Monday, June 30, 2014

Courier-Times Reports Anchor New Castle Pharmacy Appeals Property Tax in Henry County

From the New Castle Courier-Times:

A fight over property taxes could end up costing Henry County $180,000 or more.
A property tax fight between Anchor New Castle Pharmacy, the company that purchased the land Walgreens now occupies, and the Henry County Assessor’s office is similar to the fight between David and Goliath, said Jeff Wuensch, chief operating officer for Nexus Group, a company which works closely with the Henry County Assessor’s office.
According to Wuensch, Anchor purchased the former Red Barn site, located at the intersection of Ind. 3 and Broad Street. Anchor is appealing property tax assessments for 2011 and 2012 before the Indiana Board of Tax Review (IBTR). Anchor also filed an appeal of its 2013 assessment, which Wuensch said was denied by the Henry County Property Tax Assessment Board of Appeals, and could also go before the IBTR.
“Like any taxpayer who believes his real estate assessment is excessive, we have the right to appeal,” said Phil Caruso, a media relations representative for Walgreens corporate office. “We are exercising that right.”
If Anchor wins, Henry County could have to refund that company $150,000 plus about $30,000 interest, said Henry County Assessor Jodie Brown.

Tax income lost if Henry County loses the case will cost the community about $50,000 per year Brown said. “A loss at the state will be devastating to the county, local taxing units, and New Castle schools.”

Hershman: Indiana Takes Conservative Approach to Tax Incentives

By Senator Brandt Hershman in the Indianapolis Star:

As chair of the Senate Tax and Fiscal Policy Committee, I've heard from people who say Indiana should pull back on tax incentives and people who want to see Indiana offer more incentives to compete with other states. Our state's approach to date reflects Hoosier common sense: We recognize that some financial incentives for employers are necessary and effective to help the economy, but we have been deliberate in creating those incentives.

The Star editorial ended with a call for government leaders to "carefully measure whether Hoosiers really are getting a strong return on their substantial investments." I think readers will be pleased to know that such a review is exactly what state legislators had in mind when we unanimously passed a law this year requiring a bipartisan committee to examine state and local tax incentives on an ongoing annual basis.

This review is required to include the amount of benefits claimed, the economic return on investment and the policy goals for each tax incentive. I'm excited to be a member of this committee for 2014, and I look forward to a productive series of meetings this summer and fall. I'm confident that our review will lead to future improvements in Indiana's tax code.

Episodes like those of Carbon Motors and Elevate Ventures should lead to reflection. Members of the public and the media are right to scrutinize the tax incentives given out by their government.

I just hope that scrutiny doesn't always equal negativity. Indiana is taking a modest approach to offering incentives, we have a tax climate that benefits working Hoosiers, and we're taking new steps to improve the system we have in place.

Journal-Gazette Reports Revenue Shuts Fort Wayne Restaurant

From the Fort Wayne Journal-Gazette:

Golden Corral Corp. says although a Fort Wayne franchisee fell behind on his taxes, the chain is doing well, including a remaining restaurant at 4747 Lima Road.

Bob McDevitt, senior vice president of franchising for the company, said the State Department of Revenue closed a Golden Corral at 10510 Maysville Road and another in Noblesville because businessman Scott VanKirk had unpaid state taxes.

“Unfortunately, it reached the point to where the state had to take action,” McDevitt said. “He still owns a restaurant in Warsaw.”

VanKirk, a managing partner with the restaurant group, said the winter played a major role in the closings that happened this month.

“From about Christmas to March, we were probably closed more than we were open because of the weather,” VanKirk said, adding he owes less than $100,000 to the state. “It was just really tough this year. It has been for the past three years.”

Herald-Times Reports Owen County Council OKs Local Option HIghway User and Wheel Taxes

From the Bloomington Herald-Times:

Starting next year, Owen County residents will be paying twice as much in local option highway user taxes and wheel taxes when they register their vehicles at the license branch after a recent vote by county council members seeking to increase revenue for road repairs.

The current highway user tax for cars, motorcycles and most pickup trucks will increase from $12.50 to $25. The wheel tax that applies to mopeds, larger trucks, semis, buses, trailers and recreational vehicles will increase from $5 to $10. With the tax hikes, the county expects to raise an additional $335,000 for repairs to rural roads.

Times Reports Reassessment Teams Hit the Streets this Week

From the Northwest Indiana Times:

Indiana begins sending out field examiners Tuesday to reassess property for taxing purposes.
"We will have two teams of two in the area. They will have orange vests on, they will have their ID tags on. They will knock on the door, identify themselves and then they will do an exterior review. They will walk around if there are no fences," said Kristie Dressel, Center Township assessor.
"We really don't want to disturb the homeowner, but if we feel we need to get interior, we leave a note with our name and number and they can call us to set up an appointment to see whether the basement  or attic is finished or not.
"Homeowners don't have to, they have every right to deny us access. We are just trying to make sure we have fair and correct assessments that they are not being overassessed or underassessed," she said.
In the past, reassessments involved an inspection of every parcel in the state and an interval of four or more years could separate one from the next.
But starting this year, it will become a continual, rolling process with local assessors inspecting one quarter of the county's 247,000 parcels each year over a four-year cycle.

Revenue Finds Filing Federal Extension did not Excuse Failing to Pay at Least 90% of Income Tax Owed to Avoid Penalty

Excerpt of Revenue's Determination follow:

Taxpayers filed their Indiana 2012 income tax return in October 2013, approximately six months after the original April 2013 due date. Taxpayers assert that they had obtained a federal extension regarding their 2012 federal income tax. Taxpayers did not pay at least ninety percent of their 2012 Indiana income tax by the original due date. Therefore, the Indiana Department of Revenue ("Department") issued a proposed assessment for penalty.

Taxpayers protest the imposition of penalty. Taxpayers state that they received an extension for their federal 2012 income tax return and that they filed and paid their Indiana 2012 income taxes in a timely manner based upon that federal extension.

An analysis of relevant statutes begins with IC § 6-8.1-6-1, which states:

In this case, Taxpayers did not pay at least ninety percent of the final amount of income tax due by the original due date. The Department determined that this lack of payment constituted negligence under 45 IAC 15-11-2(b), and so imposed penalty under IC § 6-8.1-10-2.1(a). During the administrative hearing, Taxpayers did not provide sufficient documentation or explanation to establish that they experienced unusual circumstances which prevented them from paying the amount of tax due to satisfy the applicable statutes and regulations. Taxpayers have not established that the failure to pay Indiana income tax for the 2012 tax year was due to reasonable cause and not due to negligence, as required by 45 IAC 15-11-2(c).

Herald-Bulletin Reports State Changing Gas Tax

From the Anderson Herald-Bulletin:

Most Americans travel daily in a vehicle that runs on gasoline, and every fluctuating cost affects the amount of discretionary dollars a person and family has to spend.

Starting next week, there will be a change in how Indiana adds a tax to the price of gasoline, which could mean higher prices at the pump. No one really believes it will lower the costs.

On July 1, Indiana will no longer collect the 7 percent sales tax on a gallon of gasoline and diesel fuel. With current prices in Madison County hovering around the $3.70 per gallon mark, the sales tax is around 26 cents per gallon in addition to the 18-cent flat tax.

Instead, Indiana will be charging a use tax, which is expected to start at 22.9 cents per gallon and will change monthly.

At the same time, Sen. Tom Carper, D-Delaware, is proposing an increase in the federal gasoline tax to help pay for the nation’s highway infrastructure.

Carper wants the federal tax to increase by 12 cents per gallon over the next three years and then increase based on the inflation rate.

If approved by Congress and signed by President Barack Obama, the federal fuel tax will climb from the current 18.4 cents to 30.3 cents a gallon by the end of 2017.

The impact will be felt the most by individuals and families in the low- and fixed-income brackets with fewer discretionary dollars to spend. Those driving Hummers and expensive foreign and domestic cars and SUVs will just keep on driving.

Friday, June 27, 2014

Trib-Star Reports State Board of Accounts Examining Terre Haute Redevelopment Commission

From the Terre Haute Tribune-Star:

The Indiana State Board of Accounts unexpectedly announced Tuesday night it has initiated what it called an “examination” of the Terre Haute Redevelopment Commission.

The announcement followed a private meeting Tuesday among State Examiner Paul Joyce, who is a member of the three-person State Board of Accounts, and several top city officials.

According to an SBA news release emailed to the Tribune-Star shortly after 7 p.m., the purpose of the meeting was to “initiate an examination of the Redevelopment Commission.”

It further stated: “The matters discussed during the conference [Tuesday’s meeting] related to record keeping and disbursements of the Redevelopment Commission, including but not limited to, bond covenants, loans, cash balances, operational expenses, bank accounts and fiscal officer responsibilities as a result of a new law passed in 2014, [Senate Enrolled Act] 118.”

Mayor Duke Bennett, reached late Tuesday, said his administration has been working with the SBA “from the very beginning. We look forward to them reviewing any and all matters related to this.”

Also reached late Tuesday, Cliff Lambert, executive director of the Terre Haute Redevelopment Department, said “the Redevelopment Commission and department staff are pleased that State Examiner Paul Joyce has initiated a special audit of the Redevelopment Commission regular and [tax increment finance] TIF monies.”

In May, Lambert publicly questioned the Bennett administration’s transferring of millions of dollars from TIF bank accounts. He filed a formal complaint about the transfers in early June with the SBA, which audits all local governments in Indiana.

DLGF Publishes Information from its Annual Budget and Gateway Training

Annual Budget and Gateway Training - June 2014

Revenue Finds Taxpayer Failed to Prove Exempt Transactions were Incorrectly Categorized as Non-Exempt by Faulty Computer System

Excerpts of Revenue's Determination follow:

Taxpayer is an Indiana combination gas station and convenience store. Taxpayer sells gasoline and diesel fuel. As a convenience store, Taxpayer sells cigarettes, candy, snack foods, dairy products, automobile parts, and the like.

The Department reviewed Taxpayer's 2010, 2011, and 2012 business records including ST-103MP ("Monthly Trust Tax Return") forms, fuel invoices, cash register "z tapes" and vendor invoices.

For the years 2011 and 2012, the audit determined that the amount of exempt sales reported on the ST-103MP forms conflicted with the amount of exempt sales reported on Taxpayer's "z tapes." The audit report explained the method by which the Department determined an amount of additional tax due.

To determine the amount of the overstated exempt sales, the following approach was taken:

Exempt Categories from cash register z tapes were totaled by month.
Z tape exempt sales were subtracted from the reported exempt sales.
The difference between the cash register z tape totals and the exempt sales reported on the ST-103 MP sales tax returns will be the proposed additional taxable sales adjustment.

Taxpayer believes that its own computer/record keeping system was faulty and resulted in exempt transactions being incorrectly categorized as non-exempt. When Taxpayer installed its new computer software, Taxpayer believes that the underlying software miss-categorized certain specific transaction classifications. Taxpayer speculates that one category of purchases, which would ordinarily be exempt, was mistakenly included in a category of purchases which are subject to sales tax. In particular, Taxpayer points to what it perceives as a sharp increase in cigarette sales between 2010 and following years. Since the audit reviewed 2010, 2011, and 2012 records and the assessment is entirely attributable to 2011 and 2012, Taxpayer believes its explanation has merit because the new computer software was installed at the start of 2011.

Without entirely discounting Taxpayer's explanation, it is relevant to point out that, "Every person subject to a listed tax must keep books and records so that the department can determine the amount, if any, of the person's liability for tax by reviewing those books and records." IC § 6-8.1-5-4(a). In addition, IC § 6-8.1-5-4(c) provides that, "A person must allow inspection of the books and records and returns by the department or its authorized agents at all reasonable times." IC § 6-8.1-5-4(c). In other words, it is Taxpayer's responsibility to assure that its books and records correctly reflect the nature of its business transactions.

Taxpayer has provided what it believes is a rational explanation for the apparent discrepancies, but the Department is unable to agree that Taxpayer has met its statutory responsibility of proving that the assessment is wrong. The Department agrees with the audit's conclusion that "the [T]axpayer was unable to produce any documentation to substantiate [its] claim."

Taxpayer believes that it is entitled to abatement of the ten-percent negligence penalty because "there was no change in 2010 only an issue with 2011 & 2012 [at] which time a new register system was put in use that did not group sales categories correctly. The situation has since been corrected."

The Department believes that Taxpayer has not proven the sales and use tax assessment was wrong. However, there is insufficient information to establish that Taxpayer's actions were so egregious as to constitute negligence. 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.

Reporter Reports Lebanon Grants Abatement to GDI Construction

From the Lebanon Reporter:

A 10-year tax abatement was approved Monday by the Lebanon City Council for a proposed speculative warehouse building, the city’s first spec building. The council has been discussing the issue for the past month. It was brought before the council in late May for consideration, and an economic revitalization area was approved earlier this month, which sets the stage for the approval of a tax abatement. GDI Construction and Northpoint Development plan to construct a 741,000-square-foot building in the Lebanon Business Park, on the south side of Indiana 32 directly across the street from Arby’s and KFC, in hopes of attracting a future tenant. Joe LePage director of marketing and communications for the Boone County Economic Development Corp. had said that 80 percent of companies looking to locate in Boone County want to move into an existing building.

Courier Reports Madison Approves 14 Tax Abatements

From the Madison Courier:

The Madison City Council approved 14 tax abatement renewals for area industries during a meeting Tuesday.

Councilman Jim Lee told the council the new projects committee met June 12 to consider tax abatement renewals from Arvin Sango, Key Manufacturing, Madison Tool & Die, Environmental Laboratories, Vehicle Service Group/Rotary Lift and Grote Industries.

After two hours of consideration earlier this month, the committee recommended the renewals be sent to the City Council for approval after finding that each of the companies "fell within guidelines" for the renewals, Lee said.

Lee said the renewals included five tax abatements for Arvin Sango, one for Key Manufacturing, two for Madison Tool & Die, one for Environmental Labs, three for Vehicle Service Group/Rotary Lift and two for Grote Industries.

Thursday, June 26, 2014

Revenue Proposes Repealing Rules Related to Quality Assessment on Health Facilities


Proposed Rule
LSA Document #14-109


Repeals 45 IAC 20-1-145 IAC 20-1-245 IAC 20-1-345 IAC 20-1-445 IAC 20-1-5,45 IAC 20-1-6, and 45 IAC 20-1-7 concerning quality assessment on health facilities. Effective 30 days after filing with the Publisher.

Posted: 06/25/2014 by Legislative Services Agency

Notice of Public Hearing
LSA Document #14-109

Notice of Public Hearing

Under IC 4-22-2-24, notice is hereby given that on Tuesday, July 22, 2014, at 9:00 a.m., at the Indiana Government Center North,100 North Senate Avenue, Room N248, Conference Room A, Indianapolis Indiana, the Department of State Revenue will hold a public hearing on a proposed rule to repeal all of 45 IAC 20-1.
The proposed rule does not impose requirements or costs under IC 4-22-2-24(d)(3).
Copies of these rules are now on file at the Indiana Government Center North, 100 North Senate Avenue, Room N248 and Legislative Services Agency, Indiana Government Center North, 100 North Senate Avenue, Room N201, Indianapolis, Indiana and are open for public inspection.

Michael J. Alley
Department of Revenue

Posted: 06/25/2014 by Legislative Services Agency

Economic Impact Statement
LSA Document #14-109

IC 4-22-2.1-5 Statement Concerning Rules Affecting Small Businesses
The proposed rule will not impose requirements or costs on small businesses underIC 4-22-2.1-5.

Posted: 06/25/2014 by Legislative Services Agency

Times Reports Portage Budget in Good Shape after Tax Draw

From the Northwest Indiana Times:

The city's financial situation is "good, not great" after officials received word of the spring tax draw.
Clerk-Treasurer Chris Stidham said this week that there likely won't be any adjustments to the city's budget after the city received word that it has won its excess levy appeal and tax collections seem to be up.
"It's good, not great," he said.
The city won the $650,000 excess levy appeal based on previous year's shortfalls due to property tax appeals.
In 2013, the city received about 90 percent of its tax money. Both Stidham and Mayor James Snyder said if the spring draw is any indication, taxes collected in 2014 will be above that mark.
"Last year the two draws were less than the four previous years," Snyder said. "I believe the appeals have finally been settle and we took the brunt of it last year."
"Last year was a pretty big hiccup," he said.
Stidham said assessments lag behind the economy and they had been declining, which hurt the city's collections. However, he believes the assessments have bottomed out and will be able to help counter the effects of tax caps.
Stidham said they based this year's budget on 90 percent collection rates.
"We have enough to pay for our budget," Stidham said.

Reporter Reports Boone County Commissioners Approve Increase in Cumulative Capital Development Tax

From the Lebanon Reporter:

In a 2-1 vote, the Boone County Commissioners Tuesday approved an ordinance that would allow the county council to raise a property tax. “It has come to a point where we have to do something,” Commissioner Jeff Wolfe said before joining Donnie Lawson, president of the commissioners, in voting for the ordinance that allows an increase in the county’s cumulative capital development tax to no more than 3.33 cents for every $100 of taxable value.

Revenue Finds Server and Software Partially Exempt, but Denies Exemption for Labels and Ink

Excerpts of Revenue's Determination follow;

Taxpayer is an Indiana corporation. Taxpayer manufactures plastic components through a thermoforming process.

After an audit, the Department issued proposed assessments of use tax on certain purchases of computer hardware, computer software, labels, and ink. Taxpayer protests the assessment asserting that such purchases are exempt from use tax.

Taxpayer argues that the purchases of computer hardware, computer software, labels and ink are exempt because they "are directly related to [Taxpayer's] manufacturing process . . . ." Generally, "all purchases of tangible personal property by persons engaged in the direct production [or] manufacture . . . of tangible personal property are taxable."45 IAC 2.5-5-8(a). However, "transactions involving manufacturing machinery, tools, and equipment are exempt" if they are purchased for "direct use in the direct production [or] manufacture . . . of other tangible personal property." IC § 6-2.5-5-3(b); 45 IAC 2.5-5-8(a).

A. IQMS Software, Cisco Network Switch, Dell Server

Taxpayer concedes that the IQMS Software, Cisco Network Switch, and Dell Server were purchased in retail transactions and used in Indiana. However, Taxpayer argues that at least a portion of the purchase price of each transaction is exempt from use tax because use of part of each item is "directly related to [Taxpayer's] manufacturing process . . . ."

It is undisputed that Taxpayer is producing tangible personal property, so the issue is whether Taxpayer has shown that the IQMS Software, Cisco Network Switch, and Dell Server are "essential and integral part[s] of an integrated process that produces tangible personal property." Kimball, 520 N.E.2d at 457; 45 IAC 2.5-5-8(c).

1. IQMS Software

The audit report states that IQMS Software is "used to accept orders, bill customers, various accounting functions, and to monitor the manufacturing process" and thus not exempt. Taxpayer asserts that part of the IQMS Software is used for exempt purposes.

The IQMS Software is made up of many different components, and Taxpayer is claiming an exemption for only three components of the total IQMS Software purchase: Shop Floor User, SPC, and RealTime. Shop Floor User is used to "log into a work order on the shop floor, monitor and report production, view documents, enter SPC data, print labels, create PM work orders and more." SPC is used to "enhance decision making and facilitate continuous improvement based on readily accessible SPC data analysis." RealTime Production Monitoring is used to monitor "the currently running product in real time" and "process data at the PLC level in real time, as it is happening on the plant floor . . . ."

Taxpayer explains that these three components of the IQMS Software allow a machine operator to analyze "the real time data to determine what adjustments need to be made to get the machine back within control limits." The Taxpayer asserts that "[t]he operator's ability to monitor the real time data through IQMS is critical in his effort to avoid making defective parts."

The Shop Floor User component of the IQMS Software is used outside the production process for non-operational activities like monitoring and reporting production, viewing documents, and printing labels. Shop Floor User is not "an essential and integral part of an integrated process that produces tangible personal property." Kimball, 520 N.E.2d at 457;45 IAC 2.5-5-8(c).

The RealTime Production Monitoring component of the IQMS Software is used to monitor "the currently running product in real time" and "process data at the PLC level in real time, as it is happening on the plant floor . . . ." Additionally, the SPC component of the IQMS Software is used to "enhance decision making and facilitate continuous improvement based on readily accessible SPC data analysis." The RealTime Production Monitoring and SPC components of the IQMS Software are quality control software which is used throughout the production cycle to ensure that a marketable product is created. As they are used to monitor and adjust the whole production process for quality purposes, they are "an essential and integral part of an integrated process that produces tangible personal property." Kimball, 520 N.E.2d at 457; 45 IAC 2.5-5-8(c) and (i). Because they are essential and integral parts of an integrated process that produces tangible personal property, the RealTime Production Monitoring and SPC components of the IQMS Software were acquired for "direct use in the direct production [or] manufacture . . . of other tangible personal property." IC § 6-2.5-5-3(b).

Taxpayer's protest is sustained regarding the RealTime Production Monitoring and SPC software components of the IQMS Software. (This includes items designated SPC, RT PROD MON, RT LICENSE, RT PM, RT PM ifF-GEN, and RT PM LICENSE on the IQMS Software Purchase Detail provided by Taxpayer for the administrative hearing.) Taxpayer's protest is denied regarding the Shop Floor User component of the IQMS Software. This results in a 38 percent exemption rate for the IQMS software purchase under protest.

2. Cisco Network Switch and Dell Server

The audit report states that the Dell Server "is used to store their recipes and manufacturing instructions for their production equipment" and the Cisco "[N]etwork [S]witch is used to access the information stored on the server." However, Taxpayer indicates that the IQMS Software is run through the Cisco Network Switch and Dell Server. Computer hardware which is used for both exempt and non-exempt purposes may be exempt to the extent the property is used for exempt purposes. See 45 IAC 2.2-5-8(c) Example (7). In this case, the exemption extends to the Cisco Network Switch and Dell Server to the extent that they are directly used by the IQMS Software during the production process. RealTime Production Monitoring and SPC software components of the IQMS Software comprise 38 percent of the total purchase price of the IQMS Software. Therefore, 38 percent of the purchase price of the Cisco Network Switch and Dell Server is exempt. Taxpayer's protest is sustained regarding 38 percent of the purchase price of the Cisco Network Switch and Dell Server.

B. Labels and Ink

Taxpayer affixes labels to boxes containing their finished products. As described in the audit report, the labels are "used for shipping the product" and contain "the shipping address, the manufacturers [sic] address, bar codes for inventory tracking, part number, customer PO number, and any other requested information from the customer." There are second labels which "contain the shift number and date of manufacture." According to the audit report, the labels "do not qualify as wrapping materials, do not become an integral part of the product sold, and do not meet the necessary criteria to be exempt purchases for resale in the same form as they were purchased."

Taxpayer explains that these labels are used to "complete traceability from the original resin pellet to the final finished goods part that is installed on [Taxpayer's] customers [sic] products." The labels "are required by [Taxpayer's] customers," and Taxpayer argues that "even though they contain other 'administrative' data in addition to [Taxpayer's] traceability serial number, it is the serial number that becomes critical when [Taxpayer] must back track a part back to its original chemical content and how it was processed."

In this case, Taxpayer has not demonstrated that the labels are an integral part of its integrated production or manufacturing process. "The fact that particular property may be considered essential to the conduct of the business of manufacturing because its use is required either by law or by practical necessity does not itself mean that the property 'has an immediate effect upon the article being produced'. Instead . . . the property must also be an integral part of an integrated process which produces tangible personal property."45 IAC 2.2-5-8(g). While the labels may be essential to the conduct of Taxpayer's business and required by its customers, the labels and ink used to print them is not an essential and integral part of an integrated production process. Taxpayer's protest is respectfully denied regarding the labels and ink.

Board Finds Taxpayer's Evidence Failed to Support a Reduction in the Property's Value

Excerpts of the Board's Determination follow:

22. In a proceeding concerning property that is not residential, a party to an appeal may introduce evidence of the assessments of any relevant, comparable property. I.C. § 6-1.1-15-18. However, preference shall be given to comparable properties that are located in the same taxing district or within two (2) miles of a boundary of the taxing district. The determination of whether properties are comparable shall be made using generally accepted appraisal and assessment practices. Id.

23. A petitioner seeking review of a determination of an assessing official has the burden to establish a prima facie case proving that the current assessment is incorrect and specifically what the correct assessment would be. See Meridian Towers East & West v. Washington Twp. Assessor, 805 N.E.2d 465, 478 (Ind. Tax Ct. 2003); see also, Clark v. State Bd. Of Tax Comm’rs, 694 N.E.2d 1230, 1234 (Ind. Tax Ct. 1998).

24. The Petitioner did not argue for a specific assessment for the properties. It did argue that the 100% influence factor should be removed from each of the parcels. Smith testimony.

25. “Influence factor” refers to a condition peculiar to the lot that dictates an adjustment to the estimated value to account for variations from the base lot on which the base unit land value for the subject property is predicated. See REAL PROPERTY ASSESSMENT GUIDELINES for 2011 (Incorporated by reference at 50 IAC 2.4-1-2(c)), Bk. 1 Ch. 2 at 9, 70-71.

26. In making its case, the taxpayer must explain how each piece of evidence is relevant to the requested assessment. See Indianapolis Racquet Club, Inc. v. Washington Twp. Assessor, 802 N.E.2d 1018, 1022 (Ind. Tax Ct. 2004). ([I]t is the taxpayer’s duty to walk the Indiana Board ….through every element of the analysis.”)

27. Regardless of the method used to rebut an assessment’s presumed accuracy, a party must explain how its evidence relates to market value-in-use as of the relevant valuation date. O’Donnell, 854 N.E.2d at 95. See also, Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 471 (Ind. Tax Ct. 2005).

28. While Petitioner did provide the property record cards for the subject property and two properties offered as comparable to the subject property, Petitioner failed to provide the Board with a detailed explanation or analysis as to how the comparable properties specifically compare to the subject property. Petitioner simply argues that because the assessor did not apply the same positive influence factor to properties that Petitioner concludes are comparable to the subject property, the influence factor on the subject property should be removed. Petitioner made the same argument in a previous case to no avail. See Kooshtard Property VIII, LLC, v. Shelby County Assessor, 987 N.E.2d 1178 (Ind. Tax Ct. 2013). In Kooshtard the court determined: “Kooshtard did not present any market-based evidence to support its claim; instead, Kooshtard merely concluded that because the Assessor did not apply the same positive influence factor of 100% to a nearby office building, automotive sales/service center, and fast food restaurant, the factor should be removed from its assessment.” Id. at 1181. The court went on to hold that such conclusory statements are insufficient to make a prima facie case because they are not probative evidence. Id.

29. The information provided by Petitioner is insufficient for the Board to conclude that these properties are in fact comparable to the subject property. A hearing officer does not have an affirmative duty to make a case on behalf of a party. North Park Cinemas, Inc. v. State Board of Tax Comm’rs, 689 N.E.2d 765, 769 (Ind. Tax Ct. 1997).

30. Accordingly, the Petitioner failed to establish a prima facie case that there is an error in the 2012 assessment of the subject property. See Eckerling, 841 N.E.2d at 674 (stating that “when a taxpayer chooses to challenge an assessment, he or she must show that the assessor’s assessed value does not accurately reflect the property’s market value-in use.)

31. The Petitioner also offered the case of Love and Kiwala v. Porter County Ass’r, Petition No. 64-025-07-1-5-00008, in support of its argument. Smith testimony, Pet’r Exhibit 4. As with the case at hand, Petitioners in Love argued that the assessment of their property is too high. In support of their argument, Petitioners in Love presented a spreadsheet showing the sales prices and assessed values for seven properties that sold in their taxing district in the two years previous to the assessment year at issue in their appeal. They also provided assessment information for each of the properties sold and a sales disclosure form for each sale. Id. at 2. The Petitioner in the instant case offered no such sales-based studies of the subject property taxing district and offered no ratio study to support its argument. In the Love case the Board concluded that the Petitioner had presented a prima facie case that their property’s level of assessment was not uniform and equal with other properties in their neighborhood for the assessment year at issue. Id. at 4. It also concluded that the Respondent in Love had failed to rebut or impeach the Petitioner’s evidence. Id. at 7. In the case at hand, Petitioner failed to establish a prima facie case that their property was assessed incorrectly. In addition, the Respondents in this case presented substantive, credible testimony and documentary evidence supporting the assessment of the property. The facts of the Love case are readily distinguishable from the case at hand.

32. The Respondent’s duty to offer substantial evidence of the correct assessment was not triggered. See Lacy Diversified Indus. v. Dep’t of Local Gov’t Fin., 799 N.E.2d 1215, 1221-1222 (Ind. Tax Ct. 2003). Thus the Board will not review the Respondent’s evidence.

Wednesday, June 25, 2014

Tax Court Upholds DLGF's Denial of Clark County's Excess Tax Levy Request

Excerpts of the Tax Court's Decision follow:

On appeal, Clark County provides the Court with three reasons why the DLGF’s final determination is invalid and should be reversed. First, Clark County argues that the DLGF abused its discretion by arbitrarily and capriciously determining that the Council did not make a data error, correctable under Indiana Code § 6-1.1-18.5-14, when it approved its 2008 property tax levy for $2.7 million less than what was statutorily permitted. Second, Clark County argues that the DLGF contravened the law when it failed to apply retroactively the 2011 statutory amendment that eliminated the “use it or lose it” provision from the formula contained in Indiana Code § 6-1.1-18.5-3. Third, Clark County argues that the DLGF violated its due process rights.


Clark County claims that the DLGF abused its discretion by arbitrarily and capriciously determining that the Council did not make a data error, correctable under Indiana Code § 6-1.1-18.5-14, when it approved its 2008 property tax levy for $2.7 million less than what was statutorily permitted. (See Pet’r Br. at 13-16.) Clark County acknowledges that the Council intentionally decided not to ask for the maximum levy allowable under Indiana Code § 6-1.1-18.5-3. (See Pet’r Br. at 14-15.) Nonetheless, it argues that that decision constituted a data error correctable under Indiana Code § 6-1.1-18.5-14 because

[n]o responsible member of the [] Council would have knowingly and intentionally breached their primary statutory duty to budget and appropriate sufficient funds to provide for the essential functions of Clark County government, thereby jeopardizing the public health, safety, and welfare of its citizens by the consequences of the dire financial condition which has inevitably now resulted. To the contrary, while the vote of the [] Council to reduce the 2008 department budgets . . . may have been an intentional act, it is clear… that the [] Council had no clue of the long-term financial damage that [this decision would] inflict[] on Clark County and its citizens by the resultant maximum levy reduction.

(Pet’r Br. at 14-15.) In other words, Clark County argues that the Council made a data error when it decided to forego the additional revenue that could be generated through the levy because it could not have foreseen any of the unexpected financial expenses and setbacks that would occur in 2009 and beyond. (See, e.g., Oral Arg. Tr. at 27-28 (asserting that the Council could not have possibly known in 2008 “what issues would crawl out of the woodwork” in subsequent years).)

Unambiguous statutes must be read to mean what they plainly express and that plain meaning may not be enlarged or restricted. Indiana Dep’t of State Revenue v. Horizon Bancorp, 644 N.E.2d 870, 872 (Ind. 1994). Indiana Code § 6-1.1-18.5-14(a) unambiguously allows for the correction of an “error in data,” not an error in interpreting that data. See I.C. § 6-1.1-18.5-14(a). Thus, the statute allows for the correction of an objective error only, not a subjective error. This conclusion is supported by the fact that Indiana Code § 6-1.1-18.5-14 allows the DLGF to correct an error in data on its own initiative (indicating that the error is not only readily fixable, but that it is easily observable to someone who did not make it). See id.

Here, there is no record evidence to indicate that there was an objective error in the Council’s data when it made its decision to forego the maximum levy allowable for 2008. Indeed, the evidence indicates that when it made its decision, the Council had accurate numbers as well as a warning from the DLGF that the consequence of reducing its 2008 levy would be to significantly reduce the county’s maximum levy in 2009, regardless of what the future held. Despite the DLGF’s warning, the Council proceeded to approve a property tax levy for $2.7 million less than what was statutorily allowed in 2008. This was not an “error in data,” nor was it even an error in interpreting data. Instead, it was simply a failure on the part of the Council to plan for budgetary contingencies. Consequently, the Court will not reverse the DLGF’s final determination on this basis.


Clark County also claims that the final determination should be reversed because the DLGF should have retroactively applied the 2011 statutory amendment that eliminated the “use it or lose it provision” incorporated within Indiana Code § 6-1.1-18.5-3’s calculation of “maximum permissible ad valorem property tax levy.” (Pet’r Br. at 16-19.) Clark County argues that the Legislature intended this amendment to be applied retroactively because it is remedial. (See Pet’r Br. at 18-19.)

Without strong and compelling reasons, statutes and statutory amendments will not be applied retroactively. See Indiana Dep’t of State Revenue v. Estate of Riggs, 735 N.E.2d 340, 344 (Ind. Tax Ct. 2000). An exception to this general rule exists for remedial statutes and amendments, i.e., those statutes and amendments that are intended to cure a defect or a mischief that existed in a prior statute. State v. Pelley, 828 N.E.2d 915, 919 (Ind. 2005). “Ultimately however, whether or not a statute [or amendment] applies retroactively depends on the legislature’s intent.”  Bourbon Mini-Mart, Inc. v. Gast Fuel and Servs., Inc., 783 N.E.2d 253, 260 (Ind. 2003).  Thus, “when a remedial statute is involved, a court must construe it to ‘effect the evident purpose for which it was enacted[.]’” Id. (citation omitted).

Prior to July 1, 2011, the Legislature included the “use it or lose it provision” in the formula for calculating and adjusting a “maximum permissible ad valorem property tax levy for the preceding calendar year[.]” See I.C. §§ 6-1.1-18.5-1, -3. Effective thereafter, however, the Legislature completely removed that provision from the calculation. See Pub.L.No. 124-2011 § 1 (eff. July 1, 2011). Clark County asserts that this amendment was remedial because the original statute’s defect of being too complex. (See Pet’r Br. at 18 (asserting that “the Indiana Legislature recognized that the procedures for calculating and adjusting maximum levies needed to be simplified” when it eliminated the “use it or lose it” provision).)

The best evidence of the Legislature's intent is found in the actual language used within a statute or an amendment. DeKalb Cnty. E. Cmty. Sch. Dist. v. Dep’t of Local Gov’t Fin., 930 N.E.2d 1257, 1260 (Ind. Tax Ct. 2010). Here, the words of the amendment unambiguously provided that it was not entitled to retroactive effect. See Pub.L.No. 124-2011 § 1 (stating that the “use it or lose it” provision was eliminated “[f]or purposes of determining a maximum permissible ad valorem property tax levy under [Indiana Code § 6-1.1-18.5-3] for property taxes imposed for an assessment date after January 15, 2011” (emphasis added)). Accordingly, the statutory amendment eliminating the “use it or lose it” provision was not remedial.


 Finally, Clark County claims that Indiana Code § 6-1.1-18.5-12 required the DLGF to conduct a hearing on its levy appeal, and by not doing so, the DLGF deprived it of its right to due process. (See Pet’r Br. at 11-12.) Indiana Code § 6-1.1-18.5-12, however, did not require the DLGF to conduct an administrative hearing on Clark County’s levy appeal.

The relevant portions of Indiana Code § 6-1.1-18.5-12 state that

(a) Any civil taxing unit that determines that it cannot carry out its governmental functions for an ensuing calendar year under the levy limitations imposed by [Indiana Code § 6-1.1-18.5-3] may . . . appeal to the [DLGF] for relief from those levy limitations. In the appeal the civil taxing unit must state that it will be unable to carry out the governmental functions committed to it by law unless it is given the authority that it is petitioning for. The civil taxing unit must support these allegations by reasonably detailed statements of fact.

(b) The [DLGF] shall immediately proceed to the examination and consideration of the merits of the civil taxing unit’s appeal.

(c) In considering an appeal, the [DLGF] has the power to conduct hearings, require any officer or member of the appealing civil taxing unit to appear before it, or require any officer or member of the appealing civil taxing unit to provide [it] with any relevant records or books.

IND. CODE § 6-1.1-18.5-12(a)-(c) (2010) (emphasis added). This statutory language merely provided the DLGF with the discretionary power to conduct a hearing on Clark County’s levy appeal. See, e.g., Horizon Bancorp, 644 N.E.2d at 872 (explaining that the plain and obvious meaning of an unambiguous statute may not be enlarged or restricted). Because Indiana Code § 6-1.1-18.5-12 did not require the DLGF to hold a hearing on Clark County’s levy appeal and Clark County has not provided the Court with any other legal analysis to support its claim that it has been deprived of due process, the DLGF’s final determination will not be reversed on this basis.

Tax Court Upholds DLGF's Rejection of Library's Budget

Excerpts of the Tax Court Decision follow:

The Library admits that no notice was provided to the public pursuant to Indiana Code § 6-1.1-17-3 with respect to the Town Council’s September 13th meeting. (See Pet’r Br. at 4.) On appeal, however, the Library presents the Court with two arguments to support its claim that the DLGF erroneously determined that such notice was required.


 The Library first argues that the DLGF erroneously determined that notice of the Town Council’s September 13th meeting was required because under Indiana Code § 6-1.1-17-20(e), the Town Council did not adopt the Library’s budget, it merely reviewed it. (See Pet’r Br. at 14 (asserting that the Library adopted its own budget on August 17th), 15 (implying that the Town Council is not an adopting entity because it does not have the authority to increase the Library’s budget); Pet’r Reply Br. at 2 (asserting that the Town Council becomes an adopting entity only if it modifies the Library’s originally adopted budget).) To support its argument, the Library points to the fact that before it submitted its budget to the Town Council, it filed its budget with the Speedway Town Clerk pursuant to Indiana Code § 36-3-6-9(b). (See Pet’r Br. at 3, 14-15; Pet’r Reply Br. at 1-2.) That statutory provision states that “[t]he board of each entity listed in subsection (a) shall, after adoption of its proposed budget and tax levies, submit along with detailed accounts, to the city clerk before the first day of September of each year.” I.C. § 36-3-6-9(b) (emphasis added). The Library maintains that if some other entity actually adopted its budget, there would have been no reason for the legislature to use the words “after adoption”’ in Indiana Code § 36-3-6-9(b). (See Pet’r Br. at 15; Pet’r Reply Br. at 2.) The Library’s argument fails for three interrelated reasons.

 First, to the extent the Library filed its budget with the Speedway Town Clerk pursuant to Indiana Code § 36-3-6-9(b), that statutory provision did not apply. As previously stated, Indiana Code § 36-3-6-9(b) provided that “[t]he board of each entity listed in subsection (a) shall, after adoption of its proposed budget and tax levies, submit them, along with detailed accounts, to the city clerk before the first day of September of each year.” I.C. 36-3-6-9(b) (emphasis added). Subsection (b) must therefore be read in relation to subsection (a). See State v. Adams, 583 N.E.2d 799, 800 (Ind. Ct. App. 1992) (explaining that a statute must be read as a whole, and not sections or parts of it piecemeal), trans. denied. Indiana Code § 36-3-6-9(a), in relevant part, states:

Except as provided in subsection (d), the city-county legislative body shall review the proposed operating and maintenance budgets and tax levies and adopt final operating and maintenance budgets and tax levies for each of the following entities in the county:

(1) An airport authority operating under IC 8-22-3.
(2) A public library operating under IC 36-12.
(3) A capital improvement board of managers operating under 36-10.
(4) A public transportation corporation operating under IC 36-9-4.
(5) A health and hospital corporation established under IC 16-22-8.
(6) Any other taxing unit (as defined in IC 6-1.1-1-21) that is located in the county and has a governing body that is not comprised of a majority of officials who are elected to serve on the governing body.

I.C. § 36-3-6-9(a) (emphasis added). See also I.C. § 36-3-6-9(d) (explaining that because the Library is outside Unigov’s jurisdiction, it would not submit its proposed budget to the city-county legislative body referenced in subsection (a).) Given this language, it is clear that Indiana Code § 36-3-6-9(b) did not apply to the Library; instead, it applied to the public library that has its budget and tax rates approved by the City-County Council of Indianapolis and Marion County (i.e., the Indianapolis-Marion County Public Library). See supra at p. 3. 

Second, Indiana Code § 6-1.1-17-20(e) unambiguously instructed the Town Council to review the Library’s proposed budget and adopt a final budget, not review or adopt. See I.C. § 6-1.1-17-20(e). Thus, while the Town Council may have simply approved or accepted the Library’s budget and tax levy “as submitted,” that act constituted more than just a “review” of the Library’s budget. It constituted the Town Council’s adoption of a final budget for the Library. See, e.g., Indiana Dep’t of State Revenue v. Horizon Bancorp, 644 N.E.2d 870, 872 (Ind. 1994) (explaining that the plain and obvious meaning of an unambiguous statute may not be enlarged or restricted). See also WEBSTER’S THIRD NEW INT’L DICTIONARY 29 (2002 ed.) (defining “adopt” as “to accept formally”; “to take over . . . esp. with little or no change in form”; “to endorse and assume official responsibility for”). 

The final reason the Library’s argument fails is because when the Town Council received the Library’s proposed budget and tax rates, it was required to conduct a hearing thereon. See I.C. § 6-1.1-17-20(c) (indicating that the Library was required to submit its proposed budget and tax levies to the Town Council at least 30 days before it held a budget approval hearing thereon). In turn, notice of that hearing was statutorily required. See IND. CODE § 6-1.1-17-3(a) (2010).


Alternatively, the Library argues that no notice of the Town Council’s September 13th meeting should be required because the Library had already complied with and satisfied the notice requirements. More specifically, the Library explains that:

The whole purpose of the publication process is to give citizens notice of what is going on in their communities, let them know when and where they can then go an[d] be heard in their opinions. These goals were met by the publications [on] July 14 and 21, 2010. The citizens of the taxing unit were advised of the date, time, place and purpose of the public budget hearing being held on August 4, and August 17, 2010 to consider the [Library’s] budget. . . . So if the concern is that the public did not have an opportunity to comment on and/or object to the budget, tax rates and levies[,] that concern is alleviated.

(Pet’r Br. at 15-16.) Moreover, the Library explains that the Town Council’s September 13th meeting was a regularly scheduled meeting with a posted agenda. (Pet’r Br. at 15.) This argument, however, is no more availing than the Library’s first one. As just explained, the Town Council was required to provide the public with notice of its September 13th meeting. Thus, the fact that the Library provided notice of its August 4th hearing and its August 17th meeting misses the point. See Town of Beverly Shores Plan Comm’n v. Enright, 463 N.E.2d 246, 248 (Ind. 1984) (explaining that notice statutes “are generally strictly construed and notice in accordance with their provisions held to be mandatory”). See also generally IND. CODE § 6-1.1-17 (demonstrating that because taxpayers have multiple opportunities to object and be heard on a political subdivision’s proposed budget, notice will also occur on multiple occasions). Furthermore, the record evidence does not show that notice was provided for the Town Council’s September 13th adoption meeting nor does it show that the agenda for that meeting was posted. (See generally Cert. Admin. R.)

AP: Pence Seeks Review to Simplify State Tax Code

By the Associated Press in the Northwest Indiana Times:

Gov. Mike Pence said Tuesday he wants to review Indiana's tax code to simplify it and promote economic development.
"This is not about raising taxes or cutting taxes," Pence said during a summit he called to examine possible tax changes. "This is about trying to look at a way we can reform the tax code and lessen the burden of compliance on Hoosiers and Hoosier businesses and create a more attractive environment for investment in Indiana through tax simplification."
Lawmakers have been cutting taxes fairly routinely in recent years, but a report from the conservative Tax Foundation found that that the average tax burden for Indiana residents grew between 2001 and 2011, in large part because of declining incomes. Lawmakers capped property taxes in 2008, but they also increased the state sales tax by a percentage point, from 6 percent to 7 percent.
Like much of his governing, Pence is starting off with a broad idea and leaving things largely open-ended. The summit, organized by Office of Management and Budget Director Chris Atkins, culled general ideas for tax reform from a mix of national conservative leaders and state and local tax experts.
Anti-tax activist Grover Norquist said no tax-code overhaul should be used to hide tax increases. Meanwhile, Jim Eads, former head of the national Federation of Tax Administrators, told attendees that comprehensive tax reform is often talked about but seldom achieved.
Democratic lawmakers and staff attended the daylong event but were not included on any of the panels. House Minority Leader Scott Pelath, D-Michigan City, continued a longstanding criticism of Pence and the state's Republican leaders.
"Notably absent from these proceedings is anyone representing working people or working families trying to get into the middle class," Pelath said in a statement. "Looking at the roster of participants, I'm not sure anyone should be surprised that the middle class has been left out. It's far better for them to lecture others than to get out into neighborhoods and communities to see the impact of their policies."