Saturday, November 30, 2013

Tribune Reports Porter County Hospital Attempts to Withdraw Property Tax Appeal

From the Chesterton Tribune:

A tax specialist representing Porter Health tried to withdraw the appeal made in 2012 on the new hospital at U.S. 6 and Ind. 49 in Liberty Twp. during Tuesday’s Property Tax Assessment Board of Appeals but the case will now move forward as Porter County Assessor Jon Snyder disagrees with the value his office came up with using the state’s methods.

Porter Regional Hospital was assessed at $34.1 million for the March 2012 assessment date when the hospital was said to be at 90 percent construction.
For the hospital, Donald Feicht, Jr., Vice-president of Taxation for Uzelac & Associates, informed the PTABOA of the intention to drop the appeal but it was not accepted, as Snyder and PTABOA attorney Chris Buckley said that state law asks that a petitioner give notice of at least eight days before a hearing.
Feicht said he had no evidence to present for the appeal and that the hospital is willing to accept the assessment because the assessor’s office had figured it using the state’s model for assessments.
Snyder contended however that the hospital should be assessed higher, based on what he has gathered as “evidence.” First, Snyder submitted a number of news articles quoting statements made during the hospital’s construction purporting the cost to be $210-225 million.
Next, Snyder said there was no way that his office could use a market-comparison approach because there were no local sales of hospitals relatable to Porter in an area. His office did look at four different hospitals sold in places such as New York City and Tulsa, for which sale prices ranged from $218 to $874 per square foot.
“It’s tough to find sales (on hospitals) and the verification process is difficult as well,” said John Yanek who works as the appeals director in the assessor’s office.
Also, Snyder provided the PTABOA with copies of the hospital’s abatement filings from 2011 and 2012 signed by Porter CEO Jonathan Nalli, which indicated the real property of the hospital was valued at $130 million. If so, then the value at 90 percent completion would equal around $117 million.
The $34.1 million assessment figure was produced by classifying the hospital as “general office space,” but Snyder disagrees that reflects the building’s market-based value, labeling the hospital as a “unique” property.
“I think that’s where the model goes awry,” Snyder said.
Rebutting, Feicht said Snyder was making his assertions based on hearsay from the media and argued that cost is not the same as assessed value.
Feicht contended that the state assessment model does classify “very clearly” that hospitals are considered office buildings and therefore should be assessed as such.
He also argued that Snyder needed to have permission from the state if he was going to deviate from the standards, but Snyder said he believes the guidelines allow him to use any method to get an accurate assessment.
Feicht said that had Porter officials known they were going to have their property values assessed in a way not according to state approved methods, they in retrospect would have second thoughts about building its new hospital in Porter County.
“Porter may not have built the hospital here if they knew that they were going to be taxed differently,” he said.
See the full article here:

Times Reports Lake County Auditor Gives Property Owners Last Chance to Avoid Hefty Property Tax Increase

From the Northwest Indiana Times:

The Lake County Auditor's Department office is reaching out one last time to thousands of homeowners about to lose a valuable property tax deduction.

Auditor Peggy Katona said her office is sending letters to 10,000 county residents whose homestead credits the state is about to revoke because the homeowners failed to provide identification needed to verify their ownership status.

She said those owners have until Dec. 31 to respond by going online to The homeowners must fill out a state form noting their Social Security or state driver's license numbers or expect their property taxes to be significantly higher next year.

This is the last of a several-year effort to eliminate invalid homestead deductions, which illegally increase taxes on law-abiding residents.

The Indiana Department of Local Government Finance reported homestead deductions have become a target of fraud because they are so valuable and in short supply.

The deductions benefit homeowners by reducing a property's assessed value -- in many cases by more than half its market value up to a maximum of $645,000 -- and capping taxes at no more than 1 percent of the reduced assessed value in most Indiana counties.


See the full article here:

Revenue Publishes Commissioner's Directive on Local Food and Beverage Taxes

Commissioner's Directive #30
October 2013
(Replaces Directive #30 Dated February 2010)
Effective Date July 1, 2013

SUBJECT: Local Food and Beverage Taxes
Aside from nonsubstantive, technical changes, this version of the directive has been changed from the previous version to include the new food and beverage taxes authorized for Steuben County and Monroe County, as well as the towns of Cloverdale and Fishers.
The purpose of this directive is to assist retail merchants in the proper application of the food and beverage tax. Generally, in counties or municipalities that adopt a food and beverage tax, the rate is 1% of the gross retail income received from taxable food and beverage transactions. In some instances where both a county and municipality within the county have adopted the food and beverage tax, the total tax rate for a taxable transaction inside the municipality is 2%.
The food and beverage tax applies only to transactions that take place in a county or municipality that adopts the tax. With regard to retail merchants that cater, the tax is not based on where the retail merchant is located. Rather, the tax is based on where the catering is provided. A retail merchant that caters in counties or municipalities that have not adopted the tax will not collect the tax on transactions in those counties and municipalities.
The food and beverage tax applies to any transaction in which food or beverage is furnished, prepared, or served by a retail merchant for consumption at a location or on equipment provided by the retail merchant in a county or municipality that adopts the tax.
"For consumption at a location or on equipment provided by the retail merchant" includes transactions in which food or beverage is (1) served by a retail merchant off the merchant's premises, (2) sold in a heated state or heated by a retail merchant, (3) made of two or more food ingredients, mixed or combined by a retail merchant for sale as a single item (other than food that is only cut, repackaged, or pasteurized by the seller and eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the federal Food and Drug Administration), or (4) food sold with eating utensils provided by a retail merchant, including plates, knives, forks, spoons, glasses, cups, napkins, or straws. A container or package used to transport the food is not considered a plate.
Taxable transactions include:
• Food sold and served by a retail merchant that is performing catering activities;
• Food sold at a deli counter in a grocery store that is cooked or heated on the premises of the retail merchant; and
• Where the seller provides eating utensils, including plates, knives, forks, spoons, glasses, cups, napkins, or straws.
Transactions not subject to tax include:
• Sales of food that is only cut, repackaged, or pasteurized by the seller; and
• Sales of eggs, fish, meat, and poultry requiring cooking by the consumer.
The food and beverage tax does not apply to the sale of food and beverages if the transaction is exempt from the sales tax.
The food and beverage tax is imposed, paid, and collected in the same manner as the sales tax. The filing of the return and the remittance of the tax collected are due 30 days after the end of the month in which the transaction occurs. The return for the food and beverage tax is a separate return from the sales and use tax return. A retailer that is required to collect and remit the tax may file a consolidated food and beverage tax return if the retailer operates multiple locations in the same county. A separate return is required to be filed by the retailer if the retailer has locations in different adopting counties.
The retailer is required to file a separate return if the retail establishment is located in a municipality inside a county where both units of government have adopted a food and beverage tax.
With the exception of Johnson County, all tax returns and remittances for the food and beverage tax are required to be filed with the Indiana Department of Revenue. Johnson County has passed an ordinance to have the tax remitted to the county treasurer. The following counties and municipalities have enacted food and beverage taxes at the following rates. NOTE: The total rate that applies to a transaction is the county rate plus the municipal rate, if applicable. For example, the total food and beverage tax rate for a transaction occurring in Carmel is 2%. The rate is based on Hamilton County's rate of 1% plus Carmel's rate of 1%.
County Rate Effective Date 
Allen County 1% July 1986 
Boone County 1% August 2005 
Delaware County 1% August 1986 
Hamilton County 1% August 2005 
Hancock County 1% August 2005 
Hendricks County 1% August 2005 
Henry County 1% October 1987 
Johnson County 1% August 2005 (collected by county treasurer) 
Madison County 1% February 1989 
Marion County 2% July 1981 and July 2005 (rate increase) 
Monroe County 1% Authorized March 13, 2009* 
Shelby County 1% August 2005 
Steuben County 1% Authorized March 19, 2008* 
Vanderburgh County 1% August 1985 
Municipality Municipality Rate Effective Date County County Rate Total Rate 
Avon 1% July 2005 Hendricks 1% 2% 
Brownsburg 1% August 1995 Hendricks 1% 2% 
Carmel 1% August 2005 Hamilton 1% 2% 
Cloverdale 1% September 1, 2013 Putnam n/a 1% 
Fishers n/a Authorized July 1, 2013* Hamilton 1% 1% 
Lebanon 1% November 2005 Boone 1% 2% 
Martinsville 1% July 2005 Morgan n/a 1% 
Mooresville 1% August 1990 Morgan n/a 1% 
Nashville 1% July 1987 Brown n/a 1% 
Noblesville 1% August 2005 Hamilton 1% 2% 
Plainfield 1% August 1995 Hendricks 1% 2% 
Shipshewana 1% July 1990 LaGrange n/a 1% 
Westfield 1% August 2005 Hamilton 1% 2% 
Zionsville 1% November 2005 Boone 1% 2% 
*As of the date of publication of this directive, food and beverage taxes have been authorized, but not yet imposed, in this county.
Michael J. Alley

Star Reports Supporters Say Proposed Hotel Tax Could Help Johnson County Businesses

From the Indianapolis Star:

With 14 golf courses, dozens of attractions, a winery and a microbrewery, there are plenty of ways folks can have fun in Johnson County.

However, few visitors know about them. In the nine-county metropolitan area, only Johnson County is without a convention and visitors bureau.

Council members Loren Snyder and Anita Knowles hope to change that. They say they will introduce a measure to adopt a 5 percent tax on hotel guests to fund tourism efforts when the council meets at 6 p.m. Monday.

“It’s something our county needs to move forward,” Snyder said. “This is one way I think we can truly start making a difference and start bringing in economic development dollars.”

Indiana allows counties to collect the so-called innkeeper’s tax of up to 5 percent. The money must be spent to promote local tourism through brochures, websites and other marketing efforts.

“We’re missing out because everybody else around us markets their county,” Knowles said.

Amy Kelsay, of Kelsay Farms in Whiteland, said county businesses could benefit from a coordinated marketing effort.

“In terms of agritourism, it would be a great benefit to our industry to bring in potential customers and cross promote,” Kelsay said. “Right now, we’re all on our own.”

Council member Jim Eckart said he’s not convinced the tax is a good idea. He questions findings of a Ball State University study that for every $1 spent on tourism in Indiana, a county reaps about $15 in additional tax revenue.

“It seems like taxation on people who have no representation,” said Eckart, noting that runs counter to his idea of how government ought to work. “I fear we are going to subsidize marketing of small businesses at the expense of people who are never going to benefit.”

However, Eckart said he can see good things that could come from the tax and stressed he’s yet to make up his mind on how he’ll vote.

Eckart said he’d probably be more open to considering a tax of under 5 percent or to asking lawmakers to allow a portion of Johnson County’s hotel tax revenue to be spent on things besides tourism.

Johnson County officials considered the innkeeper’s tax four years ago. The plan failed when council members disagreed over whether some of the money should be spent on parks — that would have required a special law approved by state lawmakers and the governor.

Hendricks County has an eight percent innkeeper’s tax. Marion County’s tax is 10 percent.

Bartholomew, Boone, Hamilton, Madison and Shelby counties have a 5 percent tax. Hancock County’s tax is 4 percent.

“Johnson County needs one entity to market the whole county as a great place to live, work and visit,” Greater Greenwood Chamber of Commerce Director Christain Maslowski said in an email.

“If we had the professional leadership in place to activate our message, we know we can attract more outside dollars into our local community.”

See the full article here:

Friday, November 29, 2013

Herald-Bulletin Reports Trustee Request to Vacate Alley Sparks Property Tax Dispute

From the Anderson Herald-Bulletin:

A request by the Anderson Township trustee’s office to vacate an alley has turned into a dispute over the payment of property taxes.

The request is to remove an alley from public right-of-way behind Anderson Discount Tobacco. The alley parallels 1th Street and runs from Central Avenue to Main Street. The tobacco store is located on one of three parcels owned there by the township trustee.

The request was tabled by the City Council on Nov. 14 and continued last Monday. It could be considered at the council’s Dec. 12 meeting.

But since 2008, neither Anderson Discount Tobacco nor the Anderson Township trustee has paid property and personal property taxes on the business.

Madison County Assessor Larry Davis and Auditor Jane Lyons believe the tobacco store should be paying those property taxes. An opinion by the Indiana Department of Local Government Finance supports that position saying that since the property is being rented by a private for-profit business, it is not eligible for a government exemption from paying taxes.

Currently there is $3,375.15 in back taxes owed on the property not including penalties and interest for 2012. There is $2,279.30 owed on the 2011 taxes that were due in 2012.

Lyons said the property was listed for a tax sale by the county but was removed from the list by Judge Thomas Newman Jr.

She said the trustee believes the property should not be taxed because it’s owned by a government entity.

“It has always been the opinion of the Auditor’s office, even before I became auditor, that since they were making money from the business, it should be taxed,” she said.

Lyons said she won’t remove it from the list and that the Anderson Township trustee can seek an exemption from the Property Assessment Board of Appeals or the DLGF.


See the full article here:

News and Tribune Reports New Albany Battling Big Box Retailers over Assessments

From the Clark County News and Tribune:

City officials believe it’s worth enough to New Albany financially to spend $75,000 to potentially keep two large corporations from winning an appeal of their assessed property tax values.

The New Albany Redevelopment Commission on Tuesday approved two contracts worth up to $75,000 combined for a Real Estate firm to represent them against The Home Depot and Meijer.

According to David Duggins, director of redevelopment and economic development for the city, the two corporations have asked for a reassessment of their property tax rates.

The amounts are substantial, according to Duggins. The Home Depot, which is located at 2239 State St., is further along in its appeal than Meijer, according to Duggins.

He said The Home Depot is requesting that its assessed property value be reduced to $3 million, which is half the amount it was originally rated at.

“These are moneys that are substantial, and they’re long-term,” Duggins said.

The two corporations are important pieces of the city’s tax-increment financing system.

See the full article here:

Star-Press Reports Muncie Meets Monday to Consider Abatement Compliance of Monogram Comfort Foods

From the Muncie Star-Press:

Muncie City Council will hold a special meeting at 7 p.m. Monday to discuss tax-abatement compliance of Monogram Comfort Foods LLC.

The council meets in the auditorium of Muncie City Hall, 300 N. High St. Its regular monthly meeting will begin at 7:30 p.m.

Times Reports Lake County Auditor Announces Online Service for Property Tax Deductions

From the Northwest Indiana Times:

The wait is over for new homeowners seeking homestead and mortgage deductions, Lake County Auditor Peggy Katona said.

The public can apply for both tax credits online through the county government website at

Previously, the public could only line up outside her office and wait for her staff to provide the applications and stick around while her staff processed them in turn.

Katona said new owners now can go on the county government online portal, click the "File Property Tax Exemptions" link on the task bar on the left side of the page and file their applications for the cost of a $5.50 convenience fee.

She said homeowners also can print out the forms and mail them to the auditor's office at 2292 N. Main Street, Crown Point, IN. 46307. They will receive confirmation emails when applications are approved or denied.

A short video on the webpage provides instructions on how to apply.

Katona said the public can still come in person and have the auditor's staff serve them as before.

Homestead and mortgage deductions reduce a property's assessed value and cap the owner's taxes at no more than 1 percent of that reduced assessed value, although in some Lake County communities the cost of servicing government debt still raises the tax cap above the 1 percent level.

Individuals and married couples are limited, by state law, to one homestead standard deduction. Second or seasonal homes and rental properties cannot receive the credit.

Times Reports Munster to Issue EDC Bonds for Land O'Frost Incentive

From the Northwest Indiana Times:

In mid-December, the town will sell more than $2.45 million in economic development revenue bonds to provide a $2 million incentive to Land O’Frost for relocating its corporate headquarters from Lansing.

The incentive was offered by the town of Munster for land acquisition and construction of Land O’Frost’s corporate headquarters, said Clay Johnson, assistant town manager.

Of the total raised by the bond sale, $450,000 will be used to pay the costs of issuing the bonds as well as debt service, Johnson said.

The authorization to issue the EDC bonds and provide $2 million for the lunch meat manufacturer came after a series of meetings by three municipal agencies Monday.

First the Munster Redevelopment Commission met to adopt a resolution pledging revenues from the tax increment financing district to support the EDC bonds and providing 200 percent coverage or guarantee for those bonds.

The Redevelopment Commission resolution also declared that the bond revenues will be used for the purposes of economic development within the town’s Economic Development Area that includes the west side of Calumet north of Main Street.

Immediately following that special meeting, the Munster Economic Development Commission held a public hearing to adopt the project report about the number of jobs the Land O’Frost move will create. According to the project report, the move will shift 50 jobs to the town. The public hearing drew no remonstrators, and the EDC voted to accept the project report.

Those actions allowed the Town Council to authorize issuing the bonds to benefit the relocation of Land O’Frost. The ordinance was adopted on first reading, contingent upon a final legal review by Town Attorney Eugene Feingold.

The bond sale will be negotiated by Ice Miller on Dec. 12.

IBJ Reports Indianapolis Mayor Pushes Plan to Use City Funds to Upgrade Natatorium

From the Indianapolis Business Journal:

City officials confirmed Wednesday that Mayor Greg Ballard's staff is backing a plan for the city to pay about half of the $17 million to $20 million in renovations needed at the Indiana University Natatorium at IUPUI.

The city’s Capital Improvement Board is also contemplating setting aside $500,000 annually in local hospitality tax revenue for the ongoing maintenance of the facility, officials said.

As IBJ reported Oct. 19, IU officials have been seeking financial help for the renovations, and have considered turning over day-to-day operations of the venue to a third party. In recent months, they have been in discussions with Ballard and officials from the Indiana Sports Corp., the CIB, and the National Institute for Fitness and Sport.

IU owns the facility on the west side of downtown. Administrators are working on a plan to come up with the rest of the money needed for the 31-year-old aquatics venue.

Journal Gazette Reports Blue M Medical Offered Incentives for Investment in Columbia City

From the Fort Wayne Journal-Gazette:

An orthopedics industry veteran is investing $600,000 to launch a startup in Columbia City. Plans call for up to 25 jobs by 2016.

William Smith plans to open Blue M Medical LLC, a custom medical devices maker, after Jan. 1. The operation will offer design, engineering and quality control services to orthopedic devices manufacturers from a renovated former office building at 350 N. Oak St. The workforce will be five to seven to start.

The Indiana Economic Development Corp. offered Blue M Medical up to $250,000 in conditional tax credits based on its job creation plans. Whitley County and Columbia City also have offered the company incentives.

Revenue Finds it Failed to Sufficiently Establish that Royalty Payments Distorted Taxpayer's Indiana Income

Excerpts of Revenue's Determination follow:

Taxpayer is a multi-state business which manufactures automobile parts. Taxpayer had been filing a separate Indiana income tax return until 2005 when it began filing a consolidated return with two entities here labeled as "Associated Company" and "Associated Company Two."

Taxpayer, along with "Associated Company" and "Associated Company Two," filed consolidated Indiana income tax returns beginning in 2005.
"Associated Company" owned a warehouse in Indiana. The warehouse location was closed. The audit stated that "Taxpayer continued to include ["Associated Company"] in their consolidated filings . . . even though this company's presence in Indiana was removed."
The audit also found that "the [T]axpayer and ["Associated Company"] had such large disparities in both the amount of their Indiana activities and in their respective income and loss that the standard method of apportionment does not fairly represent the [T]axpayer's income derived from sources within the State of Indiana."
The audit found that "income/loss produced by the [T]axpayer is entirely attributable to activities taking place in Indiana while the income/loss of ["Associated Company"] is the result of activities taking place almost entirely outside of Indiana. In addition, the audit found that, "These disparities in Indiana activity were exacerbated when there were also large disparities in income/loss between the [T]axpayer and ["Associated Company"]. In the periods 2007 and 2008 ["Associated Company"] had losses that equaled or exceeded the income of [Taxpayer]."
The audit concluded that the standard method of apportioning income did not fairly reflect the parties' Indiana source income. "In this instance, losses that are produced almost entirely outside of Indiana by ["Associated Company"] eliminate income that is produced entirely in Indiana by [Taxpayer] under the standard method of apportionment." " This combination of dissimilar Indiana activity levels and income under the standard method of apportionment does not fairly represent the consolidated group's income derived from sources within the state of Indiana." (Emphasis added).
The audit pointed out that "Associated Company's" Indiana warehouse was closed in 2006 and that "Associated Company's" presence in Indiana was removed." Taxpayer disputes the audit's characterization pointing out that "Associated Company" has a significant number of clients and product sales in Indiana, that it maintains a full time resident employee in Indiana who serves as an "after market territory manager," that it employs technical service representatives who regularly visit Indiana customers, that its service representatives train its customers' mechanics and technicians, and oversee customer repair issues, perform "Product Installation Audits."
Taxpayer provided documentation establishing that "Associated Company" maintained resident and non-resident employees whose responsibility was to "support customers on all quality related issues," "[m]ake regular customer visits on a proactive & reactive basis," "[m]itigate and/or negotiate customer issues," "[w]rite and implement internal corrective actions," along with other duties and responsibilities such as testing, developing, and training. Taxpayer provided documentation establishing that "Associated Company's" employees regularly conduct activities that "Associated Company's" Indiana activities exceed the protections set out under Public Law 86-272. See 45 IAC 3.1-1-38 (stating that, for apportionment purposes, a taxpayer is "doing business" in this state if it conducts "[A]ny other act in such state which exceeds the mere solicitation of orders so as to give the state nexus under P.L. 86-272 . . . .").
Taxpayer points out that, as a consolidated group, "Associated Company" and Taxpayer had positive Indiana taxable income during 2008 and 2010, that Taxpayer – the purported profitable entity – experienced losses in its 2009 returns, while "Associated Company – the purported "loss" entity – had Indiana taxable income in its 2005 and 2006 returns. In addition, Taxpayer argues that the Department's audit placed too much weight on the disparities between "Associated Company" and Taxpayer's property and payroll factors. Taxpayer points out that Indiana law places increased "weight" on the amount of sales in the apportionment factor (70, 80, and 90 percent) and that "in determining where a company's income is earned is in great part based on where your customers are located and services, and where your product is delivered." Taxpayer states that if the Department has "focused on where ["Associated Company's"] and [Taxpayer's] customers were located and their products were sold, [the Department] would have concluded that the income/loss of [Taxpayer] is the result of activity taking place almost entirely outside Indiana, while the income/loss of ["Associated Company"] is the result of activity taking place almost entirely inside Indiana" a conclusion which is in direct contrast to the audit's finding.
The issue is whether the Department was sufficiently justified in exercising its authority under IC § 6-3-2-2(l) requiring a "separate accounting" of Taxpayer and "Associated Company" to determine to what audit stated was the "correct income derived from sources within Indiana." As a threshold issue, 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." Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007).
As Taxpayer correctly points out, it is well established law that the standard apportionment formula "is the most accepted and recognized method of computing a company's taxes." Wabash, 729 N.E.2d at 625, and that the Department "has consistently required that a consolidated return use a combined three-factor apportionment as the fairest method of reflecting the income derived from Indiana sources." (See also Sherwin-Williams Co. v. Dept. of State Revenue, 673 N.E.2d 849, 851 (Ind. Tax Ct. 1996)). While the Tax Court noted in Wabash that "[s]ufficient differences in the method of doing business may be justification for separate classification and differential tax treatment," the Department has the responsibility of establishing that the preferred apportionment method does not fairly reflect the Taxpayer's Indiana source income. Wabash, 729 N.E.2d at 624.
Taxpayer has established that "Associated Company" had more significant contacts with Indiana than first understood. In these particular circumstances and for these particular years, the Department has failed to demonstrate that it was necessary to depart from the standard apportionment formula under the standard set out in Wabash.
The audit found that both Taxpayer and "Associated Company" paid multi-million dollar royalties each year to a related entity here designated as "Corporation." The royalties were paid in order to permit Taxpayer and "Associated Company" to use Corporation's intellectual property. The audit noted that the royalty payments "had no effect on the consolidated federal income" of the parent company because the payments were simply eliminated as intercompany expenses on the parent company's consolidated federal return. The audit also noted that the parent company's "economic position was not changed in a meaningful way as [a] result of these intercompany transactions."
However, the audit found that the royalty payments had the effect of distorting Taxpayer and "Associated Company's" Indiana source income. "[T]he royalty payments did have the effect of distorting Indiana income by transferring income from the two corporations subject to Indiana taxation to an entity that was not included on the Indiana consolidated income tax return."
As explained in the audit report:
An adjustment to these royalty expenses for the periods 2005 and 2006 has been made to correct this distortion and fairly reflect Indiana source income to determine the proper net operating loss carry forward from these periods.
As authority for eliminating the royalty expenses, the audit cited to IC § 6-3-2-2(m) as follows:
(m) In the case of two (2) or more organizations, trades, or businesses owned or controlled directly or indirectly by the same interests, the department shall distribute, apportion, or allocate the income derived from sources within the state of Indiana between and among those organizations, trades, or businesses in order to fairly reflect and report the income derived from sources within the state of Indiana by various taxpayers.
Taxpayer disagrees stating that "Corporation" was established and acquired the intellectual property from Parent Company in order to "maintain and enhance the value of [Parent Company's] intangible assets which were being utilized both domestically and internationally." Those intangible assets consist of "technology, patents, trademarks, trade names, copyrights and service marks."
Taxpayer points out that it arranged for a Transfer Pricing Study in order to evaluate the worth of the intellectual property and to determine an "arms length range of royalty rates." After the Transfer Pricing Study was complete, "Associated Company" and Taxpayer entered into signed licensing agreements with "Corporation" which granted a non-exclusive right to use the intellectual property on a domestic and world-wide basis "in connection with the production, marketing, distribution and sale of a wide range of products." In exchange, Taxpayer and "Associated Company" made annual cash payments to "Corporation" in accordance with the licensing agreements.
Taxpayer maintains that the independently authored Transfer Pricing Study supports the amounts of royalties paid, and that "there is nothing inherently distortive about various business functions being located within different controlled legal entities."
The issue is whether the Department was sufficiently justified in exercising its authority under IC § 6-3-2-2(m) to disallow (add back) royalty expenses claimed during 2008, 2009, and 2010 in order to correct "distortion" and fairly reflect Indiana source income to determine the proper net operating loss carry forward . . . ."
The Department has routinely found that there are circumstances justifying the disallowance or add back of claimed royalty expenses when the taxpayer was unable to explain the "nature and substance of the underlying [royalty] agreement," Letter of Findings 02-20030423 (May 25, 2005), 28 Ind. Reg. 3379, when the deduction of the royalty expenses and interest expenses resulted in an "unfair reflection of the income earned from Indiana sources," Letter of Findings 02-20090945 (June 11, 2010), 20110323 Ind. Reg. 045110114NRA, when the royalty expenses constituted an "abusive tax scheme," Letter of Findings 02-20060511 (November 15, 2007), 20080130 Ind. Reg. 045080019NRA, when the payment of royalties represented an intercompany circular flow of money which had no "commercial business purpose." Letter of Findings 02-20100494 (January 4, 2011), 20110323 Ind. Reg. 045110119NRA.
Taxpayer presented documentation establishing that "Corporation" acquired the intangible property pursuant agreements with Parent Company under which "Corporation" made payments totaling $10,460,000 to acquire certain rights to that intellectual property, that an independent assessment was made to arrive at that purchase price, and that the price paid for the property was commensurate with the income produced by the property. Taxpayer admits that while "Associated Company" and Taxpayer experienced federal and Indiana losses during the audited years and that the royalty fees increased the amount of losses, the royalty fees – standing alone – were insufficient to change either company from a profitability or a loss position (or vice versa) in any year. As explained by Taxpayer, "Each company was consistently profitable or unprofitable for both federal and Indiana tax reporting purposes in every year both before and after taking into account license fees paid to ["Corporation"]."
Under IC § 6-8.1-5-1(c), Taxpayer has met its burden of proof of establishing that – for the audit years 2008, 2009, 2010 – these specific royalty payments did not significantly change either company's financial results, that the royalty payments were commensurate with the value of the intellectual property, that the particular payments to and from "Corporation" did not constitute an abusive "intercompany circular flow of money which had no 'commercial business purpose,'" and that the money earned from licensing the intellectual property was legitimately administered pursuant to the parent company's "centralized cash [management] process." As explained and demonstrated by Taxpayer, "Throughout tax years at issue, cash was moved among various businesses throughout the world as needed most notably to assist in debt service incurred due to acquisitions, intercompany loans, working capital needs, and funding of business[] units throughout the world."
In these particular circumstances and for these particular years, the Department has failed to sufficiently establish that the royalty payments paid Corporation distorted Taxpayer and "Associated Company's" Indiana source income.

Wednesday, November 27, 2013

Trancik: Board Dismissed Appeal Where Matters Previously Settled with Assessor

Excerpts of the Board's Determination follow:

In this case, the parties crafted a Settlement Agreement that resolved the dispute over the 2009 assessment of two parcels of land owned by the Tranciks. Settlement agreements are governed by the general principles of contract law. Ind. State Highway Comm’n. v. Curtis, 704 N.E.2d 1015, 1018 (Ind. 1998). If the terms are unambiguous and the intent of the parties is discernible from the written contract, the court is to give effect to the terms of the contract. Id.

“Terms are ambiguous if a reasonable person would find them subject to more than one interpretation, but are not ambiguous merely because the parties disagree concerning their proper interpretation.” Fackler v. Powell, 891 N.E.2d 1091, 1096 (Ind. Ct. App. 2008). When the contract terms are clear and unambiguous, the terms are conclusive and a court will not construe the contract or look to extrinsic evidence. Id.

The terms of the Settlement Agreements are clear and unambiguous. As such, they should be given their plain and ordinary meaning. It is clear from the Agreements that the parties intended to settle this matter in the proceeding before the Assessor.

Specifically, the evidence presented by the Assessor shows that the Settlement Agreements both reference the subject parcels, and as shown above, the basis for the Tranciks’ appeal to the Assessor, and the Assessor’s response which caused the Assessor to reduce the assessment for each parcel. The Agreements also state that “[t]he Petitioner is in agreement with this value.” (See Motion to Dismiss, Ex. C, D).

Further, the evidence presented by the Assessor shows that the Settlement Agreements were signed by both parties at an informal hearing. This reflects the intent to settle this matter.

Moreover, the Settlement Agreements informed the parties if the “disagreement in the value of the property cannot be resolved at this conference, the appeal will be determined by the County Property Tax Assessment Board of Appeals.” See Motion to Dismiss, Exs. C, D. The Tranciks did not file an appeal to the PTABOA, and this matter was not determined by the PTABOA, other than a general acceptance by the PTABOA of the terms of the Agreements.

The Tranciks disagree that the Settlement Agreements were meant to settle this matter or be considered final. However, they failed to introduce any evidence that would raise a genuine issue of fact as to whether, based on the Agreements, the parties intended to settle this matter.

The evidence they introduced included a sales disclosure form for two nearby properties, a Uniform Residential Appraisal Report for parcel 16-10-20-00-02-005.000, and a Form 133 Petition for Correction of an Error filed with the Assessor on February 25, 2010 (See Motion to Stop Dismissal, Exs. A-D). However, this evidence does nothing to cast doubt on the meaning of the Agreements, which is that the Agreements were meant to settle the valuation dispute at the reduced amount set forth by the Tranciks.

The terms of the Agreements, which reduced the assessment for both parcels, are only subject to one interpretation. The terms are not ambiguous simply because the Tranciks allege the Settlement Agreements were not intended to settle the matter. Their position is simply not supported by the terms of the Agreements. Pursuant to the Settlement Agreements, the assessed value for 2009 for each parcel was reduced by the Assessor to the value the Tranciks contended it should be (See Motion to Dismiss, Exs. C, D). The Tranciks failed to present evidence that set forth a genuine issue of material fact as to whether the parties intended to settle this matter. To show a genuine issue of material fact, they needed to show the terms of the Settlement Agreements were ambiguous necessitating extrinsic facts. This, they did not do. The Agreements were not ambiguous, and were meant to settle this matter.

As such, Assessor’s motion for summary judgment is granted. The Tranciks’ Form 131 appeals are dismissed.

Riley: Coming Next Another Cut in Local Tax Revenues?

By Larry Riley in the Muncie Star-Press:

Last week saw the opening of the next General Assembly as the Indiana legislature held “Organization Day” and leadership in both House and Senate chambers announced priorities for next year’s “short” session.


Republican leadership in both chambers — the GOP controls both houses of the General Assembly — agreed on several issues of priority: education in general, early childhood education in particular, and the “skills gap” between many Hoosiers and the needs of modern workplaces.

Speaker of the House Brian Bosma added another: his hope of eliminating the business personal property tax in Indiana.

“While we’ve cut employer taxes to spur job growth,” he said in his Org Day statement, “we’re still one of the few states in the nation that taxes business personal property; investment by Hoosier employers is taxed in Indiana like not many other places.”

As far as property taxation goes, taxpayers are most familiar with real estate taxes: property taxes paid on land and buildings, including houses.

The calculations are more complicated, but in brief, homeowners generally get taxed at up to 1 percent of the gross assessed value of their homes, payable in twice annual payments in May and November. Legislation and a constitutional amendment in 2010 set this 1 percent cap.

For rental real estate, the cap is 2 percent, and for commercial and industrial property, the cap is 3 percent.

In addition to this tax, however, businesses pay property taxes on machinery and tools and desks and chairs, tables, filing cabinets, computers — any equipment that helps produce income.

See the full article here:

Journal and Courier Reports 5% Penalty for Late Tax Payment Still Available

From the Lafayette Journal and Courier:

Time is running out for property owners to pay their taxes with only a 5 percent fine for being late.

Property taxes were due on Nov. 12, Tippecanoe County Treasurer Bob Plantenga said, but the state allows for a 30-day period with the smaller fine for property owners who might have overlooked the deadline or were short of cash at the due date. The last day to pay at the lower fine is Dec. 11, he said.

The 5 percent fine applies to any delinquent property owners who did not have any prior delinquencies in their taxes, he said. For property owners who missed the Nov. 12 deadline and also have prior missed payments, the fine is 10 percent.

“If you don’t pay within 30 days, you will have a 10 percent penalty,” Plantenga said.

Payments can be made at the treasurer’s office on the second floor of the County Building, 20 N. Third St., in Lafayette.

The fines will appear on the property owner’s spring tax bills.

So far, about 96 percent of Tippecanoe County property owners have paid their 2013 property taxes, Plantenga said.

Journal-Gazette Reports Rieke Offered Incentives for Expansion in Auburn

From the Fort Wayne Journal-Gazette:

Rieke Corporation, a global manufacturer and distributor of specialty, highly-engineered closure and dispensing systems, announced plans today to expand its operations here, creating up to 15 new jobs by 2016.

The Auburn, Ind.-headquartered company, a subsidiary of Bloomfield Hills, Mich.-based TriMas Corporation, will invest $7.5 million to equip its existing 73,360 square-foot facility located at 2855 E. Bellefontaine Road in Hamilton. The expansion, which began in August, will allow the company to expand its capacity and capabilities, better serving its customers.

"With a solid foundation in low taxes and limited red tape, Indiana's business climate is ripe for companies looking to achieve an extra competitive edge," said Eric Doden, president of the Indiana Economic Development Corporation. "We've built Indiana into a state that works. With our skilled workforce and pro-growth policies, companies with a world of choices choose to remain operating in Indiana."

Rieke, which currently employs about 1,400 employees internationally, including more than 210 Hoosiers in Hamilton and Auburn, has already begun hiring skilled maintenance associates, skilled plastic mold setters and assembly operators. Interested applicants may apply online by going to the careers page.


The Indiana Economic Development Corporation offered Rieke Corporation up to $150,000 in training grants based on the company's job creation plans. These incentives are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives. The town of Hamilton approved additional tax abatement at the request of the Steuben County Economic Development Corporation.

Herald-Argus Reports LaPorte Grants Preliminary Approval of Abatement for Heartland Footwear

From the LaPorte Herald-Argus:

The La Porte County Council approved preliminary plans to grant Heartland Footwear a tax abatement.

The county will hold a public hearing before their next scheduled meeting on the matter. Then, the Heartland Footwear tax abatement will have to be officially approved at the next county council meeting.

La Porte County Economic Development Director Matt Reardon said this would create up to 52 jobs with about $2.2 million in salaries. He said having this manufacturing company would be better than having an empty building.

With hesitation by Councilman Jeff Santana to grant Heartland a 10-year tax abatement plan, Councilman Matt Bernacchi said this abatement could create more jobs.
“If we aren’t going to offer 10 years, Porter or Lake County or someone else will,” said Bernacchi.

Heartland Footwear is expected to be moving their shoe manufacturing business to La Porte County in the near future.

The business, currently located in Pocahontas, Ark., will being relocating their production to Rolling Prairie in the existing O’Tech Corporation building.

O’Tech is located at 4744 E. Oaknoll Road, between U.S. 20 and Ind. 2. It is a supplier business to Heartland Footwear.

Heartland produces rubber and polymer based waterproof footwear that is distributed worldwide.

The County Council meeting for December has been canceled and the next meeting will be held in January 2014.

Revenue Finds Taxpayer Refurbishing Stadium Seating Exempt as an Industrial Processor

Excerpts of Revenue's Determination follow:

Taxpayer is an Indiana business which acquires, refurbishes, and markets used sports stadium seating. Taxpayer acquires the seating from various stadiums throughout the United States.

The seats are disassembled on-site and shipped back to Taxpayer's location. Taxpayer removes paint from the metal parts. If the metal parts contain lead paint, the lead paint is "abated" pursuant to various environmental regulations. The metal and plastic parts are repainted, reassembled, boxed, and shipped to the person who purchased the seat.
The sales take place in two stages. In the first stage – even though the refurbished seats are held by Taxpayer – the seating remains the property of the stadium owner or team. Interested customers interact with the stadium (or team) placing orders and paying the stadium or team for that order. When the order is placed, Taxpayer is directed by the stadium owner or team to ship the refurbished seating to the stadium's or team's customers. The customer pays the stadium/team and the stadium/team keeps the money it earns.
After a set period of time, any remaining seats become the Taxpayer's property. Taxpayer continues to sell the refurbished seats, but now the customer deals directly with what are now Taxpayer's customers. Customers acquire the seating from Taxpayer, customers pay Taxpayer for the seating, and Taxpayer keeps the money it earns from selling the seating directly to its customers.
Taxpayer argues that when it refurbishes used stadium seating on behalf of the stadium owner or the team, the equipment and supplies used to refurbish the seating are exempt pursuant to the manufacturing exemption under IC § 6-2.5-5-3. As explained by Taxpayer:
The first customer is the stadium who wants to have their seats (seats owned by the stadium) remanufactured into a product they can sell and help raise funds to pay for new seats or a new stadium. The stadiums do not have this ability, so they contract with [Taxpayer] who will drop ship the remanufactured seats to the stadiums' customers at the stadiums' directions.
The audit report recognized that Taxpayer sold the seating by means of two different business models.
In the analysis of the [T]axpayer's operations, there are two components. The [T]axpayer refurbishes seats owned by the stadiums and also refurbishes seats owned and sold by the [T]axpayer. In the case of the seats owned by the stadiums, the [T]axpayer is not refurbishing the seats as a normal part of the life cycle of the seats. The stadium is not a manufacturer so the [T]axpayer cannot be acting as an industrial processor. When the seats were installed in the stadiums, recycling them and reselling them was not part of the normal life cycle. In this case, the [T]axpayer is acting as a service provider for the stadiums performing extraction and refurbishing of the seats much like a furniture refinisher.
The audit did agree that Taxpayer was acting as a "manufacturer" when it sold refurbished seats for which it had acquired ownership, which were sold to Taxpayer's own customers, and where Taxpayer earned the money from selling the refurbished seats. As stated in the audit report:
However, in the instances of the seats which are owned and sold by the [T]axpayer, the [T]axpayer is acting as a manufacturer that is remanufacturing the seats that are sold to end users and resellers. Therefore, the [T]axpayer was allowed a percentage of the manufacturing exemption to the extent of the seats owned by the [T]axpayer that were refurbished. 
The issue is whether Taxpayer is entitled to the "industrial processor" exemption when it refurbishes used stadium seats owned by the stadium or team.
Taxpayer cites to Rotation Products Corp. v. Indiana Dep't of State Revenue, 690 N.E.2d 795 (Ind. Tax Ct. 1998), which involved a taxpayer that claimed the equipment and consumption manufacturing exemptions. Taxpayer believes it meets the standard set out in that case.
According to Rotation Products, IC § 6-2.5-5-3(b) "cover[s] a host of different activities and factual situations. There are innumerable ways to produce other tangible personal property, and the exemption provisions cannot be expected to give a precise answer to each factual situation that arises." Rotation Products, 690 N.E.2d at 798. According to Rotation Products, a taxpayer is eligible for the exemption based on "whether the activity was directly involved in the creation of a product." Id. at 799. To make this decision, the Rotation Products court established a four-part test as follows:
1) The substantiality and complexity of the work done on the existing article and the physical changes to the existing article, including the addition of new parts;
2) A comparison of the article's value before and after the work;
3) How favorably the performance of the remanufactured article compares with the performance of newly manufactured articles of its kind; and
4) Whether the work performed was contemplated as a normal part of the life cycle of the existing article. Id. at 802-03.
Taxpayer must satisfy all of the above to be considered a remanufacturer or "processor" of stadium seats.
Taxpayer meets the first test because Taxpayer's stadium seats undergo a substantial change. Not only are the parts disassembled, cleaned, and painted, Taxpayer adds replacement parts as necessary. The seats were originally mounted on the stadium's vertical concrete riser; in effect, the stadium seats, as removed from stadium, do not have "legs" and would not support themselves in an individual consumer setting. Therefore, Taxpayer must modify and add four legs to each seat.
Taxpayer meets the second test because the value of the seating, as removed from the stadium, is negligible. Discarded seats which are not remanufactured have little or no value; in some cases, these seats are disposed of in a landfill. Remanufactured seats are sold to individuals for whatever price can be obtained depending on the public's interest in the team or stadium.
Taxpayer meets the third test because, upon removal from the original stadium, the seats are not functional because the seats have no standard legs. The Taxpayer adds value to the recycled seats because it designs, fabricates, and attaches legs rendering the recycled seats usable for the consumer. Because certain of the seats contain lead paint, the seats are unmarketable in their original condition.
Taxpayer meets the fourth test because the seats undergo a transformation from a commercial product installed in large stadiums to an individual consumer item which is a process not within the normal or expected lifecycle of this particular product. The items were built as seating in sports stadiums; as refurbished, the seats are sold as fan souvenirs. See Mechanics Laundry & Supply, Inc., v. Indiana Dept. of State Revenue, 650 N.E.2d 1223, 1229 (Ind. Tax Ct. 1995) (holding that laundering shirts did not constitute production within the meaning of the sales tax exemption).
Taxpayer has met its burden of demonstrating that refurbishing used stadium seating – ownership of which is retained by the original stadium or team – is exempt. Under IC § 6-2.5-4-2, Taxpayer qualifies as an "Industrial Processor" because Taxpayer acquires the seating from its owner, provides "industrial processing" of the seats, and transfers the seating back to the owner for sale to the owner's customers.
The audit division is requested to review the original audit to the extent warranted by this Letter of Findings. It should be noted, that the exemption does not apply to equipment and supplies used either before or after the actual and immediate refurbishment of the stadium seats.
Taxpayer purchased "Gaylord Bins" which "are [] pallet-size box[]es used for storage and shipping of bulk quantities." Wikipedia: Bulk Box, . (last visited August 10, 2013).
Taxpayer purchased the bins to "bring the seats to [Taxpayer's location]. However, after bringing the seats to [Taxpayer], the bins, while, in Indiana were and are used to temporarily store and move hundreds of pieces of seats, parts, arms, etc. while work-in-process."
In addition, Taxpayer seeks an exemption for a forklift because "it is constantly moving the Gaylord bins full of work in process around the warehouse through the various stages of the production process.
Taxpayer has failed to provide sufficient information necessary to establish that either the Gaylord boxes or the forklifts are "directly used in the production process" or that either have an "immediate effect on the article being produced."
Taxpayer's remanufactured stadium seats are typically sold in sets of two or three. As discussed above, Taxpayer adds legs to the seats in order for the seats to be used by the casual, ordinary, consumer of these seats. The legs are then permanently mounted on a sheet of plywood which is intended to add stability to the seats.
Taxpayer has provided information sufficient to meet its burden under IC § 6-8.1-5-1(c) of demonstrating that the plywood sheets – which are purchased, cut, and permanently attached to Taxpayer's refurbished stadium seats – become an integral part of the product being sold to its customers.
Taxpayer believes that it is entitled to abatement of the ten-percent negligence penalty because "Taxpayer was a new business running all across the country, removing tens of thousands of seats." According to Taxpayer, it purchased items of equipment on an ad hoc basis in out-of-state locations where Taxpayer hired hundreds of temporary employees to remove the stadium seats in the extremely limited period of time permitted to remove the stadium seating.
The Department believes that Taxpayer erred in determining its sales and use tax liability. However, there is insufficient information to establish that Taxpayer's position was so egregious as to constitute "willful neglect." Based on a "case-by-case" analysis and after reviewing "the facts and circumstances of each taxpayer" the Department agrees that the ten-percent negligence penalty should be abated.

Daily Journal Reports Developer Seeks $2 Million in Tax Dollars for New Subdivision in Franklin

From the Johnson County Daily Journal:

A developer planning to build a new subdivision in Franklin is requesting $2 million in tax dollars to help start the neighborhood.

That money would cover 25 percent of the costs to help pay for building roads and extending sewers for the 149-lot Hillview subdivision on Upper Shelbyville Road, developer John Grimmer said. The Franklin Redevelopment Commission is considering the request.

The money would come from the city’s tax-increment financing, or TIF, districts, which set aside property taxes collected from new construction to be used for economic development. Neither Franklin nor Greenwood has ever spent TIF money to aid a residential development.

Tuesday, November 26, 2013

IBJ Reports ACE Seeks Abatement for Investment in Indianapolis

From the Indianapolis Business Journal:

ACE, which employs 96 at its facility at 705 S. Girls School Road, near Indianapolis International Airport, said the new manufacturing equipment will let it retain 96 employees and add another 104 before the end of 2019. The positions, it said, pay an average wage of more than $21 per hour.

The 30-year-old company has asked the Metropolitan Development Commission for a tax abatement on the personal property, which would save ACE nearly $110,000 over six years.  The company would pay almost $60,000 in personal-property taxes on the new equipment during that time, plus another $22,000 annually after the abatement period.

ACE said it needs the equipment, which will be used to make and repair carbon fiber airplane parts, to stay competitive in the aerospace industry.

The Department of Metropolitan Development is backing the tax break. The MDC is expected to hear the proposal  Dec. 4. The plan also will require approval of the City-County Council because ACE is in a tax-increment finance district.

Times Reports Porter Regional Hospital's Appeal Could Backfire

From the Northwest Indiana Times:

An attempt by Porter Regional Hospital to reduce the first assessed value of its new building at Ind. 49 and U.S. 6 may wind up costing them more.
After the hospital failed Tuesday in a last-minute attempt to withdraw the appeal, Porter County Assessor Jon Snyder argued the 2012 assessment in question should be increased from $34 million to $117 million.
His request and a second appeal of the former hospital building in Valparaiso were taken under consideration by the Porter County Property Tax Assessment Board of Appeals.
Snyder said the state model, which calls for assessing hospitals as general office space, failed taxpayers by under valuing the new property in Liberty Township when it was 90 percent complete and yet unopened.
He presented members of the PTABOA with various news articles, including a couple quoting Porter Hospital Chief Executive Officer Jonathan Nalli that place the value of the new site at $210 million and $225 million.
Nalli also signed off on a value of $130 million for the new site, according to documents submitted that relate to the 10-year tax abatement granted to the new hospital by the Porter County Council.
The proposed increase was immediately opposed by Donald Feicht Jr., vice president of taxes at Uzelac & Associates, who accused Snyder of singling out the hospital and improperly varying from state assessing guidelines using nothing more than hearsay.
Also Tuesday, the hospital appealed the $22.3 million assessment in 2012 of the former hospital building at 814 LaPorte Ave. in Valparaiso, which has since been torn down.

Chase: Third Party Contracts Carve up Lake Taxpayers

By Marc Chase in the Northwest Indiana Times:

At least five people should be giving extra thanks during their Thanksgiving dinners for newly approved, lucrative Lake County government contracts that further carve into taxpayers' wallets.
The five stand to make hundreds of thousands in county taxpayer dollars for collecting delinquent property taxes — essentially performing the work of the Lake County treasurer's office. Taxpayers should demand an end to this gravy train.
Delinquent county tax collections put fat turkeys on the tables of politically connected hired guns year after year.
Some of those folks, like former tax collector Roosevelt Powell, haven't exactly fostered confidence we're spending our money wisely. Powell was convicted in 2007 in Hammond federal court for defrauding taxpayers in a Gary land deal.
Powell's crime aside, county officials need to begin explaining why they require so many third-party tax collectors — and other outside consultants — to perform work required of government offices.
Last week, the Lake County commissioners rubber-stamped tax collection contracts with five perennial hired guns, each of whom stands to pocket 10 percent to 15 percent of any delinquent property taxes collected.
Four of the five — Jewell Harris Jr., Ronald Ostojic, John Stanish and Alexander Lopez — collectively made $465,000 last year and netted $107,585 thus far in 2013.
Harris alone received $180,518 in 2012 and collected $73,393 this year to date.
Thanks to new 2014 deals, the tax collectors will have a chance to do it all again. How exciting for them and disappointing for the rest us.
The county treasurer is quick to explain delinquent taxpayers end up funding these third-party collectors through late fees. But wouldn't that money be better used in the county's general fund — you know, the one so economically malnourished that county officials passed a new local income tax earlier this year to fatten it up?
The treasurer's office boasts 37 employees and a $1.8 million budget.
Are any of these folks capable of collecting taxes without the additional expense of a group of virtual bounty hunters?
Delinquent taxes are a hindrance to efficient government. But why must the county so frequently answer inefficiencies with more inefficiencies? If the county staff already receiving government pay and handsome health care and other benefits aren't capable of handling these tasks, perhaps it's time to restructure how the office does business.