Sections of the Tax Restructuring Bill

Sections of the Tax Restructuring Bill, HEA1001(ss), passed on June 22, 2002, that deal with property taxes on inventories.

SECTION 30. IC 6-1.1-10-29, AS AMENDED BY P.L.90-2002, SECTION 100, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003]: Sec. 29. (a) As used in this section, "manufacturer" or "processor" means a person that performs an operation or continuous series of operations on raw materials, goods, or other personal property to alter the raw materials, goods, or other personal property into a new or changed state or form. The operation may be performed by hand, machinery, or a chemical process directed or controlled by an individual. The terms include a person that:
        (1) dries or prepares grain for storage or delivery; or
        (2) publishes books or other printed materials.
    (b) Personal property owned by a manufacturer or processor is exempt from property taxation if the owner is able to show by adequate records that the property:

        (1) is stored and remains in its original package in an in-state warehouse for the purpose of shipment, without further processing, to an out-of-state destination; or
        (2) is inventory (as defined in IC 6-1.1-3-11) that will be used in an operation or a continuous series of operations to alter the personal property into a new or changed state or form and the resulting personal property will be shipped, or will be incorporated into personal property that will be shipped, to an out-of-state destination; or
        (3) consists of books or other printed materials that are stored at an in-state commercial printer's facility for the purpose of shipment, without further processing, to an out-of-state destination.
    (c) Personal property that is manufactured in Indiana and that would be exempt under subsection (b)(1), except that it is not stored in its original package, is exempt from property taxation if the owner can establish in accordance with exempt inventory procedures, regulations, and rules of the department of local government finance that:
        (1) the property is ready for shipment without additional manufacturing or processing, except for packaging; and
        (2) either:
            (A) the property will be damaged or have its value impaired if it is stored in its original package; or
            (B) the final packaging of finished inventory items is not practical until receipt of a final customer order because fulfillment of the customer order requires the accumulation of a number of distinct finished inventory items into a single shipping package.
    (d) A manufacturer or processor that possesses personal property owned by another person may claim an exemption under subsection (b) or (c) if:
        (1) the manufacturer or processor includes the property on the manufacturer's or processor's personal property tax return; and
        (2) the manufacturer or processor is able to show that the owner of the personal property would otherwise have qualified for an exemption under subsection (b)(1), (b)(3), or (c).

SECTION 34. IC 6-1.1-12-42 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2003]: Sec. 42. (a) As used in this section, "assessed value of inventory" means the assessed value determined after the application of any deductions or adjustments that apply by statute or rule to the assessment of inventory, other than the deduction established in subsection (c).
    (b) As used in this section, "inventory" has the meaning set forth in IC 6-1.1-3-11.
    (c) A taxpayer is entitled to a deduction from assessed value equal to one hundred percent (100%) of the taxpayer's assessed value of inventory beginning with assessments made in 2006 for property taxes first due and payable in 2007.
    (d) A taxpayer is not required to file an application to qualify for the deduction established by this section.
    (e) The department of local government finance shall incorporate the deduction established by this section in the personal property return form to be used each year for filing under IC 6-1.1-3-7 or IC 6-1.1-3-7.5 to permit the taxpayer to enter the deduction on the form. If a taxpayer fails to enter the deduction on the form, the township assessor shall:
        (1) determine the amount of the deduction; and
        (2) within the period established in IC 6-1.1-16-1, issue a notice of assessment to the taxpayer that reflects the application of the deduction to the inventory assessment.
    (f) The deduction established by this section must be applied to any inventory assessment made by:
        (1) an assessing official;
        (2) a county property tax assessment board of appeals; or
        (3) the department of local government finance.