Tribune Reports Last Chance for Homestead Exemption in Howard County

From the Kokomo Tribune:

Property owners in Howard County have until July 15 to file paperwork to ensure they continue to receive the homestead credit on their residential property taxes.

The state deadline for verification of the homestead credit was Dec. 31, after that date the homestead credit was to be removed. The homestead credit can amount to up to 25 percent of the gross property taxes owed.

Martha Lake, Howard County auditor, said local residential property owners have until July 15 to complete the required form.

“We discovered that approximately 800 property owners, out of 23,000 residential property owners in the county, had not submitted the verification form,” she said. “If the forms are not returned by July 15, the property owner will lose the homestead exemption starting with this year’s taxes.”

...

The effort to fight homestead credit fraud by requiring residential property owners to fill out an additional form seems to be working.

Lake told members of the Howard County Council Tuesday that since the process began, more than $613,000 has been collected and placed in the Homestead Ineligible Fund.

The council approved spending $100,000 of those funds to begin digitizing records in the auditor’s office.

Lake said starting today only $100,000 per year is allowed to be placed in the Homestead Ineligible Fund with the remaining amount being directed to the county’s general fund.

The remaining $513,000 collected to date will remain in the fund to be used only by the auditor’s office.

Under state law, a property owner with an ineligible homestead credit deduction can be required to pay back taxes for three years plus a 10 percent penalty.

All the collected taxes are placed into a local fund along with 90 percent of the money generated from the penalty. The remaining 10 percent of the penalty revenue goes to the state.

In the future, the fund that takes in tax revenue could be used to buy equipment or to pay employee salaries to further the process.

http://kokomotribune.com/local/x1145374982/Last-chance-for-homestead-credit

IBJ Reports Nyhart Actuary & Employee Benefits Offered Incentives for Expansion in Indianapolis

From the Indianapolis Business Journal:

Nyhart Actuary & Employee Benefits plans to expand its Indianapolis headquarters and create as many as 25 jobs here by 2017, continuing its recent growth spurt.

The firm will invest $840,000 to lease and equip an additional 8,000 square feet of office space, according to Nyhart CEO Thomas Toten. Nyhart currently is negotiating an expansion of the 20,000 square feet it leases at 8415 Allison Pointe Blvd. in the Castleton area.

Nyhart currently has 68 full-time employees in Indianapolis and about another 30 across five other states. The firm already has started hiring additional actuaries, administrators and benefit consultants from college programs for its Indianapolis expansion.

...

The Indiana Economic Development Corp. has offered Nyhart up to $325,000 in conditional tax credits and up to $35,000 in training grants based on the company’s job-creation plans. The credits are performance-based, meaning the company cannot claim incentives until employees are hired.

http://www.ibj.com/benefits-firm-to-continue-growth-spurt-add-25-jobs/PARAMS/article/42235

Revenue Finds Taxpayer's Non-specific Objection Insufficient to Meet Burden

Excerpts of Revenue's Decision follow:

Taxpayer is a shareholder in an S-corporation. The S-corporation operates a combination gas station and convenience store. The Department of Revenue (Department) conducted an audit review of the gas station/convenience store. After reviewing the S-corporation's business records and tax returns, the audit adjusted the S-corporation's gross receipts. The adjustment resulted in additional taxable income which "flowed through" to the individual Taxpayer.

...

Without providing specific objections, Taxpayer objects in general to the assessment of additional individual income tax.

An S corporation such as Taxpayer's gas station/convenience store normally does not pay income tax. 45 IAC 3.1-1-66, states that, "Corporations electing Subchapter S status under Internal Revenue Code § 1372... are exempt from adjusted gross and supplemental net income tax on all income except capital gains...." Rather than taxing the income at the business level, the S corporation's income is passed through to the shareholders. The shareholders then must report the income on their own income tax return. 45 IAC 3.1-1-66states that, "Subchapter S corporation shareholders are taxed on their distributive shares of income at the individual income tax rate."

As in any assessment, it is the Taxpayer's responsibility to establish that the existing tax assessment is incorrect. As stated in IC § 6-8.1-5-1(c), "The notice of proposed assessment is prima facie evidence that the department's claim for the unpaid tax is valid. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made." Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007).

Taxpayer has provided no substantive arguments which would form the basis for adjusting the amount of income tax owed. Presumably, if the S-corporation's assessment is adjusted the results would "flow-though" to the Taxpayer. However, as mentioned previously, the S-corporation's protest is addressed in a separate Letter of Findings.

Taxpayer has not met his burden of demonstrating that the proposed assessment of individual income tax was wrong.

http://www.in.gov/legislative/iac/20130626-IR-045130250NRA.xml.html

DLGF Publishes Guidance on Fire Protection Territory Establishment

MEMORANDUM

TO:                 All Cities, Towns, and Townships

FROM:           Michael E. Duffy, Staff Attorney

RE:                 Fire Protection Territory Establishment

DATE:           July 1, 2013

Introduction

Due to widespread compliance issues with IC 36-8-19-6(b) by units petitioning the Department of Local Government Finance (“Department”) for an initial maximum levy for a proposed fire protection territory (“territory”), the Department issues this memorandum and presentation template to facilitate compliance with IC 36-8-19-6(b). Please note that this memorandum is intended to be an informative bulletin; it is not a substitute for reading the law. Also, the Department cannot pre-approve legal, advertising, or financial documentation. Full compliance with IC 36-8-19-6(b) (including use of the attached template) does not guarantee approval of a petition; the Department evaluates petitions in their entirety.

Indiana Code 36-8-19-6(b)

Before the legislative body of a unit may adopt an ordinance or a resolution to form a territory, the legislative body must, at the public hearing held at least thirty days before adopting the ordinance or resolution, make available to the public the following information:
       

(A) The property tax levy, property tax rate, and budget to be imposed or adopted during the first year of the proposed territory for each of the units that would participate in the proposed territory.

The units should document how the territory’s budgets, rates, and levies are broken down for each of the participating units. This breakdown should mirror the data in the units’ published notices. For instance:

Fire Protection Territory A:

First Year Proposed Budget: $750,000

First Year Proposed Levy: $750,000

First Year Proposed Rates (Uniform): $0.01 total (includes $0.005 for equipment replacement fund)

Participating Unit B (Assessed Value of Unit B is $50,000,000):

First Year Proposed Budget: $750,000, of which Unit B bears two-thirds

First Year Proposed Rates (Uniform): $0.01 total (includes $0.005 for equipment replacement fund)

First Year Proposed Levy (Unit’s share): $500,000 ($0.01 applied to $50,000,000)

Participating Unit C (Assessed Value of Unit C is $25,000,000):

First Year Proposed Budget: $750,000, of which Unit C bears one-third

First Year Proposed Rates (Uniform): $0.01 total (includes $0.005 for equipment replacement fund)

First Year Proposed Levy (Unit’s Share): $250,000 ($0.01 applied to $25,000,000)

(B) The estimated effect of the proposed reorganization in the following years on taxpayers in each of the units that would participate in the proposed territory, including the expected property tax rates, property tax levies, expenditure levels, service levels, and annual debt service payments.

The units should document for the territory’s initial year and at least one following year (preferably at least two following years) at least the following for each participating unit: the expected 1) rates, 2) levies, 3) expenditure levels, 4) service levels, and 5) annual debt service payments. If the units do not anticipate debt service payments, the units should state this. Likewise, if service levels are not anticipated to change, the units should indicate this. However, the units should not simply say that they assume rates, levies, and expenditures will remain the same in future years. The units should provide reasonable estimates of rates, levies and expenditures for future years, taking into account changing assessed valuations, the assessed value growth quotient, and inflation. While the Department understands that such projections may not be precise, taxpayers deserve the most accurate and available information possible.

(C) The estimated effect of the proposed reorganization on other units in the county in the following years and on local option income taxes, excise taxes, and property tax circuit breaker credits.

The units should document for the territory’s initial year and at least one following year (preferably at least two following years) at least the following for at least those units in the county underlying or overlapping the petitioning units: the estimated effects on 1) local option income taxes, 2) excise taxes, and 3) circuit breaker credits. In other words, the units should list each unit in the county and the corresponding fluctuations in local option income taxes, excise taxes, and circuit breaker credits for those units in the territory’s initial year and at least one following year (preferably at least two following years). Again, the Department understands that these figures will be projections and that a number of variables will affect the actual numbers, but the units should offer taxpayers some concrete estimates and not just generic statements.

(D) A description of the planned services and staffing levels to be provided in the proposed territory.

The units should provide a reasonably detailed summary of the services and staffing the territory intends to provide. If the units do not anticipate changing existing services or staffing, they should say so, but also offer some overview of the existing services and staffing.

(E) A description of any capital improvements to be provided in the proposed territory.     

The units should provide a reasonably detailed summary of any anticipated capital improvements. The units should say more than simply that they may purchase things like radios or fire apparatus. Likewise, if the units do not anticipate any capital improvements, they should say so and explain why they will impose an equipment replacement fund tax rate even though they have no anticipated capital needs.

Summary

In sum, the above addresses what units should do at an absolute minimum to satisfy IC 36-8-19-6(b). Units should feel free to document more than the minimum amount of required information. The Department requests that units use the attached template to document the information required by IC 36-8-19-6(b) to be made available to taxpayers at the first public hearing. The Department notes that all of the above information should be made available in writing to taxpayers and the Department. Questions may be directed to Staff Attorney Mike Duffy at 317-233-9119 or mduffy@dlgf.in.gov. The Department reiterates that it cannot pre-approve legal, advertising, or financial documentation.

DLGF Publishes Guidance on Procedures for the Establishment of Cumulative Funds

MEMORANDUM

TO:                 All Political Subdivisions

FROM:           Dan Jones, Assistant Budget Director

SUBJECT:    Procedures for the Establishment of Cumulative Funds

DATE:           July 1, 2013

INTRODUCTION

The Department of Local Government Finance (“Department”) issues this bulletin, which applies to the following Cumulative Funds established under IC 6-1.1-41. This bulletin supersedes all previous bulletins.

PLEASE NOTE: This memorandum is intended to be an informative bulletin; it is not a substitute for reading the law.

Fund                                                                                        Statutory Authority

Cumulative Voting System Fund                                           Ind.  Code § 3-11-6-9

Cumulative Channel Maintenance Fund                                Ind.  Code § 8-10-5-17

Cumulative Bridge Fund                                                        Ind.  Code § 8-16-3

Major Bridge Fund                                                                 Ind.  Code § 8-16-3.1

Airport Cumulative Fund                                                       Ind.  Code § 8-22-3-25

Cumulative Levee Fund (Vanderburgh Co.)                          Ind.  Code § 14-27-6-48

Cumulative Improvement Fund                                              Ind.  Code § 14-33-21

Cumulative Hospital Sinking Fund                                        Ind.  Code § 16-22-4

Cumulative Hospital Fund                                                       Ind.  Code § 16-22-8-41

Cumulative Fire Fund                                                             Ind.  Code § 36-8-14

Cumulative Transportation Fund                                            Ind.  Code § 36-9-4-48

Cumulative Courthouse Fund                                                 Ind.  Code § 36-9-14

Cumulative Capital Development (County Unit)                   Ind.  Code § 36-9-14.5

Cumulative Jail Fund                                                              Ind.  Code § 36-9-15

Cumulative Capital Development (Municipality)                   Ind.  Code § 36-9-15.5

Cumulative Building, Sinking, or Capital Improvement Fund           Ind.  Code § 36-9-16-5

Cumulative General Improvement Fund                                Ind.  Code § 36-9-17-3

Cumulative Township Vehicle and Building Fund                Ind.  Code § 36-9-17.5

Cumulative Building Fund for Municipal Sewers                  Ind.  Code § 36-9-26

Cumulative Drainage Fund                                                     Ind.  Code § 36-9-27-99

Cumulative Park Fund (County and Municipality)                Ind.  Code § 36-10-3-21

Cumulative Park Fund (Certain Cities)                                  Ind.  Code § 36-10-4-36

Township Cumulative Park Fund                                           Ind.  Code § 36-10-7.5-19

Fire Protection Territory Equipment Replacement Fund[1]      Ind.  Code § 36-8-19-8.5 

In addition to complying with the budget, tax rate, and tax levy requirements of IC 6-1.1-17, the following steps must be taken when establishing a cumulative fund or increasing the rate of an established fund. If the establishment of a fund is not in compliance with IC 6-1.1-41 and this bulletin, a tax to finance the fund may not be levied in the ensuing year.

STEP 1: PUBLICATION OF NOTICE TO TAXPAYERS

A political subdivision (“unit”) desiring to levy for a cumulative fund must hold a public hearing on a proposal to establish the fund. This hearing must be publicized through a Notice to Taxpayers that describes the tax levy to be imposed (see Appendix A) and must be published two times, at least seven days apart, with the first publication being at least ten days before the public hearing and the second at least three days before the public hearing, in accordance with IC 5-3-1-2(f). The notice must also be printed in two newspapers published within the unit, as applicable, in accordance with IC 5-3-1-4 (see Appendix D). If the fund is for a Cumulative Voting System (IC 3-11-6) or Cumulative Channel Maintenance (IC 8-10-5-17), notice of the proposal and the public hearing must also be posted in three public places within the unit.

STEP 2: PUBLIC HEARING & ADOPTION OF RESOLUTION/ORDINANCE

The adopting body for the unit must conduct a public hearing on the proposed cumulative fund on the date, time, and location as indicated in the Notice to Taxpayers. At this meeting, taxpayers of the affected taxing district(s) have the right to be heard. Upon completion of the public hearing, the adopting body must vote whether to pass a resolution/ordinance (see Appendix B) adopting the proposed cumulative fund as presented or at a lesser tax rate.

STEP 3: PUBLICATION OF NOTICE OF ADOPTION

The unit must publish a Notice of Adoption to the affected taxpayers (see Appendix C). The unit must publish the Notice of Adoption one time within thirty days after the date of the adoption in  two newspapers published within the unit, as applicable, in accordance with IC 5-3-1-4 (see Appendix D). If the fund is for a Cumulative Voting System (IC 3-11-6) or for Cumulative Channel Maintenance (IC 8-10-5), the notice shall also be posted in three public places in the political subdivision. The publication of this Notice begins a 30-day remonstrance period for the taxpayers affected by the cumulative fund.

OBJECTION PETITIONS

Taxpayers who are affected by the proposed cumulative fund may file an objection petition with the county auditor, not later than noon 30 days after the publication of the Notice of Adoption, setting forth their objections to the proposed fund. Exceptions to the 30-day remonstrance period are limited to the Cumulative Building and Capital Improvement Fund (IC 36-9-16-5) and the Cumulative Building for Hospitals Fund (IC 16-22-5-4). Only these two funds require a ten-day remonstrance period. Pursuant to IC 6-1.1-41-6, the number of signatures required for a valid objection petition is specific to each type of cumulative fund as follows:

           

Cumulative Fund                                                                    Minimum Number of Taxpayers

Cumulative Voting System Fund                                           Ind.  Code § 3-11-6    100

Cumulative Channel Maintenance Fund                                Ind.  Code § 8-10-5    10

Cumulative Bridge Fund                                                        Ind.  Code § 8-16-3    10

Major Bridge Fund                                                                 Ind.  Code § 8-16-3.1 10

Airport Cumulative Fund                                                       Ind.  Code § 8-22-3    50

Cumulative Levee Fund (Vanderburgh Co.)                          Ind.  Code § 14-27-6  10

Cumulative Improvement Fund                                              Ind.  Code § 14-33-21 10

Cumulative Hospital Sinking Fund                                        Ind.  Code § 16-22-4  20

Cumulative Hospital Fund                                                      Ind.  Code § 16-22-5  25

Cumulative Fire Fund                                                             Ind.  Code § 36-8-14  10

Cumulative Transportation Fund                                            Ind.  Code § 36-9-4    10

Cumulative Courthouse Fund                                                 Ind.  Code § 36-9-14  50

Cumulative Capital Development (County Unit)                   Ind.  Code § 36-9-14.5  50

Cumulative Jail Fund                                                              Ind.  Code § 36-9-15  50

Cumulative Capital Development (Municipality)                   Ind.  Code § 36-9-15.5  50

Cumulative Building and Capital Improvement Fund           Ind.  Code § 36-9-16  50

Cumulative General Improvement Fund                                 Ind.  Code § 36-9-17         50

Cumulative Township Vehicle and Building Fund                Ind.  Code § 36-9-17.5           50

Cumulative Bldg.  Fund for Municipal Sewers                      Ind.  Code § 36-9-26  50

Cumulative Drainage Fund                                                     Ind.  Code § 36-9-27  50

Cumulative Park Fund (County and Municipality)                Ind.  Code § 36-10-3  30

Cumulative Park Fund (Certain Cities)                                  Ind.  Code § 36-10-4  10

Township Cumulative Park Fund                                           Ind.  Code § 36-10-7.5           30

Fire Protection Territory Equipment Replacement Fund        Ind.  Code § 36-8-19-8.5        50 

The county auditor must immediately certify the objection petition(s) to the Department by verifying:

a)      the number of taxpayers on the petition and counterparts who are property owners within the taxing district(s) where the proposed cumulative fund will be levied;

b)      that the proper number of qualified signatures appears on the petition and counterparts; and

c)      the petition(s) was filed within the proper number of days after the publication of the Notice of Adoption.

If a petition is certified by the county auditor to the Department, the Department must fix a date for a hearing within a reasonable time after receipt of the objection. Notice of the hearing, under the signature of the Commissioner of the Department, must be given to the county auditor and the first ten taxpayers whose names appear on the petition at least five days before the date of the hearing. A hearing will be conducted in the county by a hearing officer of the Department, at which time all affected taxpayers will have the right to be heard. Testimony will be accepted from those in opposition to, as well as those in favor of, the proposed cumulative fund. The hearing officer will submit a report on the hearing to the Commissioner. The Department must certify approval, disapproval, or modification of the proposal to the county auditor. The action of the Department with respect to the proposed fund is final.

In the years following the year of adoption of the cumulative fund, and pursuant to IC 6-1.1-41-12, taxpayers of the taxing district(s) where the rate is levied may file with the county auditor a petition for reduction or revision of the cumulative fund levy. Such petitions must be filed by noon of August 1 of the year following the imposition of the levy. 

STEP 4: SUBMISSION TO THE DEPARTMENT

A unit that adopts a proposed cumulative fund pursuant to IC 6-1.1-41 must submit the proposal to the Department for approval before August 2 (postmarked not later than August 1) of the year preceding the year in which the proposed levy takes effect. The following must be submitted to the Department:

• Procedure Checklist (see Appendix E);
• Resolution/Ordinance of adopting body (Appendix B);
• proofs of publication (and proofs of posting, if required) of the Notice to Taxpayers;
• proofs of publication (and proofs of posting, if required) of the Notice of Adoption, if available*;
• county auditor’s Certificate of No Remonstrance, when available*; and
• any other relevant documentation.

*NOTE: A proposal must be postmarked to the Department on or before August 1. In order for the proposal to be complete, the Department must be able to determine whether a Notice of Adoption was properly published. Thus, a unit must at least have properly published a Notice of Adoption on or before August 1. Proofs of publication of this Notice, if available, must be included with the proposal. If proofs of publication are not available on or before August 1, a newspaper clipping of the actual Notice will suffice (the clipping should also show the date and name of the newspaper). Failure to document that a Notice of Adoption was published on or before August 1 will result in denial of the proposal. The Department notes that while IC 5-3-1-2(i) requires a Notice to be published within 30 days of the date of adoption, IC 6-1.1-41-4 requires that a proposal be submitted to the Department on or before August 1. This means that although a unit can potentially advertise a Notice of Adoption 30 days from the date of adoption, publication of this Notice must still occur on or before August 1. Thus, a unit that adopts a cumulative fund in mid-July will not have a full 30 days to publish the Notice of Adoption. Ideally the proposal will include the Auditor’s Certificate of No Remonstrance, but the Department will accept this Certificate even if it is issued after August 1. The Department will strictly enforce the above.

STEP 5: REVIEW BY THE DEPARTMENT

The proposal will be reviewed by the Department for completeness. If the proposal contains errors or proper procedure has not been followed, the packet will be returned to the fiscal officer of the adopting unit for correction, provided that the time constraints outlined in Step 4 can be met; that is, the corrected proposal is postmarked no later than August 1.

STEP 6: CUMULATIVE FUND IS LEVIED

An approved cumulative fund may be levied beginning with the first annual tax levy imposed following approval of the proposal or in the year stated in the Department’s order. Cumulative funds, with the exception of the Cumulative Building or Cumulative Capital Improvement Fund under IC 36-9-16-4, do not expire and may be levied from year to year as long as they are advertised annually with the annual budget or are not time-limited by the establishing resolution/ordinance.[2]

If the appropriate fiscal body wishes to increase the rate in subsequent years, the fund must be reestablished and presented to taxpayers (a unit establishing a municipal or county cumulative development fund may adopt three years’ rates upon establishment of such fund). The fund must also be reestablished if the use of the cumulative fund is changed. The tax rate may not exceed the rate specified by the statute authorizing the fund. The Department will apply the rate cap calculations to all cumulative funds as listed in this bulletin. The maximum property tax rate levied must be adjusted each time a reassessment of property takes effect. When a cumulative fund is established, the Department order will reflect the (statutory) rate adopted by the unit. The Budget Order will reflect the cap rate adjustment pursuant to IC 6-1.1-18.5-9.8.

ADDITIONAL INFORMATION

Taxes collected for a cumulative fund must be deposited in that same fund and may only be used for the purposes authorized by the corresponding statute and the resolution/ordinance as adopted. All funds must be appropriated before expenditure. The Department must approve all appropriations, except for those involving the Cumulative Bridge Fund or Cumulative Levee Fund. Appropriations may be included in the unit’s annual budget or may be performed through the additional appropriation process under IC 6-1.1-18-5.

If the unit establishing the fund decides that the need for which the fund was established has been satisfied or no longer exists or the unit rescinds the tax levy for the fund, the fiscal body shall, pursuant to IC 36-1-8-5, order the balance of the fund to be transferred as follows, unless a statute provides that it be transferred otherwise:
            (1) funds of a county, to the general fund or rainy day fund of the county;
            (2) funds of a municipality, to the general fund or rainy day fund of the municipality;
            (3) funds of a township for redemption of township assistance obligations, to the   township assistance fund of the township or rainy day fund of the township; and

            (4) funds of any other political subdivision, to the general fund or rainy day fund of the    political subdivision. 

QUESTIONS?

Questions regarding this bulletin or matters pertaining to the establishment of a cumulative fund should be directed to Dan Jones, Assistant Budget Director, at (317) 232-0651 or djones@dlgf.in.gov (or faxed to (317) 232-8779).