Tuesday, July 31, 2012

Board Finds Appraisal's Cost Approach Unreliable to Establish Property's Value

ALC offered Mr. Matheidas’s valuation opinion of the subject property, which he based solely on the cost approach. Mr. Matheidas took his cost data from a nationally recognized service and generally explained how he reached his valuation opinion, albeit without much detail. Thus, at least at first blush, Mr. Matheidas’s valuation opinion is prima facie evidence that the subject property’s true tax value was $1,675,000 as of April 1, 2011—the date for the current cost multiplier that Mr. Matheidas used in his analysis. And while Mr. Matheidas did little to explain how his opinion related to the March 1, 2010, and January 1, 2008, valuation dates at issue in these appeals, Mr. Lichtenberg supplied information from which Mr. Matheidas’s opinion could be related to those dates.

The Assessor, however, impeached Mr. Matheidas’s valuation opinion through Mr. Lichtenberg’s testimony and consulting report. Mr. Lichtenberg, who is an experienced MAI appraiser, credibly pointed to several problems with Mr. Matheidas’s analysis, including Mr. Matheidas’s failure to apply a size multiplier and his use of an insufficient sprinkler adjustment. Had Mr. Matheidas used the appropriate adjustments, his improvement values would have been higher, ranging from $1,621,688 to $1,725,317 for January 1, 2008, and from $1,603,198 to $1,705,810 for March 1, 2010. Without those adjustments, Mr. Matheidas found depreciated improvement values ranging from $1,510,772 to $1,577,634.

The bigger problem with Mr. Matheidas’s cost-approach analysis lays in his failure to include (1) soft costs that were not otherwise included in MVS cost data, and (2) entrepreneurial incentive.

The Board need not delve too deeply into the issue here, because both experts apparently recognized that generally accepted appraisal principles require including some amount for entrepreneurial incentive or profit when valuing the subject property. Indeed, in his closing argument, Mr. Matheidas acknowledged that had he done an appraisal, he would have included indirect costs and “some entrepreneurial profit.” Matheidas argument. Thus, Mr. Matheidas’s failure to include those things detracts significantly from the credibility of his valuation opinion. And contrary to Mr. Matheidas’s testimony, the sum of excluded indirect costs and entrepreneurial profit or incentive together with Mr. Lichtenberg’s other corrections amounts to far more than $200,000.

Mr. Matheidas’s errors are even more troubling in light of his decision to rely solely on the cost approach despite the fact that market participants do not rely on that approach when buying and selling properties like the subject property. Mr. Matheidas justified his decision to forego the income approach primarily on grounds that ALC does not get any income from the subject real estate itself but instead makes its money from services provided at the property. Even if ALC does not operate the subject property to generate income from the real estate itself, however, that does not automatically hold true for comparable facilities from which one might draw market income and expense information. But the record says little about whether such data exists, so Mr. Matheidas’s justification for not applying the income approach arguably has at least some merit.

That cannot be said about Mr. Matheidas’s justification for ignoring the sales-comparison approach—that sales of assisted living facilities almost always include intangible property, such as business enterprise value. Granted, the fact that sales may include non-real-estate interests likely makes for a for a difficult valuation problem—allocating comparable sale prices between real-estate and non-real-estate interests. But it is a problem that appraisers and analysts are called on to solve. Blanket statements that most sales include business value and that allocation is too complex do little to justify ignoring a valuation approach on which market participants heavily rely.

Mr. Matheidas also reasoned that it is against the spirit of property assessment appeals to require appraisals. He is right; the Indiana General Assembly has made it clear that a taxpayer need not have an appraisal to initiate or prosecute an assessment appeal. I. C. § 6-1.1-15-1(m); I.C. § 6-1.1-15-3(f). But that does not mean that a taxpayer may ignore generally accepted valuation principles on grounds that applying them would be too complex or expensive.

Northwest Allen County Schools Contemplates November Referendum

From the Fort Wayne Journal-Gazette:

Northwest Allen County Schools officials say a tax increase referendum must be considered as the district struggles to find solutions to its budget woes.

NACS officials reviewed part of the district’s 2013 budget Monday, and the forecast wasn’t promising: The district’s property tax-supported funds are projected to lose $2.4 million in 2013 because of the property tax caps imposed by the state, according to Business Manager Bill Mallers.

NACS Superintendent Chris Himsel said the losses are so significant that the district will need to consider several options to pay its bills.

The most helpful option, he said, would be a referendum in which voters agreed to pay higher taxes.

Himsel said NACS is feeling the pain of the property tax caps in a way that many other districts haven’t experienced. NACS, a growing suburban district, built and expanded schools in the years before the tax caps were implemented. The tax cap losses are hitting NACS as the district’s debt payments for construction are coming due.

In 2013, the state will take care of debt service payments, Himsel said. But the cost of the payments will be taken out of the districts’ transportation, capital projects and bus replacement funds, limiting many of the services the district would like to provide students.

By this winter, Himsel hopes the board can make a decision about how to handle the tax cap losses. Besides a referendum, he said the district could try traditional or non-traditional refinancing. Although both of those options would help the situation, he said neither would solve the financial problem.

“A referendum is the only option that truly solves the problem,” he said.

Himsel said the district would continue to maintain buildings and update security systems – the kinds of projects that relate to student health and safety. As a result, he said, technology plans and other projects would need to be put on the backburner.

Mallers will review the district’s general, or state-supported fund, at the next board meeting. The board will vote to adopt the budget in October.


Editorial Explains Indiana's Budget Surplus

By Larry DeBoers in the Vincennes Sun Commercial:


Back in July 2011, the budget agency projected that the state would have balances of $1.220 billion by the end of fiscal 2012 (July 31). One year later, they reported balances of $2.155 billion.That’s a $936 million, or 77 percent, increase in balances over expectations, in just one year. You can see these budget reports on the budget agency’s website, at http://www.in.gov/sba/2362.htm.

How did this happen?

Click here to find out more!
Let’s start with revenue. The economy grew faster than expected. Forecast revenue for fiscal 2012 was $13.831 billion, including taxes and other revenue sources. Actual revenue turned out to be $14.167 billion, $336 million more.

The corporate income tax added the most — $272 million more than projected. Corporations earned more profits and paid more taxes. Then there was the corporate income tax accounting error, reported in December of last year. For a few years, some corporate taxes weren’t counted in the general fund. In 2012 they were counted, so actual revenues exceeded the projections made before the error was discovered.

The error, reported in April, worked in the opposite direction. Local income taxes had been undercounted, and state income taxes overcounted in 2011 and 2012. After the correction, state individual income tax collections come in a bit lower than had been projected in 2011.

The two corrections also caused some fund transfers. The uncounted corporate taxes had been kept in a collections fund. They were transferred to the general fund. Income tax revenues owed to local governments for fiscal 2011 were transferred out of the general fund. Those two transfers netted out to a $217 million gain for the state general fund in 2012.

Indiana has established a new hospital assessment fee, which added about $106 million to state revenues. Indiana collects the fee, and then pays it back to hospitals in higher Medicaid payments. That sounds like a wash, except the added payments draw more federal matching dollars. It’s a net revenue gain for everyone (except the federal government).

What about spending?

Appropriations for fiscal 2012 were set in the budget passed in 2011. Appropriations are the legal authorization to spend money, and they were almost unchanged between the closeouts in 2011 and 2012. But “reversions” increased. These are appropriations that are not spent, so they revert to general fund balances. In 2011, the budget agency projected reversions to be $30 million. They turned out to be $316 million. That’s $286 million in expected spending that didn’t happen.

The budget agency provides a list of reversions by agency. The biggest spending reductions were $64 million from the Family and Social Services Administration and Child Welfare Services, $35 million in gaming tax distributions, $26 million from the Department of Correction, $23 million from the Department of Environmental Management and $67 million in reconciliations, which appear to be mostly accounting changes.

Appropriations minus reversions is a rough measure of total general fund spending. Larger reversions meant that spending growth in 2012 was less than expected, 0.3 percent instead of 2.3 percent.

Apart from a few miscellaneous changes, it all adds up to $936 million in balances that we didn’t think we’d have. Total balances are expected to remain above $2 billion through the end of the biennium in 2013.

And that means, for the first time in a long time, the General Assembly will have money to work with in the 2013 budget session.


Mayor Argues for Maximum Budget Expansion in Columbus

From the Columbus Republic:

Columbus Mayor Kristen Brown wants to expand city government by the maximum amount allowed under state law to pay for two additional police officers, 2.5-percent raises for city employees and infrastructure projects including road repaving.

Brown spoke generally last week about the city’s priorities for the 2013 budget cycle. However, neither the revenue projections nor a draft spending budget were ready for public disclosure on Friday, according to Jeff Logston, the city’s director of operations and finance.

Brown and her financial advisers planned to work through the weekend, if necessary, to come up with a draft proposal to present to the City Council today and Tuesday, Logston said.

City department leaders on those days will take turns presenting spending requests, after which council members will go through the requests before adopting a budget Oct. 2.

Brown told The Republic last week that the city will request that its maximum levy be increased by 2.8 percent, the maximum allowable by state regulators this year.


Clark County Property Taxes to Increase

From a lengthy article in the Jeffersonville News and Tribune:

The decision of the Clark County Board of Commissioners to increase the rates on two cumulative funds at a Thursday meeting has raised questions on how the decision will affect the county’s general fund, other taxing units and the taxpayers themselves.

The commissioners raised the rate on the cumulative capital fund from $0.018 to $0.0333, and raised the cumulative bridge fund’s rate from $0.008 to $0.05. The rate increases will raise about $2.2 million in revenue. The commissioners say they need the funds to pay for relief efforts in tornado-affected areas and repairs to county bridges and culverts.

In a letter submitted into the public record at Thursday’s meeting, County Commissioner John Perkins wrote that the cumulative bridge rate was reduced when a wheel tax was enacted, but was never increased when the wheel tax was later repealed. He cited those actions — along with the 2007 decision by the County Council to permanently eliminate 25 percent of the levy — as reasons for the commissioners’ actions Thursday.

“The ongoing damage to the general fund from that act has affected other funds in the years following 2007,” Perkins wrote. “[Contracted accounting firm] Umbaugh recommendations of July 11, 2011, have not been implemented to assist in infrastructure and bridge maintenance and repairs. Costs of these services increase from year to year.”

The circuit breaker property tax caps were reached by 28.3 percent of tax parcels in Clark County in 2011, according to the LSA. The 2012 numbers are not available.

“If they’re not at the circuit breaker tax cap, whatever the rate increase is, that increase goes on the property taxes,” Clark County Auditor Monty Snelling said. “So if you haven’t met the cap yet, then your taxes will go up.”

“If you have a parcel that is already at the circuit-breaker cap, and let’s assume the tax rate goes up, then that taxpayer is not going to pay any more taxes because they’re at the cap and their circuit-breaker credit increases,” the LSA said. “And that circuit-breaker credit is the loss of revenue that is shared by all of the taxing units in that tax district. Potentially, in that scenario, potentially then the library, and the school, and the floodwall, and the levee control — all of those taxing units then would share in the loss, if you will, that could be caused by another unit’s rate increase.”

See the full article here:


Tax Court Schedules Two Matters for Oral Argument in August

Board of Commissioners of Clark County, Indiana v. Indiana Department of Local Government Finance
Start Date: 8/16/2012Start Time: 11:00 AM
End Date: 8/16/2012End Time: 12:00 PM
Entry Description

The Clark County Board of Commissioners challenges the DLGF’s final determination denying an increase to the County’s Cumulative Capital Development Funds up to the maximum tax rate.

Room 300, Jefferson County Courthouse
300 East Main Street
Madison, IN 47250

Shelby County Assessor v. CVS Pharmacy, Inc. #6637-02
Start Date: 8/17/2012Start Time: 10:00 AM
End Date: 8/17/2012End Time: 11:00 AM
Entry Description

The Assessor challenges the Indiana Board of Tax Review's final determination that held that the assessed values established for 2007 and 2008 should remain unchanged, finding the competing appraisals submitted by both parties less credible/reliable.

Senior Judge Thomas G. Fisher presiding

State House, Room 413
Indianapolis, IN 46204


Monday, July 30, 2012

Tax Credits Offered to Apex Benefits for Expansion in Indianapolis

From the Indianapolis Business Journal:

Employee benefits provider Apex Benefits Group Inc. said Monday that it plans to expand in Indianapolis, creating up to 25 high-wage jobs by 2016.

The company, now based at Keystone in the Crossing, plans to invest $1 million to lease and equip a new facility for its headquarters at 3755 E. 82nd St. As part of the project, the company will purchase new furniture, computer hardware and software for the 7,329 square-foot office building.

The company plans to begin hiring additional sales and professional workers in Indianapolis this September. The jobs will earn an average wage of $44 an hour.   

The Indiana Economic Development Corp. offered Apex up to $400,000 in tax credits and up to $45,000 in training grants based on the company's job-creation plans. The city of Indianapolis plans additional incentives.

Council President Argues Monroe County Fiscally Sound

From the Bloomington Herald-Times:

Monroe County Council President Geoff McKim didn’t go as far as calling the county’s 2013 fiscal picture “rosy,” but his preliminary projection shows next year ending with fat reserves and a relatively skinny budget deficit, even without cuts.

Hearings for Monroe County government’s 2013 budget don’t start until mid-September, but county council members have already started crunching numbers in order to give department heads and elected officials guidance as they prepare their financial proposals.

After a published report on the city of Bloomington’s budget hearings, which concluded Thursday night, McKim decided to compare city and county budget projections for the year.

In his analysis, McKim presents city and county finances side-by-side, using the city’s method of representing budgetary reserves: the projected cash balance in the General Funds at the end of 2013 plus the Rainy Day Funds. For Bloomington, that amount is $7,160,873, and for the county, McKim projects reserves of $16,854,488.

In 2013, Bloomington will spend $781,157 of its reserves, while Monroe County will end up spending $713,546 from its reserves, McKim forecasts.

“Of course, there are a lot of what-ifs in this analysis,” he said. McKim factored a 2 percent cost of living increase for county employees into his analysis, a factor that hasn’t been decided yet.  Otherwise, he uses a flat budget based on the first six months of 2012. He factored out one-time budget impacts, such as a correction to county option income tax revenues earlier this year. He factored in a state-set 2.8 percent increase in property tax collections, but flat income tax and miscellaneous revenues.

He also assumed a 3 percent decrease in county contributions to its health insurance reserves, which are already comfortably high, he said, “unless three county employees need organ transplants.”

The state has required a 1.5 percent increase in contributions to the Public Employee Retirement Fund, which his numbers reflect. He also assumed $150,000 in additional appropriations in 2013.

“The upshot is that even under a projected deficit scenario, Monroe County government, through years of prudent fiscal management, clearly has reserves that are very healthy, compared to the proposed level of deficit spending during these difficult economic times. This is exactly why we build up reserves during good times — so we don’t have to slash basic public services when times are tighter.”


Editorial Argues Merger Debate Just Getting Started in Vanderburgh County

From the Evansville Courier & Press:

Those in favor call it unification. Those opposed use the term reorganization. For all intents and purposes, it's consolidation.

Residents of Vanderburgh County, including those in the city of Evansville, can vote on the plan in November. Whether it passes into local law will depend largely on how many actually follow through at the ballot box.

In theory, the plan will reduce layers of overlapping government. There would be a single elected mayor, who would appoint a deputy mayor to serve both as an assistant and as a replacement if needed. You wouldn't need both a city and county clerk, so a single county clerk's office would be in place. The city and county garages would be merged. Instead of a nine-member city council, a seven-member county council and three county commissioners, you'd have a 15-member common council representing 12 districts with three at-large positions.

A group titled "Yes! for Unification!" leads the support, with Vanderburgh County Sheriff Eric Williams its most public figure. A group called "Citizens Opposed to Reorganization in Evansville" (CORE) is rallying dissent, with county businessman Bruce Ungethiem and county treasurer (and former mayoral candidate) Rick Davis as its leading spokesman.

Both sides have been effective in making points.

The keys, of course, are costs and savings. Yes! people, while admitting that early claims of savings likely won't be realized soon, believe a unified government will do a better job of attracting and retaining businesses, creating greater tax bases and in the long term providing savings that way.

CORE wonders what current county residents will get from consolidation, other than a larger share of the property tax burden. And some in the center city, with the Rev. Adrian Brooks leading the call, suggest they will lose representation within a larger single entity.

What's known, for sure, is that both sides are passionate of their opinion.

See the full story here:


Supreme Court Denies Transfer in Neterer Case

Estate of Christine L. Neterer, Deceased, Deborah Pollock and Marilyn Humbarger v. Indiana Department of State Revenue
Transfer Denied - All Justices concur.
Fisher, Sr. J.

The original Tax Court decision can be found here:

Allen County Awaiting Data to Settle Property Tax Dispute with Glenbrook Square Mall

From the Fort Wayne Journal-Gazette:

Allen County officials are hopeful they will soon receive financial data requested from Glenbrook Square that is necessary to settle years of appeals related to the shopping mall’s property tax assessment.

The Allen County Assessor’s Office and Glenbrook Square have been at odds since 2002 when the Assessor’s Office began requesting detailed financial information regarding the mall’s tenants.

In 2002 – the first year for the state’s court-ordered reassessment of properties – counties had to base a property’s tax assessment on its market value. Under state law, properties are reassessed every five years.

Every year since, the mall’s parent company, General Growth Properties, has filed a tax appeal.
The 1.2 million-square-foot mall – consistently named one of the county’s top taxpaying properties – was sold to General Growth Properties in 2003 for about $220 million.

According to assessors at the time, the mall was worth about $64 million.

Commercial properties can be assessed based on the amount of income they generate. To determine the value of income-producing properties, the assessor’s office must have information relating to the rental incomes derived from mall tenants, said Mark GiaQuinta, attorney for the assessor.

Although the assessor’s office recently filed a court order to obtain those documents by July 18, they plan to give Glenbrook an additional 10 business days to comply, GiaQuinta said, adding he is confident the information will be provided Monday.

“When we get the information, we can either settle the case or litigate,” GiaQuinta said. “Our job is to come up with a fair assessment,” he said.

In 2008, Allen County cleared a major hurdle in the legal fight over Glenbrook’s property assessment when an administrative law judge denied a request to rule in favor of the mall’s owners without a trial. No trial date has been set.

At stake is a tax refund of $10 million to $15 million, including interest that local taxing units would have to pay to Glenbrook if the county lost the case, which stems from Glenbrook’s 2002 reassessment.

Since Glenbrook’s tenants pay the taxes through a special lease that includes not only rent and utilities but all real estate taxes, building insurance, and maintenance, it is unclear where exactly the refund – if it transpires – would go or whether past and present tenants would receive a share of that refund.

Glenbrook’s attorney, John Burns, declined to comment.

Glenbrook Square’s parent company, General Growth Properties filed a Chapter 11 bankruptcy in 2009 and included the shopping mall in its bid to reduce and restructure debt.

About 15 million shoppers visit Glenbrook each year. The enclosed, two-story shopping center includes about 150 tenants, a food court and a two-story carousel.


Allen County Commissioner Pushes for State Changes to Fund Local Road Repair

From the Fort Wayne Journal-Gazette:

Allen County Commissioner Therese Brown has never been one to mince words, and she is using her position as president of the Association of Indiana Counties to push for state changes to benefit local roads.

In a recently written letter sent to Indiana newspapers seeking publication on opinion pages, Brown calls on the state to begin using all of its fuel tax revenues for infrastructure. She claims that current law allows $144 million of those taxes to be diverted for other us.

“Local officials have administrative and public safety costs that are covered by the units’ general funds and the state should do the same,” she wrote

Brown offered some sobering stats to back up her argument: “In Allen County and the surrounding nine counties, 40 major projects controlled by the state and local agencies are needed by 2025 for commercial development and traffic mitigation. Eight are funded.”

She also wrote that roads that should be repaired every decade are fixed every 16 to 30 years. Brown admitted local sources of revenue, such as excise and wheel taxes, are part of the solution, but state action must also be included.

“After nearly a decade of falling revenue, many rural roads, but also city streets, are teetering on the need for major repair. The decisions by some localities to close bridges or return roads to gravel reflect that dilemma,” she wrote.

Whether her call will gain any traction remains to be seen, but it is likely not the last time people across Indiana hear from Brown’s bully pulpit.


Budget Issues Could Swallow Surplus

From the Indianapolis Business Journal:

With $2.2 billion in the bank, improving tax collections and extra tax refunds on their way to Hoosiers, it would be easy to assume Indiana's leaders could coast for a while.

But lawmakers and the next governor will have to make some tough decisions about which way the state heads as they write the budget that will set much of the Indiana's direction for the next two years.

A few decisions have already been made for them. That $2.2 billion cushion will be whittled back to $1.4 billion as a result of Gov. Mitch Daniels' automatic tax refund, which will return more than $100 to each taxpayer next year, and payments to Indiana's teacher pension fund. Lawmakers will also have to make up for cuts already approved to the state's corporate income tax and the phasing out of the inheritance tax (some of which will be offset with the state's sales tax agreement with online retail giant Amazon).

Indiana's next governor will have to decide whether to expand Medicaid under the federal health care law. Lawmakers and the new governor also will have to find roughly $500 million each year to pay for transportation projects as the money from the leasing of the Indiana Toll Road runs out.

"Highway funding is going to be a big issue," said House Ways and Means Chairman Jeff Espich, R-Uniondale, who is not seeking re-election after more than four decades in the General Assembly.

Espich also notes that the economic picture could turn again at any time, causing the state to begin losing money as it did during the Great Recession. He said even a small adjustment of a percentage point in tax collections could throw off the state's books by hundreds of millions of dollars, cutting into the $500 million structural surplus the state has built.

John Ketzenberger, president of the Indiana Fiscal Policy Institute, said the best thing lawmakers and the new governor can do is to take a deep breath before making major decisions about how that money should be spent—either on more services like education, or on tax cuts.

Espich said his replacement as the House's budget-writer should get used to saying "no." He estimated that of the roughly 80 bills he weighed in his committee earlier this year, 50 were new tax credits of some sort for local economic development, farm aid and many other projects.

Ironically, it's the state's solid footing that makes it that much harder for lawmakers to say "no" after years of pent-up demand caused by budget cuts, Ketzenberger said.

"It's harder for the Legislature to say no when there is revenue available, certainly more than it is when you're in the negative," he said.

Some drains on the state reserve will likely be out of Indiana's hands. Even if the state decides not to expand Medicaid, the expected growth in in the program already underway and increasing reimbursement costs could eat away at the reserves just as easily as any conscious decision from lawmakers, Espich said.

In the end, $2.2 billion might look like a lot, but it could easily disappear depending on myriad factors, some within state leaders' control and some not.


Revenue Finds Taxpayer's Request for Refund Time Barred

Taxpayer protests refunds denied for 2007 and 2008. The refunds represented amounts withheld by Taxpayer's employer. Taxpayer states that his employer erroneously withheld Indiana tax on his wages and did not correct the error until 2011. Taxpayer further states that he was required to pay California tax, penalty, and interest on the wages on which Indiana tax was erroneously withheld. The issue is whether the refund request was timely submitted.

Under IC § 6-3-4-8(h), a taxpayer must file an original Indiana individual income tax return within two years of the due date of that return in order to claim a refund for taxes withheld by an employer. For 2007, the due date of the return was April 15, 2008. For 2008, the due date of the return was April 15, 2009.

Taxpayer did not file an original Indiana individual income tax return for 2007 and 2008 until August 31, 2011. The latest date under IC § 6-3-4-8(h) for filing the returns was April 15, 2010 (for the 2007 tax year) and April 15, 2011 (for the 2008 tax year).

While the Department understands Taxpayer's issues trying to resolve his erroneous withholding and the fact that Taxpayer has been required to pay a portion of his tax twice, Indiana law has a statutory requirement to file an Indiana income tax return to seek the erroneously-withheld taxes within a prescribed time period. Taxpayer did not file his returns within that time period. Thus, Taxpayer's protest of his 2007 and 2008 refund claims was properly denied.


Editorial Urges Caution in use of Abatements

By David Henke in the Elkhart Truth:

While Elkhart city and surrounding communities struggle to gain jobs, the use of tax abatements have increased in that effort. As publicized in The Elkhart Truth, I questioned the current process and unchecked methodologies that are used to validate that abatements actually grow our local economy instead of adding an additional cost to taxpayers.

While I desire this community to be business friendly, we must acknowledge the many companies that already exist and pay their fair share of taxes without government help. While being business friendly, elected officials must also be diligent to protect future business taxes collected as abatements may very well lower the margins in which the city needs to continue full services.

While normal business cycles will continue, we hope that new business starts and expansions equal the business that are experiencing slow down or shut down. From a finance standpoint, that business cycle provides municipal government, schools, trustees and libraries with necessary taxes to sustain services. If, however, abatements are encouraged without measurable, sustainable returns, the amount of money collected may not offset the taxes lost by failing companies and those experiencing slowdown.

For these reasons, I voted no on the Keil North America expansion. Scope Technologies’ owner stated that if another competitor comes in with $450,000 of government assistance someone has to fail, as there is not enough demand for their specific industry. Mind you that this seating company just completed a $2.5 million expansion without government help, taking the number of jobs from 20 to 150. In my opinion, adding 62 new jobs to replace an equal number of existing jobs is a fail.

For the Elkhart Truth editorial board to quickly and flatly declare the question of abatement wrong implies that everyone agrees with the process and it consistently benefits the municipality and community. That simply is not accurate.

As always, I believe that more discussion and debate is healthy and warranted or the government we have today is the best we can hope for.

See the full article here:


Companies Already Making Plans for TIF Expansion in Valpo

From the Northwest Indiana Times:

The city's tax increment financing district won't officially include the U.S. 30 corridor until Aug. 8, but the first customer hoping to take advantage of it already is waiting.

The expansion of the TIF to include all of U.S. 30 within the city, all of Ind. 130 within the city and the Washington Street/Ind. 2 corridor from Monroe Street to the city limits was approved by the City Council on Monday. Now it goes to the city's Redevelopment Commission on Aug. 8 for a public hearing and a final vote.

Although the new TIF territory includes only the property within the roads' rights of way, it will allow the city to use TIF revenue to provide incentives to businesses interested in building or redeveloping a site, extend city utilities, improve intersections and provide landscaping and other improvements along those corridors.

If the expansion is approved as expected, the next item on the agenda will be setting up a facade grant program for U.S. 30 similar to those offered for businesses in several other areas of the city, in which they can get half the cost of exterior improvements reimbursed up to a maximum of $25,000.

Assuming that is approved, too, Nohit Patel will be next up with a request for a $25,000 grant to pay for part of the exterior renovations to the former Holiday Inn Express on U.S. 30. Patel, a managing member of the project, said work already is under way on the building with the goal of opening it by the end of the year.

Redevelopment commission Executive Director Stuart Summers said plans call for spending $125,000 on the exterior and $552,600 on the interior.


Saturday, July 28, 2012

Board Finds 2002 Stipulation not Probative of Property's 2006 Value

In the present case, the Petitioner argues that the $255,000 assessment in 2006 is unreasonable based on the property’s 2002 assessment of $129,800. Bennett Testimony. However, the 5% increase must be measured against “the immediately preceding assessment date.” Ind. Code § 6-1.1-15-17.2. The Respondent’s evidence shows that the property’s assessed value in 2005 was $305,600 and the value in 2006, as determined by the PTABOA in the Form 115, totaled $255,100. Respondent Exhibit 6. Because the property did not increase 5% between 2005 and 2006, the Petitioner bears the burden of proving that the property’s assessment in 2006 was incorrect, and showing what the value of the property should be.

The Petitioner failed to provide sufficient evidence to raise a prima facie case that its property was over-valued for the 2006 assessment year. The Board reached its decision for the following reasons:

The Petitioner’s representative first contends that the assessed value of the Petitioner’s property was incorrect for 2006 based on the property’s 2002 stipulated value. However, the Indiana Tax Court has held that prior settlement agreements are inadmissible under Indiana Evidence Rule 408. See Boehning v. State Bd. Of Tax Com’rs, 763 N.E.2d 502, at 504-505 (Ind. Tax Ct. 2001). …  Allowing taxpayers to use prior settlements … “would have a chilling effect on the incentive of all assessing officials to resolve cases outside the courtroom.” Id. Because the property’s assessment in 2002 was the result of an agreement between the Petitioner and the Department of Local Government Finance, Indiana Evidence Rule 408 prohibits the Petitioner from using the agreed upon value as evidence in the present case. Similarly, the settlement agreement itself prohibits such an act. See Petitioner Exhibit E (the assessed value stipulated within the settlement “does not represent a final determination of the most appropriate or accurate assessed valuation of the property,” and that the terms of the settlement “should not be used as evidence of the assessed valuation” of the property).

Moreover, the Board notes, the property’s “value” that the parties purportedly stipulated to for 2002 is unclear. On its face, the stipulation document states that the parties agreed to “(1) change[] 2 story house into dairy barn (no living area); (2) change[] shed measurements to 20x40 for 40x72; and (3) [give] 50% obsolescence depreciation to concrete silo.” Id. But no assessed value is identified in the stipulation. A hand-written notation in the upper corner of the document shows two columns of figures: “L 23,400, I 276,600, total 300,000” and “L 23,400, I 106,400, total $129,800.”. … Even if the hand-written notation was determined to be reliable and admissible evidence of the property’s 2002 value, it would still be insufficient to show that the property’s assessed value in 2006 was incorrect. Each assessment and each tax year stand alone. … There are numerous reasons why the value of a property would change over a five year period, and it is the Petitioner’s burden to show that the assessment for the year at issue was incorrect.

Finally, the Petitioner’s representative argues that the Petitioner’s property is not worth its assessed value. Bennett argument. However, the only evidence Mr. Bennett offered of the property’s value was his testimony that a realtor from Century 21 said the Petitioner “would be lucky to get $159 for it right now.” Even if the Board gave any weight to Mr. Bennett’s hearsay testimony, the valuation date for the March 1, 2006, assessment was January 1, 2005. 50 IAC 21-3-3. Because Mr. Bennett failed to relate Mr. Likus’ opinion of the property’s value “right now” to the property’s value in 2005, the evidence fails to show the property’s 2006 assessment was incorrect. See Long v. Wayne Township Assessor, 821 N.E.2d 466, 471 (Ind. Tax Ct. 2005).

Howard County Saves State Funds for Rainy Day

From the Kokomo Tribune:

As recommended by the state, Howard County has placed the additional tax revenues received through a state accounting error into the Rainy Day Fund.

The Howard County Council voted to transfer $815,010 from the county’s general operating fund into the Rainy Day Fund, which functions as a savings account.

All local taxing units received $4.2 million following a mistake discovered by the Indiana Department of Revenue earlier this year.

Howard County taxing units this year will receive an additional $3.7 million in county and local option incomes taxes and $533,900 in economic development income taxes.

The transfer of the $815,010 into the Rainy Day fund increased the balance in the fund to $2,074,906 or a 39 percent increase.

“This is the additional income tax revenue that came in from the state,” said Richard Miller, president of the council. “It was recommended by the state and agreed to by the commissioners.”

In addition to approving the transfer of the funds, the council passed a resolution so that a paper trail exists for the Indiana State Board of Accounts.

The council has to approve any appropriation from the Rainy Day Fund for the money to be spent.

Treasurer Martha Lake said Howard County received an additional $635,000 in County Option Income Tax revenue and $203,193 in County Option Economic Development Income Tax funds.


Indianapolis Looks to IMPD for Budget Cuts

From a lengthy article in the Indianapolis Business Journal:

Many Indianapolis police officers drive their patrol cars during off-duty hours without paying for the gas they use.

The cops last year agreed to reimburse the city for one tank of gas a month, potentially saving taxpayers $1 million a year, but the Department of Public Safety has yet to implement the policy.

That and other long-discussed savings in the criminal justice system might finally come to fruition this year, as the city confronts an estimated $27 million budget gap for 2013. The only places left to find that money are in sheriff, police, fire and court budgets, which account for 85 percent of spending from the $569 million general fund.

Mayor Greg Ballard vows to continue his march for government efficiency into politically sensitive territory.

“There have not been efficiencies in public safety,” Ballard said. “Everyone else has cut back. Everyone has been more efficient. All these sacred cows have to stop.”

City-County Council President Maggie Lewis said she recognizes that public safety is the logical target for cuts, but the Democratic-controlled council might disagree with Ballard on exactly where to make them.

“This is going to be a test of the councilors and administration,” she said. “Are we really going to be able to work together?”

Ballard’s budget will be introduced Aug. 13, but City Controller Jeff Spalding expects negotiations over the final allocations to last all fall. The deadline for adoption is Nov. 1.
See the full article here:


Sallie Mae Seeks Incentives for Expansion in Muncie

From the Indianapolis Business Journal:

Student-loan giant Sallie Mae announced Friday morning that it plans to add 200 jobs at its Muncie location as part of a $5 million expansion.

The Newark, Del.-based corporation said the investment will go toward a 20,200-square-foot expansion of its offices at Airpark Industrial Park. When finished next summer, the 75,000-square-foot facility will house 900 employees.
The Muncie Redevelopment Commission will consider in August an incentive proposal to lower the purchase price of the building that Sallie Mae now leases but intends to buy. The City Council will consider a request for a partial tax abatement on Aug. 6.


State Board of Accounts Establishes New Funds to Prevent Commingling


To: County Auditors

From: Paul Joyce, Deputy State Examiner of the State Board of Accounts

Brian Bailey, Commissioner of the Department of Local Government Finance

Date: July 24, 2012

Re: New Funds for Certain Income Tax Distributions

Implementation of the uniform county chart of accounts has brought to light that counties have been commingling income tax certified shares and distributive shares with property tax dollars. This practice fails to provide accountability for each of these revenue streams and any remaining balances. In order to avoid creating shortfalls in these commingled funds State Board of Accounts (SBOA) did not ask for change in 2012 but we are looking to improve the uniform accounting system in 2013 and beyond.

Beginning in 2013, the SBOA is instructing all county units to use funds, 1110, CAGIT County Certified Shares or 1121, COIT County Distributive Shares, as applicable, to receipt, disburse and account for balances of county income tax dollars not otherwise designated for special legislation or property tax relief. Planning and budgeting for this change is necessary during the 2013 budget process. Please enter these funds as new "home rule" funds in Gateway.

These new funds are separate income tax revenues for the purpose of fixing the county budget and may be used for any allowable governmental purpose. Salaries, fringe benefits, capital expenses are all appropriate uses of these funds. Income tax, however, is the only revenue source for the fund. The Department of Local Government Finance (DLGF) recommends leaving costs that affect the maximum levy calculation in the general fund where the property tax is receipted. Costs affecting the maximum levy calculation for counties include the mental health and mental retardation contributions. Leaving these costs in the property tax supported fund should prevent possible future challenges.

It should be noted that no changes are required for CAGIT PTR, CAGIT for county specific legislation, COIT for county specific legislation, CEDIT or any of the LOITs for property tax relief. These amounts are already accounted for in separate funds.


Friday, July 27, 2012

Council Calls for Deeper Cuts in Allen County

From the Fort Wayne Journal-Gazette:

After two days of budget hearings, the bottom line was, it’s back to the drawing – or cutting – board for many Allen County departments.

Allen County Council members decided Thursday not to use its reserve funds to balance the 2013 budget. As a result, nine departments will be asked to trim budgets an additional 1.5 percent to 2.5 percent

County Auditor Tera Klutz had recommended the council use $2.3 million from the county’s rainy-day fund to balance the county’s nearly $85 million budget.

The fund will likely end the year with $12.5 million, Klutz said.

County offices excluded from making further cuts were the Recorder, Voter Registration, Wayne Township Assessor and Voter Registration, who have asked to reduce – or in the case of the Recorder, eliminate – their budgets.

The sheriff’s department, with a budget of about $22 million, had asked for a budget increase of $279,650 for increased fuel and inmate food costs, overtime pay and extra help at the jail. Sheriff Ken Fries also requested $406,500 for projects including new squad cars, computers, scanners and printers.

Because of spiraling health insurance costs, council members agreed to provide about $3.4 million to the county’s self-insurance fund – $2.3 million of that coming from the rainy-day fund. Klutz said the insurance fund will be out of money in a few weeks because of high claims.

The council denied a request from Homeland Security asking for $460,000 for emergency warning sirens and reduced the Youth Service Center’s budget by $252,983. They also asked the Youth Service Center to offset operating costs using money from their user fee fund.

There was about $700,000 in the center’s user fees fund at the end of the year, and it had only spent $200,000.

Although the council approved 2 percent raises for employees in 2013, those raises will be offset by the 3 percent employees must contribute to their retirement funds – an amount previously contributed by the county. Police and probation officers are excluded from the increases because the state mandates a raise of 2.2 percent.

Departments may appeal their requests Sept. 20, and final budget approval is set for Oct. 18.


Congress Debates Online Sales Tax; Could Net Indiana Millions in Tax Dollars

By Maureen Hayden in the Jeffersonville News and Tribune (and others)

Federal legislation that would allow Indiana and other states to collect millions of dollars in unpaid sales taxes on online purchases may be getting closer to reality.

Indiana state Sen. Luke Kenley — the Republican chairman of the state Senate appropriations committee and a key player in the online sales tax issue — said pressure is ramping up on Congress to act. Earlier this week, the U.S. House and Senate held committee hearings on online sales tax legislation. They heard bipartisan testimony from leaders of cash-strapped states who said they need a federal law to recoup an estimated $18 billion in revenues lost to online sales that go untaxed.

“The pressure is really beginning to build,” Kenley said. “I think it could happen this year.

Kenley has spent a decade on the issue, working on a multistate agreement to streamline the much-varied sales taxes that exist among the states. Two bills, one in the House and one in the Senate, would clear the way for states to collect an online sales tax if they sign onto the streamlined sales tax agreement.

Indiana stands to gain millions in tax revenues — estimates range from $77 million to $200 million-plus a year — at a time when it’s phasing out the state’s inheritance tax. State fiscal experts say the inheritance tax phase-out will cost Indiana about $165 million a year in revenue, starting in 2020.

The online sales tax issue has lingered for years, following a 1992 Supreme Court decision that let most online-only retailers off the hook for collecting state and local sales taxes on purchases made by their customers. The court said it was up to Congress to come up with a fix.

A combination of factors — including heat generated by states hard hit by the recession and by bricks-and-mortar retailers who say online competitors have an unfair pricing advantage — have elevated the issue, Kenley said. Backers of federal legislation that would allow states to collect the online sales tax include the National Governors Association, and the giant online retailer, Amazon.com, which had been fighting individual states’ attempts to force it to collect the tax.

Earlier this year, Amazon.com, struck a bargain with Indiana Gov. Mitch Daniels. Amazon agreed to voluntarily begin collecting Indiana’s 7 percent sales tax on Internet purchases, beginning in 2014 if a federal law doesn’t pass before then. At the time, state fiscal experts said untaxed purchases made online by Amazon customers in Indiana accounted for about $25 million a year in lost tax revenues.


Clark County Commissioners Increase Tax Rates on Two Funds but Claim No Property Tax Increase

From the Jeffersonville News and Tribune:

The Clark County Board of Commissioners unanimously increased the rates on the county’s cumulative bridge and cumulative capital funds at a Thursday meeting, citing deteriorating infrastructure and disaster relief as the reasons for the increases.

The cumulative bridge rate was increased from $0.008 to $0.05, which will increase the amount in the fund from about $300,000 to about $1.9 million annually.

The cumulative capital fund went up from $0.018 to $0.0333, the maximum allowed by state law. Board President Les Young said the funds were needed to help pay for recovery efforts in Henryville and Marysville.

Perkins and Young both initially denied the rate increases to the two funds would affect taxpayers.

“What we did tonight is inside the levy,” Perkins said.

He went on to say the rate changes would come out of the county’s general fund.

County Councilman Brian Lenfert disputed Perkins’ claim after the meeting.

“That would only be the case if all homeowners were at the 1-percent cap,” Lenfert said. “If a parcel — a taxpayer — is not at the 1-percent cap, then this will be a tax increase.”

County Councilman Chuck Moore added that other government entities within the county would be adversely affected.

The county council is holding its budget meetings Aug. 14 and 16 for county departments. Moore said the council could use its authority to approve the budget to oppose the commissioners’ efforts. 

Cook Shelves Expansion Plans Because of Medical Device Tax

From the Indianapolis Business Journal:

Cook Medical Inc. had been planning to open five new manufacturing plants over the next five years in small communities around the Midwest, including Indiana, but has shelved those plans because of the hit it will take from a new U.S. tax on medical devices.

The Bloomington-based medical device maker estimates it will pay between $20 million and $30 million once the tax takes effect in January, Pete Yonkman, executive vice president of strategic business units at Cook Medical, said this week.

The 2.3-percent tax on sales of all medical devices was created as part of President Obama’s 2010 health reform law to help pay for its expansion of health insurance coverage to as many as 30 million more Americans. The tax is projected to raised about $2.9 billion per year.

“It is a challenge for us, no doubt,” Yonkman said in an interview after the IBJ Life Sciences Power Breakfast on Wednesday (see video below). “We have fewer resources to be able to spend on those kinds of projects.”


See full article and video here:


Falling Property Values Push Assessed Values Lower in Chesterton

From the Chesterton Tribune:

The slump in the housing and real estate market values may have an adverse effect on county government in the coming years say officials in the county assessor and auditor offices.

Both offices are in the process of finalizing the 2012 assessed and net certified values which will show up on property taxpayers’ 2013 bills released next spring, but the early figures from County Assessor Jon Snyder estimate the county’s total assessed value will be about $13.1 billion compared to $13.4 billion in 2011, a drop of $360 million or 2.7 percent.

Snyder said his office submitted real property assessed figures to the Indiana Department of Local Government Finance on July 2 and personal property figures on July 10, one of the first five counties in the state to do so and is ahead of the curve with on-time billing ahead of last year.

County Auditor Bob Wichlinski said he expects to have the net assessed values figured by next week’s Aug. 1 deadline, which will then be sent to the state for further evaluation. He said it is too early to say what the official figures will be since the state has the power to set the final 2013 budgets and the tax rates, which are not due until February.

The largest AV dips occurred in the county’s two biggest municipalities. Portage City’s AV dropped nearly $120 million according to unofficial figures, going from $2,299,319,564 in 2011 to $2,179,439,915 in 2012. Valparaiso saw a similar decline, going from $2,516,432,730 in 2011 to $2,404,617,110 in 2012, a difference of about $112 million, the unofficial figures suggest.

But not all of the county’s 29 taxing units are projected to see their AVs decline. Thirteen could see increases.

The taxing unit with the largest AV growth according to early figures was in Duneland. Thanks to the new $210 million hospital on the corner of Ind. 49 and U.S. 6, Liberty Twp. saw the biggest jump in AV of about $39 million. Behind it coming in with the second and third largest AV increases were two more Duneland units, Beverly Shores with an increase of $14.9 million and the Town of Porter with a rise of $13.6 million.

From Duneland’s 12 taxing units, only four showed decreased AV results in the assessor’s unofficial figures. Those were Chesterton-Westchester (-$47.8 million, a 5.4 percent drop) Jackson Township (-$18.4 million, a 3.3 percent drop), Westchester Township (-$17.7 million, a 10.7 percent drop) and Chesterton-Jackson (-$4 million, a 10.6 percent drop).

The other Duneland units showing increased AV values were Burns Harbor (+$6.9 million), Pine-Duneland School District (+$3.4 million), Chesterton-Liberty (+$2.4 million), the Town of Pines (+$1.5 million) and Dune Acres (+$832,800).

The three Chesterton taxing units combined showed a negative difference of $49.4 million in unofficial figures.

Other notable decreases throughout the county include a $49.2 million drop in Center Township’s unofficial 2012 AV, a $38 million drop in Ogden Dunes, and a $37.5 million drop in Porter Township.

AV increases were seen in the taxing units of Valparaiso-Washington Twp. (+$10.9 million), Pine- Michigan City School District (+$10.6 million) and Hebron (+$8 million).

The new figures come from the most recent countywide reassessment which was completed by Snyder’s office this year in accordance with the state’s March 1 deadline.

Snyder said his office expects to mail out the final assessment figures to taxpayers in early October, about the same time as last year. Taxpayers who wish to appeal their values then have 45 days to do so, he said.

Lower assessed valuation generally drives tax rates higher, while higher AV totals tend to drive tax rates lower.

Higher tax rates will cause more properties to hit the state tax cap circuit breakers: One percent cap for owner-occupied residential properties, two percent for multi-family dwellings and agricultural land, and three percent for commercial property or other real property.

Wichlinski said whether a property is located within a tax increment finance (TIF) district or a conservancy district is another reason a tax bill may go up or down.

Property owners in the Duneland School Corporation can expect to see an additional item on their 2013 bill with the passing of the corporation’s referendum to increase the property tax by 22 cents per $100 of assessed value, Wichlinski said.

Morristown Council Adopts New Property Tax

From the Shelbyville News:

The Morristown Town Council voted to create a new property tax Wednesday.

The tax ultimately will require Morristown residents to pay about another 5 cents per $100 of assessed valuation each year. The tax will start off at about 2 cents per $100 for the first year, then increase to 3 cents for the second year and cap at 5 cents from then after.

Clerk-Treasurer Don Roberts said that the new tax might raise $20,000 total in the first year and $35,000 the third year and beyond for the town.

After some discussion with the few Morristown residents who are regulars at the town council meetings who showed up for a public hearing on the tax, the council voted 3-0 in its favor.

"No. 1 is, we don't know how long (Indiana Downs) is going to be around," council member Mike Freeman said of concerns the town's leaders have about revenue in the future. The town currently earns a percentage of the taxes paid by Indiana Downs and its partner casino, Indiana Grand.
The money will go into a capital fund that the town had plans to use for a new fire station.

The town also made a final vote, 3-0, on a plan to raise garbage collection user fees from $6 to $6.50 because the actual cost to collect the garbage is $6.50.


Greenwood Consider TIF Funds for New Pool

From the Johnson County Daily Journal:

Greenwood has used special tax district dollars to pay for widened roads, a fire station and a construction loan for a business expansion. Now officials are thinking of using the money for a new pool.

Pool committee chairman and Greenwood City Council member Thom Hord said the best way to pay for a new aquatic center would be to borrow money and repay it with special tax district dollars. The hope is that the city could take out a loan to pay for a multimillion-dollar pool without having to charge a new property tax rate or increase taxes, Hord said.

Instead, taxes from businesses in certain parts of the city would pay for a new pool. An attorney told city officials Wednesday that Greenwood could legally use special tax district money to build a pool that’s not actually in the tax-increment financing district because it could help lure more businesses to town.

Greenwood also wouldn’t have to bring the project to a referendum if it used special tax district dollars, Hord said. He said he’d prefer that an aquatic center not go to a public vote after library, jail and school projects all recently failed at the polls.

“It’s hard to pass a referendum in Indiana, with the history of the way referendums have gone,” he said.


Ellettsville Seeks to Reauthorize Fund: Raise Property Taxes

From the Bloomington Herald-Times:

Residents will have the opportunity to weigh in Monday as the Town of Ellettsville moves to seek an increase in the tax rate for a fund used for capital improvements.

The town will seek to reauthorize its Cumulative Capital Development Fund this year for the first time in 10 years, a move that will allow it to increase the tax rate for that fund to closer to the state’s maximum of 5 cents per $100 of assessed value. The Ellettsville Town Council will hold a public hearing on the matter at its meeting at 7 p.m. Monday at the Ellettsville Fire Department training and conference room, 5080 W. Ind. 46.

In 2012, the fund’s tax rate — which slowly declines as a municipality’s net assessed value rises unless a city or town reauthorizes it at a higher rate — was about 3.1 cents per $100 of assessed value, according to Clerk-Treasurer Sandy Hash. However, Hash believes that the tax rate, which she said is based on a complicated formula, is unlikely to rise all the way to 5 cents per $100 of assessed value in 2013.

The fund brings Ellettsville about $55,000 on average, Hash said. Those funds are use for capital improvements, most often the purchase of police cars, building maintenance and, more recently, information technology equipment and software.

Because of the economic downturn, Ellettsville has been spending some of the cash reserves in that fund, Hash said. She is seeking a reauthorization in hopes of bringing in some extra money to replenish the fund, though she said she thought it unlikely that an increased tax rate would generate much more than $60,000 a year for the fund.

Hash said she could not make a projection of how much the increased tax rate for the fund could cost Ellettsville taxpayers, but said those taxpayers will not likely feel the increase in 2013 because the town will be collecting less tax money for certain debt service payments that will be lower next year.

The Bloomington City Council has already voted to reauthorize its own cumulative capital development fund for next year at the maximum rate of 5 cents per $100 of assessed value in hopes of raising perhaps another $750,000 to be used toward capital developments, City Controller Mike Trexler has said.

If the rate is increased from about 2.7 cents to 5 cents per $100 of assessed value, a resident whose property has a net assessed value of $100,000 would pay about $23 extra a year, he said.


Supreme Court Reverses Tax Court Finding Beer Sales Took Place in Indiana Regardless of the Method of Delivery; "Example" in Rule did Not Have Force of Law

Miller Brewing Company is a Wisconsin corporation engaged in the production and sale of malt beverage products. It is headquartered in Milwaukee and operates breweries in various other states. Under Indiana law, corporations like Miller are liable to Indiana for income tax on the proportion of their total income that was earned from Indiana sales. This case concerns the percentage of Miller’s total income that is subject to Indiana income tax in tax years 1997, 1998, and 1999; specifically, whether Miller’s income from sales to Indiana distributors should be allocated to Indiana if common carriers transported the products from Miller’s out-of-state brewery to the distributors in Indiana.

The sales in question generally proceeded as follows: after an Indiana distributor submitted a product order to Miller headquarters in Milwaukee, Miller arranged for the ordered products to be prepared for transport at one of its breweries. The distributor then determined how to transport the products to Indiana; it could 1) pick up the products from the Ohio brewery and bring them back to Indiana itself (customer pick-up sales), 2) hire a third-party common carrier to pick up the products and deliver them to it in Indiana (customer-arranged carrier pick-up sales), or 3) request that Miller hire a third-party common carrier to pick up the products and deliver them to it in Indiana, later reimbursing Miller for the delivery charge (Miller-arranged carrier pick-up sales).

According to Indiana Code § 6-3-2-2(e), a sale “of tangible personal property” is deemed to have taken place in Indiana if “the property is delivered or shipped to a purchaser that is within Indiana, other than the United States government.” Ind. Code § 6-3-2-2(e). This is true “[r]egardless of . . . other conditions of the sale.” Id. (emphasis added).

Here, quite clearly, the malt beverage products were taken from Miller’s brewery and “delivered or shipped” to purchasers in Indiana. The statute does not differentiate between goods that were “delivered or shipped” by Miller and goods that were “delivered or shipped” by third-party carriers; rather, it states that all goods “delivered or shipped” to an Indiana customer constitute Indiana sales, and that this rule applies “regardless” of the particular arrangements of the sale. Because the statute is unambiguous, we decline parties’ invitations to consider extraneous evidence of legislative intent, including—but not limited to—legislative history and administrative interpretations of the statute.

Miller argues not only that the statute is ambiguous, but that the ambiguity is clarified by an “example” accompanying a related administrative rule. (Resp.’s Br. at 11–16.) According to that example, “[s]ales are not ‘in this state’ if the purchaser picks up the goods at an out-of-state location and brings them back into Indiana in his own conveyance.” 45 Ind. Admin. Code 3.1-1-53 (Example 7). Miller contends that the term “in his own conveyance” includes not only vehicles owned by the purchaser himself, but also vehicles owned by common carriers hired by either the purchaser or the seller to transport the goods to Indiana. (Resp.’s Br. at 15.)

That interpretation is plainly inconsistent with the language of the example; the ordinary reader would understand “his own conveyance” to mean a conveyance owned by the purchaser, not a conveyance owned by anyone else, such as a third-party common carrier. It is also inconsistent with the way that the Department has used the term in other contexts. The Department has consistently distinguished between a seller’s or buyer’s “own conveyance” and a conveyance belonging to a common or contract carrier. See, e.g., 28 Ind. Reg. 3748 (July 26, 2005) (stating that there is no tax on furniture delivered outside Indiana “by either the taxpayer’s own conveyance or common carrier”); 27 Ind. Reg. 3380 (May 7, 2004) (differentiating between freight charges for delivery “in the seller’s own conveyance” and those “made by common carrier”); 25 Ind. Reg. 575 (Nov. 1, 2001) (stating that there is no tax on sales to goods delivered outside of Indiana regardless of “whether shipment is made by the seller in his own conveyance, by his contract carrier or by common carrier”). Thus, Example 7 does not apply to carrier pick-up sales at all.

Even if Miller’s reading of Example 7 were correct and applicable, it would make no difference. The Department has unequivocally stated that examples are “included in” rules “for illustrative purposes only,” meaning that they are not themselves rules. 45 Ind. Admin. Code 15-3-2(g) (2008). Such illustrations “specifically designated as examples” of how rules apply “are not to be considered as an official part of such rules.” Id. Example 7 appears, along with six other paragraphs, after the text of the rule itself and under the separate heading “Examples.” 45 Ind. Admin. Code 3.1-1-53. Thus, it is “specifically designated” as an example and not a rule, and it does not have the force of law.

Finally, we acknowledge the Department’s contention that the Tax Court applied the wrong standard of review in this case, reviewing the case de novo when it should have granted deference to the Department’s administrative expertise. (Pet.’s Br. at 1.) The Tax Court did not explicitly identify a standard of review in its opinion. See Miller II, 955 N.E.2d at 867. Nevertheless, we note that where, as here, the taxpayer appeals a proposed assessment and a denied refund, the Tax Court has the authority—indeed, the obligation—to review the Department’s ruling de novo.5 Ind. Code §§ 6-8.1-5-1(i) (2010) (mandating de novo review for appeals of proposed assessments), 6-8.1-9-1(d) (2010) (mandating de novo review for appeals of denied refund claims).