Monday, March 31, 2014

Tribune Reports GE Aviation Offered Tax Credits for Investment in Lafayette

From the Kokomo Tribune:

GE Aviation officials said Wednesday that a $100 million jet engine manufacturing factory that it's building in Lafayette will be a key in producing its new-generation engine for passenger airliners.
The company already has orders for more than 6,000 of its new LEAP engine that's now undergoing development testing and will have its final assembly at the Lafayette factory, said David Joyce, the president and CEO of GE Aviation.
"So we're kind of in a hurry," he said. "With that backlog in sales, we've got to move fast so we hope to break ground this year in Lafayette. We hope to hire in 2015."
The company expects the factory will open in 2016 in a Lafayette industrial park and have more than 200 workers within five years. The new engine will be used by passenger jets built by Airbus, Boeing and Chinese company Comac for airlines worldwide, according to GE Aviation, which is based in suburban Cincinnati.
Joyce stood before one of the engines as he spoke from a stage at the Purdue University Airport during the announcement ceremony with Gov. Mike Pence and several local officials. He pointed to the long ties between Purdue and parent company General Electric Co., which he said had more than 1,200 Purdue graduates among its employees.
Joyce said Lafayette beat out several other communities in an aggressive competition for the factory.
"If this facility works the way any of our others, we'll be knocking down one of the walls shortly and adding on," he said.
The Indiana Economic Development Corp. said it offered the company up to $3.6 million in tax credits and training grants based on its hiring plans. The state also will pay for about $1.3 million in infrastructure improvements.

Star Reports Heartland Food and ConAgra Foods Seek Abatements for Investment in Indianapolis

From the Indianapolis Star:

Heartland Food Products and ConAgra Foods have asked for property tax abatements on two Indianapolis food factory expansions.

The expansions, both on the Northwestside, will create up to 210 jobs over the next several years.

Carmel-based Heartland wants an eight-year abatement worth $135,289 from the city for $20 million in improvements to its plant at 4635 W. 84th St. The leased 130,000-square-foot plant makes flavor enhancers and food sweeteners.

Heartland told the Metropolitan Development Commission that the expansion will increase its production and allow it to compete for more business. The plant employs 267 employees, and the expansion could create up to 151 new jobs by 2017, paying an average of $18 an hour, Heartland said.

ConAgra Foods also asked for city approval to assume the tax abatements given to a bakery ConAgra bought at 7575 Georgetown Road last year from Avon-based Harlan Bakeries. The Omaha, Neb.-based food giant paid $35 million to acquire the Harlan bakery, which was a ConAgra contract manufacturing site and produced pies, bread, cakes and nutrition bars, including Clif bars.

The plant now employs 540 full-time and 300 part-time and contract employees, and ConAgra said it aims to add about 60 more full-time employees, at an average wage of $10.24 an hour, in the next two years.

City planners recommended that the commission on Wednesday approve a four-year abatement to ConAgra worth $618,855. Harlan had received three previous tax abatements on the site that were slated to run through 2018.

Riley: Farm Tax Values Far Below Market but Rising

By Larry Riley in the Muncie Star-Press:

Two weeks ago, two farmland properties in Indiana were auctioned off and buyers bid up the price to an incredible $10,000 per acre.


Farmland owners are lucky with respect to Indiana law exempting their property assessment for tax purposes from following the marketplace.

Can you imagine that Kokomo farmland paying 2 percent in property taxes annually? That’d take $31,000 of the $46,500 cash rent proceeds.

In what probably was considered a concession to farmers, the state legislature has established a convoluted formula for establishing a base value of farmland.

The equation involves “averaged capitalized net farm income” for the lowest five of the last six years, but with a four-year lag in data for commodity prices and yields.

Farmers might not be feeling so lucky, however.

While last year’s tax bills were paid on farm grounds assessed at $1,500 per acre for the base value, this year’s base value rose 10 percent, to $1,650 per acre.

(This gets complicated: last year’s tax bills were actually the 2012 taxes, paid, as our Hoosier system operates, in arrears in 2013. Your 2013 taxes will be paid in May and November of this year — or earlier if you want to help a distressed county government.)

This year (for 2014 taxes to be paid in 2015), the base assessment rises another 8 percent, to $1,760 an acre.

These are going to make eye-popping tax bills to farmers.

Revenue Publishes Tax Tips for Hoosiers - Part 3

Contact: Chetrice Mosley
Phone: (317) 232-2379

Tax Tips for Hoosiers – Part 3

INDIANAPOLIS (March 25, 2014) – More than 1.9 million Indiana taxpayers have filed their annual tax returns. Individuals must file and pay before the individual income tax deadline on April 15, 2014.
I. How to File?
Indiana offers INfreefile, a free online filing system for qualified taxpayers. Visit to see if you are eligible to complete your state and federal taxes using INfreefile. More than 85,000 Hoosiers have filed with INfreefile so far this year.
II. What if you owe?
You should file a tax return by April 15 even if you cannot pay the tax due. The easiest way to pay is through the secure ePay site at If you cannot pay the full amount due, you can:
  1. Send as much of the amount owed as possible when you file your return. Penalty and interest will be due on the unpaid amount. The more you pay when you file, the less penalty and interest you will owe. The department will send a bill within a few weeks of your filing with the remaining amount due.
  1. If you cannot pay any amount, send in your tax return without payment. The department will send a bill within a few weeks with the full amount due plus penalty and interest.
Taxpayers can qualify for a bill payment plan if they owe more than $100 and can pay at least 20 percent down. Businesses must owe more than $500 and pay at least 20 percent down. After receiving a bill, taxpayers can set up a payment plan online or request it by contacting the department. Once the plan is approved, payments can be made online or by mail .
If you believe you qualify for a payment plan, please call (317) 232-2165.
This is the third Hoosier Tax Tips before the individual income tax deadline on April 15, 2014

Revenue Announces INfreefile Available to University Students

INfreefile Available to University Students

  • Students with an Adjusted Gross Income of $58,000 or less will qualify.
  • Visit to see if you qualify.
  • File by April 15, 2014.
The Indiana Department of Revenue is offering qualified taxpayers a free filing service called Indiana freefile (INfreefile) to file both their federal AND state taxes online.
Thousands of university students will qualify for free federal and state tax filing with Indiana freefile (INfreefile) this tax season.
Students should visit to see if they qualify for INfreefile based on the vendors’ options. If they qualify, all students have to do is click the vendor of their choice and complete their tax returns online.
There are many advantages to electronically filing:
  • Faster refunds—e-filed returns are processed in less than 2 weeks, while a paper return can take up to 12 weeks.
  • Better security—fewer people see your information.
  • Get more or pay less—e-filing software may suggest credits and deductions you might not have known about.
  • Better accuracy—electronic returns have a 2 percent error rate versus 20 percent for paper returns.
If you have any questions specific to your return, please contact the department at (317) 232-2240 or contact us online at

Oral Argument in Fresenius USA v. Revenue Posted

 During my absence, the follow oral argument was posted:

THU, MAR 20, 2014 at 10:00 AM

One Hearing Scheduled for April in Tax Court

Paul J. Elmer & Carol A. N. Elmer v. Ind. Dep't of State Revenue (View)
Monday, April 07, 2014 10:00 AM - 11:00 AM

This is a hearing on the Respondent's Motion for Summary Judgment.

For a description on the merits of the case see the Tax Summaries at

Senior Judge Thomas G. Fisher, presiding

State House, Room 413
Indianapolis, IN 46204

Three Appeals Filed in Tax Court in March

03/19/14Globe Metallurgical, Inc. Indiana Dep't of State RevenueN/A49T10-1403-TA-5
03/19/14Calumet Township Trustee v. Dep't of Local Government FinanceN/A49T10-1403-TA-7
03/19/14Indiana Dep't of State Revenue, Inheritance Tax Division v. Estate of Janice HamblinN/A49T10-1403-TA-6

Tax Court Holds Fraternal Order of Eagles Failed to Prove it was Fraternal Beneficiary Society or Predominantly Used for Charitable Purposes

Excerpts of the Tax Court Decision (issued during Indiana Tax Reporter vacation) follow:


On appeal, Eagles argues that the Indiana Board’s final determination must be reversed for two reasons. First, Eagles claims that the Indiana Board’s determination that it failed to establish a prima facie case that it was entitled to the fraternal beneficiary association exemption under Indiana Code § 6-1.1-10-23 is both contrary to law and unsupported by substantial evidence. Second, Eagles claims that the Indiana Board’s determination that it did not establish a prima facie case that it was entitled to the charitable purposes exemption under Indiana Code § 6-1.1-10-16 is also contrary to law and unsupported by substantial evidence.

The fraternal beneficiary association exemption

 During the 2006 tax year, Indiana Code § 6-1.1-10-23 provided that “tangible property is exempt from property taxation if it is owned by a fraternal beneficiary association which is incorporated, organized, or licensed under the laws of this state.” IND. CODE § 6-1.1-10-23(a) (2006). The statute further provided that a fraternal beneficiary association’s real property is exempt when “it is actually occupied and exclusively used by the association in carrying out the purpose for which it was incorporated, organized, or licensed.” I.C. § 6-1.1-10-23(b). Accordingly, a taxpayer seeking an exemption under Indiana Code § 6-1.1-10-23 must first provide evidence to show that it is a fraternal beneficiary association.

In its final determination, the Indiana Board relied on the Indiana Court of Appeals’ decision in State Board of Tax Commissioners v. Fort Wayne Sports Club, Inc., 258 N.E.2d 874, 880 (Ind. Ct. App. 1970) for a definition of “fraternal beneficiary association:”

The term “fraternal benefit society” or “fraternal beneficiary association” shall mean any corporation, society, order or voluntary association, without capital stock, organized and carried on solely for the mutual benefit of its members and their beneficiaries, and not for profit and having a lodge system and representative form of government, and which shall make provision for the payment of [death] benefits in accordance with this act.

(See Cert. Admin. R. at 35-36.) In its appeal to the Court, Eagles claims that the Indiana Board’s use of that definition is contrary to law because it conflicts with the common law definition of “fraternal beneficiary association” as provided in a 1944 Attorney General Opinion. (See Pet’r Br. at 3-5.) Furthermore, Eagles maintains that the 1944 Attorney General Opinion expressly recognized Indiana’s long-standing tradition to grant property tax exemptions to fraternal beneficiary associations that use their property for fraternal purposes. (See Pet’r Br. at 3-4; Pet’r Reply Br. at 2; Oral Arg. Tr. at 16.)

A final determination of the Indiana Board is contrary to law if it violates any statute, constitutional provision, legal principle, or rule of substantive or procedural law. Shelbyville MHPI, LLC v. Thurston, 978 N.E.2d 527, 529 (Ind. Tax Ct. 2012). Official opinions of the Attorney General have no precedential value and they are not judicially binding. See McPeek v. McCardle, 888 N.E.2d 171, 177 n.4 (Ind. 2008); Illinois-Indiana Cable Television Ass’n v. Pub. Serv. Comm’n, 427 N.E.2d 1100, 1111 (Ind. Ct. App. 1981). 

Nonetheless, the 1944 Attorney General Opinion is instructive because it explained that for purposes of the fraternal beneficiary association exemption, the term “fraternal beneficiary association” should be defined to be consistent with Burns Indiana Statutes Annotated § 39-4401 et seq. See 1944 Ind. Op. Att’y Gen. No. 65 at 265, available at Contrary to Eagles’ claim, therefore, the 1944 Attorney General Opinion defined the term “fraternal beneficiary association” according to a statutory definition, not a common law definition. Moreover, both the Indiana Court of Appeals in the Fort Wayne Sport Club case and the Indiana Board in this case used the same statute to define a “fraternal beneficiary association.” See State Bd. of Tax Comm’rs v. Fort Wayne Sports Club, Inc., 258 N.E.2d 874, 880 (Ind. Ct. App. 1970). (See also Cert. Admin. R. at 35-36.) Consequently, Eagles has not shown that the Indiana Board’s final determination is contrary to law on this basis.

Eagles further claims that the Indiana Board’s determination that it did not present a prima facie case that it is a fraternal beneficiary association is in error because it is unsupported by substantial evidence. More specifically, Eagles contends that the Indiana Board simply ignored its uncontroverted evidence that showed that it is indeed a fraternal beneficiary association that uses its property for fraternal and charitable purposes. (See Pet’r Br. at 5-9.)

 It is well-established that exemption statutes are to be strictly construed against the taxpayer, and thus, the burden is on the taxpayer to prove that it is entitled to the exemption that it seeks. See Tipton Cnty. Health Care Found., 961 N.E.2d at 1051. See also Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 471 (Ind. Tax Ct. 2005) (explaining that to make a prima facie case, a taxpayer must walk the Indiana Board through every element of its analysis rather than assuming that the evidence speaks for itself), review denied. Here, then, Eagles was required to present probative evidence demonstrating that it satisfies the statutory definition of a fraternal beneficiary association set forth in Indiana Code § 27-11-1-1 (i.e., the successor to Burns Indiana Statutes Annotated § 39-4401(b)). See Fort Wayne Sport Club, 258 N.E.2d at 880 (explaining that an entity must satisfy Burns Indiana Statute Annotated § 39-4401(b) to qualify as a fraternal beneficiary association).

At the Indiana Board hearing, Eagles’ sole witness testified that the lodge is used by its members only, that Eagles donates its profits to support needy families and other charitable organizations, and that it provides death benefits to its members. (See Cert. Admin. R. at 369-74.) The witness also described how Eagles’ members used the lodge (e.g., meetings, fundraisers, drinking, and gambling) and that Eagles made charitable donations after deducting the cost of its own expenses. (See Cert. Admin. R. at 376-435.) In addition, Eagles argued that its federal I.R.C. § 501(c)(8) status and its documentary evidence (e.g., its bylaws, certificate of incorporation, and constitution) showed that it uses its property exclusively for fraternal and charitable purposes. (See Cert. Admin. R. at 363-65.)

Initially, Eagles’ recognition as an I.R.C. § 501(c)(8) fraternal beneficiary society, order, or association for federal income tax purposes does not, by itself, establish that Eagles met all the definitional requirements contained in Indiana Code § 27-11-1-1. Moreover, Eagles failed to show how its other documentary and testimonial evidence satisfied each element of the definition of a “fraternal beneficiary association” as defined under Indiana Code § 27-11-1-1. As the Indiana Board pointed out, Eagles’ evidence does not indicate whether it has a representative form of government as required under Indiana Code § 27-11-1-1. (See Cert. Admin. R. at 37-38.) See also IND. CODE § 27-11-1-1 (2006). Furthermore, the Indiana Board found that Eagles’ evidence was unpersuasive because it was often conclusory, and therefore, it could not independently demonstrate that Eagles met the six statutorily prescribed elements of the definition of a “fraternal beneficiary association” in Indiana Code § 27-11-1-1. (See Cert. Admin. R. at 36-38.) Based on its review of the certified administrative record, the Court finds no basis for reversing the Indiana Board’s findings. Consequently, Eagles has not shown that the Indiana Board’s determination that it did not present a prima facie case that it is a fraternal beneficiary association is unsupported by substantial evidence.

The charitable purposes exemption

 The charitable purposes exemption, set forth in Indiana Code § 6-1.1-10-16, provides that “[a]ll or part of a building is exempt from property taxation if it is owned, occupied, and used by a person for . . . charitable purposes.” IND. CODE § 6-1.1-10-16(a) (2006) (footnote added). The exemption generally extends to the land on which an exempt building is situated and the personal property that is contained within. See I.C. § 6-1.1-10-16(c), (e). Accordingly, a taxpayer seeking a charitable purposes exemption under Indiana Code § 6-1.1-10-16(a) must demonstrate that it owns, occupies, and either exclusively or predominately uses its property for charitable purposes. See 6787 Steelworkers Hall, Inc. v. Scott, 933 N.E.2d 591, 595 (Ind. Tax Ct. 2010); IND. CODE § 6-1.1-10-36.3 (2006).

 The Indiana Board determined that Eagles did not make a prima facie case that its property was exclusively or predominately used for charitable purposes. (See Cert. Admin. R. at 31-34.) Eagles contends that the Indiana Board’s determination is contrary to law and is unsupported by substantial evidence. (See Pet’r Br. at 9-13; Pet’r Reply Br. at 2; Oral Arg. Tr. at 20-25.)

 A review of Eagles’ presentation indicates that it urged the Indiana Board to find that using property for fraternal purposes is synonymous with using property for charitable purposes because fraternal organizations collectively seek to promote the general welfare of their members and society in general. (See, e.g., Cert. Admin. R. 110-14, 268-73, 288, 363-66, 369-70.) The General Assembly, however, has not expressly declared in any statute that property owned, occupied, and exclusively used by a fraternal organization is ipso facto used for a charitable purpose and thus exempt. See Indianapolis Elks Bldg. Corp. v. State Bd. of Tax Comm’rs, 251 N.E.2d 673, 681 (Ind. Ct. App. 1969); see also I.C. § 6-1.1-10-16(a). Therefore, the fact that Eagles used its property for fraternal purposes does not necessarily establish that its property was used for charitable purposes.

In this case, the evidence contained in the certified administrative record shows that Eagles used its property both for a variety of social and recreational purposes (e.g., gambling, drinking, dancing, karaoke, pool/dart tournaments, and general relaxation) and for charitable purposes (e.g., fundraisers and donations). (See Cert. Admin. R. at 107-45, 336-38, 369-414.) Nonetheless, Eagles’ Usage Report did not provide the Indiana Board with a comparison of the relative amounts of time that the lodge was used for exempt and non-exempt purposes. (See Cert. Admin. R. at 105-45, 288 380-82.) Eagles’ failure to provide this comparison was fatal to its claim for either a full or a partial exemption. In addition, Eagles’ evidence failed to show that the activities that it claimed were charitable (i.e., its fraternal activities) truly were.  Consequently, Eagles has not demonstrated that the Indiana Board’s determination that it did not make a prima facie case that its property was exclusively or predominately used for charitable purposes is either contrary to law or unsupported by substantial evidence.

Board Finds Assessor with Burden Failed to Prove Assessed Value of Rental Properties

Excerpts of the Board's Determination follow:

13. The parties agreed that between 2011 and 2012 the assessment of the subject property increased more than 5%—from $51,200 to $60,200. The Respondent therefore has the burden of proving that the 2012 assessment is correct. To the extent that the Petitioners seek an assessment below the previous year’s level, however, they have the burden of proving a lower value.  

B. Discussion  

14. The Respondent failed to make a prima facie case that the 2012 assessment is correct. The Board reaches this conclusion for the following reasons:  

a) Indiana assesses real property based on its true tax value, which the 2011 Real Property Assessment Manual defines as “the market value-in-use of a property for its current use, as reflected by the utility received by the owner or a similar user, from the property.” 2011 REAL PROPERTY ASSESSMENT MANUAL 2 (incorporated by reference at 50 IAC 2.4-1-2). In an assessment appeal, a party may offer “[a]ny evidence relevant to the true tax value of the property as of the assessment date. . . .” Id. at 3. The gross rent multiplier, however, is the preferred method for valuing property with between one and four rental units. Ind. Code § 6-1.1-4-39(b).  

b) In any case, a party must explain how its evidence relates to the property’s market value-in-use as of the relevant valuation date. O’Donnell v. Dep’t of Local Gov’t Fin., 854 N.E. 2d 90, 95 (Ind. Tax Ct. 2006); Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 471-72 (Ind. Tax Ct. 2005). Otherwise, the evidence lacks probative value. Id. For 2012 assessments, the valuation date was March 1, 2012. See I.C. § 6-1.1-4-4.5(f).  

c) Here, the Respondent’s witness, Mr. Shultz, attempted to support the subject property’s assessment by comparing it to the assessments five other multi-family homes. Other assessments do not automatically show the market value-in-use of a property under appeal. The party relying on those assessments must (1) show that the other properties are comparable to the property under appeal, and (2) explain how relevant differences affect the properties relative values. See Ind. Code § 6-1.1-15-18(c)(2) (requiring the use of generally accepted appraisal and assessment practices to determine whether properties are comparable); see also Long, 821 N.E.2d at 471 (finding sales data lacked probative value where the taxpayers did not explain how purportedly comparable properties compared to their property or how relevant differences affected value).  

d) Beyond explaining that his purportedly comparable properties are multi-family homes, Mr. Shultz did not meaningfully compare any of those properties to the subject property much less account for any relevant ways in which they differ from each other. For instance, while the Petitioners offered undisputed testimony and photographs to show that the subject home is in worse condition than Mr. Shultz’s comparables, Mr. Shultz did not attempt to adjust any of the assessments to account for that difference.  

e) Thus, the Respondent failed to make a prima facie case that the 2012 assessment of $60,200 is correct. The Petitioners are therefore entitled to have that assessment reduced to its 2011 level of $51,200. Because the Petitioners seek an even lower assessment, the Board now turns to their evidence.  

15. The Petitioners failed to make a prima facie case for reducing the assessment below $51,200. The Board reaches this conclusion for the following reasons:  

a) The Petitioners first point to the condition of their property. But simply identifying examples of deferred maintenance does little to prove a property’s market value-in-use or even a range of values. The Petitioners offered additional evidence, such as the price they paid for the property in 2008 as well as sale and listing prices for what they believe are comparable properties. 

b) Although the Petitioners bought the subject property more than three years before March 1, 2012, they failed to explain how the sale price relates to the value as of the relevant valuation date. Therefore, that sale price therefore lacks probative value.  

c) Some of the Petitioners’ purportedly comparable properties sold close enough in time to the valuation date to be relevant. But the Petitioners compared those properties to the subject property in terms of only a few characteristics while omitting other relevant characteristics, such as location. The Petitioners similarly failed to explain how various relevant differences affect the relative values. Thus, the Petitioners’ sale and listing evidence ultimately does not suffice to prove the subject property’s market value-in-use.  

d) Finally, the Petitioners offered some basic income and expense information for the subject property. Such information is generally relevant to proving a rental property’s market value-in-use. Indeed, the income capitalization approach is one of the three generally accepted approaches for valuing real property. And using a gross rent multiplier is the statutorily preferred method for valuing rental properties with four or fewer units. But those approaches contemplate more than simply offering raw data for the property being valued. They require converting the anticipated future income to a present value based on risk and various other factors that market participants typically consider. See Indiana MHC, LLC v. Scott County Assessor, 987 N.E.2d 1182, 1185-86 (Ind. Tax Ct. 2013) (describing the income capitalization approach). By itself, the Petitioners’ raw income and expense data does not sufficiently prove their property’s market value-in-use.

e) Because they did not offer probative evidence to show the market value-in-use, the Petitioners failed to make a case for reducing the disputed assessment below $51,200.

Revenue Denied Protest of Sales Tax Where Taxpayer Failed to Prove RFID Label "Incorporated" into MREs

Excerpts of Revenue's Determination follow:

Taxpayer is a manufacturer of "shelf-stable" meals. The Department conducted a sales and use tax audit for the years 2009, 2010, and 2011. As a result of that audit, the Department issued proposed assessments. Taxpayer filed a protest regarding a portion of the proposed assessment. Specifically, Taxpayer protested that it "disagree[s] with the assessment regarding the purchases" of labels and label software.

As noted above, Taxpayer is a manufacturer of "shelf-stable meals" which includes meals-ready-to-eat and unit group rations. The Audit Report states that the majority of Taxpayer's products are sold to the government "and other not-for-profit organizations for military and emergency rations." The Audit Report also notes the following:

As the audit progressed, the auditor became aware of the refund claims filed by [Taxpayer's representative] on behalf of the taxpayer, covering 2008 through 2010. The refund claims included both sales tax paid to vendors and use tax self-assessed by the taxpayer.

The Audit Report cites to IC § 6-8.1-5-2(g) regarding erroneously granted refunds. The Audit Report states that "since the refunds claimed by the taxpayer were issued on 6/3/2011 and on 11/29/2011, the Department may issue assessments through the corresponding dates in 2013."

Under the rubric of that IC § 6-8.1-5-2(g)(1), the Audit reduced the Taxpayer's previously claimed refund. Turning to Taxpayer's protest, Taxpayer states:

Please note we disagree with the assessment regarding the purchases from [Company T] by [Taxpayer]. These purchases are labels for individual MRE (Meals Ready-to-Eat) cases for tracking purposes by [the governmental entity] and the label software for printing them.

Taxpayer argues that the labels are "incorporated into the Tangible Personal Property that is resold" to the government and "are exempt under 45 IAC 2.2-5-14." Taxpayer concludes its argument by asserting, "These labels are an integral part o the MRE's processed and shipped to ensure safety and delivery in accordance with the governmental contract."

Taxpayer's contract with the government, per the Audit Report, "specifies that the taxpayer must apply RFID labels to each carton." The Audit Report states that the labels "contain electronically stored information which can be read from up to several meters away, using wireless non-contact radio-frequency electromagnetic fields to transfer data." This allows "all of the carton data for the entire shipment" to be "read automatically without the need for physical inventory of each carton in the shipment." The Audit Report explains:

The taxpayer produces the individual meals and packages them in an individual meal container (box). The taxpayer produces 24 menus of meals. They package the individual meals (boxes) in two separate cartons (A & B). Thus, menus 1-12 are in cartons identified as "A", and meals 13-24 are in cartons identified as "B." Having one of each carton provides the entire range of menu possibilities. The taxpayer's production line begins with food preparation, and continues through sealing the cartons (either A or B), and securing each carton with two mesh bands. The cartons are then removed from the production line.

The Audit Report further states in part:

Prior to shipment, cartons are transported to the "palletizer line." This is a post- production line, located in a separate area of the plant. At this line, the RFID labels are electronically encoded, physically printed with a barcode and label ID to match the encoding, and are applied to the outside of each carton.

The auditor concluded:

[T]he RFID labels do not qualify as being incorporated into the product under 45 IAC 2.2-5-14, because they are not physically incorporated into the finished product. They are added to the outside of the cartons after production has ended and bear no relation to the preparation or consumption of the food.

45 IAC 2.2-5-14(d) states in pertinent part:

"Incorporated as a material or an integral part into tangible personal property for sale by such purchaser" means:
(1) That the material must be physically incorporated into and become a component of the finished product;
(2) The material must constitute a material or an integral part of the finished product; and
(3) The tangible personal property must be produced for sale by the purchaser.

In the case at hand, the RFID labels are not incorporated into the tangible personal property for sale (i.e., the MRE's are the finished product). The labels, per the Audit Report, are applied to the outside of the carton. From the photograph of the labels provided by Taxpayer, they are barcoded shipping/tracking labels. Taxpayer has not met it burden of proof regarding the RFID labels; Taxpayer's protest of the RFID labels and label software is denied. Also, interest cannot be waived, per IC § 6-8.1-10-1(e), thus Taxpayer's protest of the imposition of interest is denied.

Revenue Finds Taxpayer Failed to Show Reasonable Cause to Abate Penalty

Excerpts of Revenue's Determination follow:

Taxpayer is a fire protection contractor. The Indiana Department of Revenue ("Department") conducted a sales and use tax audit of Taxpayer for the years 2010 through 2012. As a result of that audit, the Department issued proposed assessments for the years at issue. Those proposed assessments also included penalty and interest. Taxpayer protested the imposition of a negligence penalty.

In its protest letter, Taxpayer states that it "protests the penalties on these notices." Taxpayer states:
We did not intentionally fail to pay use tax on the items that are noted in this assessment. Since we fabricate our own material for the fire suppression systems we install, we took into account that these items were used in the manufacturing of the system. Going forward since the audit has taken place and the auditor explained the guidelines in determining use tax on these manufacturing items, [Taxpayer] is now paying the use tax on these items. Furthermore, we did not understand that phone support for our software program is taxable. We were also unaware that the vendor that we purchased our equipment from was not including sales tax on the invoices. The price we paid was supposed to be all inclusive.

The negligence penalty was imposed pursuant to IC § 6-8.1-10-2.1. The Department notes  45 IAC 15-11-2(b), which states:

"Negligence" on behalf of a taxpayer is defined as the failure to use such reasonable care, caution, or diligence as would be expected of an ordinary reasonable taxpayer. Negligence would result from a taxpayer's carelessness, thoughtlessness, disregard or inattention to duties placed upon the taxpayer by the Indiana Code or department regulations . Ignorance of the listed tax laws, rules and/or regulations is treated as negligence. Further, failure to read and follow instructions provided by the department is treated as negligence. Negligence shall be determined on a case by case basis according to the facts and circumstances of each taxpayer.

(Emphasis added).

And 45 IAC 15-11-2(c) provides in pertinent part:

The department shall waive the negligence penalty imposed under IC 6-8.1-10-1 if the taxpayer affirmatively establishes that the failure to file a return, pay the full amount of tax due, timely remit tax held in trust, or pay a deficiency was due to reasonable cause and not due to negligence. In order to establish reasonable cause, the taxpayer must demonstrate that it exercised ordinary business care and prudence in carrying out or failing to carry out a duty giving rise to the penalty imposed under this section. Factors which may be considered in determining reasonable cause include, but are not limited to:
(1) the nature of the tax involved;
(2) judicial precedents set by Indiana courts;
(3) judicial precedents established in jurisdictions outside Indiana;
(4) published department instructions, information bulletins, letters of findings, rulings, letters of advice, etc;
(5) previous audits or letters of findings concerning the issue and taxpayer involved in the penalty assessment.
Reasonable cause is a fact sensitive question and thus will be dealt with according to the particular facts and circumstances of each case.

Taxpayer has been audited before by the Department. The current Audit Report notes that Taxpayer "does not have a use tax system in place for purchases of construction supplies." Taxpayer has failed to show reasonable cause under 45 IAC 15-11-2(c), and is thus denied regarding its protest of the penalty.

Monday, March 10, 2014

Blogger Vacation

The Indiana Tax Reporter will not be updated for two weeks as the editor is out of the country.

Saturday, March 8, 2014

News and Tribune Reports Floyd County to Fight Meijer and Home Depot Property Tax Appeals

From the Clark County News and Tribune:

A state board will decide in May if The Home Depot and Meijer’s property tax assessments in New Albany are too much, as city and Floyd County officials are prepared to fight the appeal.

The Indiana Board of Tax Review, or IBTR, will hear the case. In November, New Albany hired a Real Estate firm to represent the city against The Home Depot and Meijer.

Floyd County Assessor Trish Byrd is also assisting the city in fighting the appeal.

The Home Depot, located at 2239 State St., and Meijer, located at 4206 Charlestown Road, are major contributors to tax-increment financing districts.

According to David Duggins, director of economic development and redevelopment for the city, the sides are so far apart on what’s being suggested as a tax assessment that it’s difficult to estimate the hit New Albany would take if the property value changes.

But the difference shouldn’t be enough to interfere with any of the current debt the city has through TIF projects, Duggins continued.

However, he expressed disappointment that Meijer and The Home Depot, who are located off roads improved through TIF projects, are attempting to lower their tax responsibility.

“It’s a corporate wide strategy by Meijer and The Home Depot to do this in Indiana,” Duggins said, as he added The Home Depot has challenged its assessment amount in other cities in the state.

Messages left at the corporate offices for The Home Depot and Meijer Friday afternoon hadn’t been returned as of press time.

Duggins said Meijer and The Home Depot aren’t being good corporate citizens by attempting to lower their tax assessments, as he added those are the only major retailers in the city challenging their status.

“You don’t see Kroger doing this,” Duggins said.

Budget Agency Releases February Revenue Report

The monthly revenue report of February 2014 state tax collections was released today.


 State general fund revenues for February were $708.4 million, $54.1 million (7.1%) below target based on the December 20, 2013 forecast, but $7.4 million (1.1%) above collections in February 2013.

 Sales tax collections were $512 million for February, which is $19.7 million (3.7%) below target for the month – likely due to severe winter weather.

 Individual income tax collections totaled $121 million for the month, which is $65.2 million (35%) below target for the month. For the first eight months of the fiscal year, individual income tax collections have missed the estimated target by $117.7 million or 3.8%.

 Corporate income tax collections were $34.8 million above target for February and $47.1 million (11.5%) above target year to date.

 Gaming revenues missed the monthly target by $5.4 million and are $13.3 million below forecast for the first eight months of FY 2014. Severe winter weather closed four gaming facilities for two to three days in January, which contributed to lower gaming collections for the month.


Through the first eight months of FY 2014, state general fund revenues were $8,769.8 million, which is $89.5 million (1.0%) below target based on the most recent revenue forecast updated on December 20, 2013.

For the first time in FY 2014, the current month’s sales tax collections were below collections for the same month in FY 2013. Sales tax collections in February 2014 were below collections from February 2013 by $13.7 million (2.6%). Severe winter weather throughout the state in January very likely contributed to lower sales tax collections for the month.
Individual income tax collections for February 2014 were $34.3 million (22.1%) below income collections for February 2013. Year to date, withholdings increased by $149.7 million (3.9%) over the same time last fiscal year. However, the local income tax certified distributions and the transfers for the LOIT reserve are also $88 million more this fiscal year compared to the same time in FY 2013. Additionally, the Department of Revenue has processed more returns this February versus last February due to a delay imposed by the IRS in 2013, which shifted more returns to March and April 2013.
 Corporate income tax collections for February 2014 were $34.8 million (94.7%) above target for the month and $47.1 million (11.5%) above target for the year. Compared to February 2013, corporate income tax collections in February 2014 were $69.0 million (97.3%) higher, and year to date are $29.5 million (6.9%) higher. Corporate income tax collections are significantly exceeding target for the month and the year despite reductions in the rate.

News-Sentinel Reports L.H. Carbide Seeks Incentives for Investment in Fort Wayne

From the Fort Wayne News-Sentinel:

A $4.8 million expansion is expected to create 18 well-paying jobs at a Fort Wayne manufacturer of laminated and stamped products.

L.H. Carbide Corp., 4420 Clubview Drive, has asked City Council to approve a “phase in” that would reduce its taxes on new equipment and improvements, including a 25,000-square-foot facility, by more than $746,000 over 10 years. The company currently has 79 employees, and the new positions will pay an average of $66,528, according to the application to be considered by Council on Tuesday.

Friday, March 7, 2014

Times Reports Porter Hospital's Appeal Jeopardizing its Tax Breaks

From the Northwest Indiana Times:

Porter Regional Hospital's decision to continue challenging the assessed value of its new facility as too high could end up costing the business 10 years of tax breaks granted by the county.

The tax abatement resolution approved in 2009 by the County Council requires the hospital build a structure valued at $130 million or more, according to a letter sent to the healthcare provider by council President Dan Whitten and Vice President Karen Conover.

Yet the hospital continues to argue the value of the site at Ind. 49 and U.S. 6 should be $39.3 million -- far below the county's assessment of $244.5 million -- which would be in "substantial non-compliance" with the abatement, the letter reads. The council, "may need to consider revoking the real property tax abatement."

"We cannot have the taxpayers double-hit by having a tax abatement on a substantially non-compliant property," Whitten and Conover wrote.

Hospital officials on Friday released a statement Friday which read, "We've not yet received this letter, but certainly want to work with the county to resolve this matter."

Other unaddressed questions muddying up the abatement question, as pointed out in the council letter, include when the 10 years of breaks start and whether an outpatient building next to the main hospital, yet not owned by it, qualifies for the abatement.

Whitten said the multiple issues need to be addressed expeditiously and will come up for discussion during the council's next meeting in April.

Journal-Gazette: Indiana Blames Polar Vortex for Drop in Tax Collections

From the Fort Wayne Journal-Gazette:

Severe winter weather is being blamed for a sharp drop in tax collections by the state.

The State Budget Agency reported Friday that tax collections came in $54 million less than expected in February. Sales tax collections fell $19 million below expectations, largely because of the polar vortex that hit the state.

The drop comes as Republican Gov. Mike Pence is seeking approval for new spending in a handful of areas, including early childhood education. Senate Republicans have expressed apprehension about approving new spending this session, in part because of the state’s budget constraints.

The tax numbers for February follow a few months after Pence was forced to cut agency budgets and put the state plane up for sale because of a roughly $300 million budget downturn.

Chapman Asks How Effective are Tax Incentives?

By Jeff Chapman in the Indianapolis Star:

Creating jobs and boosting local economies are of primary importance to legislators in virtually every state. Yet lawmakers too often rely on incomplete, conflicting or anecdotal evidence when deciding whether to adopt and maintain tax incentives to spur economic development. Indiana is poised to take a major step toward ensuring effective evaluation of the state’s tax incentives with the Indiana Economic Development Tax Incentives Evaluation Act (House Bill 1020).

Tax incentives — which include credits, exemptions and deductions — are designed to encourage businesses to locate, hire, expand and invest within a state. HB 1020 continues a commitment by the legislature and by the Indiana Economic Development Corporation to enhance the quality of information available to determine which incentives work, which do not, and how these programs can be improved.

All of this represents real progress for the Hoosier State. A study by The Pew Charitable Trusts showed that until 2012, Indiana was one of the states that did not take the basic steps necessary to assess the results of its tax incentives.

HB 1020, which passed the House and Senate by wide margins, cements recent efforts into law, borrowing proven practices and tools from other states. For example, it would establish regular evaluations of all economic development incentives, requiring that each program be reviewed every five years to determine whether it is meeting the state’s goals and how it can be refined.

But conducting evaluations is not enough, because evidence produced in studies is often not given substantive consideration in policy and budget discussions. HB 1020 would ensure that lawmakers are directly involved in the evaluation process by holding public hearings to examine the data. The Rhode Island legislature passed a similar proposal last year with only a single dissenting vote. This year, Indiana is one of a number of states considering following suit, along with Maine, Mississippi, Nebraska and North Dakota.

When the state of Washington adopted a comprehensive evaluation process in 2006, it established a schedule to review each tax incentive at least every 10 years. Nonpartisan analysts work with a citizen commission to examine a set of incentives annually and make recommendations to the legislature on whether to continue, reform or end them.

Pew’s research shows that evaluators should ask the right questions and draw clear conclusions about what policy changes a state should consider. HB 1020 follows best practices by guaranteeing that programs are evaluated based on how well they reflect state priorities. And it requires rigorous analysis to measure the economic impact of incentives.

This type of evaluation can yield useful results. In Louisiana, businesses benefiting from the state’s Enterprise Zone program reported creating 9,000 jobs. An evaluation by the state’s economic development department found, however, that the new jobs in hotels, restaurants, retail and health care mostly displaced existing jobs. The agency estimated that the program netted only 3,000 new jobs and identified several ways the incentive could be strengthened. The Louisiana legislature now has adopted many of the suggestions.

In Indiana, HB 1020 would give lawmakers the evidence they need to ensure that Hoosier taxpayers get a good return on the millions of state tax dollars spent each year on economic development incentives. This will improve their ability to encourage businesses to create jobs, increase investment, and enhance the state’s quality of life.

Revenue Finds Taxpayer Failed to Show Reasonable Cause for Late Withholding Tax Payment

Excerpts of Revenue's Determination follow;

Taxpayer had a withholding tax payment for April 2013 that had a due date of May 30, 2013. The Indiana Department of Revenue ("Department") received the withholding tax payment after the due date, and thus a Proposed Assessment with penalty was issued by the Department. Taxpayer protested the penalty.

Taxpayer, in correspondence to the Department, states that the business receives "paper reminders" for things such as "insurance premiums." Taxpayer states:
I have been in business since 1974 and have grown accustom to receiving mail forms and notifications for filing and paying taxes. In recent years this has become an on-line process. The employer is responsible to file a report and make a payment without any notification.
Taxpayer's argument, then, is that it is used to getting reminders in the mail, and is not yet used to the online process. Taxpayer has missed filing deadlines for withholding tax on other occasions (e.g., October 2012 and March 2013 liability periods). Taxpayer has not established any reasonable cause for the late payment at issue, thus Taxpayer has not provided any legal or factual grounds to permit penalty waiver.

Thursday, March 6, 2014

Daily News Reports Greensburg Council Takes Official Stance Against Tax Cut

From the Greensburg Daily News:

The Greensburg City Council has officially opposed a state legislative proposal that has the potential to significantly reduce local tax revenues.

Gov. Mike Pence proposed late last year to completely eliminate the tax that businesses pay annually on their personal property, such as metal stamping machines, plastic injection molding machines and other equipment. Bills in the Indiana Senate and Indiana House tackle the tax in different ways, but both would eliminate just some of the tax.

Proponents of the elimination of the tax say it hinders economic growth because it essentially punishes businesses when they invest in new machinery — and in each subsequent year so long as they own the equipment. Most other states either have eliminated the tax or assess it at a lower rate than Indiana.

However, the tax brings in about $1 billion annually into the coffers of the state’s local governmental units — including counties, cities, towns, townships, sanitation districts and libraries — and city and school officials have said that if the state legislature does not find a way to replace the $1 billion, popular local services, on which residents rely daily, will suffer.

The size of the potential tax revenue losses varies greatly among Indiana cities, counties, towns and libraries and depends on how heavily the counties rely on equipment-heavy jobs such as manufacturing. Potential losses for the city of Greensburg could reach about $425,000. Losses for Greensburg Community Schools could exceed $300,000, and for Decatur County government, the loss could be close to $170,000, according to a report from the Legislative Services Agency, which helps legislators and residents understand the impact of proposed legislation. But depending on the language in the bill, the potential losses could be significantly reduced.

Greensburg City Council on Monday unanimously adopted a resolution to oppose the elimination of the tax at this time. The Council said that the issue needs to be studied more over the summer and that the tax should be eliminated only if the state finds replacement revenues for local governmental units so that they do not have to cut local services.

Many cities, towns and schools in the state oppose the legislation, and some have adopted similar resolutions.

Tribune Reports Gay Marriage Tax Benefit Nixed

From the South Bend Tribune:

Gay rights advocates said they're deeply concerned about a split in state policy from a new federal approach to taxes recognizing same-sex marriage that the Indiana Senate approved 41-6 on Tuesday.

Lawmakers voted to change a tax bill Monday, a move allowing the state to keep its current policy, which does not recognize same-sex marriages for tax purposes.

move comes in the wake of an emotional debate to ban gay marriage in the state constitution that was derailed earlier this session.

Tim Orient, who lives with his husband and two children in Indianapolis, was married five years ago in Massachusetts. If the bill passes through final legislative negotiations and is signed by Gov. Mike Pence, he'll have to file jointly for his federal return then split his assets for the state.
"I guess it was something I'd figured I'd have to live with," Orient said. If Indiana keeps the split with federal policy, "it's going to cost us twice as much" to file his returns, he said.
Without the changes to the bill, Indiana could have adopted a new Internal Revenue Service policy giving same-sex marriages equal privileges in tax filings.

Times Reports Mystery Company Withdraws Abatement Petition in Portage

From the Northwest Indiana Times:

A company that has shown interest in purchasing as many as 43 acres in the city's Northside Business Park remains a mystery.

Noserus, a code name given to the company by the Indiana Economic Development Corp., had been on Tuesday night's City Council agenda seeking tax abatements for both equipment and real estate.
The company withdrew its request to be on Tuesday's agenda the day before.

Director of Community Development A.J. Monroe confirmed the company withdrew the petition, but said he didn't know why.

It could be Noserus is no longer interested, or simply wasn't ready to make its presentation to the City Council.

City officials continue to be mum on who the company is.

At last week's Redevelopment Commission, members approved the sale of up to 43 acres of land in the business park for $60,000 an acre contingent on the company making a decision to locate in Portage and completing the approval process. The RDC also hired a consultant to represent the city in the process.

The paperwork filed by the company requesting the abatements gave a Merrillville address in a large, multi-tenant office building. Calls by The Times to the representative listed on the application were not returned.

According to the application, the company is proposing to build a new facility of approximately 87,000 square feet initially and 300,000 square feet when completed.

The estimated cost of the construction would be $25 million and the company would hire an additional 150 employees with salaries averaging $23.31 per hour.

The application also indicates the company would purchase $40 million in new manufacturing equipment. The target start date for installing the equipment would be Dec. 15 with a completion date of Aug. 15, 2015.

Journal & Courier Reports Lafayette Attorney and Tippecanoe County Assessor at Odds Over Property Value

From the Lafayette Journal & Courier:

Lafayette attorney Jeff Cooke is on a mission to find out exactly how the Tippecanoe County assessor’s staff calculates and sets values on property.

Those assessed values help determine local government tax rates, and ultimately figure into each property owner’s tax bill

Cooke appeared Thursday before the county’s Property Tax Assessment Board of Appeals, and presented his case to have the 2013 assessment of his law office building in the 300 block of Columbia Street reduced.

What prompted Cooke to appeal was a document dated Dec. 30 from the assessor’s office notifying him that the assessment on his building had increased by $113,400 from a previous assessment notice he received in August.

Cooke wants to know why the assessment jumped from $161,900 in August to $275,300 in December. Specifically, he asked to see the data that was entered into IncomeWorks, a software program the county uses to calculate assessed values on commercial buildings.

He got an explanation of sorts from Jesse Wallenfang, an employee in the assessor’s office. He explained three methods of assessing commercial property: cost approach, sales trending and income approach.

The $161,900 was based on the cost approach. The higher December figure was calculated by IncomeWorks using an income approach, that is, what the property potentially could generate as rent-producing property.

“We believed the form that went out (in August) was in error,” Wallenfang said.

“We do not have good trending value in IncomeWorks, so we went back to the original assessment you appealed to let us get this back on track for a correct assessment.”

See the full article here:

Star Press Reports Local Referendum could come from Transit Bill

From the Muncie Star-Press:

For the first time, legislation opening the door for an expanded mass transit system in central Indiana, including Delaware County, has cleared both houses of the General Assembly.

The House voted 52-47 on Monday in favor of Senate Bill 176, which would allow Delaware, Hamilton, Hancock, Johnson, Madison and Marion counties to raise income taxes — with voter approval — to help fund an expanded mass transit system.

Last month, the bill passed the Senate on a 28-20 vote. Still, differences remain between the House and Senate versions.

The Senate wants the business community to cover 10 percent of the expanded system’s operating costs via a corporate income or employment tax. The House wants to give counties the option of developing a light rail system in addition to bus service.

Despite those disagreements, Rep. Jerry Torr, the Carmel Republican who sponsored the bill in the House, thinks the two chambers can reach a compromise.

“I’m pretty confident at this point that we’ll work out our differences,” he said.

Indianapolis-area mass transit advocates have tried for at least three years to get similar legislation through the General Assembly.

This year’s measure will now go to conference committee, where House and Senate appointees will try to meld their two bills.

The legislation that emerges from that process will then go back to both chambers for a final vote.
Over the coming days, conference committee members will try to compromise with the other chamber without shedding too many votes in their own.

That tension was already on display during Monday’s floor debate in the House.

Rep. Mike Speedy, R-Indianapolis, worried about the level of risk to taxpayers, especially if counties are allowed to fund light rail, which has experienced major cost overruns in other cities.

“If we don’t understand those risks,” he said, “how can we expect the public to understand them?”

DLGF Publishes Guidance on Golf Course Assessment Procedures

TO:         Assessing Officials         
FROM:  Barry Wood, Assessment Division Director
RE:          Golf Course Guidance
DATE:    March 6, 2014
Per Indiana Code 6-1.1-4-42(e), the Department of Local Government Finance (“Department”) is required to establish uniform capitalization tables and procedures to be used for the assessment of golf courses. These tables and procedures were formally promulgated in 50 IAC 29 (see
Determining the Net Operating Income (“NOI”) is a key determinant in establishing the value of a property, in this case the golf course enterprise, in the income approach. The other key component that may have a significant effect on the total value of the property is the capitalization rate. The Overall Capitalization Rate (“OAR”) expresses the relationship between Net Operating Income and the market value of the property. The OAR reflects risk, liquidity (or lack thereof), potential for growth in net income, and general requirements of the investor. The OAR to be used statewide for the March 1, 2014 assessment date is 11.91%. To determine the value of the property (simplistically), divide the Net Operating Income by the Overall Capitalization Rate. 
Indiana Code 6-1.1-4-42(c)(3) excludes from the true tax value the value of personal property, intangible property, and income derived from personal or intangible property such as course naming rights. The Department has interpreted this statute to exclude the income derived from the rental of golf carts from the income capitalization approach to valuation. The Department believes this would be applicable to pro shop income as well.
For specific instructions to complete the golf course/golf course enterprise assessment, please refer to the tables and procedures established in the formally promulgated rule, 50 IAC 29.  Additionally, when a golf course has multiple parcels that combined comprise the golf enterprise, every effort should be made to combine them into one parcel per Indiana Code 6-1.1-5-16.
If you have any questions, please contact your Assessment Division Field Representative or Assessment Division Director, Barry Wood at or (317) 232-3762.

Revenue Orders Supplemental Audit of Sample to Estimate Compliance Rate

Excerpts of Revenue's Determination follow:

Taxpayer is a manufacturer with operations in Indiana and other states. As the result of an audit, the Indiana Department of Revenue ("Department") determined that Taxpayer had not paid sales tax on all taxable purchases of tangible personal property upon which sales tax was due during the tax years 2008, 2009, and 2010. The Department therefore issued proposed assessments for use tax and interest for those years.

Taxpayer protests the imposition of use tax on some purchases which the Department had included in its use tax liability calculations for the tax years 2008-10. The Department based its determinations on a review of Taxpayer's records. Due to the amount of purchases in question, the Department used a sample and projection method to determine Taxpayer's compliance rate. That compliance rate was then applied to Taxpayer's total purchases for all three years. The Department imposed use tax on the difference between the amount of sales and use tax paid by Taxpayer and the amount which the Department determined was due after application of the compliance rate.
Taxpayer protests that some of those items of tangible personal property included as taxable in the sample had actually had sales tax paid at the time of purchase and that the compliance rate was therefore incorrect. Taxpayer believes that those purchases upon which it states that sales tax was paid should be removed from the Department's calculations of use tax due and that the compliance rate should be recalculated and reapplied. The Department notes that the burden of proving a proposed assessment wrong rests with the person against whom the proposed assessment is made, as provided by IC § 6-8.1-5-1(c).
In this case, the Department gathered a sample population of Taxpayer's purchases during the tax years at issue and determined which purchases were taxable and non-taxable. The Department then determined upon which taxable purchases sales tax had been paid at the time of purchase. The remaining taxable purchases were determined to have use tax due. The Department determined the percentage of taxable purchases upon which neither sales nor use tax had been paid. This compliance percentage was then applied to Taxpayer's total purchases for the three tax years at issue.
In the course of the protest process, Taxpayer provided invoices in support of it position that sales tax was paid on certain purchases or that the invoice in question was for services and not for the sale of tangible personal property. Taxpayer states that these invoices show that sales tax was paid on purchases which the Department had considered as subject to use tax. Taxpayer therefore requests that the Department take this new information into account and recalculate and reapply the compliance percentage for these years.
The Department will conduct a supplemental audit and will review the invoices supplied by Taxpayer in support of its protest. The supplemental audit will, at its discretion and after verification, remove any of the purchases listed on the supplied invoices from the taxable purchases calculations and will then recalculate and reapply the compliance rate. The supplemental audit will constitute the Department's final determination in this matter.

Wednesday, March 5, 2014

Tribune Reports Attorney General's Suit Names Former LaPorte County Deputy Auditor

From the South Bend Tribune:

Indiana Attorney General Greg Zoeller on Monday personally filed a lawsuit aimed at recovering nearly $200,000 in public funds allegedly embezzled by a now former chief deputy LaPorte County auditor.

Zoeller, to help send a message that stealing tax dollars will not be tolerated, filed the lawsuit about 3 p.m. in the clerk's office at LaPorte Circuit Court.
He said lawsuits by his office are common in cases involving theft of tax dollars.
However, the legal action taken against Mary Ray asks for three times the amount she allegedly took because she was in a position of trust and evidence, suggesting the monies went for gambling and, perhaps, other personal use.
''It's meant to show the public that we're going to take these things seriously. We're not going to look the other way,'' said Zoeller.
An audit by the State Board of Accounts alleges Ray from Sept. 19, 2011, to Dec. 28, 2012, during more than 150 bank transactions, pocketed a percentage of the cash and checks taken in by the county.
The thefts were covered up in the county ledgers, which reflected amounts higher than what was actually deposited, according to the audit.
The lawsuit seeks recovery of the slightly more than $153,000 allegedly taken and $45,813 expended by the state on the audit.
The total amount sought is more than $450,000 because of a state law that allows up to three times as much stolen to be sought from the court in addition to attorney fees and other costs.
Ray was chief deputy auditor from 2009 to 2012 under Craig Hinchman, who lost a re-election attempt.

IBJ Reports Bill Adds Oversight to Redevelopment Commissions

From the Indianapolis Business Journal:

Despite opposition from cities and towns, the Indiana House passed a Senate bill Monday night that will mean more oversight of redevelopment commissions and force decades-old tax-increment financing districts to expire.

Senate Bill 118, approved on a 71-27 vote, is a victory for Sen. Luke Kenley, R-Noblesville, who for the past two years failed to get similar legislation through the House. The bill was authored this year by Sen. Pete Miller, R-Avon, and combined with related bills by Republican Sens. Greg Walker and Jim Smith.

The legislation will return to the Senate for concurrence.

The bill prohibits redevelopment commissions from issuing public debt greater than $5 million without approval from their local town or city councils.

“Senator Kenley feels strongly that when you’re making a significant obligation … you should have an elected official involved,” Miller said.

He said Kenley asked him last summer to carry a bill similar to one Kenley had filed in the past.

The Carmel Redevelopment Commission was the poster child for lax oversight until 2012, when the city passed a local ordinance that gave the Carmel City Council final say on the CRC’s spending. The CRC had issued millions in debt without council oversight, and the council ended up helping to refinance $184 million by pledging the local property-tax base.

Miller said the bill's limits on tax-increment financing districts caused "some heartburn" for cities and towns, including Greencastle, Brownsburg and Avon in his own district. There are 40 to 50 TIF districts around the state that were grandfathered into perpetuity by the existing statute. Under the bill, any TIF district created before 1995 now must be dissolved by 2025.

That means the incremental property-tax revenue that the districts captured for redevelopment will become available to local government units, such as schools and libraries.