MEMORANDUM
TO:
All County Assessors and Auditors
FROM:
Micah G. Vincent, Commissioner
DATE:
May 8, 2014
This
memorandum addresses several legislative changes concerning property tax
exemptions and the corresponding powers and duties of county assessors and
auditors. Please note that this memorandum is intended to be an informative
bulletin; it is not a substitute for reading the law.
I.
Early Childhood Education Providers Property Tax Exemption
On
March 26, 2014, Governor Pence signed into law Senate Enrolled Act 158 (“SEA
158”), which introduces a property tax exemption for certain early childhood
education providers.
Section
1 of SEA 158 amends IC 6-1.1-10-16, effective January 1, 2015, so that a
for-profit provider of early childhood education services to children who are
at least four but less than six years of age on the annual assessment date may
receive an exemption for property used for educational purposes only if all the
requirements of IC 6-1.1-10-46 (discussed below) are satisfied. A for-profit
provider of early childhood education services that provides the services only
to children younger than four may not receive this exemption. Where IC
6-1.1-10-36.3 addresses the applicability of an exemption to property used or
occupied for one or more stated purposes, the exemption for early childhood
education providers is excluded.
Section
3 adds IC 6-1.1-10-46, effective January 1, 2015, which outlines the
eligibility requirements for the exemption. In sum, tangible property owned,
occupied, or used by a for-profit provider of early childhood education
services to children who are at least four but less than six years of age is
exempt from property taxation under IC 6-1.1-10-16 only if all the following
requirements are satisfied:
(1)
The primary purpose of the provider is educational.
(2)
The provider is the property owner and the provider also predominantly occupies
and uses the tangible property for providing early childhood education services
to children who are at least four but less than six years of age.
(3)
The provider participates in the early education evaluation program established
under IC 12-17.2-3.8 and meets the standards of quality recognized by a Level 3
or Level 4 Paths to QUALITY program rating or has a comparable rating from a
nationally recognized accrediting body.
If the
property owner provides early childhood education services to children who are
at least four but less than six years of age and to children younger than four,
the amount of the exemption must be on that part of the assessment of the
property that bears the same proportion to the total assessment of the property
as the percentage of the property owner's enrollment count of children who are
at least four but less than six years of age compared to the property owner’s
total enrollment count of children of all ages.
The
annual assessment date or, if the annual assessment date is not a business day
for the property owner, the business day closest to the annual assessment date,
must be used for the enrollment count. However, a property owner that believes
that the enrollment count on this date for a particular year does not
accurately represent the property owner’s normal enrollment count for that year
may appeal to the county assessor for a change in the date to be used for that
year. The appeal must be filed on or before the deadline for filing an
exemption under IC 6-1.1-10-16.
If the
county assessor finds that the property owner’s appeal substantiates that the
property owner’s normal enrollment count is not accurately represented by using
the specified date, the assessor must establish an alternate date to be used
for that year that represents the property owner’s normal enrollment count for
that year.
II.
Management of Property Tax Exemptions
A.
House Enrolled Act 1266
On
March 26, 2014, Governor Pence signed into law House Enrolled Act 1266 (“HEA
1266”), Section 6 of which amends IC 6-1.1-11-4 which governs the effect on an
exemption of a change in ownership. This amendment, effective July 1, 2014,
essentially modifies the statute to conform to existing practice.
Specifically,
if, after an assessment date, an exempt property is transferred or its use is
changed resulting in its ineligibility for an exemption under IC 6-1.1-10, the
county assessor must terminate the exemption for that assessment date. However,
if the property remains eligible for an exemption under IC 6-1.1-10 following
the transfer or change in use, the exemption must be left in place for that
assessment date.
Example:
If a church receives a property tax exemption on a parcel on March 1 under
IC 6-1.1-10, it sells the property after March 1, and the property no longer
qualifies for an exemption under IC 6-1.1-10 following the sale, the exemption
is terminated for that assessment date.
For
the following assessment date, the person that obtained the exemption or the
current owner of the property, as applicable, must, except as otherwise
provided, file a certified application in duplicate with the county assessor of
the county in which the property that is the subject of the exemption is
located. In all cases, the person that obtained the exemption or the current
owner of the property must notify (using Form 136-CO/U, as prescribed by the
Department of Local Government Finance) the county assessor for the county
where the tangible property is located of the change in ownership or use in the
year that the change occurs.
If the
county assessor discovers that title to or use of property granted an exemption
under IC 6-1.1-10 has changed, the county assessor must notify the persons entitled
to a tax statement under IC 6-1.1-22-8.1 for the property of the change in
title or use and indicate that the county auditor will suspend the exemption
for the property until the persons provide the county assessor with an affidavit,
signed under penalties of perjury, that identifies the new owners or use of the
property and indicates whether the property continues to meet the requirements
for an exemption under IC
6-1.1-10. Upon receipt of the affidavit, the county assessor must reinstate the
exemption under IC 6-1.1-15-12. However, a claim under IC 6-1.1-26-1 for a
refund of all or a part of a tax installment paid and any correction of error
under IC 6-1.1-15-12 must be filed not later than three years after the taxes
are first due.
B.
Senate Enrolled Act 420
On
March 25, 2014, Governor Pence signed into law Senate Enrolled Act 420 (“SEA
420”), effective July 1, 2014. SEA 420 institutes several changes concerning
assessment dates and the management of property tax exemptions.
Although
the Department of Local Government Finance (“Department”) will issue a separate
memorandum addressing SEA 420’s changes to the assessment calendar, the
Department will reiterate here that Sections 2 and 3 of SEA 420 provide that
the assessment date of tangible property, as specified in the newly-introduced
IC 6-1.1-2-1.5, is as follows:
1)
For non-mobile home properties, the assessment date is March 1 in a year ending
before January 1, 2016, and January 1 in a year beginning after
December 31, 2015.
2)
For mobile home properties subject to assessment under IC 6-1.1-7, the
assessment date is January 15 in a year ending before January 1,
2017, and January 1 in a year beginning after December 31, 2016.
Section
19 of SEA 420 adds IC 6-1.1-11-1.5, which provides that an award of a property
tax exemption for a particular assessment date beginning after
December 31, 2015 (or December 31, 2016 for mobile homes assessed
under IC 6-1.1-7) must be based on the property’s eligibility for the
exemption on that assessment date. An act occurring after the assessment date,
including a change in:
(1)
use, value, character, or ownership of the tangible property; or
(2)
the age, disability, or income of any owner, contract buyer, or possessor of
tangible property;
does not
affect the eligibility of the tangible property for an exemption for that
assessment date.
Example:
A property tax exemption is applied to a charitable organization’s building
for the January 1, 2016, assessment date. On November 1, 2016, the charitable
organization sells the building to a startup, for-profit business. The
exemption on that building remains for the January 1, 2016 assessment date.
Section
20 amends IC 6-1.1-11-3 so that, for an assessment date in a year beginning after
December 31, 2015, the deadline to submit a property tax exemption
application to the county assessor is April 1 of the year containing the
assessment date. If the county property tax board of appeals denies the
application, it has no later than April 25 to provide notice to the taxpayer.
Section
21 amends IC 6-1.1-11-3.5 to provide that, after December 31, 2015,
a non-profit corporation that receives an exemption for a particular year but
which becomes ineligible for the following year must notify the county assessor
before April 1 of the year for which it becomes ineligible. Also, after
December 31, 2015, if part or all of a non-profit corporation’s property
becomes ineligible due to a change in use, the non-profit corporation must
notify the county assessor before April 1.
Section
24 adds IC 6-1.1-11-11, which states that any conflict between a provision of
IC 6-1.1-11 added or changed in the 2014 regular session of the General
Assembly and a provision in another law is to be resolved in favor of a
provision in IC 6-1.1-11.
C.
Reconciling HEA 1266 with SEA 420
For
2014 and 2015 (and 2016 for mobile homes), if a property is transferred or its
use is changed so that it is no longer eligible for an exemption under IC
6-1.1-10, the exemption is removed for that year’s assessment date.
Starting in 2016, if non-mobile home property receiving an exemption is
transferred or its use changed so that it is no longer eligible for an
exemption under IC 6-1.1-10, the exemption will remain in place for that
year’s assessment date. Starting in 2017, if a mobile home property receiving
an exemption is transferred or its use changed so that it is no longer eligible
for an exemption under IC 6-1.1-10, the exemption will remain in place
for that year’s assessment date. If the General Assembly makes any additional
changes to these laws in 2015, the Department will distribute information
accordingly.
Contact Information
Questions
may be directed to Staff Attorney Mike Duffy at (317) 233-9219 or mduffy@dlgf.in.gov.
