Sunday, March 31, 2013

Journal & Courier Reports Sensible solution to a surprising assessing goof

From the Lafayette Journal & Courier:

We spend enough time picking apart the General Assembly when lawmakers make a mess of things by overreaching or misreading or just blundering.

So it’s good to see lawmakers looking for the right sort of compromise when oversight by government slips and taxpayers are on the hook.

Last week, an Indiana Senate panel considered a measure stemming from a case in Tippecanoe County, in which a Lafayette developer was hit by the promise of a tax bill approaching $200,000. The bill was meant to catch up with delays in updated assessments as his property went from bare ground to a $2 million-plus holding.

When the county assessor caught up with the increased value of Cascada Center on McCarty Lane, property taxes went from $7,650 a year to nearly $75,000 a year. What’s more, the county was looking to claw into previous years to extract what should have been owed in the time when improvements were made to the time the county had those improvements properly marked in the books.

The Statehouse role in all of this?

An amendment for a property tax bill being heard in the Senate would have forgiven those retroactive charges. That would have served Cascada Center perfectly. But it wasn’t a solution that was greeted kindly in a Senate committee.

Sen. Brandt Hershman, R-Buck Creek, came up with what has to be considered a fair solution for a frustrating situation: The property owner should be given time, equal to the number of years the assessing mistake went on, to catch up with what is owed the county.


Journal-Gazette Reports Allen County Chafs at City Oversight

From the Fort Wayne Journal-Gazette:

The Allen County Council had all kinds of things to say about the Fort Wayne City Council’s examination of its options for plugging a $5 million hole in its budget, especially its proposal to raise income taxes.

None of them was nice.

Local income taxes are set by the Allen County Income Tax Council, but that body’s votes are based on population, so the city controls the tax council.

“We have been working so hard on economic development,” said Roy Buskirk, R-at large. “It’s a slap in the face that they are truly considering that.”

County Council President Darren Vogt said not only was the city reckless, but undemocratic.
“We took steps in 2011-12 and asked all department heads to cut their budgets. The city did not do that. They continue to spend at the same levels,” Vogt said. “City Council has all that power (to raise income taxes), while 70,000 people have no say in the matter. That is taxation without representation.”

For the record, “taxation without representation” means not getting a vote. It doesn’t mean not having a majority vote. And last we checked, the 250,000 Fort Wayne residents were also residents of Allen County.

The city responded Tuesday evening by pointing out that the city has charged less than the maximum property taxes the state allowed since 1991, to the point where in 2008, the city collected $35 million less in property taxes than it could have. Over the years, it has collected $303 million less than the maximum, Controller Pat Roller said.

Allen County, meanwhile, she pointed out, has taken the maximum amount the state allowed every single year, as has every other taxing body she knows of.

Officials also pointed out the city does not collect property taxes for debt service or have a cumulative capital development levy, while the county does.

“The people who have sat around this (council) table for the last 20 years have voluntarily decided to reduce that levy by $303 million,” Roller said. “We have been thinking about reducing the levy for 20 years longer than anyone else has.”

Courier & Press Reports Vanderburgh County Mails Property Tax Bills

From the Evansville Courier & Press:

The county this month sent out notices to property owners who will pay higher taxes this year.
Twice per decade the county completes countywide reassessments on every property. That assessment determines the amount the owner will pay in bi-annual property taxes, May 10 and Nov. 12.

It’s an assessment year.

Only property owners whose assessed values have increased are sent notices. If you got one of those notices, you have until April 15 to appeal the county’s ruling. Property owners who did not receive a notice — which means their assessed values either remained the same or decreased — also can appeal the ruling once tax statements are sent in early April, Chief Deputy Assessor Cindy Vaught said. Tax statements are already posted online at

Overall, assessments across the county decreased this year, Vaught said — although certain neighborhoods did increase.

“Some neighborhoods increased more than others,” Vaught said. “If you’re on the south side in a dilapidated house, your assessed value probably went down. But if you’re in an area that is more in demand, you may have gone up.”

Because overall assessments decreased this year, property tax rates have all gone up, said County Auditor Joe Gries.

The state of Indiana sets the tax rate to meet local government budgets.

The county auditor’s office totals all the assessments, then subtracts all tax deductions and exemptions, said Vanderburgh County Auditor Joe Gries.

“We turn into the state the net assessed evaluation,” Gries said. “Once we give that to the state, and they have everybody’s budget information, the state actually creates those tax rates.”

However, property tax caps have cut into the budgets of each taxing unit, Gries said. Since the state of Indiana placed caps on property taxes in 2010 — capping residential property tax at one percent, agricultural property at two percent and commercial property at three percent — the various taxing units in Vanderburgh County lost $10.5 million in tax revenue in 2012, Gries said. The county anticipates it will lose $22.5 million in 2013.


See the full article here:

Eric Bradner in Courier & Press Argues Opponents of city-county merger look to make future one tougher

From the Evansville Courier & Press:

The tremendous failure of a proposal to merge the governments of Evansville and Vanderburgh County in last November’s referendum stuck a fork in that idea at least for now.

On the heels of that victory, opponents of a city-county merger are now trying to make it much harder for one to take place at any point in the future.

They are pushing Senate Bill 343, which would require a “rejection threshold” for any such merger efforts. It’s a tricky phrase, but in practice, it would hand far more power to voters who live in the county but not the city and therefore would make mergers far less likely.

Here’s what “rejection threshold” means:

Last year, Vanderburgh County held a single, countywide vote. Those who lived inside Evansville’s city limits had just as much voting power as those who lived outside the city, and whatever the county’s full set of voters decided would go.

With a “rejection threshold,” there would instead be two votes. Any proposed merger would have to win the approval, separately, of the city’s voters and the county’s voters.

With 67 percent of Vanderburgh County’s residents voting against a city-county merger in November 2012, the area is unlikely to see another serious pursuit of such a merger any time soon. Lawmakers, though, could make that task even more daunting than last fall’s election returns suggest.

See the full article here:

Trib Star Reports Terre Haute Must Cut 2013 Budget by $1 Million

From the Terre Haute Tribune-Star:

The City of Terre Haute has got to find about $1 million to cut from its proposed 2013 budget, according to the Indiana Department of Local Government Finance, which approves city budgets.

The DLGF, after reviewing this year’s budget, has told the city to make about $1.2 million in cuts – the lion’s share of which fall on the transit department and fire department pensions.

However, the firefighter pensions are guaranteed, so the proposed $270,000 cut in the pensions will have to come from other parts of the budget, said Mayor Duke Bennett, speaking last week.

“We will have to find [the fire pension money] somewhere else in the budget,” he said, adding he is unsure why the DLGF targeted pensions for cuts when they must be covered by the city. “There’s no fluff in there,” Bennett said of proposed pension spending.

Overall, the state approved about $47 million in city government spending, including $33 million in the critical general fund, which covers day-to-day expenses. The DLGF made no cuts in the general fund, something Bennett said surprised him given the big drop – about 7.5 percent – in assessed property value in Vigo County in 2012.

Most dramatically, the DLGF is calling for a whopping $836,000 cut from the city’s transit department, which is the city’s bus system. That amounts to a cut of about 37 percent, although the actual cut is expected to be less.

“We will have to go in and reduce expenses or find some other revenues,” Bennett said of the transit department budget, adding about $300,000 in revenues were overlooked in the transit budget review, meaning the overall cuts will be smaller, about $500,000 – but that’s still about 22 percent of the transit budget that must be either cut or funded from other parts of the budget, Bennett said.

The DLGF is also calling for an approximately 12 percent cut in the city’s cemetery budget. The city proposed spending about $625,000 on cemeteries in 2013. The state called for that to be reduced by $74,000. Bennett said it is not yet clear where those savings will be found.

The state also called for a $10,000 reduction in the city’s approximately $2.6 million park budget – a tiny cut of less than 1 percent.


See the full article here:

Daily Journal Reports Greenwood Cuts Spending by $500,000

From the Johnson County Daily Journal:

Greenwood has cut spending by about $500,000 so far this year and is looking at whether it can start saving as much as other communities that keep enough in reserves to cover months of expenses.

The city has managed to reduce its general fund spending to about $2.3 million so far this year, down from about $2.8 million over the same period last year, controller Adam Stone said. The 17 percent spending decrease has been the result of greater employee contributions to health care expenses, a new system of budgeting and a new stormwater utility fee of $5 per month, Stone said.

Other local governments also have been looking to set aside more money. They want to save enough to cover emergency expenses, to be prepared if property tax payments don’t arrive in time and to be able to pursue future road and infrastructure projects.

Saturday, March 30, 2013

Daily Journal Reports Thousands Question New Property Values in Johnson County

From the Johnson County Daily Journal:

When a Center Grove area man opened his property assessment this year and saw the land value on his creekside home increased by 11 percent, he wanted to find out why.

Patrick Vercauteren, who lives in Woodridge Estates, called the county assessor’s office and requested a review. He now is waiting for a hearing to discuss his land value. He’s never questioned his assessment before but is asking for a review for the first time.

More than 3,700 property owners are questioning the value the county deemed their property was worth this year. Those appeals tripled this year after a reassessment in 2012 increased values on about half of all properties in the county. And home, business and land owners want answers about why their values changed since last year.

Randall Shepard in the IBJ: Speedway promotion is a smart move

From the Indianapolis Business Journal:

There are times, of course, when the cost/benefit analysis is difficult to assess. It has not been difficult in the case of the legislative proposal to advance the Speedway and the automotive industry.

Analysts for Indiana University’s Public Policy Institute recently quantified the direct and indirect impact of the Speedway and associated industries. Briefly put, IMS means $510 million a year and 6,200 jobs for Indiana’s economy.

A relatively small part of this total represents ticket purchases and spending by Indiana residents who go to the races. Most of it comes from sources like the out-of-state visitors, the value of Indiana-based racing teams, and the manufacturing operations attracted to Indiana by the motorsports cluster.

From the period of Tony George’s stewardship onward, we have come to understand that the IMS is much greater than a week in May. The institute’s new analysis makes it plain just how much greater it really is.

The pending legislation creates a special taxing district that would commit a small portion of the public revenue being generated toward the goal of building an even greater enterprise. The IMS would likewise have skin in the game.

I suggest that the discussion of this proposal is an example of public policy being well conducted. It is the exact opposite of the old line about “not wanting to watch laws or sausage being made.”

And the answer about whether to move forward seems pretty plain.

Sun-Commercial Reports Voters will decide new pool's fate on May 7

From the Vincennes Sun-Commercial:

The question to be posed to voters for the May 7 Rainbow Beach referendum is, at first glance, rather daunting at more than 150 words with the inclusion of several numbers and a math problem to solve at the end.

But what all that verbiage essentially boils down to is this: Do registered voters in Vincennes want a new pool?

And Steve Beaman, superintendent of the city’s Parks and Recreation Department, is hopeful the answer will be, “Yes!”

“I hope by the time people see this question, they already fully understand the situation, know what the pool will be, how much it will cost, and it all comes down to a simple, ‘Yes’ or ‘No,’ answer,” he said. “By May 7, you should be able to read that question and already know if you are for or against this project. That has been our main goal.”

The actual language of the question has gone back and forth between the parks board and the state Department of Local Government Finance until, finally, it was given two thumbs up at the state level. The county election board has also approved the question.

And by nature, it’s bound to be a bit complicated, Beaman said.

“Nearly every aspect of the project must be crammed into a one-sentence question,” he said. “It’s just the legal process. It has to mention everything that is going to affect the amount of the bond. It can’t be vague.”

The bond issue cannot exceed $3.8 million, although Beaman says he thinks the actual cost of the 8,300-square-foot facility will be closer to $3.4 million if not a little less than that.

At $3.8 million, a homeowner would pay less than 8 cents per $100 of assessed valuation in new taxes.

With money raised from donations, the final amount of the bond issue could be even less. A political action committee has been formed to raise money for construction; every dollar the group collects will be taken off the bond issue.

Should the referendum pass and construction get underway, Beaman said he expects the new Rainbow Beach Aquatic Center would open Memorial Day weekend 2014.

Revenue Finds Taxpayer Established Reasonable Cause to Abate Penalty

Excerpts of Revenue's Determination follow:

Taxpayer was assessed a ten percent penalty by the Indiana Department of Revenue ("Department") for the tax year 2010. Taxpayer filed a protest regarding the proposed assessment.

Taxpayer argues that it is entitled to abatement of a ten percent penalty. Taxpayer argues that it was "the obligation of another entity to pay" the taxes. Taxpayer explains its facts thusly:
[Taxpayer], a Texas resident, owns [Company S], a Texas LLC, which owns a 49 percent interest in [Company C], an Indiana LLC.
And further:
[Company S], has no control over [Company C]. [Company S] received payments from [Company C] in 2010. [Company C] was required by Indiana law to withhold on its nonresident partners, but failed to do so. [Company S] made payments to [Taxpayer] in 2010, which did not require any Indiana withholding.
Taxpayer asserts he "was justified in expecting [Company C] to properly report and withhold any Indiana income taxes that would be due on behalf of its non-resident partners...." Taxpayer then cites to Indiana's IT-65 Partnership Return booklet regarding partnerships.
Taxpayer then states:
[Company C] failed to meet its withholding obligation in 2010. When [Taxpayer] discovered [Company C's] error in early 2011, [Company C] told him it was too late for them to pay over the required taxes. Therefore, [Taxpayer] immediately filed a late 2010 Indiana individual income tax return and paid the taxes himself. Beginning in 2011, [Company C] began to properly withhold and remit the state income taxes as required.
At the hearing, Taxpayer's representative argued that Taxpayer reasonably relied upon [Company C's] withholding duty, and that Taxpayer had relied upon the advice of a tax professional.
Based upon a "case-by-case" analysis and after reviewing "the facts and circumstances" of the Taxpayer, the Department finds that Taxpayer has established "reasonable cause" and that the penalty should be abated. Taxpayer relied upon the reporting duties of Company C, and upon Taxpayer's discovery that Company C had not properly reported, Taxpayer "filed a late 2010 Indiana individual income tax return and paid the taxes himself."

Jake Bonifield in the IBJ: A greenhorn governor flubs his launch

From the Indianapolis Business Journal:

As the first governor since the Civil War to win election with less than 50 percent of the vote, Mike Pence has a political capital problem. And it’s starting to show.

His goal of a 10-percent income tax cut has been met with a lukewarm reception from House and Senate leadership and is in jeopardy of being left out of the new budget.

The reticence of fellow Republicans to support the cut has at times seemed to mystify an administration whose only tangible policy goal is stalled and in danger of dying.

It must have been an exciting moment for the newly elected governor. Sent to the Statehouse after 12 years in Congress, the heir apparent to a legacy of pragmatism bequeathed by an enormously popular predecessor. A largesse built over eight years during which Daniels amassed a trove of political capital. And now it was Pence’s to spend.

Plenty of lottery winners (not the ones on the Hoosier Lotto billboards) could tell you what happens next.

Down the hall from his new office, Pence surely noted that both chambers of the General Assembly were filled with walkout-proof majorities of allies, like cheering fans filling the end zone, just waiting on him to walk across the goal line. Nowadays, they look more like defensive linemen.

Pence is betting his first year in the governor’s mansion on his only tangible policy goal of note, cutting the state income tax from a repressive 3.4 percent to 3.06.

Get excited. The average Hoosier would keep a meager $3 more per week, at a cost to the state of $750 million. Fiscal conservatism at its finest.

After capping property taxes—and in so doing creating a new third rail in Indiana politics—the state is now confronting what municipalities have grappled with for years, namely the inconvenient truism that fewer taxes means less revenue.

This prudent opposition has some unlikely heroes, too.


See the full opinion here:

Palladium-Item Reports Some Wayne County Tax Rates Fall

From the Richmond Palladium-Item:

The property tax rates for the city of Richmond and for Wayne County are down slightly this year, but that doesn’t mean all taxpayers will pay less.

Tax rates were published this week, meaning they are set for the 2012 tax year, payable this year.
“They are now set in stone,” said county Auditor Karen Stevens. “But what people have to realize is that just because the tax rate has gone down doesn’t mean that everyone’s taxes will go down. It depends on several other things, especially the deductions a taxpayer has.”

The tax rate for Wayne County dropped from .7440 per $100 of assessed value to .7412. For the city of Richmond, the tax rate dropped from 3.0974 in 2011 (payable in 2012) to 2.9740.

The tax rate for Richmond Community Schools fell from .06427 last year to 0.5546 this year.
Wayne County Treasurer Cathy Williams said tax statements will begin going out to taxpayers April 15.

“We will get them in the mail around that time and residents will begin seeing them shortly after that,” she said.

Tax rates are established by matching assessed value of property, budgets for the various taxing districts and deductions plus the tax caps established.


See the full article here:

One Appeal Filed in Tax Court in March

03/21/13Aztar Indiana Gaming, LLC, et al. v. Indiana Dept. of State Revenue N/A49T10-1303-TA-44

NWI Reports Gary and East Chicago's declining tax rates still tower over others

From the Northwest Indiana Times:

Lake County remains the home of the highest tax rates in the state.

Residents and property owners of Gary and East Chicago can expect to be taxed at the rate of $5.80 per $100 assessed value. Much of Gary remains at $6 per $100 assessed value or higher.

That is well above the median tax rate for the entire state, which was $1.88 per $100 assessed value last year, according to the Indiana Department of Local Government Finance website.

The city officials can be cheered by the fact their stratospheric tax rates declined from last year.

Most of Gary dropped 3 percent and East Chicago saw a 12 percent drop in its citywide property tax rate.


See the full article here:

Bob Williams in the Star: Money belongs to Indiana taxpayers: Give it back

From the Indianapolis Star:

There is a fundamental budget debate, happening right now in Indianapolis. Indiana currently has a large budget surplus — $2 billion. Gov. Mike Pence and a few members of the legislature believe that the funds belong to taxpayers and that taxpayers should get their money back. Others in the legislature, however, believe that the surplus belongs to the government and that politicians are entitled to spend it all.

A legislator who wants to forgo a tax cut and spend instead is someone who would get too much change back from a cashier and not say a word. When you receive money that you didn’t earn and don’t deserve, you must give it back.

Certainly, there are plenty of reasons to support a tax cut on its own. Twenty-seven states already have a lower income tax rate than Indiana. Incentives matter, and high taxes directly affect where people choose to live, work and invest. The research from the American Legislative Exchange Council’s “Rich States, Poor States” indicates that personal and corporate income taxes are among the worst taxes for state growth.

Putting aside the tax debate, several legislators in the Statehouse believe that they have earned the opportunity to spend Hoosiers’ money. Indiana residents didn’t donate the money to politicians and bureaucrats to spend as they please. Most taxpayers never even saw their hard-earned money — it was deducted straight away from their paychecks. The members of the Statehouse did nothing to gain this windfall.

Opponents of the tax cut say that the state needs the funds for schools, roads and other expenditures. First, this assumes that a permanent tax cut would not create any more jobs or economic activity, which is not what has occurred in other states. In the last decade, the nine states without any state income tax have outperformed all states in population and job growth.

Even still, the governor’s budget does increase funding for schools, health care, transportation and to use the rest of the surplus for the rainy day fund. The state budget reserves would be in excess of $2.3 billion, more than four times the size of Pence’s proposed income tax cut.

See the full editorial here:

Friday, March 29, 2013

Journal-Gazette Reports "Dueling videos: Indiana tax cut war continues"

From the Fort Wayne Journal-Gazette:

The clash between House Republicans and Gov. Mike Pence continued Thursday when the caucus released a video meant to defray criticism over the governor's proposed tax cut.

Pence wants a 10 percent reduction in the Indiana income tax while legislative Republicans have balked – choosing to put money into education and roads instead while accelerating the state inheritance tax elimination.

The Indiana chapter of Americans for Prosperity ran ads for more than a week criticizing the House budget as spending too much and not focusing on taxpayers.

Pence later asked the group to take a different tone but the damage was done. The rhetoric has increased in recent days and GOP House Speaker Brian Bosma also wrote a letter defending the caucus stance to all the state's county chairmen.

Now Bosma and his caucus created a video mimicking the AFP ad and put it on YouTube.

It uses similar dramatic music and green headlines to tout Republican accomplishments, such as improving Indiana's jobs environment; proposing a balanced budget; investing in education and previous tax-cutting prowess.

"House Republicans have a proven track record," according to the video.

Next up, the Senate Republicans take a swing at the budget. Up to now leaders in that chamber also have been lukewarm about the Pence proposal.

AP Reports Senators Stalling Indiana Online Sales Tax Proposal

From the Associated Press:

Some key state senators are stalling a bill that would make and other online-only retailers start collecting Indiana's 7 percent sales tax this summer.

The Indiana House voted overwhelmingly last month in favor of requiring online sales tax collection in July, six months earlier than under a deal then- Gov. Mitch Daniels brokered with Amazon last year.

Senate Appropriations Committee chairman Luke Kenley says his committee won't take up the bill and that the state should abide by the Amazon agreement.

Kenley says he understands the frustrations of traditional retailers over the price disadvantage, but that Congress first needs to give states more authority on collecting taxes from online businesses.

The Indiana Retail Council plans to keep pushing the issue through the end of the legislative session in late April.

Herald-Argus Reports Hearing to Expand TIF District in LaPorte Scheduled for April 24

From the LaPorte Herald-Argus:

The La Porte Redevelopment Commission is having a confirmation hearing to expand the TIF district at the Thomas Rose Industrial Park.

During its Wednesday meeting, commissioners said they would be having the meeting on April 24 at 5:15 p.m.

Earlier in March, the La Porte City Council and Planning Commission both voted to approve a roughly 100-acre expansion of the TIF 2 district, which encompasses the Thomas Rose Industrial Park.

This action allows more tax revenue from the district to go into developing infrastructure and bringing utilities to the industrial park, which organizers say will introduce dual rail service and provide up to 1,000 new jobs.

NWI Reports Plan to postpone LaPorte County spring property tax bill headed to governor

From the Northwest Indiana Times:

All that stands between LaPorte County property owners and one less tax bill this year is the signature of Republican Gov. Mike Pence.

The Indiana House voted 93-0 Thursday to accept changes made by the Senate to House Bill 1261, which allows the Department of Local Government Finance to permit LaPorte County to skip its provisional spring tax bill and send only a full-year tax bill in the fall.

State Rep. Tom Dermody, R-LaPorte, said property owners deserve a break after recently paying up to six prior-year tax billings due to unprecedented delays caused by an assessment dispute.

"This is hopefully the last you'll ever hear of the LaPorte property tax situation," Dermody told lawmakers.

NWI Reports House panel OKs plan to strip funds from Porter Co. auditor

From the Northwest Indiana Times:

Porter County Auditor Bob Wichlinski would lose access to nearly all the money generated by his crackdown on homestead tax credit abusers under legislation approved by a House committee Thursday.

Senate Bill 494 was changed by the House Ways and Means Committee to set a $100,000 cap on the money a county auditor can keep from ferreting out unlawfully claimed tax credits.

Current state law permits the auditor to hold on to all the money generated when an illegal homestead credit is removed. Wichlinski's recent crackdown produced nearly $2 million for his office.

State Rep. Ed Soliday, R-Valparaiso, who sought the change, said the auditor should not get the only say in how that money is spent.

He said any funds above $100,000 should go to the county council for it to decide how the money is used.

"There's a world of difference in having some money to go after malefactors and having $1.9 million," Soliday said. "All of us would like to have a slush fund, but I don't think a slush fund incentivizes folks to do what's right."

The legislation comes on the heels of the Porter County Council seizing $606,000 in tax credit abuse proceeds from Wichlinski's accounts this month and ordering Wichlinski to seek council permission to spend the money.

Wichlinski claimed that action was illegal and will prevent him from having the funds necessary to seek out more tax credit abusers.

However, should Soliday's proposal be approved by the full House, approved again by the Senate and signed by the governor, the council's action would likely comply with the new law.


Revenue Finds Taxpayer's Failure to File Correct Return Due to Reasonable Cause

Excerpts of Revenue's Determination follow:

Taxpayers are a resident married couple. Taxpayers filed a joint income tax return with the Indiana Department of Revenue ("Department") for the year in question and received a refund in the amount of $6,896. However, shortly thereafter, Taxpayers' accountants determined that the wrong return had been filed, as they had only expected Taxpayers to receive a refund of $1,909. The corrected return was filed with the Department for the year at issue, and Taxpayers repaid the appropriate amount of tax and interest due. However, the Department issued proposed assessments for a ten percent negligence penalty for the year at issue.

Taxpayers protest the imposition of the ten percent negligence penalty on Taxpayers' failure to file the correct return.
Penalty waiver is permitted if the taxpayer shows that the failure to pay the full amount of the tax was due to reasonable cause and not due to willful neglect. IC § 6-8.1-10-2.1. The Indiana Administrative Code, 45 IAC 15-11-2 further provides:
(b) "Negligence" on behalf of a taxpayer is defined as the failure to use such reasonable care, caution, or diligence as would be expected of an ordinary reasonable taxpayer. Negligence would result from a taxpayer's carelessness, thoughtlessness, disregard or inattention to duties placed upon the taxpayer by the Indiana Code or department regulations. Ignorance of the listed tax laws, rules and/or regulations is treated as negligence. Further, failure to read and follow instructions provided by the department is treated as negligence. Negligence shall be determined on a case by case basis according to the facts and circumstances of each taxpayer.
(c) The department shall waive the negligence penalty imposed under IC 6-8.1-10-1 if the taxpayer affirmatively establishes that the failure to file a return, pay the full amount of tax due, timely remit tax held in trust, or pay a deficiency was due to reasonable cause and not due to negligence. In order to establish reasonable cause, the taxpayer must demonstrate that it exercised ordinary business care and prudence in carrying out or failing to carry out a duty giving rise to the penalty imposed under this section. Factors which may be considered in determining reasonable cause include, but are not limited to:
(1) the nature of the tax involved;
(2) judicial precedents set by Indiana courts;
(3) judicial precedents established in jurisdictions outside Indiana;
(4) published department instructions, information bulletins, letters of findings, rulings, letters of advice, etc.;
(5) previous audits or letters of findings concerning the issue and taxpayer involved in the penalty assessment.
Reasonable cause is a fact sensitive question and thus will be dealt with according to the particular facts and circumstances of each case.
After review of the documentation and analysis provided in the protest process, Taxpayers have affirmatively established that their failure to file the correct return was due to reasonable cause and not due to negligence, as required by 45 IAC 15-11-2(c).

Herald-Tribune Reports Commissioners get behind economic growth push

From the Batesville Herald-Tribune:

Since 2006, Franklin County officials have divvied up an annual $500,000 riverboat revenue-sharing grant from the city of Lawrenceburg between the county and incorporated towns based on populations.

For instance, Batesville received $29,570 and Oldenburg $14,604 each year, according to county auditor Steve Brack.

Attorney Grant Reeves told Franklin County Commissioner Tom Wilson that an Indiana State Board of Accounts representative told him that practice of sharing the dollars had to stop.

Wilson and Commissioner Tom Linkel passed two laws during a March 22 special meeting. Ordinance 2013-15 repealed Ordinance 2013-13, which sought to portion out the Lawrenceburg money.

Ordinance 2013-16 divides the grant into two county piles: $376,326 to the general fund and $123,674 to the riverboat fund.

That $123,674 probably will be spent soon.

Officials at Uni-Ref Inc., which manufactures a heat-resistant material that makes up the protective linings of high-temperature furnaces, reactors and other processing units, announced plans Nov. 28 to relocate its headquarters from Sharonville, Ohio, to Brookville, creating up to 50 new jobs by 2015.

Franklin County Economic Development Commission member Bill Schirmer explained after the meeting, “We went to the council in November and said Uni-Ref is interested in relocating” here if the county could pay up to $250,000 in relocation expenses. Some money is needed for the move itself. Also, conveyors to help elevate the materials will need to be purchased as the new ceiling height is lower than the previous one.

Uni-Ref and FCEDC leaders have been waiting four months for those funds to materialize. According to Schirmer, “What I’ve learned from it, when the deal is done, the appropriations need to be made immediately  .... We’re very fortunate we’re working with a group as understanding as they have been.”

Brack said at the meeting Uni-Ref will receive its promised money in two $125,000 payments. The first is getting ready to be paid from Economic Development Income Tax (EDIT) funds.

Council members who were present said they expected to appropriate the $123,674 from the riverboat fund to Uni-Ref at the April 23 meeting. Schirmer recommended voting on the matter at an earlier special meeting.

Then the council would have to scrape up just $1,326 from another revenue source.

Reeves pointed out the commissioners must decide what to do with the $500,000 the county will receive from Lawrenceburg in 2014 beforehand as it won’t be used as a Uni-Ref incentive.

IBJ Reports "Bill Would Expand State's Historic Preservation Tax Credit"

From the Indianapolis Business Journal:

A bill that was killed last year after passing the Indiana House has been revived this session in hopes of expanding the state’s historic preservation tax credit.

Rep. Ed Clere, R-New Albany, said the bill is all about economic and job development.

He said Indiana has too many historic buildings left abandoned that could be renovated into something useful. That’s why Indiana Landmarks — a not-for-profit preservation group — supports the bill.

Marsh Davis, president of Indiana Landmarks, has said while Indiana is one of about 30 states that has a historical preservation tax credit, Indiana’s cap is one of the lowest.

“It is the least effective of all the 30-some programs in the country like it,” Davis said last year, during an earlier debate about the legislation. “And the reason is the annual allocation cap is very low. I mean most states that have caps at all are in the tens of millions, if not more.”

According to Indiana Landmarks, tax credits work in the following way: 20 percent of what a property owner spends to rehabilitate a historic, income-producing property comes off the bottom line of the taxes paid to the state and federal governments. There are restrictions and guidelines that limit the type of buildings and renovations the tax credit program covers.

Currently, the credit is backlogged because the tax credit caps at $450,000 per year. That means some projects approved for the program have been completed but can’t claim the tax credit for at least a dozen years. Supporters of  a program expansion say that gives few incentives for investors to restore historic properties, especially since many of them are private developers.

Last year, the House approved a bill to significantly expand the program. But the Senate changed it so dramatically that Clere, the author, killed the bill.

This year, a House committee amended similar language into a Senate bill. “I’m excited we’ve found a new home for the language of the bill,” Clere said.

The new bill — Senate Bill 4 — is now headed to the Ways and Means Committee, where it is expected to be considered next week.  The bill would increase the current $450,000 annual cap on tax credits to $2 million the first year and increase the cap gradually to $10 million by 2017.

Board Finds Taxpayer Failed to Show Assessment Was in Error Where Assessor Valued Mobile Home Park Improvements

Excerpts of the Board's Determination follow:

Here, the Petitioner’s representative argues it was an error to value improvements to the Petitioner’s property. Lei testimony. According to Ms. Lei, the assessor should only assess improvements located “on top of the land.” Id. The Guidelines state that mobile home parks shall be valued using commercial and industrial yard structures. GUIDELINES, ch. 7 at 2. According to the Guidelines, an assessor shall use the cost schedules to determine the base rate of mobile home parks per site. GUIDELINES, ch. 7 at 20. “Cost schedules for these structures are diverse and specific criteria are described to determine the base rate for each type.” Id. Some of the site costs included in the Guidelines are engineering, site grading, patios, walks, sewers, water, electric, landscaping and recreation. Id. Barring probative evidence to the contrary, the Board finds that the method of valuing the mobile home park chosen by the assessor to value the Petitioner’s mobile home park was reasonable.

The Petitioner’s representative also contends that the assessor erred when she applied the grade and failed to adjust the 50% depreciation on the Petitioner’s mobile home park in 2011. Lei testimony; Roland argument. However, the Petitioner failed to show how the property was assessed for any year other than 2011. More importantly, a Petitioner fails to sufficiently rebut the presumption that an assessment is correct by simply contesting the method used to compute the assessment. Eckerling v. Wayne Township Assessor, 841 N.E.2d 674, 678 (Ind. Tax Ct. 2006); P/A Builders & Developers v. Jennings County Assessor, 842 N.E.2d 899, 900 (Ind. Tax Ct. 2006) (recognizing that the current assessment system is a departure from the past practice in Indiana, stating that “under the old system, a property’s assessed value was correct as long as the assessment regulations were applied correctly. The new system, in contrast, shifts the focus from mere methodology to determining whether the assessed value is actually correct.”).

Finally, the Petitioner’s representative testified that the Petitioner purchased the subject property in 2011. Lei testimony. And, in fact, the property record card shows that the property sold on July 8, 2010, for $609,141 and again on August 31, 2011, for $440,000. Respondent Exhibit 2. Thus, even if the Petitioner’s arguments could be seen as raising a prima facie case that the subject property was assessed too high, that case was rebutted by the evidence that the property was purchased for a far higher amount than the property was assessed for in 2011.

Thursday, March 28, 2013

Star-Press Reports Magna Powertrain Offered Incentives for Expansion in Muncie

From the Muncie Star-Press:

A local manufacturing operation will continue to grow following a property tax abatement.

Officials said Magna Powertrain, which now employs 290 people in two Cowan Road facilities, will add up to 76 jobs by 2016 thanks to a five-year partial property tax abatement on $11.5 million in new equipment approved Tuesday by Delaware County Council.

The Michigan-based company, which makes automotive components and has operated locally since 2005, will hire machine operators, manufacturing engineers, quality engineers and other employees, said Terry Murphy of the Muncie-Delaware County Economic Development Alliance.

Murphy said Magna has invested $125 million in capital improvements in its local history.

In addition to Tuesday’s abatement, the Indiana Economic Development Corporation has offered Magna up to $400,000 in tax creits and up to $75,000 in training grants. The tax credits are performance based and contingent on hiring.

Revenue Issues Opinion Relating to Sales and Use Tax


Sales and Use Tax – Digital Certificates and Related Services

A company ("Taxpayer") is seeking an opinion as to whether Taxpayer's sales of authentication services via the provision of a digital certificate to the Taxpayer's customers for consideration are subject to the Indiana sales and use tax when provided to customers located in Indiana.


Taxpayer provides the following facts regarding its request for a revenue ruling:

The Taxpayer is a provider of authentication solutions for businesses and individuals seeking to perform secure electronic commerce and communications over the internet. One such solution is the provision of a digital certificate and authentication and resolution services on a subscription basis.

Digital certificates are commonly used to facilitate the secure transmissions between end user browsers and the Taxpayer's customers' ("customers") servers. A digital certificate allows an end user to recognize that they are, indeed, accessing the customers' server. For illustration purposes, assume "" is a customer of the Taxpayer. An end user of "" will access the website and know that they are accessing the real "" site and not a false site, because a check mark will appear on the real "" site, indicating that the website is authenticated by the Taxpayer. This check mark, trademarked by the Taxpayer and recognized throughout the world, serves as the visible indication on the end user's screen that the customer's site is who it purports to be.

A digital certificate is provided through an online process, and the first step in this process is the customer's access of the Taxpayer's online portal to complete a registration form. As part of the customer's request of a certificate through registration, a private and public key pair is generated by the customer's web server. The private key is retained by the customer on its web server. The public key is part of the information sent to the Taxpayer in the registration process.

The Taxpayer performs all due diligence necessary to authenticate the identity of the applicant, the related website and business, and the information presented by the customer during the registration process, including the public key. Once the Taxpayer authenticates the identity of the applicant, a digital certificate is electronically sent to the customer. A digital certificate is a flat file containing: the customer's public key, metadata with information such as certificate expiration date, the certificate owners' name, the name of the issuer (certification authority, i.e. the Taxpayer), serial number of the certificate, and an electronic signature of the issuer[.] The flat file does not contain binary code.

The digital certificate is installed by the customer on a customer's web server. When end users connect to the customer's server through a web browser, the browser establishes the authenticity of the digital certificate (and thus the authenticity of the web site) by mathematically proving that the certificate presented by the customer's web server was digitally signed by the Taxpayer. The digital certificate also contains the aforementioned public key. It is described as a "public" key because the digital certificate (and key contained therein) is readily viewable by any browser.

The end user's web browser creates a session key that is used to encrypt the transmission between the customer's server and the end user's browser. However, the end user's browser must first use the public key to encrypt the session key and then transmit the session key to the web server. The web server will use the private key to decrypt the session key so that both the web server and browser can begin using the session key for the encrypted transmissions. After the initial handshake between the browser and web server, the session key is used for the encryption of the transmissions. The encryption strength of the transmission is directly related to the bit length of the session key. The encryption/decryption is performed by the cryptographic software built into the web browser and customer's server. This software is not provided by the Taxpayer.

In addition to authenticating the digital certificate and website, the end user's browser communicates with the Taxpayer's servers to verify that the digital certificate is valid and not revoked (resolution service). If the certificate is valid, the end user's browser will show the end user a notification that the certificate is valid and has not been revoked. The charges for the authentication service, digital certificate, and resolution service are part of a lump sum subscription charge and must be renewed periodically.

Based on the foregoing facts, Taxpayer requests guidance as to whether Taxpayer's sales of authentication services via the provision of a digital certificate to the Taxpayer's customers for consideration are subject to the Indiana sales and use tax when provided to customers located in Indiana.


Pursuant to IC 6-2.5-2-1(a) and IC 6-2.5-2-2(a), sales tax is imposed on retail transactions made in Indiana. Except for certain enumerated services (none of which are at issue in this ruling), sales of services generally are not retail transactions and are not subject to sales or use tax. A retail transaction is defined in IC 6-2.5-4-1(b) as the transfer, in the ordinary course of business, of tangible personal property for consideration. Pursuant to IC 6-2.5-1-27, the term "tangible personal property" includes prewritten computer software.

Sales of specified digital products are also included in the definition of retail transactions. IC 6-2.5-4-16.4(b) provides that a person engages in making a retail transaction when the person (1) electronically transfers specified digital products to an end user; and (2) grants to the end user the right of permanent use of the specified digital products that is not conditioned upon continued payment by the purchaser.

Pursuant to Section 333 ("Use of Specified Digital Products," effective Jan. 1, 2010) of the Streamlined Sales and Use Tax Agreement ("SSUTA," effective Sept. 20, 2009), of which Indiana is a signatory, "A member state shall not include any product transferred electronically in its definition of 'tangible personal property.'" Pursuant to the same section of the SSUTA, "ancillary services," "computer software," and "telecommunication services" are excluded from the term "products transferred electronically." However, IC 6-2.5-1-27.5(c)(8) explicitly excludes ancillary services from the definition of telecommunication services, which are taxable under IC 6-2.5-4-6. Accordingly, ancillary services are not subject to sales tax in Indiana.

Based on the foregoing, Indiana imposes sales and use tax on products transferred electronically only if the products meet the definition of specified digital products, prewritten computer software, or telecommunication services. Telecommunication services are not at issue in this ruling, meaning that Taxpayer's sales of authentication services via the provision of a digital certificate to the Taxpayer's Indiana customers are subject to the Indiana sales and use tax only if such sales represent sales of specified digital products or prewritten computer software.

Taxpayer maintains that its provision of digital certificates are neither specified digital products nor prewritten computer software.

The digital certificates provided by the Taxpayer do not constitute computer software as they do not provide a set of coded instructions designed to perform a task. Likewise, the digital certificates do not constitute digital property subject to tax under the state's SSUTA taxability matrix. The certificate is a flat file containing only information (a public key, metadata with information such as certificate expiration date, the certificate owners name, name of the issuer, serial number, electronic signature, etc.). The flat file does not contain binary code and does not dictate statements, data or instructions that is used directly or indirectly to bring about a certain result. The digital certificates are akin to information conveyed digitally.

Specified digital products, as defined by IC 6-2.5-1-26.5, IC 6-2.5-1-16.2, IC 6-2.5-1-16.3, and IC 6-2.5-1-16.4, currently includes only digital audio works (e.g., songs, spoken word recordings, and ringtones), digital audiovisual works (e.g., movies), and digital books. Products transferred electronically are defined in IC 6-2.5-1-28.5 to mean products that are "obtained by a purchaser by means other than tangible storage media."

Taxpayer maintains and, for the purposes of this ruling, the Department agrees that Taxpayer's authentication services via the provision of digital certificates to Taxpayer's Indiana customers do not represent the provision of specified digital products. Accordingly, Taxpayer's sales of such services are not subject to the Indiana sales and use tax on that basis.

Pursuant to IC 6-2.5-1-14, "computer software" means a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task. Pursuant to IC 6-2.5-1-24, "prewritten computer software" is defined to mean, among other things, computer software, including prewritten upgrades, that is not designed and developed by the author or other creator to the specifications of a specific purchaser[.]

Based on Taxpayer's descriptions, the Department agrees that Taxpayer's provision of digital certificates does not represent the provision of computer software. Taxpayer's digital certificates do not represent a set of coded instructions designed to cause a computer or automatic data processing equipment to perform a task. Because the certificates are not computer software, they also cannot be determined to be prewritten computer software. Accordingly, Taxpayer's sales of such services are not subject to Indiana sales and use tax on that basis.


Taxpayer's sales of authentication services via the provision of a digital certificate to the Taxpayer's customers for consideration are not subject to the Indiana sales and use tax when provided to customers located in Indiana.


This ruling is issued to the taxpayer requesting it on the assumption that the taxpayer's facts and circumstances as stated herein are correct. If the facts and circumstances given are not correct, or if they change, then the taxpayer requesting this ruling may not rely on it. However, other taxpayers with substantially identical factual situations may rely on this ruling for informational purposes in preparing returns and making tax decisions. If a taxpayer relies on this ruling and the Department discovers, upon examination, that the fact situation of the taxpayer is different in any material respect from the facts and circumstances given in this ruling, then the ruling will not afford the taxpayer any protection. It should be noted that subsequent to the publication of this ruling a change in statute, regulation, or case law could void the ruling. If this occurs, the ruling will not afford the taxpayer any protection.

News and Tribune Reports Floyd County Budget a Work in Progress

From the Clark County News and Tribune:

Hopefully by this time next month, Floyd County will have a real certified budget from the state.
In late February, it was announced the Department of Local Government and Finance certified Floyd County’s budget at zero after it was revealed the county had a $2.4 million deficit after revenue did not match the projected budgets submitted. Council members said incorrect figures from the Floyd County Auditor’s office is what led to the problem late last year when figuring the 2013 budget. 
Since the announcement, Don Lopp, director of county operations, and Teresa Plaiss, former county auditor, have been working on coming up with cuts and trying to figure out the county’s cash balance as of Jan. 1, 2013. On Tuesday afternoon, the Floyd County Council held a work session to discuss the ongoing budget issue and to get an update from Lopp.
Council President John Schellenberger said some progress has been made. He said at the April 9 regular council meeting, the council plans on passing budgets for the health department, parks department, motor vehicle highway budget and CAGIT, or County Adjusted Gross Income Tax. However, Schellenberger said the council is not ready to send a general-fund budget back to the state for certification. He hopes to have a certified budget in late April.
“Once we find out what our cash on hand was as of Jan. 1, 2013, then we will have a better idea and be able to send it up to the DLGF,” Schellenberger said. “We are still trying to find out how much cash we had ... . That is the key. We still do not have a solid estimate of revenue streams. We just aren’t ready to submit a budget yet.” 
Recently, Lopp presented some short- and long-term recommendations to Floyd County Council members for them to consider, which he said Wednesday have helped. Short-term recommendations made by Lopp include:
• Allowing the county to start hiring new employees to replace employees who are leaving beginning May 29. A hiring freeze is in effect following the Feb. 28 special budget meeting;
• Allow the payment of all claims for March 15 cycle;
• Maintain current funding levels of budgets and keep budget cuts submitted by the departments as an alternative if budget cuts are recommended by the DLGF. 
Other recommendations included to freeze all EDIT and riverboat fund appropriations, accelerate repayment of stormwater and Pine View construction costs back to EDIT, remove the Cumulative Bridge Fund from the 2013 tax levy and appropriate CAGIT funds into the general fund which will give the county an additional $779,000 to use toward a shortfall.
“This is something we were thrown into,” Schellenberger said. “Once we got past the initial confusion we were able to come up with a strategy. We now have a better handle on it.”
Floyd County Auditor Darin Coddington announced March 1 he will resign his post effective May 3. However, he didn’t say he was quitting due to the ongoing budget issues, but cited “personal reasons.”

Tribune Reports Porter County Council Battles Auditor for Funds

From the Chesterton Tribune:

The Porter County Council will hold a special meeting on Wednesday, April 10, to reaffirm the holds they put on the County Auditor’s non-reverting fund.

At its March 11 meeting, the Council split 5-2 to transfer $606,710 in the fund to an unallocated fund which Auditor Robert Wichlinski said does not exist.

The squelch on the fund happened as the majority of Council members argued they wished to hear from the auditor how he would spend the money, for the sake of accountability. Council President Robert Poparad, D-At Large, had told Wichlinski that he could reacquire the money by asking the Council for it.

Voting to transfer the funds to unallocated on March 11 were Poparad, and members Dan Whitten, D-At Large, Sylvia Graham, D-At Large, Karen Conover, R-3rd, and Jeremy Rivas, D-2nd. Members voting against the measure were Jim Biggs, R-1st, and Jim Polarek, R-4th.

“I don’t think the auditor can spend that money. We, as the county’s fiscal body, made a vote,” said Whitten.

The non-reverting fund was set up to help fund a total quality management program that was coordinated with the assessor, treasurer, and recorder’s offices to expedite tax collection processes and recoup homestead credit violations.

At the end of the Council’s regular meeting on Tuesday, Poparad asked Wichlinski’s chief of staff Alizabeth Bailey about reports that the auditor’s office spent $57,000 since the March 11 vote.

Bailey said that the money was used to pay outstanding bills related to the funds. She said the office was “not going against (the Council’s) request” because the transfer of funds was “not done properly.”

See the full article here:

Harry Targ in the Journal & Courier Argues Tax Cutters Trying to Destroy our Public Institutions One by One

From the Lafayette Journal & Courier:

Mike Pence, Indiana’s recently elected governor, published an editorial in March 22 Journal & Courier proposing a 10 percent, “across the board” cut in state income taxes. He claimed that this tax cut would put money back into households that can better spend it than government. State financial reserves remain flush, he said, because of the wise management of public funds of Mitch Daniels, the prior governor and now Purdue University president, and the state legislature.

All of these benefits provided by public institutions are in danger of being destroyed by the tax cutters, the privatizers, and the deregulators, such as reflected over the last decade in policies instituted by governors and legislatures in states like Indiana.

The Center on Budget and Policy Priorities recently issued a report on the devastating consequences of these policy shifts on one public sector higher education (“Recent Deep State Higher Education Cuts May Harm Students and the Economy for Years To Come”). One example has been the 28 percent cut per student in state expenditures on higher education over the last five years in all 50 states. Eleven states cut their support for higher education by more than one-third. In Gov. Daniels’ Indiana, higher education funding declined by 17.2 percent — $1,240 per student — between fiscal year 2008 and 2013.

In response to declining state support for higher education, tuition increases since 2007-08 have exceeded 27 percent nationally. (In Indiana tuition has risen by 15.1 percent or $1,142 per student). Many colleges and universities have cut teaching staff, increased class size, reduced course and program offerings, shut down computer and library facilities and eliminated branch campuses.

Debates abound in state legislatures about the impacts of recession on public financing of higher education. Legitimate arguments are raised about the pattern of bloated and unnecessary administrative expansion in colleges and universities and administrative salaries that are extraordinarily out of line with the norms of public service.

But there is a deeper meaning to the Center on Budget and Policy Priorities report, the Pence proposed tax cuts and the downsizing of support for public-supported higher education. That is, powerful economic and political actors, representing what the Occupy movement called the 1 percent and their allies among traditional conservatives and right-wing populists, are on a campaign to destroy public institutions, which for the most part serve the interests of the vast majority of the population of the United States.

Revenue Finds Taxpayers Failed to Show Reasonable Cause for Late Payment of Income Tax

Excerpts of Revenue's Determination follow:

Taxpayers protest the imposition of a penalty for late payment of income tax.

Penalty waiver is permitted if the taxpayer shows that the failure to pay the full amount of the tax was due to reasonable cause and not due to willful neglect.

Taxpayers filed their 2001 income tax return, and made the payment for tax due, more than three months after its April 2002 due date. During the hearing, the Department requested that Taxpayer provide documents or other materials to support Taxpayer's protest. Taxpayers did not provide an explanation, or any additional materials to counter the Department's determination that it did not receive Taxpayers' payment and return timely.

Taxpayers must demonstrate that they had reasonable cause for not timely remitting their Indiana income tax. In order to establish reasonable cause, Taxpayer must demonstrate that it exercised "ordinary business care and prudence" in conducting the duties from which the additional tax and penalty arose 45 IAC 15-11-2(c). Taxpayers have not submitted information or documents sufficient to demonstrate reasonable cause for not timely remitting their 2001 Indiana income tax.

NWI Reports Hammond Mayor Addresses Reliance on Gaming Revenue

From the Northwest Indiana Times:

The need to wean the city off its reliance of gaming revenue was central to Mayor Thomas McDermott Jr.'s State of the City address he gave Wednesday to a packed audience at Hammond City Hall.

McDermott said he expects casinos to one day be approved and built in downtown Chicago and the south side of Chicago.

"We need to be ready for it," said McDermott, explaining the city needs to prepare in the event its funding from Horseshoe Casino takes a drastic hit.

McDermott outlined the steps his administration has taken to close the city's $12 million budget gap, notably the approximately $4 million in increased revenue the city will receive from new water contracts with Chicago Heights and Calumet City — two of its largest Illinois customers.

Sweeping changes to the health care coverage offered by the city will save approximately $3 million a year, in part, by requiring employees to contribute more for their plans.

McDermott pledged in the address to push for the renewal of the College Bound program, which he began in his first term in office. However, the scholarship program currently is funded by gaming revenue, so McDermott said the city may explore using water sale proceeds to provide long-term funding past the program's original 10-year commitment. 

The budget shortfall comes as the city continues to grapple with shrinking property tax revenue, and in 2012, an 88 percent property tax collection rate. Last year, the city received $24 million in property tax revenue, down 40 percent from when McDermott took office.

McDermott said his administration has saved money over the years, including a more than 30 percent reduction in the total manpower in the city.

NWI Reports that Lake County Likes that only 9,000 Property Owners Hate their Tax Assessment

From the Northwest Indiana Times:

Lake County's latest survey of property values appears to be going down a lot easier with the public than a decade ago when a reassessment launched a taxpayers revolt.

If happiness is measured in the number of people officially complaining that elected assessors put too high a value on their homes and businesses for taxing purposes, then the 2012 general reassessment is a rousing success, according to County Assessor Hank Adams.

"There are a lot fewer appeals we have to deal with," Adams said.

About 9,000 property owners have filed appeals demanding the county lower their assessment.

While that sounds like a lot of dissatisfaction, it's a fraction of the 27,800 angry taxpayers who wanted to tar and feather county officials after the 2002 reassessment boosted home values, for taxing purposes, so high that families saw their tax bills more than double.

Their discontent led state and local officials to place caps on the total amount of taxes that can be extracted from any single parcel in a year.

In the past, reassessments only took place once or twice a decade, so when their new real estate values were announced, they were dramatically higher because they included several years of inflation. Now, assessors recalculate property values annually, so dramatic changes are less likely.

Kelly said taxpayers should also like the fact the reassessment of the county's more than 247,000 real estate parcels was cheaper this time. Local officials spent about $11 million on the 2012 reassessment. The 2002 version cost more than $18 million.

"What’s not to like about one third the cost for two thirds fewer errors?" Kelly said.

Kelly said the smaller number of appeals also saves taxpayers the cost of county officials having to investigate claims of overassessment. Kelly predicts about half the appeals will fail and the remainder will be resolved with minor changes.

Indiana Lawyer Reports Tax Clinic Brings Relief to Homeowners Fighting High Assessments

From the Indiana Lawyer:

For Sandra Jones, the higher-than-expected property tax bill meant the projects she had planned to turn her house into a home would have to wait.

The window would remain broken and the small leak under the bathroom sink would continue to drip because more money than she had budgeted for would be going to cover the bigger house payment.

Jones is among the many Hoosier homeowners who are surprised every year by their property assessments. They can file an appeal with the county assessor’s office to get what they believe is a tax bill more appropriate for the value of the home but the process can take a long time to get a response.

At Faegre Baker Daniels LLP, the attorneys suspected there was a gap in pro bono tax help for owners of homes valued at $150,000 or less. They were looking for a volunteer opportunity so they organized the first ever Homeowner Property Tax Clinic.

For two hours on a January evening, they offered their services to Marion County homeowners. They were set up in two rooms of the Legacy Center and helped about 22 individuals.

Brent Auberry, partner at FBD, was the lead attorney on the effort. Judy Ferber, paralegal, organized the evening, modeling it on the Ask-a-Lawyer events.

Initially the FBD organizers did not know how many people would come but soon the three tables of attorneys meeting with clients were expanded to four.

“I had a feeling like a little energy, a little buzz in the air,” Auberry said, recalling the atmosphere of the clinic. He attributed the excitement to people leaving the clinic with either a resolution or a promise that the county assessor would contact them in a few days.

Jones got a resolution that day. Weeks later she still sounded elated as she described walking from the clinic and being done with the process. The clinic, she said, was a “godsend to me.”

Along with six FBD attorneys, Auberry brought along two real estate consultants as well as Marion County Assessor Joe O’Connor. The lawyers met with the homeowners on one end of the room, going through the paperwork and listening to the homeowners.

Clients were to come with the Form 11, the tax bill and any supporting information like sale price of another home in neighborhood and the condition of the homeowner’s property. After meeting with the homeowners, learning about their situation and going through the documents, the attorneys could then go directly to the assessor.

“Most important,” Auberry said, “we got the parties in same room at the same time.”

Indiana Lawyer Reports Attorneys Use Pro Bono Tax Work to Fill Gap

From the Indiana Lawyer:

Almost immediately after taking her seat on the Indiana Tax Court, Judge Martha Blood Wentworth saw the problem.

Flowing into her court were numerous pro se litigants who ended up getting their cases bounced because they had made a procedural error. They either did not have resources to hire an attorney or the amount of money at stake was too low to make getting a lawyer cost beneficial.

Adding to the dilemma were the materials available to help pro se litigants. Wentworth found pamphlets out of date, and sample petitions were so complicated that figuring out how to complete them is difficult.

That the pro se litigants made errors in presenting their cases is not surprising. However, while the motion to dismiss was warranted, the judge worried the individuals who got their cases tossed were going to lose respect for the government.

Many agree with Wentworth that there is a gap in pro bono services for tax issues. Joshua Abel, executive director of the Neighborhood Christian Legal Clinic, attributed the need to the economic recession which has depleted disposable income, making any kind of financial hit significant for families, as well as to the government tightening collection practices to cover revenue shortfalls.

Without assistance, Abel said people will get a bigger bill. In turn, they will then have less money to cover other household expenses like mortgages.

Determining the size of the need is difficult because much of the information is anecdotal. However, statistics from the Indiana Department of Revenue Tax Advocacy Office give some indication of how big the demand for help is.

Emerging from the worst of the recession, the tax advocacy office opened 3,055 new cases during fiscal year 2011. This is a sizable increase from the 2,738 cases created in fiscal year 2010 but the influx evaporated during fiscal year 2012 when 2,667 cases were created. These are typically cases that can’t be resolved through the normal collections process, such as hardship cases.

Tax problems are not just a headache for those with lower incomes. Tax questions arise when selling a company, closing a business or getting a divorce. It affects everybody in their personal lives.

“There is not anything you can do in life that doesn’t have a tax on it,” Wentworth said. “There is always a tax aspect no matter what.”

At the Indiana Coalition Against Domestic Violence, tax issues are often tied to personal safety. Individuals suffering in abusive relationships may have an even harder time leaving because a looming tax liability could crush them financially, explained Kerry Hyatt Blomquist, legal counsel for the organization.

Abusers sometimes continue the abuse through the financial system by forging a spouse’s signature on an income tax form, or using false Social Security numbers or falsely claiming children as dependents. The resulting tax liability from such actions can be so daunting that some survivors are actually opting to stay with the abuser for financial protection.

For federal tax issues, the Internal Revenue Service is approachable but a solution might not come quickly, Blomquist said. And, while forms and instructions are available online, reading through the IRS literature can be overwhelming and intimidating.

The best practice, according to Blomquist, is to make sure the survivor’s advocate is giving attention to tax concerns as well as the other issues.

See the full article here: