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Bill Watch, Feb. 19, 2016: Current Tax Legislation of Note - Taxation News

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Tax News


Posted on: Feb 19, 2016

The IndyBar Legislative Committee is currently monitoring the following tax-related legislation. IndyBar members can request that the Legislative Committee track specific legislation by contacting committee chair Lawren Mills at Lawren.Mills@icemiller.com.

Click here to view the full Bill Watch reports.

HB1068    ASSESSMENT APPEALS. (CULVER W) Provides that, if the county property tax assessment board of appeals (PTABOA) fails to issue a determination concerning a petition to correct errors within 180 days after the petition is filed with the county auditor, the taxpayer may petition the Indiana board of tax review (Indiana board) to correct errors in a final administrative determination. Provides that, if the PTABOA fails to approve or disapprove an exemption application within 180 days after an owner files the exemption application, the owner may petition the Indiana board to approve or disapprove the exemption application. Provides that the Indiana board is authorized to approve or disapprove an exemption application: (1) previously submitted to a PTABOA; and (2) that is not approved or disapproved by the PTABOA within 180 days after the owner filed the application for exemption. Provides that the county assessor is a party to a petition to the Indiana board to approve or disapprove an exemption application.

HB1169    BUSINESS PERSONAL PROPERTY TAX EXEMPTION. (SAUNDERS T) Replaces the requirement that a taxpayer that is eligible for the business personal property tax exemption (exemption) submit to the county assessor a notarized statement each year affirming the taxpayer's eligibility for the exemption, subject to penalties for perjury, with a requirement that the taxpayer indicate on the taxpayer's personal property return that the taxpayer is eligible for the exemption for the assessment date.

HB1215    STATE AND LOCAL MATTERS. (CHERRY R) Urges the legislative council to assign the study of the personal property audit process to the interim study committee on fiscal policy during the 2016 interim. Provides that an enterprise zone expires 11 years (rather than 10 years, under current law) after the day on which it is designated by the board of the Indiana economic development corporation.

HB1273    VARIOUS PROPERTY TAX MATTERS. (LEONARD D) Requires assessing officials to maintain geographic information system characteristics of real property parcels and to transmit that data annually to the geographic information office of the office of technology. Provides that personal property is exempt from property taxation if it is owned by a homeowners association and is held by the homeowners association for the use, benefit, or enjoyment of members of the homeowners association. Provides that a county auditor may accept a deduction application for a property tax abatement deduction only if the designating body has specified an abatement schedule for the deduction. Prohibits a taxing unit from transferring property tax receipts to the property tax assessment appeals fund if the property tax receipts are: (1) held in a debt service fund; or (2) treated as levy excess. Removes phrasing to emphasize that a political subdivision may not base an excess levy appeal on normal population growth. Removes obsolete provisions concerning excess levy appeals by political subdivisions. Modifies certain responsibilities of the division of data analysis of the department of local government finance. Provides that the department of local government finance may cancel any delinquencies, fees, special assessments, and penalties, in addition to property taxes, that are owed on property that is owned by the state, a county, a city, a town, a township, or a locally established port authority. Limits the period during which a county auditor may act on information that a taxpayer is ineligible for a standard property tax deduction. Authorizes the fiscal body of a township that is located next to certain counties or townships to pass a resolution to place on the ballot a local public question on whether the fiscal body of the eligible county should be required to fund and carry out a public transportation project in the township. Provides that if a public question regarding public transportation projects is defeated in a township, the fiscal body of the township may adopt a resolution to place another such public question on the ballot at a subsequent general election in the township, but specifies that such a public question may not be placed on the ballot in the township more than two times in any seven year period. Specifies the conditions under which a county fiscal body may impose an additional tax rate on county taxpayers who reside in a township that approves a local public question. Authorizes the provider unit in a fire protection territory to negotiate for and hold debt for the equipment replacement fund of a fire protection territory. Authorizes a participating unit in a fire protection territory to acquire fire protection equipment or other property and make the property available to the provider unit. Specifies the adjustments to the maximum permissible levy for a unit that ceases participation in a fire protection territory. Specifies the minimum number of taxpayers that must object to the imposition or increase of a tax rate for an equipment replacement fund of a fire protection territory. Authorizes a library to issue library cards at no charge to college students who attend a college in the library district. Requires a library to prorate the cost of a library card that is valid for less than one year. Allows a nonprofit entity that missed the applicable deadlines to claim the property tax exemptions to which it would otherwise have been entitled to submit the necessary paperwork to claim the exemptions. Repeals a provision authorizing a county fiscal body to adopt an ordinance to allow local agencies to require a person applying for a property tax exemption, a property tax deduction, a zoning change or zoning variance, a building permit, or any other locally issued license or permit to submit a uniform property tax disclosure form with the person's application for the property tax exemption, property tax deduction, zoning change or zoning variance, building permit, or other locally issued license or permit.

SB87 MULTIPLE COUNTY PTABOAS (KENLEY L) Provides that the legislative bodies of two or more counties may adopt substantially similar ordinances to establish a multiple county property tax assessment board of appeals (PTABOA). Provides that a multiple county PTABOA consists of three members appointed by the governor, not more than two of whom may be from the same political party. Requires the assessor's office for the county with the greatest population in a multiple county PTABOA to provide administrative support to the board. Provides that the county council and the board of county commissioners of each county participating in a multiple county PTABOA may jointly recommend qualified individuals to the governor for consideration for appointment to the board. Provides that the compensation of members of a multiple county PTABOA shall be determined jointly by the fiscal bodies of the participating counties. Makes conforming amendments.

SB225    PROPERTY TAX EXEMPTION FOR AFFORDABLE HOUSING. (ECKERTY D) Establishes standards for affordable rental housing property to be exempt from property taxation when the property does not otherwise qualify for a property tax exemption. Specifies that the exemption applies to properties owned by a 501(c)(3) organization (or a disregarded entity of such an organization) that are 100% occupied by residents who qualify as low income.

SB233    STATE TAX RETURN CHECK OFF FOR MILITARY FAMILY RELIEF FUND. (LANANE T) Provides for space on state income tax forms to enable a taxpayer to donate all or part of the taxpayer's tax refund to the military family relief fund. Provides that if a taxpayer is not entitled to a refund or has designated all of the taxpayer's refund be directed to one of the allowable funds, the taxpayer may make an additional contribution on the taxpayer's income tax return to the military family relief fund.

SB302    STATE AND LOCAL FINANCE. (KENLEY L) Specifies the manner in which certain excise taxes and local taxes collected under the tax amnesty program shall be distributed. Provides that after making the distributions required under the tax amnesty program, the next $42,000,000 collected under the program must be deposited into the Indiana regional cities development fund. Provides that any remaining amounts collected under the tax amnesty program shall be deposited in the state bicentennial capital account (rather than the state general fund, under current law). Specifies that revenue received from the rental of certain communications system infrastructure shall be deposited in the state general fund (rather than the state bicentennial capital account, under current law). Appropriates $42,000,000 from the Indiana regional cities development fund for the purpose of funding a third grant under the regional cities initiative.

SB304    PROPERTY TAX MATTERS. (KENLEY L) Provides that the deductions for veterans with a disability apply to individuals with a disability of at least 20% (rather than 10%, under current law). For the January 1, 2017, assessment date, increases the assessed value limit for the property tax deduction for certain veterans with a disability from $143,160 to $175,000. For the January 1, 2018, assessment date and each assessment date thereafter, provides that the assessed value limit is equal to: (1) the assessed value limit for the preceding assessment date; multiplied by (2) the assessed value growth quotient that is calculated in the year preceding the year in which the assessment date occurs. Provides that an individual may claim a deduction from the assessed value of the individual's homestead if: (1) the individual served in the military or naval forces of the United States; (2) the individual received an honorable discharge; (3) the individual has a disability of at least 50%; (4) the individual's disability is evidenced by a pension certificate or an award of compensation issued by the United States Department of Veterans Affairs or by a certificate of eligibility issued to the individual by the Indiana department of veterans' affairs; and (5) the homestead was conveyed without charge to the individual who is the owner of the homestead by an organization that is exempt from income taxation under the federal Internal Revenue Code. Specifies that a property continues to qualify as a homestead if the property is leased while the owner is away from Indiana serving on active duty in the armed forces, if the individual has lived at the property at any time during the past 10 years. (Current law specifies that a property ceases to qualify as a homestead if the property is leased while such an individual is away from Indiana.)

SB308    PROPERTY TAX MATTERS. (HERSHMAN B) Provides that when calculating the base rate for agricultural land for the January 1, 2017, assessment date and each assessment date thereafter, the department of local government finance (DLGF) shall do the following: (1) Use the six most recent years preceding the year in which the assessment date occurs (before the highest of those six years is eliminated when determining the rolling average). (2) Use a capitalization rate of at least 8%. (3) For purposes of calculating a base rate, recalculate certain prior base rates that are used in the rolling average by using a capitalization rate of at least 8%. Specifies that the adjustment of the base rate by the assessed value growth quotient applies only for the 2016 assessment date. Specifies that for purposes of the assessment of agricultural land, the soil productivity factors used for the March 1, 2011, assessment date shall be used for the January 1, 2016, assessment date and each assessment date thereafter. (Under current law, new soil productivity factors are to be used for assessment dates occurring after March 1, 2015.) Deletes the requirement that an assessor shall examine and verify the accuracy of each personal property tax return filed by a taxpayer. Provides instead that an assessor may examine and verify the accuracy of a personal property tax return if the assessor considers the examination and verification of that personal property return to be useful to the accuracy of the assessment process. Repeals provisions enacted in 2015 concerning the assessment of: (1) certain limited market or special purpose property; and (2) commercial nonincome producing real property. Provides that in addition to the factors under current law, the DLGF shall also provide for the classification of improvements on the basis of market segmentation. Specifies that the value in exchange of an improved property does not reflect the true tax value of the improved property if a market segmentation analysis indicates that purportedly comparable sale properties have a different market or submarket for the current use of the improved property. Specifies that a market segmentation analysis must be conducted in conformity with generally accepted appraisal principles and is not limited to the categories of markets and submarkets enumerated in the rules or guidance materials adopted by the DLGF. Provides that true tax value shall be determined under the rules of the DLGF (subject to the provisions of the property tax article), and that the DLGF's rules may include examples to illustrate true tax value. Specifies that true tax value does not mean the value of the property to the user. Increases the assessed value per acre of classified forest land, classified windbreaks, and classified filter strips from $1 per acre to $13.29 per acre for the January 1, 2017, assessment date. For assessment dates after January 1, 2017, increases the assessed value by the annual percentage change in the consumer price index. Authorizes a county fiscal body to adopt an ordinance providing that the county auditor shall exclude and keep separate on the tax duplicate for taxes payable in a calendar year the net assessed value of tangible property that is necessary to enable the county to pay the expenses, as specified in the ordinance, that are likely to be incurred by the county assessor in defending appeals with respect to property located in the county. Specifies that property tax receipts that are attributable to an increase in the taxing unit's tax rate caused by such a reduction in the county's net assessed value shall be deposited in the county's property tax assessment appeals fund. Provides that the assessed value growth quotient for a civil taxing unit in a particular county is the lesser of: (1) the quotient determined using a six year average of statewide income growth (as current law provides); or (2) the quotient determined using a six year average of assessed value growth in the county in which the particular civil taxing unit is located. Makes conforming changes. Authorizes a civil taxing unit to request an increase in its maximum property tax levy for a year, if the department of local government finance finds that the growth in the civil taxing unit's assessed value in the preceding year was at least two times the percentage growth allowed for the civil taxing unit's tax levy under the assessed value growth quotient determined for the ensuing year. Provides that the civil taxing unit may increase its maximum property tax levy by a percentage equal to the percentage growth in the civil taxing unit's assessed value for the preceding year. Specifies that the Indiana board of tax review (Indiana board) may, on its own motion, have a review appraisal prepared by an independent appraiser to review any appraisal submitted by a party to the hearing. Specifies that when the Indiana board makes a determination on a petition for review of an assessment, the Indiana board may consider parts or elements of the evidence submitted by the parties to the proceeding and make a finding of fact that is different from a particular fact that is asserted by a party. Provides that for purposes of a review by the Indiana tax court or the Indiana supreme court of a final determination by the Indiana board on a petition for review of an assessment, the fact that a determination by the Indiana board that the value of the property: (1) is less than the value of the property included in the appraisal report that contains the highest proposed value of the property; and (2) is more than the value of the property included in the appraisal report that contains the lowest proposed value of the property; does not by itself constitute an arbitrary or capricious action by the Indiana board, an abuse of discretion by the Indiana board, or a determination by the Indiana board that is unsupported by substantial or reliable evidence. Permits a county fiscal body to impose a local income tax (LIT) rate for a public safety emergency assistance answering point that is part of the statewide 911 system (PSAP) if the adopting body in the county is the LIT council and the LIT council has not allocated the revenue from an expenditure rate of at least 0.1% to a PSAP in the county. Specifies that the rate may not exceed 0.1%. Specifies that the revenue generated by the rate is to be paid only to the county unit and used only for a PSAP. Provides that, in the case of assessed value increases attributable to the application of an abatement schedule adopted: (1) after June 30, 2016; but (2) before the allocation area is established; the assessed value increases attributable to the application of the abatement schedule must be included in the base assessed value of the allocation area, and may not be included in the incremental assessed value of the allocation area. Provides that, in the case of assessed value increases attributable to the application of an abatement schedule adopted: (1) after June 30, 2016; and (2) on or after the allocation area is established; assessed value increases attributable to the application of an abatement schedule may be included in the incremental assessed value of the allocation area, but only to the extent that the assessed value increase is a direct result of funding or expenditures from the allocation area as determined by the fiscal body of the unit that established the redevelopment commission. Requires the Indianapolis metropolitan development commiss

SB309    STATE AND LOCAL TAXATION. (HERSHMAN B) Eliminates the exemption for property taxes during the planning and construction of a residence that is conveyed upon completion to a low income individual by a nonprofit organization. Eliminates the exemption for property taxes for improvements on real property that are constructed, rehabilitated, or acquired for the purpose of providing low income housing (and also eliminates the PILOTS required from the taxpayers claiming the exemption). Eliminates the property tax deduction for residential rehabilitation of a dwelling. Eliminates the property tax deduction for rehabilitation of a structure over 50 years old. Repeals the state income tax credits for contributions to postsecondary educational institutions in Indiana and for contributions to the twenty-first century scholars program support fund. Makes conforming changes. Provides that a taxpayer may claim the $1,500 additional dependent deduction for a dependent child for whom the taxpayer is the legal guardian. (Current law allows the additional dependent deduction to be claimed only for a child, stepchild, or foster child of the taxpayer.) Provides that if a partnership, a trust, or an estate fails to withhold and pay any amount of tax required to be withheld and thereafter the tax is paid by the partners of the partnership (or the beneficiaries in the case of a trust or estate), the amount of tax paid by partners (or the beneficiaries in the case of a trust or estate) may not be collected from the partnership, trust, or estate. Specifies that the partnership, trust, or estate remains liable for interest or penalty based on the failure to withhold the tax. Provides that the use tax is imposed on a contractor's conversion of construction material into real property if that construction material was purchased by the contractor. Specifies, however, that the use tax does not apply to conversions of construction material if: (1) the sales or use tax has been previously imposed on the contractor's acquisition or use of that construction material; (2) the person for whom the construction material is being converted could have purchased the construction material exempt from the sales and use tax (as evidenced by an exemption certificate) if that person had directly purchased the material from a retail merchant in a retail transaction; or (3) the conversion of the construction material into real property is governed by a time and material contract. Provides that a contractor is a retail merchant making a retail transaction when the contractor disposes of tangible personal property or converts tangible personal property into real property under a time and material contract. Provides that an Indiana inheritance tax return filed after March 31, 2016, must be filed with the department of state revenue (department). Amends provisions of the Indiana inheritance tax law to allow the department to process and administer inheritance tax returns filed with the department after March 31, 2016. Makes conforming changes. Provides that if an ordinance has been adopted requiring the payment of innkeeper's tax to the county treasurer instead of the department, the county treasurer has the same rights and powers with respect to refunding the innkeeper's tax as the department. Specifies tax collection requirements for a facilitator who markets lodging accommodations located in Indiana through the Internet. Defines "accommodation" as any hotel, motel, inn, tourist camp, tourist cabin, house, or any other place in which rooms or lodgings are furnished for consideration. Defines "facilitator" as a person who: (1) contracts with a retail provider of an accommodation to market the accommodation online; and (2) accepts payment from the consumer for the accommodation. Provides that a facilitator who receives payment for an accommodation must collect and remit: (1) the state gross retail or use tax; and (2) any innkeeper's tax due. Specifies that the calculation of the tax must be based on the total amount paid by the consumer to a facilitator, including any charge or fee of the facilitator. Provides that if the department issues to a person a demand notice for the payment of a tax, the person has 20 days (rather than 10 days, under current law) to either pay the amount demanded or show reasonable cause for not paying the amount demanded. Repeals, effective January 1, 2017, the provision in current law that provides that the cutting of steel bars into billets is to be treated as processing of tangible personal property for purposes of the double direct sales tax exemption for certain manufacturing activities. Adds a provision that would apply retroactively the same sales tax exemption related to the cutting of steel bars into billets (that was enacted effective January 1, 2016) to taxable year beginning January 1, 2011. Provides, however, that a taxpayer predominantly engaged in the business of cutting steel bars owned by others into billets is not entitled to a refund of state gross retail or use taxes paid for any tax period beginning after December 31, 2010, and before January 1, 2016, based on that provision.

SB323    COMBINED REPORTING STUDY. (HERSHMAN B) Requires the legislative services agency to: (1) study the combined reporting approach to apportioning income for income tax purposes; and (2) report the results of the study before October 1, 2016, to the legislative council and to the interim study committee on fiscal policy. Requires the interim study committee on fiscal policy to hold at least one public hearing at which the legislative services agency presents the results of the study.

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