Wednesday, August 6, 2014
The End...
I really appreciate all the readers over the year, but other commitments have become too burdensome. Therefore, I am reluctantly ending the Indiana Tax Reporter. I wish all my fellow tax wonks best of luck in the future and know that I will miss my daily tax fix!
Board Finds Taxpayer's 4-H Project Fails to Make Property "Agricultural"
Excerpts of the Board's Determination follow:
22. In this case, the Petitioners contend that a small
portion of the subject property’s land should be classified as agricultural
rather than residential. The statutory and regulatory scheme for assessing
agricultural land requires the Board to treat challenges to those assessments
differently than other assessment challenges. Indeed, the Indiana General Assembly
directed the DLGF to establish rules for determining the true tax value of agricultural
land. Ind. Code § 6-1.1-4-13(b). The DLGF, in turn, established a base rate to
be used in assessing agricultural land across the State of Indiana.
23. Indiana Code § 6-1.1-4-13 states, however, that “[i]n
assessing or reassessing land, the land shall be assessed as agricultural only
when it is devoted to agricultural use.” Ind. Code § 6-1.1-4-13(a) (emphasis
added). The word “devote” means “to attach the attention or center of
activities of (oneself) wholly or chiefly on a specified object, field, or
objective.” WEBSTER’S THIRD NEW INTERNATIONAL UNABRIDGED DICTIONARY AT 620.
24. Here, the Petitioners’ walking and exercising of animals
raised for 4-H fair projects clearly fall short of a devotion to agricultural
use. They failed to offer any evidence that their livelihood was in any way
dependent on farming or the agricultural use of the subject property. The
Petitioners also failed to offer any evidence as to how much time was devoted
to walking and exercising the animals on the land. Further, they failed to offer
evidence that their activities were “wholly or chiefly” attached to that field.
The Petitioners even acknowledged that the livestock was not raised on this
property; this property was only used to walk and exercise a few animals. The
Board therefore finds that the Petitioners failed to raise a prima facie case
that the property’s classification as residential excess acreage is in error.
Monday, August 4, 2014
Board Finds One Appeal Untimely and One Not Yet Before it; Taxpayer Failed to Proved Assessment Incorrect in Remaining Appeal
Excerpts of the Board's Determination follow:
34. For assessment year 2009, Petitioner filed his Form 130
with the PTABOA on February 20, 2009. There is nothing in the record to
indicate the PTABOA acted on his request for review of the 2009 assessment. If
a PTABOA does not act on a petition for review of assessment by the local
assessing official within 180 days, the taxpayer can file his petition directly
with the Board. I.C. § 6-1.1-15-1. The Form 131 filed with the Board listed the
2009 assessment of the subject property as being under appeal. The Board finds
that since the PTABOA failed to timely respond to the Form 130 filed by Petitioner
on February 20, 2009, the 2009 assessment of the subject property is properly
before the Board.
35. For assessment year 2010, Petitioner filed his Form 131
on April 16, 2012, 59 days after the Notification of Final Assessment
Determination was issued on February 17, 2012. In order to obtain a review by
the Board, a party must file their Form 131 not later than forty-five days
after the date of the notice of the determination by the PTABOA. Petitioner
testified that he might have been out of the country or undergoing a medical procedure
at that time that might have delayed him from filing the petition earlier. Petitioner
offered no documentation or specific testimony to that effect. Petitioner’s appeal
of the 2010 assessment is dismissed as untimely.
36. For assessment year 2011, Petitioner filed his Form 131
with the Board prior to filing his Form 130 with the PTABOA. Because he failed
to file a separate petition for that tax year, Petitioner’s appeal is not
properly before the Board. However, as more than 180 days have passed since
Petitioner filed his Form 130 for 2011, and the PTABOA has not taken action,
Petitioner may file a separate petition for 2011.
37. Thus, only the 2009 assessment is before the Board. Per
the Property Record Card, in 2009 the subject property was assessed at $958,000
for the improvements and $63,200 for the land for a total assessment of
$1,021,200. Resp’t Ex. 3.
38. An appraisal completed in conformance with the Uniform
Standards of Professional Appraisal Practice is often the most effective method
to rebut the presumption that an assessment is correct. O’Donnell v. Dep’t of
Local Gov’t Fin. 854 N.E.2d 90, 94 (Ind. Tax Ct. 2006); Kooshtard Property VI,
LLC v. White River Township Assessor, 836 N.E.2d 501, 506 N.6 (Ind. Tax Court
2005). Petitioner’s appraiser offered no opinion of value and no opinion of
completeness for the property in 2009. Krause testimony.
39. Petitioner presented an analysis of three properties
offered as comparable to the subject property. Pet’r Ex. A-1. The grid shows
the subject property is .14 acres in size and the properties listed as
comparable range in size from .31 acres to 7.32 acres. Petitioner’s comparison
of the subject property with the comparable properties offered lacks probative
value. A party offering such evidence must show that the properties are generally
comparable to each other, and also must show how any relevant differences
affect the relative values. See Long,
Supra 470-471 (holding that, in applying the sales-comparison approach, the
taxpayers must explain how any differences between the properties affect the
properties’ relative market value-in-use). Petitioner failed to explain or
account for any differences in the properties, and how those differences affect
the respective values.
40. Petitioner also presented a document titled “Calculation
of Land Value for Dixie Way North Area” that ostensibly compares the value of
the subject property’s land with the land values of three motels ranging in
size from four to eight acres and ranging in value from $91,800 to $321,600.
Pet’r Ex. B. Again, Petitioner failed to explain or account for any differences
in the parcels and how those differences compare with the land of the subject
property. See Long, Supra 470-471. Petitioner’s contentions as to the value of the
subject property consist largely of conclusory statements. Conclusory
statements do not constitute probative evidence. Whitley Products, Inc. v.
State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1119 (Ind. Tax Ct. 1998. Petitioner
has failed to present a prima facie case for reduction of the assessment.
41. Respondent conceded at the hearing that the improvements
to the subject property were only 60% complete rather than 100% complete as
Respondent had previously determined. Respondent also testified that, using the
appropriate tax tables, the total cost of the improvements to Petitioner’s
property is $903,833. Respondent calculates that 60% of $903,833 results in an
assessment of $543,300 for the improvements for 2009. Mandrici testimony.
Friday, August 1, 2014
Three Cases Filed in Tax Court in July
| 07/17/14 | Princess City Plaza LLC v. St. Joseph Co. Assessor | N/A | 71T10-1406-TA-49 |
| 07/17/14 | Indiana Finance Financial Corp. v. Ind. Dep't of State Revenue | N/A | 49T10-1407-TA-47 |
| 07/17/14 | Indiana Finance Co. v. Ind. Dep't of State Revenue | N/A | 49T10-1407-TA-48 |
http://www.in.gov/judiciary/opinions/taxsumm.html
Revenue Finds Taxpayer Failed to Prove Corporation's Payments were not Distributions
Excerpts of Revenue's Determination follow:
Taxpayers, husband and wife, are two shareholders of an Indiana S
corporation ("Corporation"). Corporation's gain or loss passes
through to Taxpayers, and Taxpayers report the income or deduct the loss in
their federal and Indiana individual income tax returns according to I.R.C. §
1366 and IC § 6-3-1-3.5.
In 2013, the Indiana Department of Revenue
("Department") conducted a Sales/Use Tax audit of Corporation's
business records. Pursuant to the audit, the Department found that Corporation
made various payments to Taxpayers to cover Taxpayers' personal expenditures.
Thus, the Department conducted a separate investigation concerning Taxpayers'
individual income tax on those specific payments. As a result of the
investigation, the Department determined that Corporation made additional
distributions to Taxpayers. Those additional distributions reduced Taxpayers'
stock basis in Corporation below zero, and, as a result, created additional
taxable income that was not reported on Taxpayers' individual income tax returns
for the tax years 2009 and 2010 ("Tax Years at Issue"). The
Department thus assessed Taxpayers additional income tax, interest, negligence
penalty and underpayment penalty.
…
Taxpayers, to the contrary, claimed that the Department's
assessments were overstated.
…
In this instance, Taxpayers asserted that the Department's
assessments were overstated because not all the listed payments were paid to
Taxpayers for their personal expenses. In addition to copies of Corporation's
unaudited qualified Accountant's Compilation Report for the Tax Years at issue
("Report"), Taxpayers submitted copies of Corporation's bank
statements for its Money Market Account 101XXXXX for the Tax Years at Issue to
support their protest.
Upon reviewing Taxpayers' supporting documentation, however, the
Department is not able to agree that the Department's assessments were
overstated. Specifically, in this instance, Taxpayers stated that since
Corporation "is a small family-owned business, the owners [i.e.,
Taxpayers] put in money and take out money as needed all the time." Thus,
there is no dispute that, during the Tax Years at Issue, Corporation made
various distributions to Taxpayers when Taxpayers took out money from
Corporation for their personal expenses. Also, there is no dispute as to the
shareholder's basis established in Corporation's 1120S returns for the Tax
Years at Issue for each of Corporation's shareholders, including Taxpayers.
Rather, the Department's investigation report listed various payments made from
Corporation to Taxpayers for their personal expenses, and determined that these
payments, as additional distributions to Taxpayers, reduced both Taxpayers'
basis in Corporation below zero. As a result, the Department's investigation
report concluded that these distributions created additional taxable income to
Taxpayers because the basis could not be below zero.
In this instance, Taxpayers made various statements disputing the
Department's assessments in their July 23, 2013, protest letters. For example,
the Department determined that Corporation made a distribution to Taxpayers, in
the amount of $19,302.24, in December 2009. Taxpayers asserted that "Accounts
Receivable Shareholders – 55[percent] shareholder percentage in the amount of
$19,302.24 was paid back in the tax year 2010." However, Taxpayers'
documentation failed to demonstrate that this payment was not distribution to
Taxpayers for the Tax Years at Issue. Specifically, Corporation's unaudited
qualified Report only contained Corporation's "Year-End Financial
Statements," which included summaries of "Statement of Assets,
Liabilities, & Equity," "Statement of Related Earnings," and
"Statement of Revenue and Expenses" for the Tax Years at Issue.
Corporation's Report further stated for the accountant who compiled the
information for Corporation, a disclaimer, that he has "not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or provide any assurance about whether the financial statements are
in accordance with the income tax basis of accounting." Additionally,
Corporation's monthly bank statements simply contained monthly summaries of
check deposits, withdraws, and account balances concerning its Money Market
Account 101XXXXX. Taxpayers' documentation neither explained which of
Corporation's payment or payments were paid to Taxpayers for their personal
expenses, nor those payments which would not have been considered as
distributions to Taxpayers.
As mentioned earlier, Taxpayers bear the burden of proving that
the Department's assessments are wrong and are required to provide
documentation explaining and supporting their protest. Given the totality of
the circumstances, in the absence of other supporting documentation, the
Department is not able to agree that Taxpayers meet their burden of proof
demonstrating that the Department's assessments were not correct.
In short, Taxpayers' protest is respectfully denied.
...
IBJ Reports State Eases into Rollout of Software in Tax Fix
From the Indianapolis Business Journal:
The Indiana Department of Revenue is five to seven years from replacing the 1990s software that processes the bulk of the state’s tax dollars and that auditors cited in the wake of massive accounting errors.
Auditors who reviewed the DOR in 2012 said antiquated, piecemeal technology contributed to the two mistakes, together worth a half billion dollars, and recommended that the state adopt an integrated tax system. Revenue Commissioner Mike Alley said it’s too risky to move more than $17 billion in tax collections to a single system in one leap.
“If something goes awry, all [of a] sudden you’ve lost the capability of collecting revenue for the state of Indiana,” Alley said.
Auditors who reviewed the DOR in 2012 said antiquated, piecemeal technology contributed to the two mistakes, together worth a half billion dollars, and recommended that the state adopt an integrated tax system. Revenue Commissioner Mike Alley said it’s too risky to move more than $17 billion in tax collections to a single system in one leap.
“If something goes awry, all [of a] sudden you’ve lost the capability of collecting revenue for the state of Indiana,” Alley said.
After spending two years focused on people and processes, Alley said, the department is “dipping a toe” into new software with a small pilot program this year. The DOR will use software by Massachusetts-based Revenue Sources Inc., which specializes in state governments, to handle three specialty taxes. Revenue Sources Inc. is also providing audit-management software, and the department expects to spend a total of $6.56 million.
If the company’s product works well, the DOR might choose to buy it, or some other off-the-shelf software, to handle everything. Next year, the department will conduct a study of its options, which could also include a custom-built system.
A banker appointed by former Gov. Mitch Daniels in the wake of the accounting crisis, Alley hopes that when the time comes for a major software purchase, the DOR will have generated enough additional revenue to pay for it.
Equipped with better report-generating tools, the DOR’s delinquent-accounts team boosted collections of overdue taxes 48 percent, to $260.9 million, in the fiscal year that ended June 30
If the company’s product works well, the DOR might choose to buy it, or some other off-the-shelf software, to handle everything. Next year, the department will conduct a study of its options, which could also include a custom-built system.
A banker appointed by former Gov. Mitch Daniels in the wake of the accounting crisis, Alley hopes that when the time comes for a major software purchase, the DOR will have generated enough additional revenue to pay for it.
Equipped with better report-generating tools, the DOR’s delinquent-accounts team boosted collections of overdue taxes 48 percent, to $260.9 million, in the fiscal year that ended June 30
...
Revenue Withdraws Notice of Intent to Adopt Rule Concerning Death Taxes
TITLE 45 DEPARTMENT OF STATE REVENUE
LSA Document #14-144, posted at 20140514-IR-045140144NIA , is withdrawn.
Parties Agreed on Property's Value, but Board Makes No Finding On Whether Value Rolls Forward As No Appeal on Later Years was Before it
Excerpts of the Board's Determination follow:
A. Summary of Rosetta’s case
13. The subject property contains a building that was
constructed as a freight terminal in 1992. The property sold for $290,000 on
May 17, 2010.
14. Rosetta hired Michelle Farrington, an Indiana Licensed
General Appraiser, to appraise the property in connection with Rosetta’s
appeal. Farrington used the sales-comparison and income approaches to analyze
the property’s value. Based on those approaches, she valued the property at
$500,000 as of January 1, 2007. Farrington certified that she prepared her
appraisal in conformance with the Uniform Standards of Professional Appraisal
Practice. Farrington testimony; Pet’r Ex. 6.4
15. Rosetta asked for an assessment of $500,000 in
accordance with Farrington’s appraisal. Rosetta further argued that the
$500,000 assessment should carry forward to 2009 and 2010, because the Assessor
had assessed the property for the same amount ($1,014,400) in all three years.
For support, Rosetta pointed to Ind. Code § 6-1.1-15-1(e), which provides, in
relevant part: “A change in an assessment made as a result of a notice for review
filed by a taxpayer… remains in effect from the assessment date for which the change
is made until the next assessment date for which the assessment is changed
under this article.”
16. The Assessor is wrong in claiming that Rosetta’s
voluntary withdrawal of its appeal for 2009 operated as a waiver of its claim
that any change stemming from this appeal should carry forward to 2009 and
2010. Rosetta’s withdrawal of its Form 131 petition for 2009 is irrelevant to
the question of whether a decision by the Board reducing the 2008 assessment
carries forward. Bickel argument.
B. Summary of the Assessor’s case
17. Based on Farrington’s appraisal, the Assessor agrees
that the subject property’s assessment for 2008 should be reduced to $500,000.
Agostino argument.
18. The Assessor, however, disagrees with Rosetta’s claim
that the change for 2008 carries forward to 2009 and 2010. Rosetta withdrew its
2009 appeal, explaining: “we have since learned that the appeal was intended to
be only for the 2008 assessment….” Bd. Ex. A. The doctrines of waiver and
estoppel therefore preclude Rosetta from claiming that the reduction for 2008
should carry forward. Agostino argument.
Discussion
19. Through Farrington’s appraisal, Rosetta offered
probative evidence that the subject property’s true tax value for the 2008
assessment was $500,000. The Assessor agreed. Rosetta is therefore entitled to
have the property’s March 1, 2008 assessment reduced to $500,000.
20. Although Rosetta argued that the 2008 assessment should
carry forward to 2009 and 2010, those assessments are not before the Board in
this appeal. The Board therefore makes no finding on that issue.
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.
...
http://www.indystar.com/story/news/crime/2014/07/30/ballard-announce-crime-plan/13354545/
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.
...
http://www.indystar.com/story/news/crime/2014/07/30/ballard-announce-crime-plan/13354545/
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
MEMORANDUM
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
IMPORTANT NOTICE
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.
ADDITIONAL APPROPRIATIONS
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.
PROCEDURES
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.
STEP 1
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.)
STEP 2
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).
STEP 3
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.
STEP 4
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.
STEP 5
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.
SUBMITTAL
Submit the Certified Copy, financial information, revised Form 2s, if applicable, and any other relevant information to:
DEPARTMENT OF LOCAL GOVERNMENT FINANCE
ATTN: BUDGET DIVISION—ADDITIONAL APPROPRIATIONS
IGCN ROOM N1058 / 100 N. SENATE AVE.
INDIANAPOLIS, IN 46204
or fax to: (317) 974-1629
TRANSFER OF APPROPRIATIONS
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.)
TRANSFER OF FUNDS TO AND FROM THE RAINY DAY FUND
Under IC 36-1-8-5.1, a county, city, or town may at any time, by ordinance or resolution, transfer to its General Fund or any other appropriated funds money that has been deposited in its Rainy Day Fund.
Likewise, under IC 6-3.5-7-12.7, a county, city, or town may at any time, by ordinance or resolution, transfer to its General Fund or any other appropriated funds money that has been deposited in the Economic Development Income Tax Fund (“EDIT”) established by the county, city, or town under section IC 6-3.5-7-13.1.
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.
REDUCTIONS
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.
CONTACT INFORMATION
Questions should be directed to Dan Jones, Assistant Budget Director, at (317) 232-0651 ordjones@dlgf.in.gov.
Guide to Completing the Certified Copy of Additional Appropriation Form
***IMPORTANT NOTE ***
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
SUBJECT: Gasoline Use Tax
SUMMARY
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.
INTRODUCTION
DEFINITIONS
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.
CALCULATING THE MONTHLY GASOLINE USE TAX RATE
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.
GASOLINE USE TAX INVENTORY REPORTING
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 fetax@dor.in.gov. 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.
PAYMENT OF THE GASOLINE USE TAX
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.
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).
BONDING AND FINANCIAL REPORTING
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.
EXEMPT TRANSACTIONS AND REFUNDS
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.
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