Indiana Department of Local Government Finance issues FAQ regarding personal property tax filings, waiver of penalties, 2020 assessments, and other property tax matters in response to COVID-19

Indiana Department of Local Government Finance issues FAQ regarding personal property tax filings, waiver of penalties, 2020 assessments, and other property tax matters in response to COVID-19

As posted earlier, on March 19, 2020, Indiana Governor Eric Holcomb issued Executive Order 20-05. Section 6(B) of the Order states:

Property taxes remain due on May 11, 2020, however counties are to waive penalties on payments made after May 11, 2020, for a period of 60 days. This waiver does not apply to tax payments which have been escrowed by financial institutions on behalf of property owners.

On March 27th, the Indiana Department of Local Finance (DLGF) issued FAQ (“COVID-19 & Executive Orders”) to address issues relating to this Order and other property tax concerns that have been raised in light of the COVID-19 pandemic.  Excerpts from the Department’s guidance follow:

Personal property reporting and assessments

With the income tax filing deadline moved to July 15, will the DLGF also move the May 15 business personal property tax deadline?

As included in the Department’s previous guidance memorandum, issued March 20, 2020, the deadline for filing personal property tax returns for the 2020-Pay-2021 tax cycle will remain May 15. However, a taxpayer may on or before May 15 submit a written request with the county or township assessor for a thirty (30) day extension under IC 6-1.1-3-7(b). The assessor is encouraged to inform taxpayers of this extension right and grant this extension to give the taxpayer until June 14, 2020, to make a timely filing.

With the department’s encouragement of granting an extension for personal property return filings to June 14, does this mean that we will then need to delay the issuance of Form 113/PP to July 14?

According to IC 6-1.1-3-20, if an assessing official changes a valuation made by a taxpayer on his or her personal property return or adds value to the personal property return, the assessing official must immediately give the taxpayer written notice of the change in the assessment. This change in the assessment value for personal property returns would be provided to the taxpayer via Form 113/PP. While the notice provisions under IC 6-1.1-3-20 do not specify a deadline for mailing this notice, IC 6-1.1-16-1 specifies that a county assessor must give notice of the change on or before the later of: (1) October 30 of the assessment year; or (2) five (5) months from the date the personal property return is filed if the return is filed after the filing date for personal property tax returns.

For taxpayers that are granted a thirty (30) day extension to file personal property tax returns, the required notice for any change in the assessment would have to be provided within five (5) months of the date of receipt.

Real property assessments and appeals

Are Form 11s still supposed to be mailed out by April 30?

Under IC 6-1.1-15-1.1(b)(2), the last day for counties to mail the Notice of Assessment (Form 11) is April 30 for an appeal deadline of June 15 of the assessment year. If the Notice of Assessment is mailed by the county on or after May 1 of the assessment year, the appeal filing deadline is June 15 of the year in which the tax bill is mailed by the county treasurer. In other words, if the Notice of Assessment is mailed on or May 1, 2020, the appeal filing deadline would be June 15, 2021.

Has there been any discussion on delays for the appeal deadline for certain sectors (i.e. hotels, retail, etc.)?

The Department has not been involved in any discussions regarding a delay for the appeal deadline.

Property tax abatement compliance

For property tax abatements, there are some designating bodies that want the CF-1/RE Form or the CF-1/PP Form earlier than the May due date, and some jurisdictions will have filings due in mid-April. One local council has indicated that unless the State extends the May 15 business personal property tax filing deadline, they will need to adhere to their scheduled due date and will need the CF-1/RE and CF-1/PP filing by April 15. Is there any guidance related to the personal property filing deadline and the impact on abatement compliance reporting?

According to IC 6-1.1-12.1-5.1(b), the Compliance with the Statement of Benefits forms must be filed with the county auditor before May 15 or by the due date of the owner’s personal property return that is filed in the taxing district where the property is located. While designating bodies may require property owners to complete and submit the Compliance with the Statement of Benefits form prior to May 15, they are not required to do so. If a property owner is granted an extension for the May 15 personal property return filing deadline, designating bodies should take this extension into account when determining the due date for the Compliance with the Statement of Benefits forms.

Penalties for late Spring 2020 payments

For the waiver of penalties for property tax payments, do the penalties still stay at 5% for the first 30 days and then the 10% penalty kicks in? Or will the penalties go straight to 10% right away after the 60-day period has ended?

Since the waiver period under Executive Order 20-05 is meant to provide relief to taxpayers, penalty period should also be pushed back by sixty (60) days. This means that the five percent (5%) penalty would apply to any payments made after July 10, 2020, if there is no delinquent amount, and a ten percent (10%) penalty would apply if there is a previous delinquency or if a payment is made after August 10, 2020.

The executive order only calls out the waiver of late fees or penalties for the taxes paid, with the statutory due date for taxes staying in place. There is the late fee for personal property returns, and an additional 20% penalty we assess. Are they going to be moved as well and apply, or should we just use our authority according to the statute (IC 6-1.1-37-15) to waive those?

Section 6(B) of Executive Order 20-05 refers to property tax payments that would be due by May 11, 2020 for the Spring Installment, and the penalties related to personal property returns under IC 6-1.1-37-7 have not been addressed by a current executive order.

Should we assume that all amounts, no matter if current tax, delinquent tax/penalty, or special assessments/fees, are all to be excluded from penalties for the 60-day waiver period?

Per Executive Order 20-05, all penalties are to be waived for property tax payments. Penalties for failure to pay special assessments or fees were not contemplated by Executive Order 20-05 because they are not considered property tax payments.

How is a partial payment to be considered? Currently the penalty applies to the entire late amount when it has not been completely paid by payments considered late.

Under IC 6-1.1-37-10(a), a penalty is imposed unless the property tax liability is paid in full. Therefore, penalties from partial payments are included in the waiver.

How does the 60-day penalty waiver period apply to the Annual Penalty on delinquent taxes? Currently at the time of the due date any unpaid prior year delinquent tax receives a 10% penalty.

Since Executive Order 20-05 specifies that all penalties on property tax payments made during the 60-day period after May 11, 2020 are waived, this would also apply to penalties from unpaid property taxes from prior years.

Is there a waiver of penalties for delinquent utility bills as well?

Executive Order 20-05 did not mandate a waiver for delinquent utility payments; however, Section 5 of the executive order does specify that providers of gas and electric utilities, broadband, telecommunication, water and wastewater services are prohibited from discontinuing service to any customer.

Tax Sales

How is the waiver of penalties for property tax payments going to impact our tax sales with the penalties coming on after the July 1 certification date?

Under IC 6-1.1-24-1.2(a), a property with a delinquent tax liability that has been placed on a tax sale list must remain on the list unless all of the delinquent taxes, penalties, interests, and costs directly attributable to the tax sale have been paid. Therefore, a property may be placed on a tax sale on July 1, 2020 with delinquent taxes and penalties. If the taxpayer makes the payment for the delinquent taxes between July 1, 2020, and July 10, 2020, the payment does not need to include the penalties otherwise associated with the delinquent taxes in order to be considered “paid in full.”

Since IC 6-1.1-24-1 specifies that properties may only be listed for tax sale after three (3) installments are considered delinquent under IC 6-1.1-37-10, the tax list that must be certified by July 1 will likely only include those properties that were previously placed on a tax sale list.

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