Glossary of Indiana Local Government Terms

 

Click on a letter, search the index or scroll down for definitions.

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Index. Click on the term to see a definition.

Appropriations
Assessor
Assessed Value
Association of Indiana Counties (AIC)
Auditor

Budget
Budget Form 4-B

CAGIT
CEDIT
Cities and Towns Association
COIT
Coroner
County
County Adjusted Gross Income Tax
County Association
County Economic Development Income Tax
County Option Income Tax

Department of Local Government Finance

EDIT
Exemptions

Fiscal Year
Food and Beverage Tax
Freeze, Property Tax
Fund

Hotel-Motel Tax
Homestead Credit
Homestead Deduction

Income Taxes, County
Indiana Association of Cities and Towns (IACT)
Innkeepers Tax
Inventory Tax

Legislative Services Agency
Local Government Finance, Department of

Market Value Assessment
Market Value Court Case
Motor Vehicle Excise Tax
Motor Vehicle Excise Surtax and Wheel Tax

Personal Property
Price Index
Property Tax
Property Tax Controls
Property Tax Credits
Property Tax Deductions and Exemptions
Property Tax Levy
Property Tax Rate
Property Tax Replacement Credits

Real Property
Reassessment
Recorder
Reversions

State Board of Accounts

State Board of Tax Commissioners (State Tax Board)
SPTRC
Standard Deduction

Tax Restructuring (June 2002)
Tax Review, Indiana Board of
Tax District

Town of St. John Court Case
Treasurer
True Tax Value

Use Value Assessment

Wheel Tax



A


Appropriations
Appropriations are authorizations to spend money out of a fund, made by a fiscal body such as a county council, city council, town board or school board. Appropriations are set in the local government's annual budget. Sometimes, however, appropriations are made but the money is not spent. In the state budget's general fund, such money reverts back to the general fund, so they are called reversions. Other times, additional appropriations are authorized above the initial budget appropriations. Thus, appropriations listed in the budget are spending authorized at the beginning of the fiscal year, but actual spending may be greater or less than appropriations.

Assessor
Assessors value property for property tax purposes. Indiana has both county and township assessors. The county assessor is an elected position established by state statute. The county assessor oversees, advises and instructs township assessors and township trustee-assessors in their duties. Townships with more than 8,000 people have elected township assessors. Those with 5,000 to 8,000 have the option to create a township assessor position. In townships with less than 5,000 people the township trustee performs assessing duties. Assessors at the township level collect information on the characteristics of real property. Some townships also set assessed values of property based on these characteristics, but in most counties the county assessor performs this "pricing" function.

Assessed Value
The base of the property tax. Assessed value is the dollar value of taxable property established by the assessor. Gross assessed value is assessed value before deductions are subtracted. Net assessed value is after deductions, and is the part of assessed value that is taxed. A government unit's tax rate times a taxpayer's net assessed value equals the amount the taxpayer owes to the unit (before credits); a unit's tax rate times total assessed value equals its gross tax levy. As of taxes payable in 2003, Indiana effectively became a market value state. This means that most property is assessed based on its predicted selling price. Prior to 2003, Indiana was one of two states that did not use market value, assessing instead based on a unique system called true tax value. The Indiana Supreme Court threw out the true tax value assessment rules in the Town of St. Johns case in 1998,. There are two types of assessed value: real property, which is land and buildings, and personal property, which is almost entirely business, utility and farm depreciable equipment.

Association of Indiana Counties (AIC)
The non-profit association of Indiana counties. AIC is lobbies the Indiana General Assembly on behalf of counties, serves as a liason between counties and state and federal agencies, and provides technical assistance and training to county government officials and employees. Click here to link to the AIC web page.

Auditor
The County Auditor is an elected position established in the State Constitution. Auditors are elected to four year terms, and may not serve more than eight years in any twelve. The county auditor is the county "fiscal officer", who assists with budget preparation and analysis, and keeps accounts. The county auditor serves as the secretary to the county commissioners and the county council. The auditor prepares tax duplicates showing property assessments and taxes due. The taxes are collected by the treasurer, but distributed by the auditor to the governmental bodies for which they are collected.

B


Budget
A budget is an estimate of revenues to be received and appropriations authorized for a fiscal year. It is essentially a plan for the use of a government's resources.

Budget Form 4-B
The Indiana State Board of Accounts prescribes several budget forms for use by Indiana local governments. Form 4-B, also known as the "16 line form" despite its 17 lines, is where the information from all other budget forms is collected, and used to calculate the property tax levy and tax rate. First, the form allows the local government to calculate the estimated remaining balance in a fund at the end of the budget year, December 31. Next the form adds the sum of estimated miscellaneous (non-property tax) revenues, to estimate the total non-property tax revenues available in the coming budget year. Next the form adds the sum of estimated expenditures for the coming budget year. The difference between expected expenditures and expected revenues is the amount that must be raised from property taxes. The property tax rate is this property tax levy divided by the assessed value of property and multiplied by 100.  Click here to see budget form 4-B (PDF file). 

C


CAGIT
See County Adjusted Gross Income Tax.

CEDIT
See See County Economic Development Income Tax.

Cities and Towns Association
See Indiana Association of Cities and Towns (IACT).

COIT
See See County Option Income Tax.

Coroner
The County Coroner is an elected position created in the Indiana Constitution. The coroner is charged with determining the manner of death in cases involving violence, casualty or unexplained circumstances. The coroner alerts the police or sheriff when notified of such a death. The coroner is required to employ a qualified physician if an autopsy is needed. When cause has been determined, the coroner files a report with the local health officer.

County
A county is a legal subdivision of the state. All of the state's land area is inside one of its 92 counties. Counties provide police protection through the sheriff's office, courts and jails, welfare aid, park and recreation services, health services, road and bridge construction and maintenance, and other functions. Officers of the county which are established by the Indiana Constitution include the clerk of the court, auditor, recorder, treasurer, sheriff, coroner and surveyor. Officers of the county established by statute include the county council members, county commissioners and county assessor.

County Adjusted Gross Income Tax (CAGIT)
One of Indiana's county income taxes. CAGIT may be adopted by the county council at a rate of 0.5%, 0.75% or 1%. Almost all counties use the 1% rate. Revenue is distributed to all jurisdictions within an adopting county. School corporations share in revenue generated by only the first one-quarter of one percent, while other jurisdictions share in all revenue collected. More than half of CAGIT revenue must be used for property tax relief. It is either directed subtracted from the property tax levy, or it causes a reduction in a jurisdiction's maximum levy. The remaining revenue is spendable, for any purpose. CAGIT revenue is collected by the state Department of Revenue and distributed back to the adopting counties. In mid-summer of each year the Department, after consulting the State Budget Agency, announces each county's certified distribution, which is the amount of income tax revenue the county will receive in the coming calendar year. The distribution amount is based on past income tax collections.

County Association
See Association of Indiana Counties (AIC).

County Economic Development Income Tax (CEDIT or EDIT)
One of Indiana's county income taxes. CEDIT is adopted by the county council if the county has the County Adjusted Gross Income Tax (CAGIT), the COIT council if the county has County Option Income Tax (COIT), and either body if the county has neither. Most counties that use CEDIT also have either CAGIT or COIT. CEDIT generally can be adopted at rates up to 0.5%, but the combined CAGIT and CEDIT rates in counties with both taxes cannot exceed 1.25%, and the combined COIT and CEDIT rates cannot exceed 1%. Revenue is divided among the county, cities and towns, and must be used for economic development or public capital projects. CEDIT revenue is collected by the state Department of Revenue and distributed back to the adopting counties. In mid-summer of each year the Department, after consulting the State Budget Agency, announces each county's certified distribution, which is the amount of income tax revenue the county will receive in the coming calendar year. Distributions are based on past revenue collections. An additional CEDIT rate may be added to fund a local homestead credit to offset the effect of inventory tax elimination on homeowers.

County Option Income Tax (COIT)
One of Indiana's county income taxes. COIT is adopted by the COIT council, which is a combination of the fiscal bodies of the county, and the cities and towns within the county. Votes on the COIT council are distributed based on shares in total county population, with the county's votes based on population in areas outside of cities and towns. COIT is adopted at a rate of 0.2% in the first year. The rate can rise by one-tenth of a percent per year to a maximum of 1%. Revenue is divided among all jurisdictions in an adopting county except school corporations. All COIT revenue is spendable. If the COIT council desires, part of COIT revenue can be used for a local homestead credit, to reduce property taxes for homeowners. COIT revenue is collected by the state Department of Revenue and distributed back to the adopting counties. In mid-summer of each year the Department, after consulting the State Budget Agency, announces each county's certified distribution, which is the amount of income tax revenue the county will receive in the coming calendar year.


D

Deductions
See Property Tax Deductions and Exemptions

E



EDIT
See County Economic Development Income Tax.

Exemptions
See Property Tax Deductions and Exemptions.


F


Fiscal Year
The fiscal year is the twelve month period for which a government budgets expenditures and revenues. In Indiana the local government fiscal year is the same as the calendar year, January 1 to December 31. The state government's fiscal year runs from July 1 to June 30.

Food and Beverage Tax
A few local governments have been authorized by the state legislature to collect a sales tax on food and beverage sales. The tax is one percent, and is added to the six percent state sales tax. It is collected by the state Department of Revenue and remitted to the local government. The tax is on restaurant food and beverages consumed in the restaurant or purchased "to go." Revenues are usually used for economic development and tourism projects.

Freeze, Property Tax
See Property Tax Controls

Fund
A fund is a government accounting device which is like a checking or savings account. Revenues are deposited in a fund, and expenditures are drawn from it. Almost every local government has a general fund, which is usually its largest and usually pays employee wages and salaries, among other expenditures. Most governments have other funds for specific purposes. Debt service funds are used to pay interest and principal on bonds. Cumulative funds are used to save for future capital expenditures. Road and street funds are used to pay for road and street maintenance. Each fund is accounted for separately, and usually there is no point in the budget process when all fund revenues or expenditures are added together.

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H

Homestead Credit
A percentage reduction in the property taxes paid by homeowners. Property is qualified for the homestead credit if it is owned and occupied by the taxpayer and is the taxpayer's primary residence. Homestead credits vary by taxing district. Homestead credits are calculated after assessed values and tax rates are set, so they reduce the amount of property tax revenue received by local governments. Lost revenue from the state homestead credit is replaced by state appropriations, which are paid to local governments to compensate. There are two local homestead credits. A few counties that have adopted the County Option Income Tax (COIT) use some of the income tax revenue to fund an additional local homestead credit. Many counties have adopted a homestead credit to offset the tax shift to homeowners that occured when the property tax on inventories ("inventory tax") was eliminated. These homestead credits are funded with an additional County Economic Development Income Tax (CEDIT). In 2005 the state decided not to fully fund the homestead credits. In 2006 and 2007 increases in the property tax levy will not result in increases in state homestead credit payments, so homeowner taxes will rise more.
 

Hotel-Motel Tax
See Innkeepers Tax.

I


Income Taxes, County
Most Indiana counties collect local income taxes. There are three, the County Adjusted Gross Income Tax (CAGIT), the County Option Income Tax (COIT), and the County Economic Development Income Tax (CEDIT or EDIT). Counties may adopt CAGIT or COIT, and/or CEDIT. The taxes are all collected based on state taxable income, the same tax base as the state income tax. They differ in the use local governments may make of the revenue. CAGIT revenue is distributed to all local governments, including school corporations. All the revenue schools receive from CAGIT must be used to reduce school property taxes. Part of the CAGIT revenue received by civil governments (counties, townships, cities and towns, library districts and other special districts) must be used for property tax reductions, and part can be added to local budgets. COIT revenue is distributed to all civil (non-school) governments. All of it may be added to local budgets, and spent for general purposes. CEDIT is distributed to counties, cities and towns only. The revenue may be added to budgets, but spent only on public capital projects (such as courthouses or jails) or economic development projects (such as industrial parks). An additional CEDIT rate can be adopted to offset the effect of inventory tax elimination on homeowners.

Indiana Association of Cities and Towns (IACT)
The association of Indiana cities and towns. IACT represents cities and towns in the Indiana General Assembly, and provides its members with information, training programs and technical assistance. It is a non-profit unincorporated association owned by the cities and towns of Indiana, funded primarily by member dues. Click here to link to the IACT web page.

Innkeepers Tax
Many counties collect a sales tax on the gross incomes of hotels and motels, known as the innkeepers tax or the hotel-motel tax. It may be adopted at the option of county governments at a rate up to 5 percent. Some counties have special legislation authorizing the tax, and some of these use a tax rate of 6 percent. Some counties collect and administer the tax themselves, but for most the state Department of Revenue collects the tax at the same time as the sales tax, and remits the revenue to the counties. In most counties the revenue is placed in a convention and visitors fund, to be used for the promotion of travel, conventions and tourism in the county.

Inventory Tax
Until taxes payable in 2007, the property tax applied to business inventories. There is no separate inventory tax; what is commonly known as the inventory tax is actually the property tax applied to the assessed value of business inventories, at the same tax rate as applied to land, buildings and equipment. In the tax restructuring of June 2002, the General Assembly agreed to eliminate the inventory tax. In the assessments of March 1, 2006, inventories will be assessed but a 100% deduction will be applied. Thus, in pay-2007, no property taxes will be paid on inventories. In the November 2004 election Indiana voters passed a constitutional amendment allowing the exemption of inventories. The legislature allowed counties to eliminate assessment of inventories early, and about one-third of all counties did so. Counties may adopt an added homestead credit, funded by an added County Economic Development Income Tax (CEDIT) rate, to offset the tax shift to homeowners that is caused by the elimination of inventories from the tax base. The inventory tax was the reason for the traditional "tax sale" held by auto dealers and other retailers in February. The sales were held so that inventories would be particularly low on March 1, which is the assessment date.

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Legislative Services Agency
The Indiana Legislative Services Agency (LSA) is the bill drafting and research arm of the Indiana General Assembly. It is comprised of three offices: the Office of Bill Drafting and Research (OBDR), the Office of Code Revision (OCR), and the Office of Fiscal and Management Analysis (OFMA). OFMA annually issues the Indiana Handbook of Taxes, Revenues and Appropriations, which is an extremely useful guide to state and local government revenues and expenditures. Recent handbooks are available on the General Assembly's publications website.
 
Local Government Finance, Department of
The Department of Local Government Finance (DLGF) is a state government agency charged with overseeing administration of the property tax. It was formerly known as the State Tax Board. The agency has a staff in Indianapolis and field employees throughout Indiana. Among the Tax Board's duties are to enforce the state's property tax controls, determine the rules for assessing real and personal property, and offer education to county and township assessing officials. Click here to link to the DLGF web page.


M


Market Value Assessment
A method of property assessment which sets property values for property tax purposes at their predicted sales prices in an "arms length" transaction. Indiana's 2002-03 reassessment valued property based on market value assessment, as a result of the Indiana Supreme Court decision in the Town of St. John court case. Market value can be estimated using three different methods, which are appropriate for different property types. The methods are comparative sales, which estimates the selling price for a property by comparing its characteristics to other properties that have recently sold; cost less depreciation, which estimates the selling price by calculating what it would cost to build the property, less depreciation; and income capitalization, which calculates what a buyer would be willing to pay for an income earning property by dividing the income earned by a rate of return. Farm land is assessed at its use value in agriculture. It is the only major category of property not assessed based on market value. Prior to 2002, Indiana was one of two states which did not use market value as a basis for assessing property (Nevada still does not). Instead, Indiana used a True Tax Value system, which set property assessments based on construction costs, less age-based depreciation, plus the market value of land.

Market Value Court Case
See Town of St. John Court Case.

Motor Vehicle Excise Tax
The motor vehicle excise tax is a local tax on the value of automobiles, light trucks and motorcycles. The tax payments vary based on the age and the initial retail price of the vehicle. Annual payments vary from $12 on the oldest and lowest priced vehicles, to $532 on the newest, most expensive vehicles. Taxpayers pay the tax each year when they register their vehicles. The license branches collect the tax. Motor vehicle excise tax revenue is distributed to all local governments based on shares in the property tax rate, and used for general purposes. The revenue is not used exclusively for road maintenance. In fact, statewide, school corporations receive about half of motor vehicle excise tax revenues. The motor vehicle excise tax was originally created in the early 1970s to replace the personal property tax on vehicles. In 1996 the legislature enacted a substantial cut in excise tax rates, and partially replaced this revenue for local governments out of lottery and riverboat gaming revenues.

Motor Vehicle Excise Surtax and Wheel Tax
These are county option taxes on vehicles, with revenue used by counties, cities and towns for road maintenance and repair. County councils may adopt these taxes together. The surtax may be set at between 2 percent and 10 percent of the motor vehicle excise tax payments by owners of automobiles, light trucks and motorcycles. Counties may instead impose a flat fee of between $7.50 and $25 per vehicle. The Wheel tax is a flat fee per vehicle (not per wheel) of between $5 and $40 on heavier vehicles. Taxpayers pay the surtax and wheel tax upon registration of the vehicle at the license branches. Revenues are distributed to the county, cities and towns, and must be used to construct, reconstruct, repair or maintain streets and roads.


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Personal Property
Personal property is almost entirely business, farm and utility depreciable equipment. Equipment owners pay property taxes on the assessed value of their personal property. Personal property includes equipment such as factory machinery, farm equipment such as tractors, and utility equipment such as electric generating machinery. Less than one percent of personal property is owned by individuals, mainly large recreational vehicles. Personal property is assessed annually by property owners, using forms that are usually distributed by township assessors. The assessment date is March 1. Prior to 1972 automobiles were assessed as personal property, but these taxes were replaced by the motor vehicle excise tax. Until 2006 personal property included business inventories, such as auto dealers 'stocks of vehicles, goods on retailers' shelves, farm livestock and stored grain, and fuel for utility plants. The property tax on the inventory portion of personal property was often called the inventory tax. The tax restructuring of June 2002, and the constitutional amendment of November 2004, created a 100% deduction for inventory assessments that will be applied in 2006, for taxes payable in 2007.

Price Index
A measure of the price level calculated by comparing the cost of a certain basket of goods and services in one year with the cost in a base year. The Consumer Price Index (CPI) is a commonly used price index in the United States. The National Income and Product Accounts, which contain measurements of Gross Domestic Product, also include price deflators. The GDP price deflator is another index which is often used. Percent changes in a price index measure the inflation rate. Price indexes are used to convert nominal figures into real figures. The Consumer Price Index is calculated from the total cost of a basket of goods and services which a typical consumer buys. In the United States, the CPI is published monthly by the Bureau of Labor Statistics. The market basket is established from a survey of consumer expenditures, and revised about once each decade. The base year for the index is the average of the indexes for 1982-84.

Property Tax
The primary source of revenue for local governments. The property tax is a tax on the assessed value of property. The tax rate times the assessed value owned by a taxpayer is what the taxpayer owes to the government (after deductions but before credits); the tax rate times the total assessed value of the government is the total tax levy. The state government also collects a very small part of the property tax, at a rate of less than one penny per $100 assessed value. The property tax is administered on the state level by the Department of Local Government Finance, and on the local level by the county and township assessors, the county auditor and the county treasurer.

Property Tax Controls
The system of state imposed restrictions on the ability of local governments to collect property taxes. For civil (non-school) governments, annual increases in operating levies are restricted to the six-year average of statewide personal income growth. Civil government cumulative funds have maximum rate limits, and most are also included within the operating levy ceiling. Debt service levies are not limited, though the Department of Local Government Finance can approve or reject local bond issues. School corporation levies are limited by rules set by the state school aid formula, which usually changes every two years.
 
Property Tax Credits
Property Tax Credits are percentages subtracted from property taxpayer tax bills after assessed values, deductions and tax rates have been calculated. They thus reduce the amount of revenue local governments collect from the property tax. Lost revenue is usually replaced by state payments or local revenues raised from other taxes. The property tax replacement credit and homestead credit are the most important property tax credits.

Property Tax Deductions and Exemptions
Deductions and exemptions reduce the assessed value of property upon which property taxes must be paid. Exemptions include whole categories of property which are not taxed. Exempt property includes property owned by government, not-for-profit corporations, property used for educational, scientific, literary, religious or charitable purposes, and many others. Some types of property are also exempt, irrespective of its owners, including pollution control equipment and wildlife habitats. Deductions are dollar amounts that may be subtracted from the asssessed value of otherwise taxable property, if the owner and property quality. Deductions include the homestead standard deduction, which allows most homeowners to subtract up to $35,000 from the assessed value of their primary residence, the mortgage deduction, which allows taxpayers to subtract $3,000 from the assessed values of their mortgaged residences; the 65 or over deduction, which allows people age 65 or over to subtract $3,000 from the assessed value of their residences. There are also deductions for veterans and people who are blind or disabled. Certain types of property qualify for deductions, including property equipped with solar energy heating systems and property equipped with resource recovery systems. Assessed value before deductions is gross assessed value; after deductions, net assessed value.

Property Tax Levy
The property tax levy is the revenue collected by a local government from the property tax. It is the sum of all the property tax payments that taxpayers make to the local government. While the levy is the product of the local government's property tax rate and its assessed value, the rate is actually calculated so that it will raise a particular levy dollar amount from the assessed value tax base. The levy amount is set initially to cover the difference between a local government's appropriations and its non-property tax revenues. This calculation is made on budget form 4-B. However, the levy is subject to a variety of state property tax controls which limit the amount that a local government can collect each year. The "gross levy" is the levy before property tax credits, and the net levy is the levy after these credits are subtracted. The net levy is the amount that property taxpayers actually pay to their local government.

Property Tax Rate
The property tax rate measures the share of a taxpayer's assessed value which must be paid in property taxes each year. It is measured in dollars per $100 assessed value, so it is equivalent to a percentage. If a taxpayer owns property assessed at $100,000 after deductions, for example, and the property tax rate is $2 per $100 assessed value, the taxpayer owes $2,000 in property taxes (before credits). The tax rate is determined by dividing a government's property tax levy (the revenue to be collected) by the property tax base (net assessed value), and multiplying by 100. The tax rate usually changes every year for each local government. The rate that a taxpayer pays is the sum of the property tax rates in all the jurisdictions in which his or her property is located (the "tax district"), always including the county, township and school corporation, often including a city or town, library district or other special district.

Property Tax Replacement Credits
State property tax replacement credits (PTRC or SPTRC) are revenues paid by the state government to local governments each year to reduce property taxes. They were created in 1973 and first paid in 1974. In 1974 an increase in the state sales tax from 2% to 4% generated the state revenue to fund the PTRC. Since the early 1980s state funds in addition to the two percentage points of the sales tax have been used to meet the PTRC revenue requirement. Since tax restructuring in June 2002, PTRC has equaled the sum of two calculations. The state pays 20% of operating tax levies charged to real and individual personal property. Operating levies do not include debt service, cumulative funds, capital projects funds, or excess levies. The state also pays 60% of the school corporation general fund levy. Real property owners are eligible for both parts of PTRC. Personal property owners are eligible for only the school 60%. Tax restructuring increased the PTRC payments to offset the effects of the 2002-2003 reassessment on homeowners. In 2005 the General Assembly decided not to fully fund the PTRC formula in 2006 and 2007. This means that PTRC percentage will fall in these years, and property taxpayers will pay a larger share of added property tax levies.


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Real Property
Real property is land and structures. The assessed value of real property composes the lion's share of the Indiana property tax base. Real property includes agricultural land and non-agricultural land, houses, commercial and factory buildings, and so forth. Real property is reassessed statewide on a fixed schedule. The most recent reassessment was in 2002, for taxes payable in 2003. In between statewide reassessments real property is reassessed when there is a change in land use or new construction. Starting with taxes payable in 2007, real property values will be updated annually to account for inflation. Structures are often referred to as improvements.

Reassessment
The process of updating the assessed values of real property for property tax purposes, to account for changing sales prices or construction costs. In Indiana, reassessments are done periodically on a statewide basis. The most recent reassessments have taken place for taxes payable in 1980, 1990, 1996, and 2003. The 2003 reassessment changed the basis for Indiana assessment to market value. The next reassessment is scheduled for taxes payable in 2011.

Recorder
The County Recorder is an elected position created by the Indiana Constitution. The recorder maintains public records which detail transactions in real estate, mining, personal property, mortgages, liens, leases, subdivision plats, and personal bonds. These include all records regarding titles to real property (land and buildings), which constitute the legal basis for ownership.
 
Reversions
Money that is appropriated in a budget for a fiscal year, but is not spent. In the state general fund, unspent money reverts to the general fund. There are reversions every year, because of the vagaries of spending and billing. During and after recessions, when revenues fall short, reversions often are part of the Governor's strategy for holding down spending. The Governor may ask state agencies to spend a certain percentage less than their appropriations.


S

 

State Board of Tax Commissioners
or State Tax Board
The former name of the Department of Local Government Finance and the Indiana Board of Tax Review. In 2002 the property tax oversight and appeals functions were split between these two bodies, and the Tax Board ceased to exist.

State Board of Accounts
The State Board of Accounts audits the financial statements of all governmental units within the state, including counties, cities, towns, school corporations, and state agencies. The Board evaluates government financial statements using professional auditing standards required of all independent audit organizations. The Board sometimes performs Investigatory audits when fraud or noncompliance with statutes is suspected. Click here to link to the State Board of Accounts website.


T


Tax District
An area with a particular combination of county, township, school corporation and other local property tax rates. The tax rate that a taxpayer pays is the sum of the rates of the overlapping county, township, school corporation and (possibly) city or town, library district and special district tax rates. A tax district is an area with a particular combination of overlapping units.
 
Tax Restructuring (June 2002)
In June 2002 the General Assembly passed the most significant tax changes in Indiana in 20 years. Restructuring came about in part because of the revenue shortfalls caused by the recession, and in part because of major property tax shifts expected from the 2002-03 reassessment. The sales tax was increased from 5% to 6%. Tobacco and riverboat gaming taxes were also raised. About two-thirds of the added revenue was paid out to local governments for property tax relief, in the form of additional property tax replacement credits. The remainder was added to the state budget. Restructuring also effectively converted Indiana to a market value assessment state, reformed the corporate income tax, and provided for elimination of the inventory tax.

 

Tax Review, Indiana Board of
The Indiana Board of Tax Review is the state body to which property owners may appeal their assessments. If property owners believe there has been an assessment error, they first appeal to local county or township assessors. The next step is to the county-wide County Property Tax Assessment Board of Appeals (PTABOA). Then appeals are made to the Board of Tax Review. If further appeal is needed, the taxpayer may appeal to the Indiana Tax Court. Click here for a link to the Board of Tax Review's website.

Town of St. John Court Case
A court case which tested whether Indiana's true tax value property assessment system was unconstitutional. On December 4, 1998, the Indiana Supreme Court decided that the statute governing assessment procedures was constitutional, but that the regulations or assessment rules designed by the (then) State Board of Tax Commissioners were unconstitutional. The case was originally filed in 1993 by taxpayers from the Town of St. John in Lake County. In May 1996 the Indiana Tax Court found that the true tax value assessment system violated the uniformity in taxation requirement of the Indiana Constitution. The court reasoned that uniformity could only be achieved through a market value assessment system, and since Indiana's system is not based on market value, it is unconstitutional. In December 1996 the Indiana Supreme Court vacated the Tax Court's finding, and remanded it back to the Tax Court for reconsideration. The Supreme Court found that the Constitutional requirement for uniform taxation does not imply that a market value system must be used. It told the Tax Court to reconsider. In December 1997 the Tax Court again found the true tax value system unconstitutional, this time because it is not based on a real world, objective measure of property wealth (whether market value or some other objective measure). The Supreme Court's final decision on the case in December 1998 found that the statute was constitutional because it allows (though does not require) market value methods. The regulations were found unconstitutional because they lacked "meaningful reference to property wealth." The court also found that use value assessment was constitutional. The Department of Local Government Finance (successor to the State Tax Board), and the General Assembly in the June 2002 tax restructuring, rewrote the assessment rules based on market value. These rules were applied in the 2002-2003 reassessment. Click here to see the full text of the Court's decision.

Treasurer
The county treasurer collects property taxes, and receives revenues from taxes collected by the state, such as the local income taxes. The treasurer oversees parts of the tax sale process in the case of delinquent property taxes. The treasurer has investment responsibility for county funds.

True Tax Value
Before the 2002-03 reassessment, true tax value was the standard for assessment of property for property tax purposes used in Indiana. Technically, assessed values in Indiana are still called "true tax values," though they are now calculated on a market value basis. For real property, true tax value was the market value of land, as determined by local land commissions, plus the replacement cost of structures. Replacement cost is the amount required to build the structure new, adjusted for factors such as condition and neighborhood quality, less depreciation. The reduction for depreciation increased with time regardless of the condition of the structure. Agricultural land was assessed at its use value. Until 2001-02, assessed value was one-third of true tax value.

U


Use Value Assessment
The assessment of property for property tax purposes at its value as currently used, without regard to its value in another "higher" use. All but one state (Michigan) assesses farm land at its use value, without regard for its higher value were it to be developed for residential, commercial or industrial use. In Indiana, the assessed value of farm land is calculated at a base rate of $1,050 per acre, adjusted for soil productivity and other influences, like forest cover or tendency to flood. The base rate is calculated using a capitalization formula, dividing the earnings per acre from sales of crops by an interest rate. This is use value because assessments vary only with factors that influence the land's value in agriculture. For taxes payable in 2006 and 2007, the base rate has been reduced to $880 per acre. Use value contrasts with market value. The market value of farm land would be its predicted selling price, which would reflect its potential value in non-agricultural use.

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Wheel Tax
See Motor Vehicle Excise Surtax and Wheel Tax


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