From the Lebanon Reporter:
Boone County’s 2014 budget won’t be finalized until the Boone County Council votes on the document at its meeting next Tuesday.
Confusion came this year, County Auditor Deanna Willhoite said, because the state had combined both general fund and county option income tax revenue, rather than separating those amounts as it had for the 2012 and 2013 budgets.
For the 2013 budget, the county received $17,994,576 in general fund and COIT money, Willhoite said. For the 2014 budget, that projected combined total is $995,000 less.
Property tax and the county option income tax, plus miscellaneous income from grants and reimbursements, comprise the county’s revenue sources. Including those sources, the county’s projected revenue is just over $26 million next year.
At first the council thought it was confronted with a $4.2 million shortfall. Some expenses were duplicated, however, and the actual gap was closer to $2.8 million.
“We managed to come within a hair’s breadth of balancing the budget,” Councilman Brent Wheat said.
Cuts were made almost across the board, he said. Although some expenses were moved to different funds — basically, specific spending accounts — “in my three years on the council, these were the most severe cuts we’ve made.”
...
http://reporter.net/local/x934955611/County-to-vote-on-17-million-in-spending
Friday, October 4, 2013
Republic Reports Columbus Budget Targets Mayor's Initiatives
From the Columbus Republic:
More funds for public safety, expanded hours at Columbus Transit and improving animal care in the community are among the components of the city’s 2014 budget that support Mayor Kristen Brown’s highest priorities.
The $49.3 million 2014 city budget, approved Tuesday by City Council, increased about 7 percent from 2013’s approved $46.2 million budget. However, this year the city is spending more than $2.2 million in funds from a tax distribution error. That means actual spending for this year and next year are about the same.
“We did this all with effectively flat property tax revenue and with the loss of $1.4 million out of the revenue from the trash fees,” Brown said. “We were able to make investments through efficiencies. We found a lot of cost efficiencies in the last year and a half and have been able, with a basically flat budget, to make some good investments.”
http://www.therepublic.com/view/local_story/City-budget-targets-mayor-s-st_1380741051
More funds for public safety, expanded hours at Columbus Transit and improving animal care in the community are among the components of the city’s 2014 budget that support Mayor Kristen Brown’s highest priorities.
The $49.3 million 2014 city budget, approved Tuesday by City Council, increased about 7 percent from 2013’s approved $46.2 million budget. However, this year the city is spending more than $2.2 million in funds from a tax distribution error. That means actual spending for this year and next year are about the same.
“We did this all with effectively flat property tax revenue and with the loss of $1.4 million out of the revenue from the trash fees,” Brown said. “We were able to make investments through efficiencies. We found a lot of cost efficiencies in the last year and a half and have been able, with a basically flat budget, to make some good investments.”
http://www.therepublic.com/view/local_story/City-budget-targets-mayor-s-st_1380741051
DLGF Publishes Guidance on Levy Freeze Options for 2014
MEMORANDUM
CC: All Local Units in Levy Freeze
Counties
FROM: Micah G. Vincent,
Commissioner
RE: Levy Freeze Options for
2014
DATE:
October 3, 2013
On August 30, 2013
the Department of Local Government Finance (“Department”) certified the “levy
freeze” income tax rates pursuant to I.C. 6-3.5-1.5. These are the rates that
would need to be imposed to fully fund operating levy growth with income tax
instead of property tax.
The law
requires that the council adopt the Department-certified rate for years 1 and 2
only. This year, councils now have the
option of adopting the higher rate or leaving the rate the same. (Note that the
rate may not be reduced or rescinded.) This leaves councils with three options,
outlined on Page 2 of this memorandum.
The Department
needs to know which of the three options the council selects before we can begin
processing the 2014 budget order. Specifically, the Department needs to know
which growth factor to apply to the levies and how to allocate the levy freeze
revenues. The Department requests that all councils indicate in writing
which of the three options the council selects and submit that to Courtney
Schaafsma, Budget Division Director by November 1. This will allow the
Department to correctly administer the will of the council. Work on the county’s
budget order will be on hold until the information is submitted. Submission
of this information in advance of the November 1 deadline will put the county in
a better position to ensure on-time billing.
Please note that
Department field staff conducted budget workshops with the assumption that the
levy would remain frozen (option 1 or option 2). Units in counties where option
3 is under consideration should independently review their advertising to ensure
that the advertised levy can accommodate levy growth. The Department will not
certify a levy that is greater than what was advertised by the unit.
If you have any
questions, please contact Courtney Schaafsma, Budget Director, at cschaafsma@dlgf.in.gov or
317.234.3937.
Options for 2014 Funding for Counties adopting LOIT Levy
Freeze
OPTION
1:
Adopt the
Department-certified income tax rate and keep the levy frozen. If this option is
selected, the levy growth factor on operating funds would be 0% and the growth
would be fully funded from income tax.
OPTION
2:
Keep the income tax
rate the same and keep the levy frozen. If this option is selected, the levy
growth factor on operating funds would be 0% and the revenue raised from the
income tax rate would be distributed in proportion to the levy freeze amount
calculated under I.C. 6-3.5-1.5. For example, if the total levy freeze amount in
the county were $1,000,000 and the income tax revenue were $750,000, each unit
within the county would have only 75% of its growth funded with income tax
revenues. The remaining growth would not be funded from current-year revenues.
Pursuant to I.C. 6-3.5-1.1-24(o) and I.C. 6-3.5-6-30(o), money may be
distributed from the county stabilization fund if the certified distribution for
levy freeze is less than the levy freeze amount for that year.
OPTION 3:
Keep the income tax
rate the same and allow the levy growth to come from property taxes. If this
option is selected, then the levy growth factor on operating funds is 2.6%, and
the revenue generated from the income tax funds prior year growth only. Pursuant
to I.C. 6-3.5-1.1-24(o) and I.C. 6-3.5-6-30(o), money may be distributed from
the county stabilization fund if the certified distribution for levy freeze is
less than the levy freeze amount for that year.
News-Sentinel Reports Thirty Year Old Deal with GM Complicates Job Creation Efforts in Fort Wayne
From the Fort Wayne News-Sentinel:
No too long ago, local economic development officials eliminated “tax abatement” from their vocabulary, arguing that “phase in” more accurately described the incentive offered by their favorite job-creation tool.
But now that a heretofore obscure 29-year-old agreement with General Motors has induced Allen County Council members to waive all taxes on $110 million worth of new equipment for a full decade – thereby eliminating the year-by-year phase-in of taxes granted by all such previous deals – perhaps yet another term is needed.
One that illustrates the danger of making desperation-driven, open-ended commitments, perhaps.
Three decades after the fact, it's almost impossible to grasp the fear that gripped this community after International Harvester transferred truck production to Springfield, Ohio, in 1983. Faced with the loss of 3,000 well-paying jobs, economists and politicians predicted a local unemployment rate of 20 percent, and the elimination of another 12,000 Harvester-dependent jobs.
But the expected calamity never came, in part because GM announced plans to build a 3,000-employee truck plant in southwest Allen County the following year in exchange for an incentives package estimated to be worth more than $71 million in 1986 (the equivalent of more than $151 million today) – nearly $26 million of it in the form of tax abatements.
Not widely known until recently, however, was the fact that County Council's Aug. 10, 1984 declaration of GM's 937 acres as an “economic revitalization area” seems to have committed the county to offering the company far more generous incentives than were available at the time – whether it wants to or not.
As council President Darren Vogt noted last month, officials in 1984 couldn't have predicted that the state's General Assembly in 2011 would authorize 100 percent abatements for 10 years. When they signed the deal that has been interpreted as assuring GM the maximum benefits allowed by state law, abatements eliminated taxes on new buildings or equipment in the first year only, gradually increasing taxes to 100 percent by the end of the deal.
John Stafford, who recently retired as director of the Community Research Institute of IPFW, was the county's economic development director in 1984 and said the promise of perpetual tax savings was intended to attract ongoing investment in the plant. “Equipment is a critical part of the facility. If you stop investing, the plant loses traction,” he said. The fact that GM has upgraded the plant and expanded its work force continuously for nearly 30 years indicates the strategy worked.
Before GM's latest request surfaced last month, County Council had shown little enthusiasm for granting the maximum abatement allowed by law. But what about other companies looking to relocate or expand here? Even without a deal like GM's, won't they expect equally generous incentives?
And if they do, hasn't it just gotten a lot more difficult for job-hungry politicians to say “no”?
...
http://www.news-sentinel.com/apps/pbcs.dll/article?AID=/20131003/NEWS/131009924/0/SEARCH
No too long ago, local economic development officials eliminated “tax abatement” from their vocabulary, arguing that “phase in” more accurately described the incentive offered by their favorite job-creation tool.
But now that a heretofore obscure 29-year-old agreement with General Motors has induced Allen County Council members to waive all taxes on $110 million worth of new equipment for a full decade – thereby eliminating the year-by-year phase-in of taxes granted by all such previous deals – perhaps yet another term is needed.
One that illustrates the danger of making desperation-driven, open-ended commitments, perhaps.
Three decades after the fact, it's almost impossible to grasp the fear that gripped this community after International Harvester transferred truck production to Springfield, Ohio, in 1983. Faced with the loss of 3,000 well-paying jobs, economists and politicians predicted a local unemployment rate of 20 percent, and the elimination of another 12,000 Harvester-dependent jobs.
But the expected calamity never came, in part because GM announced plans to build a 3,000-employee truck plant in southwest Allen County the following year in exchange for an incentives package estimated to be worth more than $71 million in 1986 (the equivalent of more than $151 million today) – nearly $26 million of it in the form of tax abatements.
Not widely known until recently, however, was the fact that County Council's Aug. 10, 1984 declaration of GM's 937 acres as an “economic revitalization area” seems to have committed the county to offering the company far more generous incentives than were available at the time – whether it wants to or not.
As council President Darren Vogt noted last month, officials in 1984 couldn't have predicted that the state's General Assembly in 2011 would authorize 100 percent abatements for 10 years. When they signed the deal that has been interpreted as assuring GM the maximum benefits allowed by state law, abatements eliminated taxes on new buildings or equipment in the first year only, gradually increasing taxes to 100 percent by the end of the deal.
John Stafford, who recently retired as director of the Community Research Institute of IPFW, was the county's economic development director in 1984 and said the promise of perpetual tax savings was intended to attract ongoing investment in the plant. “Equipment is a critical part of the facility. If you stop investing, the plant loses traction,” he said. The fact that GM has upgraded the plant and expanded its work force continuously for nearly 30 years indicates the strategy worked.
Before GM's latest request surfaced last month, County Council had shown little enthusiasm for granting the maximum abatement allowed by law. But what about other companies looking to relocate or expand here? Even without a deal like GM's, won't they expect equally generous incentives?
And if they do, hasn't it just gotten a lot more difficult for job-hungry politicians to say “no”?
...
http://www.news-sentinel.com/apps/pbcs.dll/article?AID=/20131003/NEWS/131009924/0/SEARCH
Truth Reports Elkhart County Nets $4.7 Million from Tax Sale
From the Elkhart Truth:
Of the 584 land certificates that were available at Elkhart County’s annual property tax sale, 234 sold for $4.7 million, which includes back taxes owed to the county and the surplus that bidders offered for the land.
The county administration building in Goshen opened three rooms for the fall sale Wednesday, Oct. 2, which drew more than 150 people, including 91 registered bidders. Before the tax sale started, the county had collected another $1.8 million from property owners who came forward with their delinquent taxes and removed their land from the sale.
“The purpose of the sale is to aid Elkhart County government in retrieving or receiving taxes on properties needed to meet governmental functions in our county and the various units of government, the cities, the towns, the schools, the libraries and that type of thing,” county attorney Gordon Lord told the crowd before the sale started. “It isn’t the county’s desire to sell peoples’ properties to their disadvantage, but the law requires the county to do this and move forward with an auction by soliciting the help of people like you who might bid.”
Landowners who owe back taxes and penalties have up to one year to redeem their properties, Gordon said. After that, the highest bidders at the auction can pursue a title for the land.
Indianapolis-based SRI Inc. led the tax sale. The company conducts tax sales, commissioners’ certificate sales and commissioners’ deed sales for more than 80 counties in Indiana, Michigan and Colorado.
http://www.elkharttruth.com/article/20131003/NEWS01/710039969
Of the 584 land certificates that were available at Elkhart County’s annual property tax sale, 234 sold for $4.7 million, which includes back taxes owed to the county and the surplus that bidders offered for the land.
The county administration building in Goshen opened three rooms for the fall sale Wednesday, Oct. 2, which drew more than 150 people, including 91 registered bidders. Before the tax sale started, the county had collected another $1.8 million from property owners who came forward with their delinquent taxes and removed their land from the sale.
“The purpose of the sale is to aid Elkhart County government in retrieving or receiving taxes on properties needed to meet governmental functions in our county and the various units of government, the cities, the towns, the schools, the libraries and that type of thing,” county attorney Gordon Lord told the crowd before the sale started. “It isn’t the county’s desire to sell peoples’ properties to their disadvantage, but the law requires the county to do this and move forward with an auction by soliciting the help of people like you who might bid.”
Landowners who owe back taxes and penalties have up to one year to redeem their properties, Gordon said. After that, the highest bidders at the auction can pursue a title for the land.
Indianapolis-based SRI Inc. led the tax sale. The company conducts tax sales, commissioners’ certificate sales and commissioners’ deed sales for more than 80 counties in Indiana, Michigan and Colorado.
http://www.elkharttruth.com/article/20131003/NEWS01/710039969
Journal and Courier Reports Tippecanoe County Approves 2014 Budget for Libraries
From the Lafayette Journal and Courier:
Property tax rates will remain almost the same for Tippecanoe County Public Library in 2014.
But the library board will have the funds to undertake some significant maintenance projects at the main branch, at 627 South Street in downtown Lafayette.
The board adopted on Tuesday night a $5.1 million operating budget for next year, roughly $100,000 more than this year’s budget of $5.03 million, said Jos Holman, county librarian.
The estimated 2014 tax rate of .068 cents per $100 assessed property valuation will likely drop closer to the current rate of .0624 cents after the state finalizes the county’s total assessed value in February, Holman said.
“The library rate has not gone past 6 cents since I have been librarian,” Holman noted.
The board also adopted a preliminary bond resolution that will allow the library to continue collecting a tax rate of .0012 cents, which is expected to generate $360,000 next year for the Bond and Interest Redemption Fund.
The fund is allocated for capital projects and has been used to repay the bonds that financed construction of the Klondike branch.
Those bonds will be paid off at the end of the year, freeing up funds to pay for projects at the South Street building that opened in 1989.
...
http://www.jconline.com/apps/pbcs.dll/article?AID=2013310010048
Property tax rates will remain almost the same for Tippecanoe County Public Library in 2014.
But the library board will have the funds to undertake some significant maintenance projects at the main branch, at 627 South Street in downtown Lafayette.
The board adopted on Tuesday night a $5.1 million operating budget for next year, roughly $100,000 more than this year’s budget of $5.03 million, said Jos Holman, county librarian.
The estimated 2014 tax rate of .068 cents per $100 assessed property valuation will likely drop closer to the current rate of .0624 cents after the state finalizes the county’s total assessed value in February, Holman said.
“The library rate has not gone past 6 cents since I have been librarian,” Holman noted.
The board also adopted a preliminary bond resolution that will allow the library to continue collecting a tax rate of .0012 cents, which is expected to generate $360,000 next year for the Bond and Interest Redemption Fund.
The fund is allocated for capital projects and has been used to repay the bonds that financed construction of the Klondike branch.
Those bonds will be paid off at the end of the year, freeing up funds to pay for projects at the South Street building that opened in 1989.
...
http://www.jconline.com/apps/pbcs.dll/article?AID=2013310010048
Journal-Gazette Reports Tax Sale Generates Almost $790,000 for Allen County
From the Fort Wayne Journal-Gazette:
Allen County coffers gained nearly $790,000 in back property taxes during this year’s tax sale.
About 200 people from all over the country showed up Wednesday to bid on 667 properties with $1.7 million in taxes owed, county Treasurer Sue Orth said.
Properties that are at least 18 months delinquent are eligible to be sold at the auction, and properties that did not sell will be deeded to the county, Orth said.
The auction brought in about $6 million in total property sales, county Auditor Tera Klutz said.
This year’s sales of 310 properties fell below the 436 properties sold in 2012, which Klutz said is a good sign.
“Tax sales mean people cannot afford to pay their property taxes,” Klutz said. “If more people can pay taxes and keep their properties, then we have fewer properties in the tax sale, and that’s positive.”
The number of properties in the sale has steadily dropped since 2010, when the county had 1,416 properties for sale.
The $789,390 in back taxes the county will receive is also less than the $1.1 million received at last year’s sale.
...
IBJ Reports Wayzata Offered Incentives for Development of Former Visteon Plant in Connersville
From the Indianapolis Business Journal:
A cabinet company will hire 309 people over five years at a vacant former auto parts plant, ending a six-year search for a major new employer in Connersville, Mayor Leonard Urban said Thursday.
Wayzata Home Products Connersville, a unit of 6 Square Cabinet Co. based in Minnetonka, Minn., will occupy the former Visteon plant that closed in 2007, Urban told the Connersville News-Examiner on Thursday.
The deal was confirmed Friday by company executives at a press conference.
It's the same site where Carbon Motors planned to build high-tech police cars until its plans fell apart last year.
Wayzata will invest about $12.5 million in the 1.8 million-square-foot plant and 183-acre campus, Urban said.
The city about 50 miles east of Indianapolis agreed to sell the plant for $1. Urban said Wayzata will own the building and take over utilities, upkeep and insurance.
Wayzata Home Products Connersville, a unit of 6 Square Cabinet Co. based in Minnetonka, Minn., will occupy the former Visteon plant that closed in 2007, Urban told the Connersville News-Examiner on Thursday.
The deal was confirmed Friday by company executives at a press conference.
It's the same site where Carbon Motors planned to build high-tech police cars until its plans fell apart last year.
Wayzata will invest about $12.5 million in the 1.8 million-square-foot plant and 183-acre campus, Urban said.
The city about 50 miles east of Indianapolis agreed to sell the plant for $1. Urban said Wayzata will own the building and take over utilities, upkeep and insurance.
Founded in 2006, Wayzata Home Products makes semi-custom kitchen cabinets for CliqStudios.com, an online retailer.
The Indiana Economic Development Corp. offered Wayzata Cabinetry LLC up to $2 million in conditional tax credits and up to $200,000 in training grants based on the job-creation plans.
The Indiana Economic Development Corp. offered Wayzata Cabinetry LLC up to $2 million in conditional tax credits and up to $200,000 in training grants based on the job-creation plans.
...
Times Reports State Revenue Continues to Miss Projections
From the Northwest Indiana Times:
State revenue edged closer to meeting expectations in September, but for the sixth time in the eight full months Gov. Mike Pence has been in office it failed to hit the target.
Indiana took in $1.46 billion last month. That's $8 million, or 0.5 percent, below the revenue forecast.
The state's two largest revenue sources, sales and income taxes, had the biggest shortfalls relative to revenue expectations, along with riverboat wagering taxes.
Sales tax revenue totaled $587.6 million, which was $4.7 million or 0.8 percent below forecast. Income taxes totaled $541.4 million. That's $26.8 million, or 4.7 percent, less than expected.
The $23.1 million in state revenue from taxes on bets placed at riverboat casinos was $5.6 million, or 19.5 percent, less than the state expected.
Indiana would have suffered a much larger total revenue miss without the addition of $23.5 million paid in inheritance taxes last month.
State lawmakers this year eliminated the inheritance tax retroactive to Jan. 1, but revenue from prior-year deaths continues to trickle in.
Through the first quarter of the 2014 budget year, Indiana's overall revenue of $3.45 billion is $73.5 million, or 2.1 percent, below expectations.
It's also down $32.7 million, or 0.9 percent, compared to the same period last year.
SBA Publishes September Revenue Information
The monthly revenue report of September 2013 state tax collections was released today.
Results
State general fund revenues for September were $1,460.4 million, $8.0 million (0.5%) below the target based on the most recent forecast updated on April 16, 2013. For the first quarter of FY 2013, total general fund revenues were $3,452.2 million.
Sales tax collections were $4.7 million (0.8%) below forecast for the month and $32.2 million below forecast for the quarter. HEA 1001-2013 redirected 1% of sales tax to the motor vehicle highway fund. Absent that change, quarterly sales tax collections would have only been $14.6 million below forecast.
Individual income tax collections totaled $541.4 million for the month, $26.8 million (4.7%) below forecast but $14.0 million (2.7%) above collections for the same month last year. For the quarter, individual income tax collections were $81.7 million below forecast at $1,166.1 million.
Corporate income tax collections were $3.7 million (1.8%) below forecast for the month, but $10.6 million above target for the quarter.
Gaming revenues were $5.9 million (16.2%) below target for the month and $3.4 million (4.7%) below forecast for the quarter.
Commentary
Through the first quarter of FY 2014, state general fund revenues were $73.5 million (2.1%) below target based on the April 16, 2013 revenue forecast. State general fund revenues were 0.9% lower than in the first quarter of FY 2013.
HEA 1001–2013’s redirection of 1% of sales tax collections to the motor vehicle highway fund reduced general fund collections by $17.6 million for the three months. Absent that change, sales tax collections would have increased by 3.5% over the same period last year. The April 2013 forecast projected sales tax collections to grow by 3.9% for the year.
Individual income tax collections were $81.7 million below target for the quarter and $58.4 million below the first quarter of FY 2013. Transfers made to the LOIT reserve fund in the first quarter totaling $59.3 million resulted in a year-over-year reduction in individual income tax revenue; there were no LOIT reserve transfers in the first quarter of FY 2013. These transfers were made in accordance with the December 2012 revenue forecast. Another factor contributing to the year-over-year reduction in individual income tax revenue is the modest growth in withholdings, which have only grown 0.4% year to date.
Through the first quarter of FY 2014, corporate income tax collections were $10.6 million (4.6%) above the forecast target, but 7.9% below the same period last year.
http://www.in.gov/sba/files/revreport_september2013_commentary.pdf
Results
State general fund revenues for September were $1,460.4 million, $8.0 million (0.5%) below the target based on the most recent forecast updated on April 16, 2013. For the first quarter of FY 2013, total general fund revenues were $3,452.2 million.
Sales tax collections were $4.7 million (0.8%) below forecast for the month and $32.2 million below forecast for the quarter. HEA 1001-2013 redirected 1% of sales tax to the motor vehicle highway fund. Absent that change, quarterly sales tax collections would have only been $14.6 million below forecast.
Individual income tax collections totaled $541.4 million for the month, $26.8 million (4.7%) below forecast but $14.0 million (2.7%) above collections for the same month last year. For the quarter, individual income tax collections were $81.7 million below forecast at $1,166.1 million.
Corporate income tax collections were $3.7 million (1.8%) below forecast for the month, but $10.6 million above target for the quarter.
Gaming revenues were $5.9 million (16.2%) below target for the month and $3.4 million (4.7%) below forecast for the quarter.
Commentary
Through the first quarter of FY 2014, state general fund revenues were $73.5 million (2.1%) below target based on the April 16, 2013 revenue forecast. State general fund revenues were 0.9% lower than in the first quarter of FY 2013.
HEA 1001–2013’s redirection of 1% of sales tax collections to the motor vehicle highway fund reduced general fund collections by $17.6 million for the three months. Absent that change, sales tax collections would have increased by 3.5% over the same period last year. The April 2013 forecast projected sales tax collections to grow by 3.9% for the year.
Individual income tax collections were $81.7 million below target for the quarter and $58.4 million below the first quarter of FY 2013. Transfers made to the LOIT reserve fund in the first quarter totaling $59.3 million resulted in a year-over-year reduction in individual income tax revenue; there were no LOIT reserve transfers in the first quarter of FY 2013. These transfers were made in accordance with the December 2012 revenue forecast. Another factor contributing to the year-over-year reduction in individual income tax revenue is the modest growth in withholdings, which have only grown 0.4% year to date.
Through the first quarter of FY 2014, corporate income tax collections were $10.6 million (4.6%) above the forecast target, but 7.9% below the same period last year.
http://www.in.gov/sba/files/revreport_september2013_commentary.pdf
Thursday, October 3, 2013
Revenue Upholds Audit Conclusion that Selling Information to Indiana Customer is Income-Producing Activity in Indiana
Taxpayer is an out-of-state business which provides information services. Taxpayer provides information to Indiana customers. Taxpayer earns money from its Indiana customers.
Taxpayer filed an amended 2007 income tax return requesting a refund of tax it had previously paid. Taxpayer also submitted an amended 2008 income tax return. Taxpayer explained that the "amended returns are filed 'to correct the sourcing of certain electronic information services revenue for the purposes of the sales factor of the apportionment percentage . . . ."'
The Department of Revenue ("Department") conducted a review of Taxpayer's 2007, 2008, 2009, and 2010 returns. The 2009 and 2010 returns were also reviewed because – according to the Audit Report – "Taxpayer also reported their Indiana sales figures based on [cost of performance] for 2009 and 2010 . . ." and excluded all of these "information services" revenues – received from its Indiana customers – from its Indiana numerator.
The Department disagreed with Taxpayer's method of reporting its Indiana source income, issued an assessment for 2008 through 2010, and denied Taxpayer's refund request attributable to the 2007 and 2008 returns.
...
...
Taxpayer argues that the money earned from its Indiana clients should be sourced to Taxpayer's out-of-state location. As explained by Taxpayer:
A comprehensive review of the direct costs associated with [the] income-producing activity giving rise to these service receipts was performed in order to determine the proportion of the costs performed within and without Indiana. The primary direct costs are (1) staffing which includes editorial, research, analysts, systems and database managers, and (2) Information Technology, which includes computers, servers, software development and maintenance. For the previously referenced information services, the review concluded that the majority of the direct costs are incurred outside the State of Indiana.
The Department's Audit Report disagreed:
Upon audit, we believe that "in [T]axpayer's specialized business, the information [T]axpayer acquires and manages would have no value unless that information was offered to and accepted by an Indiana customer. The money [T]axpayer receives is not received by virtue of the activities which [T]axpayer conducts in [other states]. The money is received because the information is "rendered" to an Indiana customer.
...
...
Taxpayer disputes the Audit's conclusion that Taxpayer's receipts are governed by IC § 6-3-2-2.2(e) because "Taxpayer's receipts clearly were not derived from fiduciary services, and they do not fit with the apparent meaning of 'other services.'"
The audit report pointed out that the rule for determining if "income-producing activity" is performed in Indiana and if the money earned from that activity is included in the numerator of the sales factor is found in 45 IAC 3.1-1-55 . Under that provision, the general rule is that "the income-producing activity" is "deemed performed" and is attributed to "the situs of the real, tangible, and intangible property" or to the place "where the personal services are rendered." However, the term "income producing activity" is defined as "the acts or acts directly engaged in by the taxpayer for the ultimate purpose of obtaining gains or profit."
The Department concludes that the actual "income producing activity" is performed in Indiana because "the acts or acts directly engaged in by the taxpayer for the ultimate purpose of obtaining gains or profit" occur in Indiana. 45 IAC 3.1-1-55 . Taxpayer does not earn money from conducting out-of-state financial research; Taxpayer does not earn money because a specific Indiana customer hires Taxpayer to conduct out-of-state financial research on that particular customer's behalf; Taxpayer earns money because it conducts financial research and then sells the results of that research to Indiana customers. The money earned from those Indiana sales transactions constitutes Indiana source income.
In summary, receipts from any "income producing activity" performed in Indiana are always attributed to Indiana under IC § 6-3-2-2(f)(1); all of the receipts or a principal source of business income are attributed to Indiana when, under the cost of performance rules, the greater proportion of the income producing activity is performed in Indiana under IC § 6-3-2-2(f)(2) and 45 IAC 3.1-1-55 .
The "cost of performance" rules apply in two situations: (1) when attributing all of the receipts for a principal source of business income to Indiana because the greater proportion is performed in Indiana; (2) when income is not a "principal source of business income" and the greater proportion of the income producing activity is performed outside of Indiana. While Taxpayer has service income derived from intangible property, the income is a "principal source of business income" for Taxpayer and is from "income-producing activity" that was performed in Indiana under 45 IAC 3.1-1-55 .
Journal-Gazette Reports Fort Wayne Scours Budget
From the Fort Wayne Journal-Gazette:
Fort Wayne City Council members began working their way through the administration’s proposed $146.8 million spending plan for 2014 Tuesday night, but most of the questions revolved around what didn’t have to be cut.
The city had been looking at a budget deficit of up to $11 million thanks to property tax caps. But a package of tax increases – including a higher local income tax that took effect Tuesday – and budget cuts not only erased the deficit but added about $10 million in new revenue to pay for more police and firefighters, and spending on parks and roads.
Tuesday, council members went over the budgets for the police, fire, parks and public works departments.
With all the changes, including the new income tax money to pay for public safety, the fire department’s budget dropped 8 percent, to $36.7 million. The city also moved $3.5 million in spending from the property tax-supported general fund budget to one paid for by a fee on City Utilities bills to cover the infrastructure costs of fire protection, such as hydrants and oversized water mains.
Before the council approved the income tax hike in June, Councilman John Crawford, R-at large, asked city department heads for a list of the worst-case scenario cuts they would have to make. Tuesday, Crawford asked them to reconsider that list and whether any items on it could still be cut.
Fire Chief Amy Biggs said she still believes the items in question – fire safety inspections and education programs, such as Safety Village – are well worth the investment. Mitch Harper, R-4th, asked whether it would be cheaper for the department to invest in sport utility vehicles to respond to medical calls instead of using expensive fire engines. Biggs said the idea could be explored.
The police department budget calls for a 6.3 percent decrease. With the new recruits not joining the force until the end of 2014, attrition, big changes in compensatory time policies and the public safety tax, the wages and benefits portion of the department’s budget – 82 percent of the total – is set to drop 6.9 percent.
Public Works Director Bob Kennedy said that when the new spending on streets and roads is taken out, the department’s proposed budget is essentially the same as this year’s.
The Parks Department, is getting $3 million in new revenue, but its 2014 budget goes up only $2.5 million.
The council also heard a proposal by Harper and Russ Jehl, R-2nd, for changes to the administration’s proposed capital improvement plan. Previously, five years’ worth of capital spending plans were included in the city’s proposed operating budget, but council members were busy looking at the year they had to vote on. Now, it is being presented as a separate document; administration officials say this allows all the city’s capital spending to be considered at once, ensuring it is coordinated and well-planned.
The proposed 2014 plan calls for $45.3 million in capital spending. But the plan also calls for borrowing $30 million to make up for the backlog of street projects that need to be done. That would let all the work be done in five years, officials said, but would require 10 years of bond payments – plus interest costs. Harper and Jehl say that by stretching the work over six years and limiting spending in other areas, the work can be done without borrowing.
http://journalgazette.net/article/20131002/LOCAL/310029970/0/SEARCH
Fort Wayne City Council members began working their way through the administration’s proposed $146.8 million spending plan for 2014 Tuesday night, but most of the questions revolved around what didn’t have to be cut.
The city had been looking at a budget deficit of up to $11 million thanks to property tax caps. But a package of tax increases – including a higher local income tax that took effect Tuesday – and budget cuts not only erased the deficit but added about $10 million in new revenue to pay for more police and firefighters, and spending on parks and roads.
Tuesday, council members went over the budgets for the police, fire, parks and public works departments.
With all the changes, including the new income tax money to pay for public safety, the fire department’s budget dropped 8 percent, to $36.7 million. The city also moved $3.5 million in spending from the property tax-supported general fund budget to one paid for by a fee on City Utilities bills to cover the infrastructure costs of fire protection, such as hydrants and oversized water mains.
Before the council approved the income tax hike in June, Councilman John Crawford, R-at large, asked city department heads for a list of the worst-case scenario cuts they would have to make. Tuesday, Crawford asked them to reconsider that list and whether any items on it could still be cut.
Fire Chief Amy Biggs said she still believes the items in question – fire safety inspections and education programs, such as Safety Village – are well worth the investment. Mitch Harper, R-4th, asked whether it would be cheaper for the department to invest in sport utility vehicles to respond to medical calls instead of using expensive fire engines. Biggs said the idea could be explored.
The police department budget calls for a 6.3 percent decrease. With the new recruits not joining the force until the end of 2014, attrition, big changes in compensatory time policies and the public safety tax, the wages and benefits portion of the department’s budget – 82 percent of the total – is set to drop 6.9 percent.
Public Works Director Bob Kennedy said that when the new spending on streets and roads is taken out, the department’s proposed budget is essentially the same as this year’s.
The Parks Department, is getting $3 million in new revenue, but its 2014 budget goes up only $2.5 million.
The council also heard a proposal by Harper and Russ Jehl, R-2nd, for changes to the administration’s proposed capital improvement plan. Previously, five years’ worth of capital spending plans were included in the city’s proposed operating budget, but council members were busy looking at the year they had to vote on. Now, it is being presented as a separate document; administration officials say this allows all the city’s capital spending to be considered at once, ensuring it is coordinated and well-planned.
The proposed 2014 plan calls for $45.3 million in capital spending. But the plan also calls for borrowing $30 million to make up for the backlog of street projects that need to be done. That would let all the work be done in five years, officials said, but would require 10 years of bond payments – plus interest costs. Harper and Jehl say that by stretching the work over six years and limiting spending in other areas, the work can be done without borrowing.
http://journalgazette.net/article/20131002/LOCAL/310029970/0/SEARCH
Times Reports State Audit Urges Gary to Tidy up its Fiscal Books
From the Northwest Indiana Times:
State auditors cited the city of Gary for sloppy bookkeeping and fiscal mismanagement Wednesday in an 88-page State Board of Accounts examination of last year's budget.
The audit was replete with complaints that city departments failed to pay bills on time, reported money transfers that ran up multi-million dollar shortfalls and failed to comply with federal grant reporting requirements in a number of social programs.
M. Celita Green, director of city finance and Arlene Colvin, director of the Gary division of community development, wrote to state officials they are taking corrective action. The city has hired Crowe Horwath, a national consulting firm, to assist in this.
City officials started 2012 with a $4.9 million deficit in the general fund that grew to more than $6.8 million by the end of last year, according to the report.
The audit states several of the funds have been overdrawn continuously for four or more years and warns that routinely overdrawn funds could be an indicator of serious financial problems, which should be investigated.
Gary has been in financial distress for years because of stated-mandated property tax collection cuts. The city has rolled over budget deficits in the hope of future relief, such as the new county income tax promising $9 million in additional funds next year.
http://www.nwitimes.com/news/local/lake/gary/state-audit-urges-gary-to-tidy-up-its-fiscal-books/article_f2115595-f3e8-59a7-a9ae-29fd4a3c37ca.html
State auditors cited the city of Gary for sloppy bookkeeping and fiscal mismanagement Wednesday in an 88-page State Board of Accounts examination of last year's budget.
The audit was replete with complaints that city departments failed to pay bills on time, reported money transfers that ran up multi-million dollar shortfalls and failed to comply with federal grant reporting requirements in a number of social programs.
M. Celita Green, director of city finance and Arlene Colvin, director of the Gary division of community development, wrote to state officials they are taking corrective action. The city has hired Crowe Horwath, a national consulting firm, to assist in this.
City officials started 2012 with a $4.9 million deficit in the general fund that grew to more than $6.8 million by the end of last year, according to the report.
The audit states several of the funds have been overdrawn continuously for four or more years and warns that routinely overdrawn funds could be an indicator of serious financial problems, which should be investigated.
Gary has been in financial distress for years because of stated-mandated property tax collection cuts. The city has rolled over budget deficits in the hope of future relief, such as the new county income tax promising $9 million in additional funds next year.
http://www.nwitimes.com/news/local/lake/gary/state-audit-urges-gary-to-tidy-up-its-fiscal-books/article_f2115595-f3e8-59a7-a9ae-29fd4a3c37ca.html
Truth Reports Elkhart Set up 2014 Spending Plan
From the Elkhart Truth:
The last planning session for Elkhart County’s 2014 budget has come to a close.
The Elkhart County Council voted unanimously Wednesday, Oct. 2, to approve a spending plan for the upcoming year that challenged the board to fix a $7.6 million shortfall.
Here is a rundown of the largest adjustments that helped the county council fill the gap:
• The Elkhart County Sheriff’s Department will pay $2.6 million in medical expenses using the jail county adjusted gross income tax, or CAGIT, fund. The county is expected to receive excess funds — $9.45 million total — from the jail CAGIT in 2014. The county typically uses $6.3 million from the account annually to pay for bonds linked to the jail’s construction. The council will make an appropriation next year from the sheriff’s department’s pension fund in the amount of $376,100, for retirement payments.
• The county council voted to plug a one-time infusion of $1 million into the budget generated from the county landfill’s tipping fees. The council also agreed to amend the landfill ordinance to set aside up to $250,000 from tipping fees each year for the general fund.
• The county council decided to use $1 million from the Economic Development Income Tax, or EDIT, fund to balance the budget. The EDIT account is used throughout the year to pay for road projects.
• The county council reduced the budget by $890,300 for new voting equipment with a plan to research leasing options for the machines.
• The county council saved almost $170,000 by keeping seven county government employee positions unfunded.
• Full-time county employees will be eligible for a pay raise of up to 3 percent of their annual salary in 2014. The raises will be at the discretion of department heads based on each employee’s job performance.
• The county’s contribution to employee health savings accounts will increase from $750 annually to $1,125.
http://www.elkharttruth.com/article/20131002/NEWS01/710029890
Times Reports Jerome Prince will Run for Assessor in 2014 Democratic Primary
From the
Northwest Indiana Times:
Lake County Councilman Jerome Prince, D-Gary, announced Tuesday he will run for county assessor in the 2014 Democratic primary.
Prince, 49, is a 1982 graduate of Lew Wallace High School. He has served in the Marine Corps, worked in real estate sales, served as a deputy Calumet Township assessor and eight years on the Gary City Council, before becoming a county councilman in 2008.
He said he has been involved in tax assessment for 19 years and expects to soon attain a state Level 3 assessor/appraiser certification.
He said in a written statement, he will introduce "the latest technologies available to efficiently and accurately determine (tax) values."
Lake County Councilman Jerome Prince, D-Gary, announced Tuesday he will run for county assessor in the 2014 Democratic primary.
Prince, 49, is a 1982 graduate of Lew Wallace High School. He has served in the Marine Corps, worked in real estate sales, served as a deputy Calumet Township assessor and eight years on the Gary City Council, before becoming a county councilman in 2008.
He said he has been involved in tax assessment for 19 years and expects to soon attain a state Level 3 assessor/appraiser certification.
He said in a written statement, he will introduce "the latest technologies available to efficiently and accurately determine (tax) values."
DLGF Publishes Form Contracts for Annual Adjustments and Cyclical Reassessment
MEMORANDUM
TO: All County Assessors
FROM: Micah G. Vincent, Commissioner
RE: Form Contracts for Annual Adjustments and Cyclical Reassessment
DATE: October 2, 2013
The Department of Local Government Finance (“Department”) has recently revised the form contract for annual adjustment (trending) services and has introduced a new form contract for cyclical reassessment services, as well as a new form contract for combined annual adjustment and cyclical reassessment services.
These new form contracts, which are posted at http://www.in.gov/dlgf/6854.htm, are available exclusively as “fillable” PDFs. The appropriate county officials and contractor representatives must type the requisite information into the fields, then print out the contract and personally sign it at a properly-advertised meeting. The original contract with the parties’ signatures should be mailed or hand-delivered to the Department. It is NOT necessary to overnight the contract to the Department as this only adds to the expenses charged by the contractors to the counties. Do NOT staple the contract or put it into any kind of binding. The Department will retain the original copy and will mail one photocopy to the county and one to the contractor. DoNOT send more than one copy of the contract to the Department.
PLEASE NOTE THAT PER IC 6-1.1-4-20, A CONTRACT FOR CYCLICAL REASSESSMENT SERVICES MAY NOT BE ENTERED INTO BY ANY PARTY UNTIL AFTER JANUARY 1, 2014. Counties are not prohibited from accepting bids for cyclical reassessment work prior to January 1, 2014. However, if the Department receives a cyclical reassessment contract entered into before January 1, 2014, it will be rejected outright.
A county assessor may not use the services of a professional appraiser for assessment or reassessment purposes without a written contract to which the Department is a signatory. These form contracts have been prescribed by the Department and approved by the Office of the Attorney General. The Department will NOT accept or approve any modifications to the prescribed form contracts. The form contracts have been designed as “fillable” PDFs to prevent any alterations from being made. Counties and contractors may NOT attempt to copy and paste from the form contracts, nor may they manually copy the form contracts. Should the Department receive any contracts that differ from the prescribed versions and/or that are not the “fillable” PDF versions, they will be rejected outright. Again, each form contract is to be used as-is.
The form contract for assessment software is forthcoming.
With regard to amending contracts, if a contract is for a specific year, it cannot be amended to cover additional years to circumvent bidding out the contract. Moreover, a contract for one service cannot be amended to include unrelated services. Counties should keep these factors in mind when advertising bids and entering into contracts. The Department will strictly enforce these policies and will reject any non-compliant addendum.
Questions may be directed to Staff Attorney Mike Duffy at 317-233-9219 or mduffy@dlgf.in.gov.
DLGF Publishes Materials from Association of Indiana County's Annual Conference and Fall Township Trustee's Meeting
- Township Trustees Fall Meeting - Dan Jones
- Property Tax Caps - Five Years After Tax Caps - Courtney Schaafsma
http://www.in.gov/dlgf/2444.htm
Board Finds Taxpayer's Purchase Price Established Property's Value and Respondent Failed to Rebut
...
There is no dispute about the
fact that the Petitioner bought the subject property for $740,000 in June 2007.
The sale of a property is often the best evidence of the property’s market
value-in-use. See Hubler Realty Co. v. Hendricks County Assessor, 938
N.E.2d 311, 315 (Ind. Tax Ct.2010) (finding that the Board’s determination
assigning greater weight to the property’s purchase price than its appraised
value was proper and supported by evidence). In this case, the purchase occurred
on or about June 26, 2007, which is only six months before the January 1, 2008
valuation date for the 2009 assessment. Thus, the Board finds that the Petitioner’s
purchase of the property in 2007 is sufficient to establish a prima facie case
that the property was over-valued for the assessment as of March 1, 2009.
d. On the other hand, the 2007
purchase occurred three years prior to March 1, 2010. Nevertheless, the fact
that the PTABOA determined that the assessed values for 2009 and 2010 were the
same is an indication that market values remained stable and, therefore, no
change would be necessary for the 2010 assessment date. Moreover, the 2012
assessment for the subject property was $780,100, which is relatively close to
the purchase price. Thus, the Board finds that the Petitioner’s purchase price
for the property is sufficient to establish a prima facie case that the property
was over-valued for the 2010 assessment. Consequently, the Board must consider
how effectively the Respondent rebutted or impeached the Petitioner’s case.
e. The Respondent offered a list
of office properties that sold in the state of Indiana between January 1, 2008
and January 1, 2011, and calculated the median price per square foot and the
average price per square foot. In order to compare sales effectively, however,
the proponent must establish the comparability of the properties being
examined. Simple conclusory statements that a property is “similar” or
“comparable” are not probative evidence. Long, 821 N.E.2d at 470. The
Respondent needed to establish the characteristics of the Petitioner’s property,
how those characteristics compared to those of the purportedly comparable
properties, and how any differences affected the market value-in-use. Id.
at 471.
f. The Respondent offered no
evidence or analysis of the specific features of the purportedly comparable
office buildings. Similarly, the Respondent offered no evidence or analysis
about how any differences affected the relative values of the office buildings.
Finally, the Respondent failed to provide a meaningful comparison of the
properties. The Respondent merely calculated the median prices per square foot
and the average prices per square foot for office properties that sold in
Indiana. Because the Respondent failed to identify or value the differences between
the properties, the other sales have no probative value. Fidelity Federal
Savings & Loan v. Jennings County Assessor, 836 N.E.2d 1075, 1082 (Ind.
Tax Ct. 2005) (“the Court has frequently reminded taxpayers that statements
that another property ‘is similar’ or ‘is comparable’ are nothing more than
conclusions and conclusory statements do not constitute probative evidence. Rather,
when challenging an assessment on the basis that the comparable property has
been treated differently, the taxpayer must provide specific reasons as to why it
believes the property is comparable. These standards are no less applicable
to assessing officials.” (citations omitted and emphasis added)).
g. The Respondent also presented
a summary of the case. The summary professed to address the value of the
subject property based on the three approaches to value, but the Respondent
only calculated a value based on the cost approach. The Respondent admitted,
however, that the replacement/reproduction cost of the subject building would
be higher than the sale amount without adding the cost of the land. The
Respondent did not develop values using the income approach or the sales
comparison approach.
h. The Respondent claims that it
did not appear that this investment property was really exposed to a regional
or national market but just the local market. According to the Respondent, this
property would have definitely been marketable on a regional basis and
marketing on a national level would have been advantageous. The Respondent seems
to imply the property would have sold for more had it been marketed to a
broader base of investors. Again, this is merely speculation and does nothing
to effectively establish the value of the property.
i. The Respondent presented MLS
listing information for the subject property as well. The listing information,
dated July 16, 2010, shows the subject property as listed for $999,900.
Nevertheless, a listing for a property that still remains unsold after three
years is not a credible indication of value.
Oral Argument in Tax Court in Simon DeBartolo Group Appeal Posted
| THU, OCT 3, 2013 at 10:00 AM Rescheduled from THU, AUG 29, 2013 at 10:00 AM | Marion County Assessor v. Simon DeBartolo Group, L.P., et. al. | Tax | Marion |
http://mycourts.in.gov/arguments/default.aspx?court=tax
Wednesday, October 2, 2013
News-Sentinel Reports Fort Wayne Councilmen Propose 'Pay as You Go' Alternative to Street Repair
From the Fort Wayne News-Sentinel:
Two city councilmen are challenging Mayor Tom Henry's plan to eliminate a backlog of street repairs and other capital improvements within five years by borrowing $30 million.
Mitch Harper, R-4th, and Russ Jehl, R-2nd, are expected to present a “pay-as-you-go” alternative at Tuesday's meeting they say would save taxpayers millions of dollars in interest payments and limit city debt while adding only one year to the improvement schedule.
“After five years (under the city's proposal), there would still be $17 million left on the bond,” said Jehl, bristling at the prospect of taxpayers having to pay interest years after the projects have been completed.
Harper, meanwhile, said City Council's July decision to increase local income taxes by 0.35 percent created an “almost irresistible” temptation within the Henry administration to spend the “greater pot of money.”
In the four-year capital improvement plan outlined by Controller Pat Roller last month, issuance of the $30 million bond and another $21 million in cash payments would allow the city to make improvements that had been deferred because of a lack of funding. At the time, Roller estimated interest on the bond would be about 3 percent. Jehl estimated that interest would total about $4.8 million.
Instead, he and Harper would address the backlog by 2019 through the use of additional $3.5 million in economic development income taxes, limiting discretionary spending on planning and community development and by using money that would have gone to bond payments to make repairs. The plan would put $3 million more into street repairs in 2014 than the city has proposed, Harper and Jehl said.
Avoiding additional debt is important, they said, because even in the supposedly austere year of 2012 city debt increased 9 percent to $619 million.
...
http://www.news-sentinel.com/apps/pbcs.dll/article?AID=/20131001/NEWS/131009980/0/SEARCH
Two city councilmen are challenging Mayor Tom Henry's plan to eliminate a backlog of street repairs and other capital improvements within five years by borrowing $30 million.
Mitch Harper, R-4th, and Russ Jehl, R-2nd, are expected to present a “pay-as-you-go” alternative at Tuesday's meeting they say would save taxpayers millions of dollars in interest payments and limit city debt while adding only one year to the improvement schedule.
“After five years (under the city's proposal), there would still be $17 million left on the bond,” said Jehl, bristling at the prospect of taxpayers having to pay interest years after the projects have been completed.
Harper, meanwhile, said City Council's July decision to increase local income taxes by 0.35 percent created an “almost irresistible” temptation within the Henry administration to spend the “greater pot of money.”
In the four-year capital improvement plan outlined by Controller Pat Roller last month, issuance of the $30 million bond and another $21 million in cash payments would allow the city to make improvements that had been deferred because of a lack of funding. At the time, Roller estimated interest on the bond would be about 3 percent. Jehl estimated that interest would total about $4.8 million.
Instead, he and Harper would address the backlog by 2019 through the use of additional $3.5 million in economic development income taxes, limiting discretionary spending on planning and community development and by using money that would have gone to bond payments to make repairs. The plan would put $3 million more into street repairs in 2014 than the city has proposed, Harper and Jehl said.
Avoiding additional debt is important, they said, because even in the supposedly austere year of 2012 city debt increased 9 percent to $619 million.
...
http://www.news-sentinel.com/apps/pbcs.dll/article?AID=/20131001/NEWS/131009980/0/SEARCH
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