From the New Castle Courier Times:
Henry County residents will soon have an easy and free way to access local government land records and the geographic information system, known as GIS, without visiting the county courthouse.
Through a recent partnership with Schneider Corp., a provider of creative solutions for land, county residents are able to access a website known as Beacon.
Beacon, which is endorsed by the Indiana Association of Cities and Towns, streamlines the public interface with the community by consolidating searches of multiple sites into one query that can be conducted from any computer.
County Auditor Pat French said the result is a more efficient way to obtain up-to-date information on properties, as well as providing search, reporting and printer-friendly features.
"The site will be a great benefit to the citizens of Henry County taxpayers and businesses," French said. "It's going to be a real time-saver for everyone. We strive to be transparent and to offer the most current information. This will be a great tool for all of us to use."
French said the county will be able to place current information on the website regarding county taxsales, drainage tax, tax history, assessment evaluations, aerial mapping, land improvement data and more.
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http://www.thecouriertimes.com/main.asp?Search=1&ArticleID=282600&SectionID=23&SubSectionID=45&S=1
Wednesday, July 31, 2013
Leader Reports Washington county Completes First Round of Budget Talks; New Public Safety Tax Likely
From the Salem Leader:
After spending two days scrutinizing the proposed 2014 budgets, it appears members of the Washington County Council have no other viable option than to establish a public safety income tax.
"If you pay property tax, you're going to get a credit, a wash of what the income tax is," Commissioner David Brown, who sat in on budget hearings, observed. "It looks to me like (that's) the best way to balance the budget."
The county council left no stone unturned as they looked at ways to reduce costs, including eliminating health insurance for county employees and giving them significant raises to help with costs of purchasing their own. Providing health insurance costs the county well over $1 million.
The council also considered layoffs; the county has 131 employees, 91 are paid from the county's general fund. David Hoar, president of the county council, said eliminating seven positions would free up about $120,000, figuring an average salary of $26,000.
"Anything that can relieve the pressure on the general fund, we're looking at," Hoar said at one point during the discussion.
But bottom line, the council needs to reduce the budgets by around $300,000 or come up with $200,000 to $400,000 more to support them
"You're either going to cut people or cut insurance, I don't know where else you are going to get the kind of numbers you are talking about," Mark Clark, attorney for council, said.
Last year, budgets funded by the general fund totaled $5,392,578 but the state ordered that to be trimmed by $329,060, reducing the amount to $4,963.518. This year, the council reviewed general fund budgets totaling $5,611,461; the county is facing more expenses than last year.
In addition to spiraling health care costs, there will be an election in 2014; the budget supporting that totals more than $96,000.
Also, there is the cost of operating the new jail, a big unknown at this point since there is no way to determine when the project will be complete and the new doors open. After meeting with Sheriff Claude Combs and reviewing estimates provided by the architect, the council decided to increase the detention center budget by $100,000, an estimate of the cost of operating the new facility for the last four months of 2014.
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http://www.salemleader.com/main.asp?Search=1&ArticleID=7237&SectionID=2&SubSectionID=20&S=1
After spending two days scrutinizing the proposed 2014 budgets, it appears members of the Washington County Council have no other viable option than to establish a public safety income tax.
"If you pay property tax, you're going to get a credit, a wash of what the income tax is," Commissioner David Brown, who sat in on budget hearings, observed. "It looks to me like (that's) the best way to balance the budget."
The county council left no stone unturned as they looked at ways to reduce costs, including eliminating health insurance for county employees and giving them significant raises to help with costs of purchasing their own. Providing health insurance costs the county well over $1 million.
The council also considered layoffs; the county has 131 employees, 91 are paid from the county's general fund. David Hoar, president of the county council, said eliminating seven positions would free up about $120,000, figuring an average salary of $26,000.
"Anything that can relieve the pressure on the general fund, we're looking at," Hoar said at one point during the discussion.
But bottom line, the council needs to reduce the budgets by around $300,000 or come up with $200,000 to $400,000 more to support them
"You're either going to cut people or cut insurance, I don't know where else you are going to get the kind of numbers you are talking about," Mark Clark, attorney for council, said.
Last year, budgets funded by the general fund totaled $5,392,578 but the state ordered that to be trimmed by $329,060, reducing the amount to $4,963.518. This year, the council reviewed general fund budgets totaling $5,611,461; the county is facing more expenses than last year.
In addition to spiraling health care costs, there will be an election in 2014; the budget supporting that totals more than $96,000.
Also, there is the cost of operating the new jail, a big unknown at this point since there is no way to determine when the project will be complete and the new doors open. After meeting with Sheriff Claude Combs and reviewing estimates provided by the architect, the council decided to increase the detention center budget by $100,000, an estimate of the cost of operating the new facility for the last four months of 2014.
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http://www.salemleader.com/main.asp?Search=1&ArticleID=7237&SectionID=2&SubSectionID=20&S=1
Revenue Finds Taxpayer Failed to Show its Sales to Out of State Customers Improperly "Thrown Back" to Indiana
Excerpts of Revenue's Determination follow:
Taxpayer is a plastics manufacturer with plants in Indiana. Taxpayer sells its products to destinations throughout North America.
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Taxpayer is a plastics manufacturer with plants in Indiana. Taxpayer sells its products to destinations throughout North America.
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The issue in this protest is whether income from Taxpayer's sales to customers located in various foreign states and jurisdictions should have been "thrown back" to Indiana and included in the Indiana sales factor of the formulary apportionment calculation of Indiana corporate income tax due.
"Throwback" sales are sales of a taxpayer the receipts of which are attributed to Indiana because the sales originating in Indiana went to purchasers in other states and the taxpayer is not subject to tax in those other states. The receipts that are not subject to tax in the other states get "thrown back" to Indiana, because the sales related to those receipts originated in Indiana.
Taxpayer filed an amended return for fiscal year ending September 30, 2008, to adjust throwback sales that were first reported to Indiana on the original return. The amended return included an explanation that Taxpayer performed activities in other states that exceeded the protection of P.L. 86-272. Taxpayer claimed it had nexus in those states with the result that the sales Taxpayer had originally thrown back to Indiana should now be reversed thus reducing "Indiana receipts factor."
During the course of reviewing Taxpayer's returns, the Department made several adjustments to Taxpayer's property and sales factors. Taxpayer protested one of the adjustments to its sales factor. Specifically, the Department attributed to Indiana certain of Taxpayer's sales made to locations in other states. The Department concluded that there was no basis for the exclusion of the throwback sales from the "Indiana receipts factor" since Taxpayer provided minimal documentation relating to Taxpayer's activities in the various other states with which Taxpayer now claimed it had nexus. The Department, therefore, treated these sales as "throwback" sales attributed to Indiana. IC § 6-3-2-2(e), (n). The decision resulted in an increase in Taxpayer's corporate adjusted gross income tax. Taxpayer maintains that the throw-back rule is not warranted for sales to Mississippi, Missouri, and Tennessee.
Indiana imposes a tax on each corporation's adjusted gross income attributable to "sources within Indiana." IC § 6-3-2-1(b). Where a corporation receives income from both Indiana and out-of-state sources, the amount of tax is determined by a three-factor apportionment formula established by IC § 6-3-2-2(b). For the years at issue, that formula operated by multiplying Taxpayer's total business income by a fraction composed of a property factor, a payroll factor, and a sales factor.
The "sales factor" consists of a fraction, "the numerator of which is the total sales of the taxpayer in [Indiana] during the taxable year, and the denominator of which is the total sales of the taxpayer everywhere during the taxable year." IC § 6-3-2-2(e).
The Department determined that, for purposes of calculating Taxpayer's Indiana tax liability, the receipts from sales to out-of-state customers should be thrown back to Indiana because the sales were made within jurisdictions where Taxpayer did not have nexus with the state. The audit based its decision on 45 IAC 3.1-1-50 and instructions included on the state return that attribute those sales to Indiana if the taxpayer is not taxable in the state of the purchaser and the sale is attributed to Indiana if the property is shipped from Indiana. Such sales are designated as "throw-back" sales. Id.
The basic rule is found at IC § 6-3-2-2. IC § 6-3-2-2(e) provides that "[s]ales of tangible personal property are in this state if... (2) the property is shipped from an office, a store, a warehouse, a factory, or other place of storage in this state and... (B) the taxpayer is not taxable in the state of the purchaser." IC § 6-3-2-2(n) provides that "[f]or purposes of allocation and apportionment of income under this article, a taxpayer is taxable in another state if: (1) in that state the taxpayer is subject to a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business, or a corporate stock tax; or (2) that state has jurisdiction to subject the taxpayer to a net income tax regardless of whether, in fact, the state does or does not." Therefore, in order to properly attribute income to a foreign state, taxpayer must show that one of the taxes listed in IC § 6-3-2-2(n)(1) has been levied against him or that the state has the jurisdiction to impose a net income tax regardless of "whether, in fact, the state does or does not." Id.
Again, it is the taxpayer's responsibility to establish that the existing tax assessment is incorrect. As stated in IC § 6-8.1-5-1(c), "The notice of proposed assessment is prima facie evidence that the department's claim for the unpaid tax is valid. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made."
Taxpayer asserts that it has nexus in Mississippi, Missouri, and Tennessee, and, therefore, the throw-back rule is not applicable to the sales that were made to purchasers in those states. Taxpayer maintains that the following activities exceeded the protections of P.L. 86-272:
(1) Designing and facilitating product development
(2) Quality control assessments at the customer location
(3) Resolving quality control issues at the customer locations.
Taxpayer argued in its October 9, 2012 protest letter that the above activities "performed in Mississippi, Missouri, and Tennessee suggests sufficient historic and future contacts requiring corporate income tax or franchise tax reporting obligations."
The Department's audit summary report states that Taxpayer made the same argument during the Department's investigation:
[Taxpayer] filed an amended return in FYE 9/30/08 to adjust the throwback sales that were reported on the original return. This return included an explanation that [Taxpayer] performed one or all of the following activities, which exceeded the protection of P.L. 86-272, in states it was improperly throwing back sales to Indiana:
1) Employee sales representatives addressed and resolved bottle and/or cap quality control issues at customers locations.
2) Indiana plant employees addressed and resolved bottle and/or cap quality control issues at customer locations
3) Consigning goods inventories were located at vendor or customer locations.
During the audit, the Department requested that Taxpayer document its position. The Department's audit summary report documents this request and Taxpayer's response:
The taxpayer was asked to provide documentation for all audit years to support the states where sales were not thrown back. The taxpayer provided minimal documentation (three expense reports) to support that employees were performing activities not protected by P.L. 86-272 in numerous states. These states included Arkansas, Canada On and SK, Iowa, Kentucky, Minnesota, Montana, Missouri and Tennessee. No explanation was included with this documentation explaining the job responsibilities of the employee or what activities were performed in the state. Since the information provided does not prove the taxpayer went beyond mere solicitation in these states, sales from these states will be thrown back [to Indiana]. The taxpayer also provided a workpaper showing consigned inventory.
This information conflicted with previous information provided that agreed with the Federal return balance sheet inventory numbers. The taxpayer did not provide any support for the changes in information. Due to these facts, sales to these states (Florida (FY 10 only), Kansas (FY 10 only), Maryland (FY 10 only) and Mississippi (all tax years) will be thrown back.
In its protest letter dated October 9, 2012, and during the hearing, Taxpayer indicated that it was in the process of entering into voluntary disclosure agreements ("VDAs") with the tax collection agencies of Mississippi, Missouri, and Tennessee whereupon Taxpayer would file and pay corporate income or franchise taxes in those states. Subsequent to the hearing, Taxpayer provided – unsigned – copies of these returns. Taxpayer did not provide copies of the VDAs, nor was Taxpayer willing to provide further documentation and explanation of the activities it claimed provided sufficient nexus with Mississippi, Missouri, and Tennessee. Taxpayer stated that several years prior to the audit years, Taxpayer engaged a consultant to do a "nexus review" of its activities. Taxpayer states it had difficulty finding the underlying data relating to the nexus activities because the employee who handled the "nexus review" was no longer with the company. Taxpayer was therefore unwilling to make any additional effort to document its activities.
Taxpayer argued in its protest letter dated October 9, 2012 that Taxpayer "determined that it likely had nexus in several states, including Mississippi, Missouri, and Tennessee through the activities of its engineers and plant employees responsible for quality control." (Emphasis added). Taxpayer continues, "Such activities could include designing and facilitating product development as well as performing quality control assessments and conducting other quality control activities at the customer location." (Emphasis added). Taxpayer contends that "while the regularity of the travel varies depending upon the year, the frequency of these travel activities in recent years suggests the establishment of substantial nexus with Mississippi, Missouri, and Tennessee for corporate income tax and franchise tax purposes."
The unsigned returns Taxpayer presented were for:
(1) Tennessee Franchise/Excise Tax returns for the periods: 10/1/10 to 9/30/11 ($1,046); 6/17/2010 to 9/30/2010 ($409); 10/1/2009 to 10/15/2010 ($2,513); 10/1/2008 to 9/30/2009 ($13,509); 10/1/2007 to 9/30/2008 ($12,492). There was no property or payroll reported in Tennessee for these periods. The total excise tax paid in Tennessee for these periods is just under $30,000.
(2) Mississippi Corporate Income and Franchise Tax returns for the periods: 10/1/2008 to 9/30/2009 ($16,069); 10/1/2009 to 6/16/2010 ($2,013); 6/17/2010 to 9/30/2010 ($1,283); 10/1/2010 to 9/30/2011 ($2,534). Again, no property or payroll reported in Mississippi for these periods. The total corporate income tax and franchise tax paid to Mississippi for these periods is just under $22,000.
(3) Missouri Corporate Income and Franchise Tax returns for the periods: 10/1/2010 to 9/30/2011 ($0); 6/17/2010 to 9/30/2010 ($3,638); 10/1/2009 to 6/16/2010 ($9,517); 10/1/2008 to 9/30/2009 ($15,794); 10/1/2007 to 9/30/2008 ($8,507). Also, no property or payroll for these periods. The total corporate income tax and franchise tax paid to Missouri for these periods is just under $38,000.
The corporate/franchise/excise taxes Taxpayer claims to have paid to these three states represent 38 percent of the Indiana corporate income tax assessed to Taxpayer for those same periods.
Absent additional documentation by Taxpayer of its claimed activities in these other states – and especially in light of the voluntary nature of Taxpayer's VDAs with these other states –the Department cannot agree with Taxpayer's contention that sales previously thrown back to Indiana by Taxpayer are now no longer attributable to Indiana. In order for Taxpayer to meet its burden in protesting this assessment of Indiana tax, more is required than its say-so.
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Herald-Times Reports Monroe County to Vote on Food and Beverage Tax September 10th
From the Bloomington Herald-Times:
The Monroe County Council will take a vote on the proposed food and beverage tax Sept. 10.
Budget hearings scheduled for that day will continue as planned.
Geoff McKim, county council president, proposed the August meeting be used to discuss the interlocal agreement between the city of Bloomington and the county, and a vote be taken in September.
Public comment will be taken at both meetings.
Council members seemed in agreement that it was time to take a vote.
“We’ve had this process go on for quite some time,” said Rick Dietz, council member.
State legislation passed in 2009 allows the Monroe County Council to implement a 1 percent food and beverage tax on items bought in restaurants and bars. It would not apply to most grocery purchases, but could apply to purchases from the deli or other take-out section.
Money raised by the new tax would go toward the proposed expansion of the Bloomington/Monroe County Convention Center.
Proponents of the expansion estimate it could add about $15 million and 200 new jobs to the county’s economy. According to studies, Bloomington visitors spend about $233 per trip.
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Keating: Tax Abatement vs. Tax Increment Financing
By Maryann Keating in the Fort Wayne News-Sentinel:
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The reason for property tax abatements, we are told, is the need for local government to play an active role in encouraging certain activities. In Indiana, tax abatements can only be granted for projects located in an “economic revitalization area,” so the government must first define and establish such an area. For example, Indianapolis officials evaluate each applicant for tax abatement and forward their recommendations to the Metropolitan Development Commission.
Assessed value and, hence, property taxes are expected to gradually increase on improved property. This, of course, assumes that there is a market for improved property. Abatements represent a reduction or exemption from taxes for a specified period. The maximum abatement permitted in Indiana exempts all taxes due in the first year due to any improvements followed with reductions in subsequent years such that in the 11th year no deductions remain.
The assumption is that improvements to certain properties would not occur in the absence of abatements; therefore, in the long run, future property tax revenues, employment and local income tax revenues should increase. There is a real cost, however, to the general public from tax abatements, namely forfeiting increased taxes that may have been generated without abatements.
Tax Increment Financing (TIF), an alternative to tax abatement, captures a percentage of the real property taxes paid by the property owner due to an increase in site value. However, captured tax revenue, referred to as tax increments, does not flow into the general revenue stream of the municipality, county or township within which the TIF is located. Tax increments remain in the district to be used at the discretion of local economic-development commissions to finance public or private projects. Essentially, a TIF is borrowing based on expected increases in property tax revenue. When a project is completed and bonds repaid, a particular TIF is expected to expire and all property taxes redirected to local government.
Local government officials, confronted with municipal-bond restrictions, state-imposed caps on property taxes, reduced federal funding and aggressive lobbying by private developers, find such incremental tax financing attractive. California has discontinued incremental tax financing but Indiana and all other states, with the exceptions of Arizona and Wyoming, have legislation enabling TIFS.
TIFs are sometimes viewed more favorably than tax abatements because property owners actually pay taxes on increased property values. However, when the cost of basic government services increases, the result is a general revenue shortfall paid from sources outside the TIF district.
Meanwhile, incremental tax revenue is allocated by commission members who are not necessarily elected representatives.
Forty percent of the city of South Bend’s geographical area is located within Tax Incremental Fund (TIF) districts. In addition, St. Joseph County, in which South Bend is located, has three TIF districts and is considering another two. It is conceivable that some TIFs, whether successful or otherwise, will never be dissolved and additional tax revenues never flow into general funds to provide essential services.
It is the case that incremental taxes in some TIF districts could be made available in the future for police, fire and other essential government operations. For example, existing funds derived from South Bend’s Erskine Village TIF are sufficient to retire all remaining debt and close 20 years ahead of schedule. However, the commission must notify the state if any funds are either used for early payment of bonded debt or dispersed outside the TIF into general local government revenue.
Corrections are being proposed. Dr. David Varner, a member of the South Bend Common Council, recommends that In addition to requiring the release of some TIF funds on an annual basis, the time horizon of new TIF districts be limited to years to maturity on bonds issued to pay for a TIF’s initial development project. He suggests that the Indiana General Assembly address statues on TIF length.
DLGF Publishes Guidance on Post Employment Benefits Reporting
MEMORANDUM
TO: Political Subdivisions
FROM: Micah G. Vincent, Commissioner
RE: Other Post Employment Benefits Reporting
DATE: July 30, 2013
On May 8, 2013, Governor Mike Pence signed into law House Enrolled Act 1001 (“HEA 1001”). The purpose of this memorandum is to outline other post-employment benefits (“OPEB”) reporting requirements to the Department of Local Government Finance (“Department”) under House Enrolled Act 1001 (“HEA 1001”). This memorandum is intended to be an informative bulletin; it is not a substitute for reading the law.
Section 345 introduces IC 36-1-8-17.5 (effective July 1, 2013), which requires political subdivisions to report before February 1 of each year on all other post-employment benefits, as defined by the Governmental Accounting Standards Board (“GASB”). This statute does not require a full analysis of liabilities under GASB Statement 45. The Department will release a reporting application in Gateway by the end of 2013.
The GASB definition of OPEB includes healthcare and other nonpension benefits provided to employees. Benefits typically include: medical, prescription drug, dental, vision, hearing, life insurance, long-term care benefits, and long-term disability benefits (not covered under a pension plan) that are provided after employment ends.
Each political subdivision must report, for the preceding year, its:
(1) OPEB liability;
(2) unfunded OPEB liability;
(3) OPEB assets;
(4) OPEB contributions; and
(5) OPEB expenses and expenditures.
(1) OPEB liability;
(2) unfunded OPEB liability;
(3) OPEB assets;
(4) OPEB contributions; and
(5) OPEB expenses and expenditures.
Reporting by units that complete an OPEB actuarial analysis
For units that currently complete an actuarial analysis of OPEB liabilities under GASB Statement 45, the Department requests that they submit this analysis via Gateway’s OPEB application. The Department understands that actuarial reports may not be available until after the January 31 deadline. Gateway’s OPEB application will stay open, as there is no penalty under IC 36-1-8-17.5 for having an incomplete report as of the January 31 deadline.
Reporting by units that do not complete an OPEB actuarial analysis
For units that do not currently complete an actuarial analysis, the Department will collect certain data that outline the potential OPEB liabilities. The statute does not require each political subdivision to conduct a full actuarial calculation of liabilities under GASB Statement 45; rather, political subdivisions shall include those types of benefits that would qualify as OPEB in estimating liabilities.
Any release by the Department of a filing pursuant to a Public Information Request will contain disclaimers to prevent confusion about whether the financial data comply with the Securities & Exchange Commission’s continuing disclosure requirements. The Department reminds all filers and users that these reports do not represent a full OPEB actuarial analysis and are not intended to fulfill continuing disclosure requirements.
Further information and details regarding OPEB reporting in Gateway will be available when the application is released. Questions may be directed to Eric Bussis, Director of Data Analysis, at erbussis@dlgf.in.gov or (317) 23
Tuesday, July 30, 2013
Ted Holaday Appointed to Board of Tax Review
Contact Us
Indiana Board of Tax Review
100 North Senate Avenue, Room N-1026
Indianapolis, IN 46204
100 North Senate Avenue, Room N-1026
Indianapolis, IN 46204
Telephone: (317) 232-3786
Fax: (317)234-5589
Fax: (317)234-5589
For general questions or information, email:
nbrewer@ibtr.in.gov
nbrewer@ibtr.in.gov
The Board is located on the 10th floor in the Indiana Government Center North Building.
The Board:
Betsy J. Brand
Terry G. Duga
Betsy J. Brand
Terry G. Duga
Ted J. Holaday
Senior Administrative Law Judges:
David Pardo
David Pardo
Administrative Law Judges:
Rick Barter
Jennifer Bippus
Ron Gudgel
Rick Barter
Jennifer Bippus
Ron Gudgel
Jaime Harris
Patti Kindler
Tom Martindale
Dalene McMillen
Joe Stanford
Dalene McMillen
Joe Stanford
Paul Stultz
Ellen Yuhan
Operations Director: Beth Hammer
Appeals Coordinator:
Jane Chrisman
Jane Chrisman
Administrative Assistants:
Nickie Brewer
Cheryl Murrell
Nickie Brewer
Cheryl Murrell
Revenue Finds Taxpayer Failed to Prove it did not Underreport its Gasoline and its Cost of Goods Sold, But Ordered Audit to Review Additional Materials
Excerpts of Revenue's Determination follow:
Taxpayer is an Indiana business which operates a combination gasoline station and convenience store. The gasoline station sells gasoline but does not sell diesel fuel. The convenience store sells, tobacco products, soft drinks, food items, and general merchandise.
Taxpayer is an Indiana business which operates a combination gasoline station and convenience store. The gasoline station sells gasoline but does not sell diesel fuel. The convenience store sells, tobacco products, soft drinks, food items, and general merchandise.
The Department of Revenue ("Department") conducted an audit review of Taxpayer's books and records. The audit began June 2012 and concluded January 2013. The audit resulted in the assessment of additional sales/use tax. Taxpayer disagreed with the assessment and submitted a protest to that effect.
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Taxpayer purchased gasoline which it eventually sold to its retail customers. The audit found that Taxpayer "underreported the gallons of fuel sold" compared to the amount of gasoline Taxpayer purchased from its vendor. The audit report noted that the underreporting:
[I]s a significant accumulation and has not been shown due to spill, contamination, a theft, or other documented reason. These amounts are greater than the underground tank capacity.
The audit found that Taxpayer understated the amount of gasoline sold at its store by approximately 231,000 gallons. The audit proposed additional sales tax based on the differences between the amount purchased and the amount reported on the pump.
Taxpayer disagrees stating that perhaps the Department's auditor "added some invoices twice or missed some but we are [now] giving the correct totals for purchases...."
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Taxpayer provided various invoices from its gasoline vendor but provides only a sketchy explanation of why these invoices are relevant to determining the amount of gasoline it actually sold. Presumably, the invoices are intended to demonstrate that Taxpayer did not underreport the amount of gasoline it sold.
Taxpayer has not met its burden under IC § 6-8.1-5-1(c) of establishing that the sales tax assessment attributable to gasoline sales is wrong. The administrative hearing is not the appropriate venue in which to conduct a detailed reexamination of the field work performed at the time the audit was conducted or to reexamine the newly supplied invoices outside the context of Taxpayer's other business records. To do so would be entirely presumptuous on the part of the Hearing Officer.
Nonetheless, the Audit Division is requested to review the gasoline invoices, determine what – if any – significance should be attached to these invoices, and to make whatever adjustment to the sales tax assessment as may be warranted.
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The audit found that Taxpayer had underreported the "cost of goods sold." For example, Taxpayer's check register "showed high amount spent on merchandise purchases than the [T]axpayer's financial statements cost of goods sold."
The audit was unable to reconcile the issue because Taxpayer was unable to provide either sales or purchase invoices. Using a "summarized list of 2010 merchandise purchases," the audit estimated the amount of additional sales tax owed by Taxpayer.
Taxpayer disagrees stating that "some of the vendors that have been added as [cost of goods sold] are not goods for resale but belong in other expense categories." Taxpayer asks that the Department review the audit findings and issue a revised – but unspecified – assessment.
It should be pointed out that, "Every person subject to a listed tax must keep books and records so that the department can determine the amount, if any, of the person's liability for tax by reviewing those books and records." IC § 6-8.1-5-4. In addition, IC § 6-8.1-5-4(c) provides that, "A person must allow inspection of the books and records and returns by the department or its authorized agents at all reasonable times." IC § 6-8.1-5-4(c).
Taxpayer has provided various documents, lists, check stubs, and the like. With one exception, Taxpayer fails to explain with any specificity the significance of these documents or to explain how or to what extent the documents affect the proposed assessment.
Taxpayer has provided a signed, executed copy of the lease for its "convenience store/Gas station." The lease calls for $4,000 per month lease payments. Accompanying the lease, are check stubs which purport to represent the $4,000 monthly payments. Taxpayer asks that the amounts be removed from the audit's cost of goods sold and that the sales tax assessment be adjusted accordingly.
As pointed out in Part I above, IC § 6-8.1-5-1(c) places the burden on the Taxpayer of establishing that the challenged tax assessment is "wrong." The lease and the check stubs raise the possibility that the audit's "cost of goods sold" tally was incorrect. The Department is unable to agree that Taxpayer has met its burden of demonstrating that the assessment was wrong. However, the Audit Division is requested to review the evidence provided by Taxpayer and determine whether or not the purported lease payments should be removed from what Taxpayer describes as the "cost of goods sold."
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Taxpayer makes a secondary argument related to the audit's assessment of sales tax based on the "cost of goods sold." Taxpayer argues that some of the "goods" were never sold but remained in inventory at the time the audit was conducted. Taxpayer concludes that it should not be required to pay tax on items which remained unsold at the time the audit concluded January 2013.
As Taxpayer explains:
Not all the purchases have been sold. There has been [a] substantial increase in inventory [and] we have inventory reports for the two periods, hopefully this might reduce the assessment of [cost of goods sold].
Taxpayer's argument is speculative because Taxpayer has provided no documentation upon which to revise the assessment. As noted previously, IC § 6-8.1-5-1(c) requires that the Taxpayer demonstrate that the assessment is "wrong."
Tribune Reports Hospital and Assessor Reach Agreement on Appraisal in Porter County
From the Chesterton Tribune:
The rift between the Porter County Assessor Jon Snyder and Porter Regional Hospital over methods to assess the 430,000 sq. ft. facility at U.S. 6 and Ind. 49 in Liberty Township ended amicably on Friday as the hospital agreed to provide most of the information requested by Snyder’s private appraiser to complete his work.
The two parties met briefly in Porter County’s Circuit Court to announce they came to an agreement late Thursday night in which the hospital will provide all but two of the 28 items for which Snyder had filed a petition of writ for production of books and records earlier this month.
Snyder’s attorney, Christopher Buckley of Gordon Etzler & Associates, said the information the hospital will provide under the terms will be sufficient for the assessor’s office to do its work in a timely manner and thanked the hospital for its cooperation.
“The appraisal will go forward as scheduled,” Buckley told the Chesterton Tribune. “We appreciate the cooperation from Porter Regional Hospital. We know it will be a good corporate citizen that will benefit the community for years to come.”
The county-owned hospital was sold to Community Health Systems of Franklin, Tenn. in 2007 which opened the Porter Regional Hospital facility last August.
County Assessor Jon Snyder hired Jack Poteet of Hospital Appraisal Services later in the fall to calculate an assessed value for next year’s tax rolls based on the hospital’s market value in-use.
Poteet requested specific documents from hospital officials but was turned down due to their concerns about Poteet’s methods of using an entrepreneurial profit assessment approach which they speculated could lead to a higher assessment. Stephen Brandenburg, an attorney hired by the hospital, argued during the July 18 court proceedings that the appraiser’s requests were unnecessary because they were not part of the state’s set guidelines for county assessors.
But in his testimony before Circuit Court Judge Pro Tem David Matsey, Snyder said he believes the state gives county assessors the authority to come up with an accurate and equitable assessment by any means necessary.
Snyder filed a subpoena against the hospital to complete the appraisal by Sept. 1 in time for assessment notices to go out to taxpayers in the fall. He said the hospital assessment is necessary for local taxing units to begin their budgeting this year and to prevent disruption of the yearly taxing process, which has had a record of being on time since 2010.
...
Journal-Gazette Reports Fort Wayne Parks to See Tax Money Boost
From the Fort Wayne Journal-Gazette:
City officials unveiled $3 million worth of improvements to Fort Wayne Parks on Monday afternoon, the latest in what is expected to be a parade of announcements on how the city’s new income tax money will be spent.
City Council members June 25 approved raising the local option income tax from 1 percent to 1.35 percent, which will generate about $13.5 million a year.
The tax increase takes effect Oct. 1 and is meant to close a budget gap caused by property tax caps and pay for projects and services officials say are needed but currently unaffordable.
Among the needs, the city said, was an additional $3 million a year to maintain the beloved park system. Now, they say, those needs can be met.
“This is the most significant event to happen to the park system since … well maybe in its history,” Parks Director Al Moll said. “This will ensure the park system is taken care of long after we’re here.”
Moll said every poll, every survey taken shows that Fort Wayne residents love the parks and want to maintain them. The new money, he said, means that will happen, and the city won’t have to go into debt.
...
News Sentinel Reports Auditor Tells Recorder to Spend More Money in Allen County
From the Fort Wayne News-Sentinel:
As recently as 2002, the Allen County recorder's office received nearly a half-million dollars a year from the county's tax-supported general fund. Today that tax subsidy is just $1, with fees more than making up the difference.
In the real world, that might make Recorder John McGauley a hero, or at least executive of the year. But in the world of government, in which seemingly arbitrary regulations too often get in the way of common sense, it's made the second-term Republican a target of state auditors who have in effect warned him that he's not spending enough of taxpayers' money.
“Since I got here (in 2007) I made it clear that self-funding (the office) was a goal,” said McGauley, who since then has transformed the office into a nearly paperless operation that more than pays for itself by generating annual fees in excess of $600,000.
And that, according to the State Board of Accounts, may earn McGauley not praise but criticism when his office is audited next year.
In a letter, State Examiner Bruce Hartman said the money in county recorders' “perpetuation” funds is available for the “preservation of records and the improvement of record-seeking systems and equipment” but “should not be used to fund the normal operating, administrative or accounting functions of the recorder's office.
“This is not to be construed to be a legal opinion, but it is the position we would take during the audit of the county,” Hartman concluded.
In the legal opinion of two county attorneys, however, McGauley is doing precisely what Indiana law allows.
...
“If the state eventually concludes that the county general fund should be paying for our staff, then that's what we will do,” McGauley said. “But I think that, especially considering the stresses the county budget is under, it is bad policy to use tax dollars to cover what our fees will clearly self-fund. When I hear that, I fear that it could cost someone a job (by forcing the transfer of tax dollars to the recorder's office from other departments).”
One could suggest that an influx of tax dollars should allow McGauley to reduce fees or transfer some of his “windfall” to the county for other uses. But, again, that's not how government works. Both his fees and his inability to return any unused portion of them to the county's general fund are prohibited by state law. Nor, he said, is he planning any major upgrades that would require more than the $1 million in fees the office is holding in reserve.
“We've gone through an epic upgrade in technology. We're where we need to be for years to come,” he said.
So McGauley, a former News-Sentinel reporter who has also cut staff by 25 percent since taking office, faces the bizarre prospect of being reprimanded by the state for a practice County Council promoted and applauded while benefiting the public.
To be fair, state officials no doubt are doing their best to interpret and enforce an ambiguous law. And McGauley admits some of his fellow recorders in smaller counties would be happy to see the state's position prevail, so their Councils will not also ask them to make do with less.
“This is a test case. There is no guidance (in state law),” said McGauley, who has spoken with at least one state legislator about providing the necessary clarity. “This drives me nuts. Either fix the statute or leave me alone.”
Good advice. Remember this the next time somebody claims government "operates like a business."
Truth Reports Time Running out for Delinquent Property Owners to Pay Taxes Before Tax Sale in Elkhart County
From the Elkhart Truth:
Property owners have less than two weeks to come up with money for unpaid taxes to keep their land from being advertised as part of Elkhart County’s fall tax sale.
The deadline to pay back taxes and keep properties out of tax sale advertisements is noon Aug. 8.
“At 12:01 p.m., it will be too late,” County Treasurer Jackie Meyers said, adding that only certified funds and cash will be accepted for payments.
Landowners still have a chance to remove their properties from the sale even after they are listed if they pay the taxes and penalties owed to the county by noon Oct. 1. The tax sale is scheduled for 10:30 a.m. Oct. 2 in Room 104 at the Elkhart County Administration Building, 117 Second St.
Meyers started off with 1,350 properties with delinquent taxes adding up to roughly $4.3 million, and on Monday, July 29, she was working to subtract 25 parcels from the list after owners had come forward with payments..
“I expect it to get down to between 750 and 800 for the day of the sale,” Meyers said.
For the first time, the county will allow landowners to make partial payments on properties up until the Oct. 1 deadline.
“It’s been all or nothing in the past,” Meyers said. “There are a number of people making payments on these, but unless they pay all of their delinquencies, their property will still be in the tax sale.”
SRI Inc., an Indianapolis-based company, will host the Oct. 2 tax sale. Meyers warns that bidders should thoroughly research properties before bidding. The highest bidder for each property will pay via certified or wired funds on the day of the tax sale. The property owner then has one year to redeem their land through the county auditor’s office. If the property taxes go unpaid, the winning bidder can then start the process to obtain a deed for the land through the courts.
http://www.elkharttruth.com/article/20130730/NEWS01/707309993
Property owners have less than two weeks to come up with money for unpaid taxes to keep their land from being advertised as part of Elkhart County’s fall tax sale.
The deadline to pay back taxes and keep properties out of tax sale advertisements is noon Aug. 8.
“At 12:01 p.m., it will be too late,” County Treasurer Jackie Meyers said, adding that only certified funds and cash will be accepted for payments.
Landowners still have a chance to remove their properties from the sale even after they are listed if they pay the taxes and penalties owed to the county by noon Oct. 1. The tax sale is scheduled for 10:30 a.m. Oct. 2 in Room 104 at the Elkhart County Administration Building, 117 Second St.
Meyers started off with 1,350 properties with delinquent taxes adding up to roughly $4.3 million, and on Monday, July 29, she was working to subtract 25 parcels from the list after owners had come forward with payments..
“I expect it to get down to between 750 and 800 for the day of the sale,” Meyers said.
For the first time, the county will allow landowners to make partial payments on properties up until the Oct. 1 deadline.
“It’s been all or nothing in the past,” Meyers said. “There are a number of people making payments on these, but unless they pay all of their delinquencies, their property will still be in the tax sale.”
SRI Inc., an Indianapolis-based company, will host the Oct. 2 tax sale. Meyers warns that bidders should thoroughly research properties before bidding. The highest bidder for each property will pay via certified or wired funds on the day of the tax sale. The property owner then has one year to redeem their land through the county auditor’s office. If the property taxes go unpaid, the winning bidder can then start the process to obtain a deed for the land through the courts.
http://www.elkharttruth.com/article/20130730/NEWS01/707309993
Star Reports City County Council Votes Down Tax Credit Phase-out and New Fountain Square Tax in Indianapolis
From the Indianapolis Star:
The City-County Council killed two tax proposals late Monday, with one vote delivering a defeat to Mayor Greg Ballard’s deficit-cutting strategy.
The council voted 18-11 against a proposal to phase out the homestead property tax credit over two years. Three Republicans joined the majority Democrats in voting it down.
A Fountain Square economic improvement tax proposal was killed using a different maneuver after opposition had increased among property owners in the commercial district.
The homestead credit vote came after Ballard had called for its elimination for a year. A study commission — created out of a bipartisan budget deal between council leaders and the Republican mayor — sided with phasing it out over two years, but it fell a vote short of issuing a formal recommendation.
...
If the proposal had passed, by 2015 most homeowners would have seen their property taxes increase annually by $30 or less. City/county coffers would have received an extra $4.2 million for next year’s still-unbalanced city-county budget, and $8.4 million in 2015. The city’s deficit for 2014 has been estimated at $55.5 million.
Ballard has argued the credit is outdated because tax caps now protect homeowners.
...
Earlier in the meeting, the council rebuffed a request by member Jeff Miller, who sponsored the Fountain Square proposal, to delay a vote until September. He cited declining support among Fountain Square property owners for the proposed tax and said there was a need for more discussion.
But some opponents of the proposal moved to strike it instead. The procedural move usually is reserved for proposals with technical issues or other fatal flaws, and which haven’t gone through committees, as the Fountain Square proposal had.
The council struck the proposal 22-7, prompting applause from opponents.
It would have required nonresidential property owners, including nonprofits, in parts of the commercial district to pay an assessment into a fund to cover beautification efforts, neighborhood promotion and other improvements. The council’s move allows proponents to regroup and bring a new proposal to the council if they collect enough support from property owners.
...
http://www.indystar.com/apps/pbcs.dll/article?AID=2013307290046
The City-County Council killed two tax proposals late Monday, with one vote delivering a defeat to Mayor Greg Ballard’s deficit-cutting strategy.
The council voted 18-11 against a proposal to phase out the homestead property tax credit over two years. Three Republicans joined the majority Democrats in voting it down.
A Fountain Square economic improvement tax proposal was killed using a different maneuver after opposition had increased among property owners in the commercial district.
The homestead credit vote came after Ballard had called for its elimination for a year. A study commission — created out of a bipartisan budget deal between council leaders and the Republican mayor — sided with phasing it out over two years, but it fell a vote short of issuing a formal recommendation.
...
If the proposal had passed, by 2015 most homeowners would have seen their property taxes increase annually by $30 or less. City/county coffers would have received an extra $4.2 million for next year’s still-unbalanced city-county budget, and $8.4 million in 2015. The city’s deficit for 2014 has been estimated at $55.5 million.
Ballard has argued the credit is outdated because tax caps now protect homeowners.
...
Earlier in the meeting, the council rebuffed a request by member Jeff Miller, who sponsored the Fountain Square proposal, to delay a vote until September. He cited declining support among Fountain Square property owners for the proposed tax and said there was a need for more discussion.
But some opponents of the proposal moved to strike it instead. The procedural move usually is reserved for proposals with technical issues or other fatal flaws, and which haven’t gone through committees, as the Fountain Square proposal had.
The council struck the proposal 22-7, prompting applause from opponents.
It would have required nonresidential property owners, including nonprofits, in parts of the commercial district to pay an assessment into a fund to cover beautification efforts, neighborhood promotion and other improvements. The council’s move allows proponents to regroup and bring a new proposal to the council if they collect enough support from property owners.
...
http://www.indystar.com/apps/pbcs.dll/article?AID=2013307290046
Monday, July 29, 2013
Palladium Item Argues Look Beyond Clawbacks in Economic Development Discussion
From the Richmond Palladium-Item:
Last year about this time, when Richmond Mayor Sally Hutton was locking horns over her desired use of $500,000 in Economic Development Income (EDIT) Tax funds as a match to get $2 million in federal highway funds to repair a residential street, some members of Richmond Common Council balked, calling, at the least, for a larger community conversation about the proper use of EDIT funds.
...
Council is now being asked to authorize those local public income tax monies for, get this, a private road that would be privately built and owned on private land for the anticipated purpose of attracting private retailers to it.
That’s progress?
In fairness to council members, they have taken serious strides to add tough clawbacks — contractual stipulations and goals regarding, for example, retail jobs created, road ownership and repayment of funds in the event the property is sold.
Clearly clawback protections are in order on behalf of taxpayers any time public dollars are being invested for any kind of private development. And that is what invariably moves these private development discussions into the wider public domain, for public debate and action.
But, in the case at hand, is the clawback discussion actually obscuring the more pressing community conversation so needed here? And that is this: Should local governments open this Pandora’s box of tax dollar investment for retail? And by its vote to fund this east-side private road, where does it then draw the line in the future? At what point is it no longer possible to even imagine such a line?
And since not every private retail development can be so boosted courtesy of taxpayer dollars, what are the criteria for picking the future winners and losers. Can you say crony capitalism? And what becomes of the losers failing to get this government largesse, those who have to make it the old-fashioned way by enduring the vagaries and pitfalls of the market?
Finally, do council members, by their discussion and action to date, believe clawbacks are the bigger issue, bigger even than the precedent for how tax dollars might be used to create often-seasonal, almost always low-paying retail jobs?
We’ll learn more in coming days, and the public should have ample opportunity to be heard on the matter.
http://www.pal-item.com/apps/pbcs.dll/article?AID=2013307280002
Last year about this time, when Richmond Mayor Sally Hutton was locking horns over her desired use of $500,000 in Economic Development Income (EDIT) Tax funds as a match to get $2 million in federal highway funds to repair a residential street, some members of Richmond Common Council balked, calling, at the least, for a larger community conversation about the proper use of EDIT funds.
...
Council is now being asked to authorize those local public income tax monies for, get this, a private road that would be privately built and owned on private land for the anticipated purpose of attracting private retailers to it.
That’s progress?
In fairness to council members, they have taken serious strides to add tough clawbacks — contractual stipulations and goals regarding, for example, retail jobs created, road ownership and repayment of funds in the event the property is sold.
Clearly clawback protections are in order on behalf of taxpayers any time public dollars are being invested for any kind of private development. And that is what invariably moves these private development discussions into the wider public domain, for public debate and action.
But, in the case at hand, is the clawback discussion actually obscuring the more pressing community conversation so needed here? And that is this: Should local governments open this Pandora’s box of tax dollar investment for retail? And by its vote to fund this east-side private road, where does it then draw the line in the future? At what point is it no longer possible to even imagine such a line?
And since not every private retail development can be so boosted courtesy of taxpayer dollars, what are the criteria for picking the future winners and losers. Can you say crony capitalism? And what becomes of the losers failing to get this government largesse, those who have to make it the old-fashioned way by enduring the vagaries and pitfalls of the market?
Finally, do council members, by their discussion and action to date, believe clawbacks are the bigger issue, bigger even than the precedent for how tax dollars might be used to create often-seasonal, almost always low-paying retail jobs?
We’ll learn more in coming days, and the public should have ample opportunity to be heard on the matter.
http://www.pal-item.com/apps/pbcs.dll/article?AID=2013307280002
Tribune Reports Error Found in Tipton Account
From the Kokomo Tribune:
It now appears a bookkeeping error in the Tipton County Auditor’s office had members of the county council wondering where an additional $200,000 would be found to pay for health insurance.
Council members earlier this month were informed by Auditor Greg Townsend that the $150,000 budgeted for Group Medical insurance was spent by the end of June.
The account was $15,784 in the red at the time and a $16,919 transfer from the County Adjusted Gross Income Tax was only enough for one month.
Townsend said Friday that a bookkeeping error might have resulted in Group Medical insurance being made from the CAGIT account instead of from the budgets of the Highway and Health Departments.
“It will be a significant amount being reimbursed to the CAGIT account,” he said. “The funds should have come from the departmental budgets.”
...
http://kokomotribune.com/local/x1724763218/Error-found-in-Tipton-account
It now appears a bookkeeping error in the Tipton County Auditor’s office had members of the county council wondering where an additional $200,000 would be found to pay for health insurance.
Council members earlier this month were informed by Auditor Greg Townsend that the $150,000 budgeted for Group Medical insurance was spent by the end of June.
The account was $15,784 in the red at the time and a $16,919 transfer from the County Adjusted Gross Income Tax was only enough for one month.
Townsend said Friday that a bookkeeping error might have resulted in Group Medical insurance being made from the CAGIT account instead of from the budgets of the Highway and Health Departments.
“It will be a significant amount being reimbursed to the CAGIT account,” he said. “The funds should have come from the departmental budgets.”
...
http://kokomotribune.com/local/x1724763218/Error-found-in-Tipton-account
Journal-Gazette Reports BRC Rubber & Plastics Seek Tax Break on Investment in Fort Wayne
From the Fort Wayne Journal-Gazette:
BRC Rubber & Plastics Inc. plans to invest $365,000 as it moves its headquarters and research-and-design technical center from Churubusco to Fort Wayne before the end of the year.
The company seeks a tax break on the project, which consists of $250,000 in real estate improvements on an existing 30,000-square-foot building, $75,000 in research-and-development equipment, and $40,000 in information technology equipment.
BRC designs, develops, tests, validates and manufactures rubber and plastic parts for customers, including Ford, Chrysler and Nissan.
The move to 1029 W. State Blvd. in Fort Wayne will bring 55 existing jobs with total payroll of more than $3 million.
State Street Tech LLC is listed as taxpayer on the property. It’s unclear what that group’s relationship is with BRC Rubber.
Fort Wayne economic development staff hopes to introduce tax abatement requests at the City Council’s Aug. 13 meeting. The company could save $45,897.
NWI Reports Valpo Parks Get Good Fiscal News
From the Northwest Indiana Times:
A higher property tax collection rate than the past several years combined with increased revenue from programs has the city's Parks Department finally seeing a bright light at the end of its fiscal tunnel.
Parks Director John Seibert told the city's Park Board last week the department is in the strongest financial position of the past three years. The recession along with assessment appeals and the start of the property tax caps had kept tax collections at about 88 percent of what was budgeted during those years.
Seibert said the first half property tax payment from the county was 47.5 percent of the total for the year with another payment due in December. If the second half is similar, the 95 percent collection would be the highest in several years.
The department will continue to underspend its budget by 10 to 12 percent, as it has been doing for the last several years and so far this year, just in case things don't turn out so well, he said. So far the department has spent about $90,000 less than it had through June of 2012.
At the same time, revenue is running almost $100,000 ahead of last year.
"If that continues, we will be back on track to a sound financial position, which has been our goal for the last several years," Seibert said.
...
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