systems within their revenue departments to adjudicate tax disputes, like the one Georgia had. Unhappy taxpayers in these systems often may appeal to state courts, but these lack specialized tax judges.

Proponents of the new tax courts include lawyers' groups and corporations. They say the courts handle appeals more quickly and in ways that are fairer to taxpayers than when the appeals are under the control of state revenue departments.

See the full ILB post here:

Calumet Specialty Products Offered Tax Credits and Training Grants for Expansion in Indianapolis

From the Indianapolis Business Journal:

Oil refiner Calumet Specialty Products Partners said it plans to expand its Indianapolis headquarters, adding 48 jobs by 2015.

The company, which produces oils, solvents, waxes, said it will make a multi-million-dollar investment to purchase a new enterprise resource planning system and computer equipment at its headquarters at 2780 Waterfront Parkway.

Calumet, which currently has 75 full-time Indiana employees, has begun hiring management, accounting, sales, human resources and information technology workers.

Calumet began operations in 1990 with the acquisition of a specialty lubricants refinery in northwest Louisiana and a distribution terminal in Burnham, Ill. The company now operates five additional plants in Louisiana, Pennsylvania, Texas, Wisconsin and Missouri.

The Indiana Economic Development Corp. offered Calumet up to $400,000 in tax credits and up to $137,500 in training grants. The city of Indianapolis will consider additional property tax abatement.

Thursday, May 24, 2012

Board Finds Auction Sale Insufficient to Raise a Prima Facie Case for Lowering Property's Assessed Value

The Knechts rely on their purchase of the subject property for $1,425,000 and on two appraisals valuing the property at $1,500,000 and $1,535,000, respectively. All three items, however, have a significant evidentiary problem—they address the property’s value as of dates more than one year after the relevant January 1, 2008 valuation date at issue in this appeal. In fact, Mr. Capozza’s appraisal values the property as of March 1, 2011—more than three years after the relevant valuation date.
Mr. Knecht did not really attempt to explain how those items related to the subject property’s market value-in-use as of January 1, 2008. ...

There is another problem with relying on the subject property’s auction price—it does not appear to meet the conditions of a market value sale. As explained in the Manual, market value is

The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing for title from seller to buyer under conditions whereby:

o The buyer and seller are typically motivated;
o Both parties are well informed and advised and act in what they consider their best interests;
o A reasonable time is allowed for exposure in the open market;
o Payment is made in terms of cash or in terms of financial arrangements comparable thereto;
o The price is unaffected by special financing or concessions.

MANUAL at 10.

The evidence in this case shows that two key indicia of a market value sale were missing—the seller was atypically motivated and the property was not exposed to the market for a reasonable time. The Knechts bought the property at auction in what all the witnesses described as a “short sale. Although the parties did not explain what they meant by that term, the Board assumes that they were describing a sale in which the sale price was less than the amount that the seller owed on the property. See In re Booth, 417 B.R. 820, 824 n.3 (Bankr. M.D. Fla, 2009) (quoting In re Fabbro, 411 B.R. 407, 413 n.7 (Bankr. D. Utah 2009) (defining a “short sale” as “a sale by a willing seller to a willing buyer for less than the total encumbrances of the home with the consent of the underlying lienholders who agree to take less than what they are owed.”). The seller was under financial duress and the property sold for significantly less than both the seller’s original asking price of $2,690,000 and his last asking price of $2,490,000. Pet’rs Ex. 3. Plus the property was twice offered at auction, each time after having been exposed to the market for significantly less than the average marketing time for lakefront properties on Lake Wawasee. Indeed, Mr. Knecht acknowledged that the property was auctioned partly because of “complications with the seller proposing a short sale.

That is not to say that an auction or short sale automatically fails to qualify as a reliable indicator of a property’s market value-in-use. The same is true regarding sales for significantly less than a property’s list price. The Board also recognizes that there may be situations where enough properties in an area are sold in forced sales or are otherwise sold under duress as to effectively constitute the market. But that is not the case here. Given the totality of the circumstances, the weight of the evidence shows that the seller in this case was under duress and the price that the Knechts paid for the subject property is not, by itself, probative of the property’s market value-in-use.

Because the Knechts offered no probative evidence relating to the subject property’s market value-in-use as of January 1, 2008, they failed to make a prima facie case for changing the property’s assessment.