Indiana Property Tax Legislation – 2020 Summary

Indiana Property Tax Legislation – 2020 Summary

The 2020 “short” (non-budget) session of the Indiana General Assembly concluded in March. Following is a summary of two acts addressing various property tax matters that passed.  The summary highlights assessment and exemption provisions in those bills.  It is not an exhaustive list.  Readers are encouraged to visit the General Assembly’s web site for more information on all bills considered and passed in the session.

House Enrolled Act 1065 / P.L. 154-2020

1. Personal Property Tax: Definition of “Inventory” Clarified.  Ind. Code § 6-1.1-1-8.4 (eff. January 1, 2014) includes “uniforms, garments, linens, and facilities services supplies owned, held, possessed, or controlled for the purpose of rental or lease in the ordinary course of trade or business” as non-taxable “inventory.”

2. Industry classification is not a factor in determining a taxpayer’s status as a “land developer” for the “developer’s discount.” Ind. Code § 6-1.1-4-12(a) is amended to include the following: “The determination of whether a person qualifies as a land developer [for purposes of the developer’s discount] shall be based upon whether such person satisfies the requirements contained in this subsection, and no consideration shall be given to either the person’s industry classification, such as classification as a developer or builder, or any other activities undertaken by the person in addition to holding land for sale in the ordinary course of the person’s trade or business.”

3. Taxpayer’s may challenge overpayments of personal property tax discovered in audits, due to errors that assessors fail to correct. Ind. Code § 6-1.1-9-10(c) (eff. Jan. 1, 2109) permits a taxpayer who believes it has overreported its personal property tax value and that purported error is discovered during an assessor’s audit, but the assessor fails to correct the error, to (a) file an appeal for a credit to offset any overpayments or (b) file a claim for refund under Ind. Code § 6-1.1-26-1.1 for any overpayments. Ind. Code § 6-1.11-15-3(a)(2) (eff. Jan. 1, 2019) is added to give the IBTR authority to hear the denial of a refund claim, with the assessor designated to defend the denial; taxpayer must file a claim within 45-days of the refund claim denial (and must provide the auditor a copy of the petition). Ind. Code § 6-1.1-26-2.1(d) (eff. Jan. 1, 2019) is amended to authorize the appeal to the IBTR.

House Enrolled Act 1113 / P.L.159-2020

1. DLGF may amend certain personal property tax regulations to comply with legislative changes. Ind. Code § 6-1.1-3-22 prohibits the DLGF from the amendment or repeal of certain personal property tax rules under 50 IAC 4.2. Subsection (f) is modified (eff. July 1, 2020) to provide: “However, the department of local government finance may amend these rules to conform with statutory changes.”

2. Assessor shall request and analyze golf course financials (deemed confidential) for three years to determine average net operating income to apply the income approach. Indiana Code § 6-1.1-4-42 requires assessment of golf courses using the income approach to value. Effective January 1, 2020, it was modified:

a.  “Golf course” expressly includes “yard improvements,” which “include a clubhouse, irrigation systems, a pro shop, a maintenance building, a driving range, a structure for food and beverage services, or other buildings associated with the operation of and included in the net operating income of a golf course.”
b.  The DLGF must annually establish uniform capitalizations rates and may rely on “recognized sources of industry capitalization rates.”
c.  New Subsection (g) instructs assessors to request – and owners to provide – income and expense data for the prior three years (and may verify with federal tax returns):

(g) On or before December 31 of each year, assessing officials shall solicit, and the owners or operators of a golf course shall provide to the assessing officials, data for the gross income and allowable operating expenses for the three (3) years immediately preceding the year in which the solicitation and submission of data is being made. Assessing officials may use federal tax returns or other similar evidence as verification that the submissions are correct.

d.  New Subjection (h) provides that assessors shall examine the three years of data to determine the average net operating income.
e.  Per New Subsection (i): “All income and expense information provided to the assessing official under this section is confidential under IC 6-1.1-35-9.”

3. “Industrial facility” now defined as $35 Million and above. For purposes of “industrial facilities” that are or may be assessed by DLGF, the definition under Indiana Code §§ 6-1.1-8.5 and -8.7 is increased from $25 Million to $35 Million and above, effective July 1, 2020.

4. Change of ownership or use removes property tax exemption for next assessment date (if property becomes ineligible). Indiana Code § 6-1.1-11-4(e) clarifies that a change of ownership or use of an exempt property after the assessment date, where the change results in the ineligibility for the exemption, eliminates the exemption for the next assessment date.

5. When a taxpayer appeals the change to personal property tax returns, County Boards do not have to issue rulings on a tight deadline. Effective July 1, 2020, under Ind. Code § 6-1.1-16-1 a county assessor and the County Board/PTABOA (acting in its assessment capacity) must make a change to a taxpayer’s personal property tax return by October 30th or within five (5) months of the return’s filing (if filed after the filing date). A taxpayer may challenge the change by filing an appeal under Indiana Code § 6-1.1-15-1.1. The County Board is no longer required to make a decision on the appeal under the same time restrictions. A taxpayer may appeal the County Board’s decision to the Indiana Board. The provision permitting the assessor to initiate an appeal under Ind. Code § 6-1.1-16-2, if the tight deadline is not met by the County Board, is eliminated.

6. Property tax refunds above $500,000+ may be applied as credits over 5, 7 or 10 years (depending on size of refund). Effective January 1, 2020, Ind. Code § 6-1.1-26-4.2 is added to apply to refunds from real property tax appeals for assessment dates after December 31, 2014. Auditors can elect to apply credits in lieu of refunds in equal installments as follows:

Amount of Refund                     Number of Years for Credits                                                                          (after appeals are concluded)

$500,000 – <$5 Million                                      5 years
$5 Million – < $10 Million                                   7 years
$10 Million and above                                      10 years

a.  The auditor may elect to accelerate credits or to provide a full or
partial refund within the periods specified.
b.  If “a claimant is no longer the taxpayer for the property on which the appeal was filed, the overpayment shall not be applied as a credit and the overpayment
may be refunded in equal installments” over the specified period.

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