Taxation and Public Finance
Senate Again Looking at Substantial Expansion to the Small Business Personal Property Exemption
SB 150 – Business Personal Property Tax Exemption
Authored by Sen. Aaron Freeman (R-Indianapolis)
Summary: Increases the acquisition cost threshold for the business personal property tax exemption from $80,000 to $250,000.
Chamber position: Support
The latest: Heard in Tax and Fiscal Policy Committee; held for further consideration.
Indiana Chamber action/commentary: This bill will bring an additional 48,000 small business personal property taxpayers under the personal property tax exemption threshold. The threshold (based on the acquisition cost of the taxpayer’s personal property) started out at $20,000 and has been doubled twice; last year from $40,000 to $80,000. By raising it to $250,000, it is estimated that the exemption would now cover 90% of all current personal property taxpayers. With a steady focus on personal property tax, this exemption has been a priority item for the Chamber since its inception in 2015. We are very excited to see the Senate continue to work on relieving small businesses from this tax and through our detailed testimony, made the merits of this bill and our support clear.
Senate Also Considering the 30% Minimum Depreciation Floor
SB 378 – Assessment of Business Personal Property
Authored by Sen. Brian Buchanan (R-Lebanon)
Summary: Increases the acquisition cost threshold for the business personal property tax exemption from $80,000 to $250,000. Provides an exemption for business personal property regardless of the acquisition cost that applies only if the property is placed in service in calendar year 2023. Allows the exemption for the entire useful life of the property. Requires the department of local government finance to adopt rules to amend the Indiana Administrative Code to reduce the minimum valuation percentage for depreciable personal property from 30% to 27.5% for the 2023 assessment date, and to 25% for assessment dates beginning in 2024 and thereafter. Amends the county option exemption for business personal property to allow counties to adopt an exemption ordinance that applies only to the first five-year period after new business personal property is placed in service and that would require the personal property to be placed back on the tax rolls beginning in the sixth year of its useful life. Makes conforming changes.
Chamber position: Support
The latest: Heard in Tax and Fiscal Policy Committee; held for further consideration.
Indiana Chamber action/commentary: This bill was heard in conjunction with SB 150 (above). It too includes the significant expansion of the exemption threshold. But it throws another relevant item on the table, the 30% depreciation floor. This subject is a top priority of the Chamber, not to mention the Governor and the House. So nice to see the attention being given to this subject that has so long been a thorn in the side of our tax policy, and which makes Indiana’s taxation of personal property all the worse. This bill and the way it is being presented appears to be putting a variety of approaches to addressing the floor in play and inviting a discussion of the advantages and disadvantages of each. As discussed above, the Chamber is all-in on raising the exemption threshold. And any manner of dealing with the depreciation floor is welcomed. We are communicating our views on the various approaches and will support the decision that the committee arrives at regardless of their choices – so long as they keep the subject on the table.
DLGF Bill Includes Changes to Property Tax Appeal Procedures
HB 1260 – Department of Local Government Finance
Authored by Rep. Dan Leonard (R-Huntington)
Summary: Provides that a county assessor shall provide electronic access to property record cards on the county’s official web site. Provides that the authority of a property tax assessment board of appeals (county board) is not limited to review the ongoing eligibility of a property for an exemption. Defines the term “taxpayer” for purposes of the procedures for review and appeal of assessments and corrections of errors. Provides that in an appeal, an assessment as last determined by an assessing official or the county board is presumed to equal a property’s true tax value until rebutted by evidence presented by the parties. Provides that a county auditor shall submit a certified statement to the Department of Local Government Finance (DLGF) not later than September 1 in a manner prescribed by the DLGF. Specifies certain dates with regard to the adjustment of maximum tax rates after a reassessment or annual adjustment. For reports filed by county boards with the DLGF, changes the requirement for the total number of “notices” to be filed to the total number of “appeals” to be filed. Requires additional information to be filed in such reports. Provides that the term “tax representative” does not include an attorney who is a member in good standing of the Indiana bar or any person who is a member in good standing of any other state bar and who has been granted temporary admission to the Indiana bar in order to represent a party before the property tax assessment board of appeals or the DLGF. Provides that the DLGF may not review certain written complaints if such a complaint is related to a matter that is under appeal. Provides that for certain airport development zones and allocation areas established after June 30, 2024, “residential property” refers to the assessed value of property that is allocated to the 1% homestead land and improvement categories in the county tax and billing software system, along with the residential assessed value as defined for purposes of calculating the rate for the local income tax property tax relief credit designated for residential property. Provides formulas for school corporations that propose to impose property taxes under a referendum tax levy. Provides that the property tax rate imposed under the provision for the Public Safety Officers Survivors’ Health Coverage Cumulative Fund is exempt from the adjustment of maximum tax rates after reassessment or annual adjustment. Removes the sunset provision on the $1 pro bono legal service fee. Repeals various property tax provisions.
Chamber position: Oppose in part
The latest: Heard in Ways and Means Committee; held for amendments and later vote.
Indiana Chamber action/commentary: The Chamber joined others in bringing attention to the potential negative impacts of rewording the burdens that assessors face in justifying their assessments in the course of an appeal to the Indiana Board of Tax Review (IBTR). Current statutory language requiring the assessor to demonstrate that their new assessment is “correct” when it is increased by more than 5% is being removed in reaction to a Supreme Court case that officials believe hamstrings the IBTR’s ability to evaluate the evidence and reach a justified assessment. The bill’s objective in repealing the existing burden is to make clear that the IBTR can reach its own determination of the proper assessment based on the “totality of evidence” the parties present. In cases over 5%, the assessor would still be required to present sufficient evidence to justify the increase, but the rewording places a lot of discretion in the hands of the IBTR in weighing the evidence to reach a compromised assessment. Our concern is primarily how such a change might subtly alter current appeal practices. We will engage to make it clear in the new language that the assessor remains obligated to present sufficient evidence to substantiate the increase before the IBTR can rule in their favor.
Resource: Bill Waltz at (317) 264-6887 or email: bwaltz@indianachamber.com
