MEMORANDUM
TO: All Political Subdivisions
FROM: Brian E. Bailey, Commissioner
RE: Allocation of Tax Revenue
Subject to “Circuit Breaker”
Credits
DATE: June 29, 2012
On March 19,
2012, Governor Mitch Daniels signed into law House Enrolled Act 1072 (“HEA
1072”), which addresses the way in which tax revenue subject to reduction by
property tax credits under IC 6-1.1-20.6 (the “circuit breakers”) is to be
allocated.
Section 35 of HEA 1072, effective July 1, 2012,
introduces two new terms to IC 6-1.1-20.6-9.8: “protected taxes” and
“unprotected taxes.”
The term “protected taxes” means the
following:
(A) Property taxes that are
exempted from the application of a “circuit breaker” credit granted under IC
6-1.1-20.6-7(b) or 7(c), IC 6-1.1-20.6-7.5(b) or 7.5(c), or another law.
(B) Property taxes imposed by a
political subdivision to pay for its debt service obligations[1] that
are not exempted from the application of a “circuit breaker” credit granted
under IC 6-1.1-20.6-7(b) or 7(c), IC 6-1.1-20.6-7.5(b) or 7.5(c), or another law
(such property taxes are subject to the credit granted under IC 6-1.1-20.6-7(b)
or 7(c) or IC 6-1.1-20.6-7.5(b) or 7.5(c) regardless of their designation as
protected taxes).
The term “unprotected taxes” refers to property
taxes that are not protected taxes.
The total amount collected from protected taxes
must be allocated to the fund for which the protected taxes were imposed as if
no credit were granted under IC 6-1.1-20.6-7 or IC 6-1.1-20.6-7.5. The total
amount of the loss in revenue resulting from the granting of credits under IC
6-1.1-20.6-7 or IC 6-1.1-20.6-7.5 must reduce only the amount of unprotected property taxes distributed to a fund in proportion to the
unprotected rate tax imposed for that fund relative to the total of all
unprotected tax rates imposed by the taxing unit.
