Thursday, July 31, 2014

Star Reports Indianapolis Mayor Proposes Tax Increase to Pay for More Education and Cops

From the Indianapolis Star:

Mayor Greg Ballard Wednesday outlined a crime-fighting plan that calls for a preschool program designed to keep kids off a troubled path, more police officers and a crack down on gun crimes.

Supporters of the mayor hailed the proposal as visionary, but critics saw it as a first strike in the 2015 mayoral campaign that is likely to focus on public safety and the city's rising violence.

The centerpiece of the proposal is a $50 million in public-private investment to make high-quality preschool available to 1,300 4-year-olds in low-income Indianapolis families for each of the next five years.

Roughly $40 million of the early schooling investment would go toward voluntary preschool scholarships and $10 million for grants to help program providers reach the top tiers of state ratings.

The city would provide half of the $50 million through the elimination of a homestead tax credit while private donations would provide the other $25 million. Axing the tax credit would cost 40 percent of the city's homeowners about $2 a week.

The mayor's proposal also calls for providing educational opportunities for students who have been expelled from school and are locked up in juvenile detention.

Much of the rest of the plan is a re-iteration of strategies that Ballard's Republican administration has previously proposed — and the Democratic City-County Council president said it doesn't include enough new police officers.

"We already know that number is not sufficient," Lewis said. "It doesn't get us where we want to go. This is just kicking the can down the road."

Ballard would pay for the new officers by raising the public safety income tax from 0.35 percent to 0.5 percent to collect $24 million annually to pay for the additional officers

The tax bump, which needs council approval, would cost a taxpayer earning $42,000 a year $5.32 per month, or about $64 a year.

The tax increase would pay for 360 new officers by 2018, for a net gain to the force of 112, after attrition.

Tax Court Posts Oral Argument in Popovich v. DOR

THU, JUL 31, 2014 at 10:00 AM

News Dispatch Reports Porter County Councilman Argues PTABOA Makeup Needs Rebalancing

From the Michigan City News Dispatch:

County Councilman Matt Bernacchi announced to his fellow council members during Monday's meeting of the La Porte County Council that the Property Tax Assessment Board of Appeals (PTABOA) has chosen to cancel all future meetings until it's appointed members are more evenly balanced by political party affiliation.
The board is comprised of five appointed members – two by the county council and three by the county commissioners.  Bernacchi currently holds one of these appointed positions.
According to Shaw Friedman, attorney for the county council, the PTABOA should represent a political make up of three from one party and two from another – with either Democrats or Republicans holding the majority. Currently, there are four Democrats on the board and one Republican.
This imbalance came in February with the council's appointment of Ken Purze, a Democrat who was selected by the council based not on his political affiliation but his ability to fulfill the needs of the board.
“We urged them not to fill that position with a Democrat,” Friedman said, knowing the imbalance would cause an unrest within the Republican party. As a result, the Republican party has filed a request with the council to reappoint one of the board Democrats with a Republican who also meets the boards qualification requirements.

Many of the council members argued, however, that the burden of maintaining a balanced board falls to the county commissioners. Additionally, council attorney Doug Biege said that, although it is improper to have an imbalanced party representation on the board, it would be equally improper to reappoint a board member based solely on their political affiliation.

DLGF Publishes Guidance on Additional Appropriation and Transfer Procedures


TO:                  All Taxing Units

FROM:             Dan Jones, Assistant Budget Director

RE:                   Additional Appropriation and Transfer Procedures(IC 6-1.1-18-5; IC 6-1.1-18-6)

DATE:              July 30, 2014


Under IC 5-11-1-4, the Department of Local Government Finance (“Department”) may approve the annual budgets or additional appropriation requests for a political subdivision (“unit”) only if it has electronically filed with the State Board of Accounts (“SBOA”) the Annual Financial Report. Also, the Annual Personnel Report (“100R”) according to IC 5-11-1-4 and IC 5-11-13-1 is now required to be filed electronically as prescribed by the State Examiner. The 100R must indicate whether the unit offers a health plan, a pension, and other benefits to full-time and part-time employees. According to IC 5-11-13-1.1, cities, towns, counties, and townships must implement an anti-nepotism policy and submit with the 100R a statement by the executive certifying that such a policy has been implemented before the Department can certify a budget or an additional appropriation for the unit. The anti-nepotism policy does not need to be submitted to the Department. The anti-nepotism policy should be made available to SBOA during its examination. SBOA will notify the Department if a unit has not adopted an anti-nepotism policy.

Effective July 1, 2012, the Department, in compliance with IC 5-1-18-7 and 8, may not approve an appropriation or a property tax levy associated with a debt (including a lease) if a debt issuance report has not been submitted to the Department, unless the Department has granted a waiver for good cause.


The additional appropriation process is used to appropriate money in excess of the Department’s certified appropriations for a unit for the current budget year. Although the fiscal body of a unit must act on all additional appropriations, approval by the Department is only required for funds that receive revenue from property taxes levied under IC 6-1.1 or the Motor Vehicle Highway (“MVH”) Fund (IC 8-14-1-1), Local Road and Street (“LRS”) Fund (IC 8-14-2-4), Rainy Day Fund (IC 36-1-8-5.1), or the Library Improvement Reserve Fund (“LIRF”) (IC 36-12-3).

Other additional appropriations must only be reported (“reporting-only funds”) to the Department. Since the Department must acknowledge reporting-only funds, submission of the unit’s financial information is necessary to ensure that adequate funds are available to support the additional appropriation request. Therefore, the Department will require a Certified Copy of Additional Appropriation to be completed for all reporting-only funds. Additional appropriations from the proceeds of bonds and loans are reporting-only funds and do not require Department approval unless the proceeds are deposited in a fund receiving property tax or state distributions. Additional appropriations meeting the requirements of IC 8-16-3-3(c) (Cumulative Bridge Fund) also are reporting-only funds and do not require Department approval. The Department will acknowledge the receipt of information for reporting-only funds. The Department relies heavily on individual fiscal officers to provide accurate information. The Department will approve additional appropriation requests only after tax rates have been certified for the county for the current year.

SBOA recommends appropriating all grants. If grant monies are receipted into a previously established fund requiring appropriation, the unit must follow the additional appropriation procedures for that fund as outlined herein. If the grant monies are provided by the state or federal government as a reimbursement of an expense made by the unit (IC 6-1.1-18-7.5), the grant monies do not need to be appropriated or reported to the Department by the taxing unit in order to make expenditures. Grant monies must be expended in accordance with the grant budget.

The following steps must be followed to obtain an additional appropriation that was not included in the certified annual budget and certified appropriations of the unit as reflected on Line 1 of the final version of the unit’s Fund Report. Indiana Code 6-1.1-18-6 does not apply to units with departmentalized budgets seeking to transfer appropriations from one department to another. Those units should follow the additional appropriation procedures and appropriation reduction procedures for such transfers.


The proper officers of a unit must give notice of their proposed additional appropriation. The notice shall state the time and place at which a public hearing will be held on the proposal. The notice shall include each fund name and number, a categorical breakdown of the proposed additional appropriation for each fund, and the total of the proposed additional appropriation for each fund. The notice shall be published one time in two newspapers published in the unit (if only one newspaper is published in the unit, publication in that paper is sufficient) not less than ten daysbefore the public hearing on the proposal, in accordance with IC 5-3-1-2(b). (A sample notice is appended to this memorandum.)


The proper officers of the unit shall hold the public hearing on the proposal as advertised. At the public hearing, action shall be taken to approve, modify, or disapprove the proposed additional appropriation as advertised. If the unit’s fiscal body postpones action on the request until the following meeting, the additional appropriation does not have to be re-advertised provided the postponement of the request is stated publicly and included in the minutes of the correctly advertised meeting. The fiscal body shall not adopt appropriations exceeding the amount advertised. (Samples of resolutions/ordinances are appended to this memorandum.)

NOTE: Any additional appropriations by a unit whose annual tax levy must be adopted by a city, town, or county fiscal body under IC 6-1.1-17-20 or by a legislative or fiscal body under IC 36-3-6-9 must be adopted by the same fiscal or legislative body by ordinance before the Department may approve the additional appropriation.

Libraries subject only to non-binding review but whose additional appropriations would increase their budgets by a percentage greater than the assessed value growth quotient must have their additional appropriations approved by the city, town, or county fiscal body described in IC 6-1.1-17-20.3(c).

After the public hearing, the proper officers of the unit must complete and file with the Department a Certified Copy of Additional Appropriation (“Certified Copy”) and any other relevant information, including the unit’s financial information. The requested amount of additional appropriation shown on the Certified Copy must not exceed the advertised amount or the fiscal body’s adopted amount, if applicable. (A sample of the Certified Copy is appended to this memorandum.) Units must use the format of the appended Certified Copy sample.

If the miscellaneous revenue amount entered on Line 4 of the Certified Copy exceeds what was determined on Line 8B of the Fund Report, a revised Form 2 (Estimate of Miscellaneous Revenue) must be attached to the Certified Copy supporting the documented increase. When a unit is reporting a tax distribution received in the current year that is for taxes due in the previous year, this amount should be added to the miscellaneous revenue amount on the Certified Copy. The unit must submit a revised Budget Form 2 along with the Certified Copy showing the revenue as the previous year’s taxes received in the current year. Entries should be made in whole dollars and cents should not be included. The revised Form 2 must show the new total amount of Miscellaneous Revenues in Column B—the amount previously reported—plus any additional amount available to be appropriated. If no revised Form 2 is received, the unit’s request will be processed using the miscellaneous revenue amount on Line 8B of the current year’s Fund Report. If revenue is available from carry-over cash that is not encumbered from the previous year or the current budget, supporting evidence is not necessary.

The unit must, if the information is available, document on the Certified Copy the amount of revenue it will lose due to circuit breakers. The Department will take this figure into consideration so as not to approve appropriations for which the unit will not have adequate funding.

When a unit is requesting an additional appropriation for a Bus Replacement Fund, debt fund, or Capital Projects Fund (“CPF”), a brief explanation of the purpose of the request and the accounts affected will facilitate the processing of the request. In some cases, amendments or emergency amendments to CPF plans and bus replacement plans may be required. Units should consult the appropriate memoranda and statutes for more information.

Incomplete documentation may result in the denial of the request or the Department may return the Certified Copy to the unit.

When the Department receives a Certified Copy for a proposed additional appropriation that requires its approval, the Department will determine whether sufficient funds are available during the calendar year for the proposal and whetherthe proper procedures have been followed before issuing a written determination within 15 days of receipt of the proposal. All requests for additional appropriations must be submitted to the Department on or before December 15. The Department will limit the amount of the additional appropriation to the amount of funds available or to be made available and that have not been previously appropriated.


A unit may request reconsideration of the Department’s denial or modification of a proposal by filing a written request with the Department within 15 days of receipt of the determination. The Department must act upon a request for reconsideration within 15 days of receipt. A request for reconsideration must state with reasonable specificity the reason for the request for reconsideration.


Submit the Certified Copy, financial information, revised Form 2s, if applicable, and any other relevant information to:       

or fax to: (317) 974-1629


Indiana Code 6-1.1-18-6 provides that:

The proper officers of a political subdivision may transfer appropriations from one major budget classification to another within a department or office if:
(1)   they determine that the transfer is necessary;
(2)   the transfer does not require the expenditure of more money than the total amount set out in the budget as finally determined under IC 6-1.1; and
(3)   the transfer is made at a regular public meeting and by proper ordinance or resolution.

(Note: It is not necessary to file documentation with the Department on transfers from one major budget classification to another within a department.)


A taxing unit can transfer unused and unencumbered funds from its General Fund or other property tax levy funds (excluding debt service funds) to the Rainy Day Fund. In addition, other unobligated cash balances from any fiscal year (excluding debt service funds) may also be transferred to the Rainy Day Fund pursuant to an ordinance or resolution that authorizes and identifies the amount, which cannot exceed 10% of the taxing unit’s total annual budget for that fiscal year.

The Rainy Day Fund is subject to the same appropriation process as other funds that receive tax money. Before making an appropriation from the Rainy Day Fund, the fiscal body shall make a finding that the proposed use of the Rainy Day Fund is consistent with the expressed intent of the fund.

The Department may not reduce the actual or maximum permissible levy of a unit as a result of a balance in the Rainy Day Fund of the unit.
Transfers to or from the Rainy Day Fund must be reported to the Department. Units must submit to the Department the resolution/ordinance from the fiscal body approving the transfers. The resolution/ordinance must include the name of each fund and the amount being transferred out of each fund to the Rainy Day Fund. Resolutions/ordinances establishing the Rainy Day Fund must also be submitted to the Department.


PLEASE NOTE: Reductions of appropriations should be handled in the same manner as additional appropriations. (A sample resolution/ordinance is appended to this memorandum.) Appropriation reductions in the current year have the effect of increasing fund balances available in the ensuing year.


Questions should be directed to Dan Jones, Assistant Budget Director, at (317) 232-0651

Guide to Completing the Certified Copy of Additional Appropriation Form

Additional Appropriations needing Department approval will not be accepted after December 15 of any year.

Fund number: This should come from your Fund Report (e.g., 0101 General, 0180 Debt Service, 1312 Park and Recreation, 0706 MVH, 0708 Local Road and Street, and 2391 Cumulative Capital Development.)

Fund name: Refer to the summary section on your Fund Report for the appropriate fund names. Many reporting-only funds will not be listed on your Fund Report.

Appropriation request: This amount should be less than or equal to what was advertised and adopted by the fiscal body, if applicable, in whole numbers. (Do not include cents.)

Amount by reduction: If the taxing unit is reducing a line item within a particular fund, it is considered a reduction. The amount reduced should be less than or equal to what was advertised and adopted by the fiscal body, if applicable, in whole numbers. (Do not include cents.)

Net amount of increase: This is the appropriation request minus the amount by reduction.

Property tax levy: This reflects line 16 from the Fund Report provided by the Department with the 1782 Notice (or the certified levy amount reflected on the Budget Order).

Levy excess applied: This reflects line 15 of the Fund Report provided by the Department with the 1782 Notice.

PTRC from CAGIT: This reflects line 13A of the Fund Report provided by the Department with the 1782 Notice. If you are located in a CAGIT county, this line mayhave an amount placed on it.

LOIT levy freeze amount: This reflects line 13B of the Fund Report provided by the Department with the 1782 Notice. If you are located in a LOIT levy freeze county, this line may have an amount placed on it.

Miscellaneous revenue estimate: This is line 8B on the Fund Report provided by the Department with the 1782 Notice. If miscellaneous revenue on the Certified Copy exceeds what was determined on Line 8B of the Fund Report, a revised Form 2 (Estimate of Miscellaneous Revenue) must be attached to the Certified Copy supporting the documented increase. The revised Form 2 must show the new total amount of Miscellaneous Revenues in Column B—the amount previously reported—plus any additional amount available to be appropriated. If no revised Form 2 is received, your request will be processed using the miscellaneous revenue amount on Line 8B of the Fund Report.

January 1 cash balance: This is the cash and investment balance in the appropriate fund as of January 1 of the current year. This figure is taken from the fiscal officer’s ledger book. Do not include investments attributed to other funds.

Subtotal of funds available: Simply add lines 1 through 6 on the worksheet. This represents total funds available before any appropriations are deducted for this fund.

Less circuit breaker: This figure represents the amount of revenue the unit will lose due to property tax caps. If available, the Department will take this figure into account so as not to approve an additional appropriation for which the unit will not have adequate funding.

Total funds available: Subtract line 8 from line 7.

Original budget: This is line 1 of the Fund Report provided by the Department with the 1782 Notice. This is also the certified budget amount on the final budget order.

Encumbered appropriations: This amount would be any prior year carryovers for a particular fund. An example: $5,000 in capital outlays are obligated through a purchase order or contract for office equipment but the check will not be written until after January 1. The original appropriation was in place the prior year but the funds were not spent.

Temporary loans outstanding as of January 1: Outstanding temporary loans and prior year levy excess amounts (amounts that need to be transferred to a levy excess fund) need to be reflected in the surplus funds. Any temporary loans added after January 1 should NOT be added to this total.

Beginning obligations: Add lines 10, 11, and 12. This represents the amount of funds already committed for this fund.

Surplus funds: This represents line 9 of this worksheet minus line 13. These are the funds available before the approval of any additional appropriations during the current calendar year.

Previous additional appropriation(s) approved since January 1: This represents any previous additional appropriations made in excess of the budget during the current calendar year. It does not include the current year budget or this additional appropriation request.

Amount transferred to the Rainy Day Fund: This represents the amount of funds transferred to the Rainy Day Fund in the current budget year

Surplus funds remaining: This represents the total amount of uncommitted funds available for appropriation. If the amount on this line exceeds the amount requested, it is likely the additional appropriation will be approved if the proper procedures have been followed. The appropriation approved will be limited to the amount on this line. Requests for amounts exceeding this line will be denied.

Republic Reports Opponents Argue Points in Battle Over Exemption

From the Columbus Republic:

A decision is expected in the next 30 days from the Indiana Tax Court to settle a seven-year dispute that could have repercussions for a local nonprofit and the types of affordable housing clients it serves.

Housing Partnerships Inc. has been attempting to regain its charitable purposes property-tax exemption since 2007, when the Bartholomew County Property Tax Board of Appeals ruled it was no longer eligible for the tax relief.

HPI owes $617,751.44 in back property taxes on properties in its portfolio at the time of a 2006 property exemption request, Bartholomew County Assessor Lew Wilson said.

Revenue Publishes Information Bulletin on Gasoline Use Tax


Information Bulletin #83
Sales Tax
June 2014
Effective Date: Upon Publication

SUBJECT: Gasoline Use Tax

P.L.227-2013 provides for the imposition of a new gasoline use tax. This new gasoline use tax replaces the previous sales tax, which will no longer be imposed on the sale of gasoline. This bulletin provides guidance as to how the gasoline use tax rate is calculated, how retail merchants file their returns, and how refunds or exemptions may be claimed.


IC 6-2.5-3.5 provides for the imposition of a gasoline use tax effective for gasoline purchases on or after July 1, 2014. The gross retail tax otherwise imposed under IC 6-2.5 is not imposed on gasoline sales. Exemptions available to taxpayers under IC 6-2.5-5 (other than the sale for resale exemption under IC 6-2.5-5-8) are also available to taxpayers for gasoline use tax.


The term "gasoline" has the same meaning as set forth under IC 6-6-1.1-103(g).

The term "federal gasoline tax" means the excise tax imposed on gasoline under Section 4081 of the Internal Revenue Code.

The term "Indiana gasoline tax" means the tax imposed under IC 6-6-1.1.

The term "qualified distributor" means a distributor that:
(1) Is a licensed distributor under IC 6-6-1.1; and
(2) Holds an uncanceled gasoline use tax permit issued under IC 6-2.5-3.5-17.

The term "refiner" means a person or entity who manufactures or produces gasoline by any process involving substantially more than the blending of gasoline.

The term "terminal operator" means a person or entity that:
(1) Stores gasoline in tanks and equipment used in receiving and storing gasoline from interstate or intrastate pipelines pending wholesale bulk reshipment; or
(2) Stores gasoline at a boat terminal transfer that is a dock or tank or equipment contiguous to a dock or tank, including equipment used in the unloading of gasoline from a ship or barge and used in transferring the gasoline to a tank pending wholesale bulk reshipment.


The gasoline use tax rate is computed monthly by the department and will be published on the Indiana Department of Revenue's website no later than the 22nd day of the month prior to the tax rate becoming effective. The following is the methodology used to compute the gasoline use tax rate:

Step 1a: The gasoline use tax rate is calculated by determining the average retail price per gallon for all grades of gasoline for each day from the 16th day of the previous month to the 15th day of the current month, inclusive of federal gasoline tax, Indiana gasoline tax, and Indiana gross retail tax or gasoline use tax. The price per grade will be weighted by the percentage of all sales by grade to determine the average retail price.

Step 1b: Subtract the per-gallon federal gasoline excise tax rate and the per-gallon Indiana gasoline excise tax rate from the amounts determined in Step 1a.

Step 1c:
• For the period from May 16, 2014, to June 30, 2014, multiply the amount determined in Step 1b by 93.46% (0.9346) in order to subtract the sales tax included in the gasoline price.
• For July 1, 2014, and later, subtract the gasoline use tax in effect on that day from the amount determined in Step 1b.

Step 1d: Determine the arithmetic average of the Step 1c amounts determined for each day from the 16th day of the prior month to the 15th day of the current month. For instance, to determine the average price for July, add the average retail price minus taxes (Step 1c) for each of the 31 days from May 16 to June 15 and then divide the sum by 31.

Step 2: Multiply the amount determined in Step 1d by 7% (0.07) and round to the nearest one-tenth of one cent ($0.001). This is the gasoline use tax rate for the following month.


Each retail gasoline station or unlicensed bulk plant operator will be required to file the GT-Inventory Report to report the gasoline use tax on gasoline in inventory as of July 1, 2014. This paper form is a one-time reconciliation for the gasoline use tax on gasoline in inventory as of business open on July 1, 2014. The department will mail the GT-Inventory Report to retail stations. If a station or an operator required to file the GT-Inventory Report does not receive a form, they should call (317) 615-2630 or email The GT-Inventory Report must be filed by Aug. 1, 2014, along with payment for the gasoline use tax on gasoline in inventory as of July 1, 2014.


Whenever a refiner, terminal operator, or qualified distributor (seller) sells gasoline to a distributor that does not meet the definition of a qualified distributor for gasoline use tax purposes as defined previously or sells to a retail merchant (buyer), that seller shall collect the gasoline use tax from the buyer.

In addition, if a refiner, terminal operator, or qualified distributor transfers gasoline to a location for purposes of the retail sale of that gasoline, that refiner, terminal operator, or qualified distributor is subject to gasoline use tax upon the transfer of the gasoline. The consumer of gasoline (i.e., the retail customer) shall have no liability for the Indiana gross retail or use taxes on any gasoline purchases.

The gasoline use tax is also imposed on distributors (other than qualified distributors) who import gasoline from outside Indiana for shipment into and sale or use in Indiana. A distributor importing gasoline into Indiana must obtain a permit from the department as defined in IC 6-2.5-3.5-17.

A refiner, terminal operator, qualified distributor, or distributor responsible for remitting the gasoline use tax shall file its returns and remit its taxes via the department's online tax filing system (INtax). Payments are due on the 25th day of the month for all gasoline sold from the 1st day of the month to the 15th day of the month (i.e., tax on sales from July 1 to July 15 are due on July 25). Payments are due on the 10th day of the following month for all gasoline sold from the 16th day of the month to the last day of the month (i.e., tax on sales from July 16 to July 31 are due on August 10).

A refiner, terminal operator, or qualified distributor must also file a monthly report reporting gallons sold and the tax paid by each purchaser or recipient. This report is due at the end of the month after the gallons of gasoline are sold (for instance, the July monthly report is due August 31).


A refiner, terminal operator, or qualified distributor that has a surety bond for gasoline tax as provided under IC 6-6-1.1-406 et seq. will also be required to have a surety bond for the payment of gasoline use tax. The department shall determine the amount of the bond; however, any bond shall not be less than $2,000 and not greater than an amount equal to a three-month gasoline use tax liability for the refiner, terminal operator, or qualified distributor, as estimated by the department.

A refiner, terminal operator, or qualified distributor may be asked to provide financial records sufficient to demonstrate their revenues, expenses, assets, and liabilities for purposes of determining bonding requirements. A current financial statement, beginning balance sheet, or year-end report, similar to what is required by the department for fuel tax license applications (Form FT-1) will be sufficient to meet the financial reporting requirements.


If a purchase or shipment of gasoline is made within Indiana for shipment and subsequent sale outside Indiana, the purchase or shipment is exempt from the gasoline use tax. In such a case, if the gasoline use tax has already been paid, a distributor (including a qualified distributor) may claim a refund for the gasoline use tax paid on the gallons purchased. This refund may be claimed by completing Form GA-110L and providing all supporting documentation.

A qualified distributor may be allowed to make an adjustment on Form GT-103 when they are notified by a retail merchant that the retail merchant was not fully reimbursed by a customer's credit card company. For example, the retail merchant sold gasoline to an exempt customer, as defined by IC 6-2.5-5, who paid using a credit card. Due to the agreement by the credit card company, the retail merchant was not fully reimbursed for the gasoline use tax when the gasoline was sold to an exempt customer. The tax that was paid by the retail merchant but not collected from the exempt customer can be claimed by a qualified distributor on the "Adjustments" line on Form GT-103. However, the qualified distributor must have a copy of all exemption certificates (Form ST-105) provided to the retail merchant available upon request by the department. Furthermore, the department will request proof that the distributor reimbursed the retail merchant for the gasoline use tax paid by the retail merchant. A copy of the credit card statement showing the difference in reimbursement to the retail merchant due to the gasoline use tax exemptions must also be provided.

In addition, a qualified distributor shall be allowed to make an adjustment on Form GT-103 to reflect any gasoline use tax imposed on purchases by the qualified distributor when the qualified distributor purchases gasoline from another distributor who has previously paid gasoline use tax on the gallons sold to the qualified distributor. Any information related to the payment of the gasoline use tax on gasoline purchased by the qualified distributor must be provided to the department upon request.

A customer who has paid the gasoline use tax on gasoline that is used for an exempt purpose, as defined by IC 6-2.5-5, may request a refund. The refund may be claimed by completing Form GA-110L and providing all supporting documentation.

Wednesday, July 30, 2014

Board Finds Petitioner Failed to Show Back Taxes and Penalties Improperly Assessed Where Both Parties Agreed Property Not Entitled to Homestead Deduction

Excerpts of the Board's Determination follow:

c) Here, the subject property received the homestead standard deduction for the 2010 and 2011 tax years. The parties agree that the subject property was not the Petitioner’s homestead and therefore did not qualify for the homestead standard deduction. Because the property did not qualify for the deduction, the County Auditor was within his or her authority, under Ind. Code § 6-1.1-12-37(f), to remove the deduction and bill the Petitioner for the taxes that would have been owed if no error existed. Whether the Petitioner actually filed for the deduction has no bearing on the County Auditor’s authority to correct the error.

d) As for the penalty imposed by the county, the Board lacks the authority to address the Petitioner’s claim. The Board is a creation of the legislature, and it has only those powers conferred by statute. Matonovich v. State Bd. of Tax Comm’rs, 705 N.E.2d 1093, 1096 (Ind. Tax Ct. 1999). The relevant statute reads:

(a) The Indiana board shall conduct an impartial review of all appeals concerning:
(1) the assessed valuation of tangible property;
(2) property tax deductions;
(3) property tax exemptions;
(4) property tax credits;
that are made from a determination by an assessing official or county property tax assessment board of appeals to the Indiana board under any law.
(b) Appeals described in this section shall be conducted under IC 6-1.1-15.

Ind. Code § 6-1.5-4-1.

e) The Tax Court has held the Board’s enabling statute “did not grant any power to the State Board to review penalties imposed by the County for the late payment of property taxes,” because it contemplated only a review of assessments, deductions, exemptions, and credits.  Whetzel, 761 N.E.2d 904.

f) Given the clear language of Whetzel, the Board lacks the subject matter jurisdiction to afford the Petitioner relief with regards to the penalties attached to his bill for back taxes.

g) The Petitioner failed to make a prima facie case for striking his bill for back taxes owed and for removing the penalties imposed with that bill.

Revenue Waives Penalty Where Taxpayer Unaware of Requirement to File Composite Return

Excerpts of Revenue's Determination follow:

Taxpayer is a business with Indiana operations. The Indiana Department of Revenue ("Department") determined that Taxpayer had not filed an Indiana adjusted gross income tax composite return for 2010, 2011, and 2012 and so imposed penalties for each year.

Taxpayer protests the imposition of penalties for 2010-12. The Department imposed a $500 penalty for each year for failure to file 2010, 2011, and 2012 composite Indiana income tax returns. Taxpayer protests that it was unaware of the requirement to file a composite return and that Indiana did get the income tax in question via the individual shareholders' returns. Taxpayer also explained that, now that it is aware of the requirement to file a composite return, it will file the proper return on an ongoing basis.

In this case, the Department determined that Taxpayer did not file Indiana adjusted gross income tax composite returns for 2010-12. The Department imposed penalty under IC § 6-8.1-10-2.1(j). As a result of the protest process, Taxpayer has affirmatively established that it acted reasonably, as required by IC § 6-8.1-10-2.1(d) and 45 IAC 15-11-2(b). The $500 penalty for 2010, 2011, and 2012 will be waived. However, the Department takes this opportunity to notify Taxpayer that since it is now aware of its filing duties, such a waiver may not be warranted for other years.

Court of Appeals Finds Motion to Set Aside Tax Deeds Not Filed in Reasonable Time

Excerpts of the Court of Appeals' Decision follow:

Rushmore filed its motion asking the trial court to set aside the order directing issuance of tax deeds and tax sale pursuant to Trial Rule 60(B)(6). Motions filed pursuant to this subsection must be filed within a “reasonable time.” T.R. 60(B). The determination of what constitutes a reasonable time varies with the circumstances of each case. Levin v. Levin, 645 N.E.2d 601, 604 (1994). Relevant to the question of timeliness is the basis for the moving party’s delay and prejudice to the party opposing the motion. Id. 6
Here, Rushmore claims that its motion was filed within a reasonable time. In particular, the record demonstrates that Rushmore filed its Trial Rule 60(B) motion on September 9, 2013, over 18 months after Oberleas received the tax deeds to the parcels of Property. Rushmore claims that its motion was filed within a reasonable time because: 1) Rushmore filed its motion within three months of acquiring an interest in the Property, which Rushmore claims is not unreasonable given the difficulty a mortgagee may have connecting a tax sale notice with an erroneous property address to a particular mortgage loan; and 2) This delay did not result in prejudice because Oberleas will still retain a lien against the Property parcels in the event that the deeds are invalidated.

We find these arguments, particularly the former, unavailing and agree with Oberleas that the delay is unreasonable. While we do not condone the errors made by Oberleas and caution that exactitude is important when recording and notifying others of property interests, Rushmore’s challenge simply comes too late.

One of the factors we consider when assessing whether or not a motion was filed within a reasonable time is the basis for the moving party’s delay. Here, Rushmore was not a party in interest during the time of the tax sale or even when the deeds were issued. In fact, Rushmore did not acquire an interest in the Property until 16 months after the deeds had been issued to Oberleas. When a mortgagee takes an assignment of a mortgage, he acquires the status of the mortgage at that time. Further, the mortgagee is charged with constructive notice of all the facts that a proper examination of the record would show. Keybank Nat’l Ass’n v. NBD Bank, 699 N.E.2d 322, 327 (Ind. Ct. App. 7 1998). The record clearly shows the Oberleas’s tax deeds were recorded in the Auditor’s Office on February 16, 2012 under an accurate lot number and property description. Appellant’s App. 91-97. Therefore, Rushmore had constructive notice of Oberleas’s tax deeds and thus was not a bona fide purchaser, despite an error in the common address. See Union State Bank v. Williams, 169 Ind. App. 345, 350, 348 N.E.2d 683, 687 (1976). Had Rushmore checked the record prior to acquiring the mortgage from Bank of America, it would have been aware that Oberleas was issued tax deeds for four of the five parcels on the Property.

Additionally, it is apparent that Oberleas suffered prejudice as a result of the delay. More specifically, for approximately 18 months, Oberleas believed he was the rightful owner of the parcels and acted accordingly. He has paid taxes and “mowed, cleared underbrush and weeds, and provided general care to the [p]arcels.” Appellant’s App. 123.

Finally, this Court recognizes a general public policy interest in having finality and closure to such transactions. As this Court previously explained, “[i]n ruling on a T.R. 60(B) motion, the trial court must balance the alleged injustice suffered by the party moving for relief against the interests of the winning party and societal interest in the finality of litigation.” Hoosier Health Sys., Inc. v. St. Francis Hosp. & Health Ctrs.,796 N.E.2d 383, 388 (Ind. Ct. App. 2003). Although Rushmore may not have had actual notice of Oberleas’s deeds to the Property parcels, it is charged with constructive notice; therefore, we do not believe Rushmore suffers grave injustice if Oberleas retains ownership of the Property because Rushmore had the opportunity to avoid the problem much earlier. See Union State Bank, 169 Ind. App. at 350, 348 N.E.2d at 687. In short, because of society’s interest in the finality of litigation, we cannot indefinitely allow banks to shift any potential issues associated with a mortgage to subsequent mortgagees if it operates to the detriment of the tax sale purchaser as it does in this case. Therefore, we conclude that Rushmore’s motion was not filed within a reasonable period of time.

Moving onto Rushmore’s other claims, it also argues that the property descriptions in the 4.5 and 4.6 notices Oberleas sent to the record owners, Thomas and Hayes, were not in substantial compliance with Indiana Code sections 6-1.1-25-4.5 and -4.6 because they omitted a digit in the common address and failed to provide a full legal description per the statute. Appellant’s Br. 7. Further, Rushmore argues that the notices were sent to Thomas and Hayes at an address in Muncie, rather than the proper address on record with the Auditor’s Office, meaning that the mailing itself was not in compliance with the statute. Id. at 11. However, we need not address the sufficiency of the 4.5 and 4.6 notices because, even if they possess merit, the issue of reasonable timing discussed above is dispositive. The sufficiency challenge simply comes too late.

Based on these facts, we cannot say that the trial court abused its discretion in denying Rushmore’s motion to set aside the issuance of the tax deeds and tax sale. Accordingly, we affirm the judgment of the trial court.

Bohanon Asks Spend Down our Surplus? Been There Done That!

By Cecil Bohanon in the Richmond Palladium-Item:

Back in 1998 the state of Indiana had over $1.3 billion in surplus funds in its general account. This was about 57 days of state spending. The state had total surplus funds of over $2 billion that was over 24 percent of its annual operating revenues. I remember the cries of the time: The state should not be a bank, social spending has been cut to the bone and must be increased, taxes should be cut in the presence of such a “structural” surplus, and, of course, education spending should be increased at all levels. Oh yes, I remember it well: I was cranking out spreadsheets to make a case for property-tax cuts.

Fast forward six years. The state of Indiana’s fiscal year-end report of June 30, 2004, was frightfully different. The surplus in the general account was a mere $200,000. This would cover about 10 minutes of state spending. Although the report showed the state had total surplus funds of over $500 million or about 5 percent of its annual operating revenues, this was all based on an accounting “trick” of payment delays. State payments originally scheduled in fiscal year 2004 were deferred to fiscal-year 2005. The close-out statement for 2004 included funds the state owed to schools and universities but had not yet distributed. Absent this accounting gimmick the state was technically bankrupt to the tune of nearly $180 million.

Over the last 10 years Indiana has slowly crawled out of its fiscal hole. This is truly remarkable as the economic downturn of 2008-2009 was much more severe than the downturn of the 2001-2002. The state now has just over $1 billion in surplus funds in its general account that would cover about 26 days of state spending. The state has total surplus funds of just over $2 billion which is just under 14 percent of its annual operating revenues.

We now hear the cries we heard 16 years ago. Every spending constituency insists it has been shortchanged and treated unfairly. Newspapers and blogs are full of stories of schools not repaired and social services not provided. My local newspaper’s editorial page chided the state for its “vast cash reserves.” I am reminded of the immortal words of the great Yogi Berra “déjà vu all over again.”