Glossary of Indiana Local Government Terms
Click on a letter, search the index or scroll down for definitions.
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
- 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.
- 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).
- 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.
Deductions
See Property Tax Deductions and Exemptions
- EDIT
- See County Economic Development Income
Tax.
- Exemptions
- See Property Tax Deductions and Exemptions.
- 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.
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.
- 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.
- 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.
-
- 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.
- 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.
- 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.
-
-
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.
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.
- 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.
- Wheel Tax
- See Motor Vehicle Excise Surtax and
Wheel Tax