Citations Affected: IC 6-1.1-22; IC 6-1.1-45.
Synopsis: Deferral of property tax payments. Allows a taxpayer who
meets income, net worth, and either age or disability requirements to
defer payment of the taxpayer's property tax liability on the taxpayer's
principal place of residence (excluding amounts for which the taxpayer
would have been eligible for a credit if the taxpayer had filed for it)
until the taxpayer dies, sells the property, or otherwise becomes
ineligible to defer the taxes. Requires a county to deposit money
collected from deferred taxes in a county tax deferral revolving fund.
Provides for replacement of deferred taxes through distributions from
the state and transfers from a county tax deferral revolving fund. Makes
Effective: July 1, 2004.
January 20, 2004, read first time and referred to Committee on Ways and Means.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation and to make an appropriation.
(3) shall be delivered to the department of state revenue. The county
auditor shall prepare the abstract in such a manner that the information
concerning property tax deductions reflects the total amount of each
type of deduction. The abstract shall also contain a statement of the
taxes and penalties unpaid in each taxing unit at the time of the last
settlement between the county auditor and county treasurer and the
status of these delinquencies. The county auditor shall prepare the
abstract on the form prescribed by the state board of accounts. The
auditor of state, county auditor, and county treasurer shall each keep a
copy of the abstract in his office as a public record.
place of residence; and
(3) either spouse:
(A) is at least sixty-five (65) years of age (or will be at least sixty-five years (65) of age in the year when tax liability being deferred is first due and payable); or
(B) is permanently and totally disabled.
(c) The fact that a person who otherwise qualifies for tax deferral is residing in a hospital, a nursing home, a convalescent home, or another facility for physical or mental care for extended periods shall not be construed to mean that the real property for which tax deferral is sought does not continue to be the principal place of residence of the person during any time during which the real property is not used by or leased to others for consideration.
Sec. 7. The following is the only real property eligible for tax deferral under this chapter:
(1) Residential real property improvements that are used as described in section 6 of this chapter, including a house or garage.
(2) Not more than one (1) acre of land that immediately surrounds the residential real property improvements and is used for residential purposes.
Sec. 8. (a) Subject to subsections (c), (d), and (e), real property is ineligible for tax deferral under this chapter if the total combined income received from all sources by the:
(1) owners of the real property who use it as their principal place of residence; and
(2) owners' relatives who live at the real property;
during the calendar year immediately preceding the year in which an assessment date occurs for taxes being deferred under this chapter exceeds the amount determined under subsection (b).
(b) The amount used in determining eligibility under subsection (a) is the greater of:
(1) thirty thousand dollars ($30,0000); or
(2) the income limit:
(A) set for a household of the same size in the metropolitan statistical area (or other area prescribed by the department of local government finance) where the real property is located; and
(B) annually published by the Department of Housing and Urban Development for qualifying for federal housing assistance under Section 235 of the National Housing Act (12 U.S.C. 1715z).
combined financial worth under subsection (a).
Sec. 10. Real property is ineligible for tax deferral under this chapter if any owner of the real property is delinquent on any part of property taxes or special assessments for the real property for which deferral is sought.
Sec. 11. (a) The department of local government finance shall prescribe forms for use under this section.
(b) Subject to subsection (c), real property is not eligible for tax deferral under this chapter unless a person annually files an application, on forms supplied by the county auditor, with the county auditor for the county in which the real property is located. The application must be made under oath or affirmation and include the following information:
(1) The names of the related persons occupying the real property.
(2) The names of all owners of the real property.
(3) The combined total income from all sources of the persons specified in section 8 of this chapter.
(4) The total combined net financial worth, including equitable interests, of the persons specified in section 9 of this chapter.
(5) Any other information required by the department of local government finance.
(c) If a county auditor elects to apply this subsection to the county served by the county auditor, a person applying for a tax deferral in that county may:
(1) file the application required under subsection (b) on a three (3) year cycle; and
(2) in the intervening years file an annual certification under oath or affirmation that:
(A) contains a statement that no information contained on the most recently filed application has changed in a manner that makes the real property ineligible for tax deferral under this chapter; and
(B) includes any other information required by the department of local government finance.
Applications and annual certifications filed under this subsection must be filed on forms supplied by the county auditor.
Sec. 12. (a) Subject to subsection (b), if a person is less than sixty-five (65) years of age, an application filed under section 11(b) or section 11(c)(1) of this chapter must be submitted with:
(1) a certification by the United States Social Security
Administration, the Indiana department of veterans affairs,
the United States Department of Veterans Affairs, or the
United States Railroad Retirement Board that indicate that
each owner that is required to be permanently and totally
disabled to receive a tax deferral is permanently and totally
(2) if the person is not eligible for certification by any of the agencies described in subdivision (1), an affidavit made under oath or affirmation by two (2) physicians who are:
(A) licensed to practice medicine in Indiana; or
(B) military officers on active duty who practice medicine with any branch of the United States Armed Forces;
to the effect that the person is permanently and totally disabled and that the determination is based on examinations and information that meet or exceed the requirements under subsection (c).
(b) A person who submits a certification issued under 42 U.S.C. 423(d) by the United States Social Security Administration shall be treated as meeting the requirements of subsection (a) and section 6(a)(2)(B) of this chapter so long as the person remains eligible for the Social Security benefits.
(c) To meet the requirements of subsection (a)(2), the affidavit of at least one (1) of the physicians must be based on a physical examination of the person by the physician. The affidavit of one (1) of the physicians may be based on medical information contained in records of the United States Civil Service Commission that are relevant to the standards for determining permanent and total disability.
Sec. 13. (a) Subject to subsections (b) and (c), documents described in sections 11 and 12 of this chapter must be filed:
(1) after January 1; and
(2) before March 1;
in a year.
(b) A county auditor may allow a later filing:
(1) by first time applicants; and
(2) for hardship cases.
(c) First time applicants may file an application while they are sixty-four (64) years of age so their deferral will become effective during the taxable year when they become sixty-five (65) years of age.
Sec. 14. (a) A county auditor shall grant a tax deferral for taxes imposed on real property that qualifies for the tax deferral under
sections 6 through 13 of this chapter.
(b) Before granting the tax deferral, the county auditor may make any reasonably necessary inquiry of an applicant, requiring answers under oath or affirmation, to determine whether real property is eligible for tax deferral under this chapter.
(c) Inquiries under subsection (b) may include inquiries about life insurance benefits paid upon the death of an owner of otherwise qualified real property.
(d) A county auditor may require an applicant to produce certified tax returns to establish combined total income or total combined net financial worth.
(e) The county auditor shall give written notice of the approval of a tax deferral to the following in the form prescribed by the department of local government finance:
(1) The county treasurer.
(2) The applicant for the tax deferral.
Sec. 15. Subject to section 19 of this chapter, a tax deferral granted for an application or annual certification that is filed within the time allowed under section 13(a) of this chapter, as extended by any period allowed under section 13(b) of this chapter, applies to property taxes first due and payable in:
(1) the year immediately following the year the application or annual certification is due under section 13(a) of this chapter; or
(2) any other period determined by the department of local government finance, if a due date that would otherwise apply under IC 6-1.1-22-9 in that year is extended.
Sec. 16. The amount eligible for deferral in a year under this chapter is equal to the property taxes first due and payable in the year for qualified real property after applying the part of all credits for which the person responsible for paying the taxes would be eligible, regardless of whether the person has applied for the credits. If a credit is applicable both to qualified real property and other property, the credit shall be apportioned to the qualified real property in proportion to the relative assessed value of the qualified real property or any other method that provides for a just allocation of the credit to the qualified real property.
Sec. 17. (a) Subject to subsection (b), deferred property taxes constitute a lien on the qualified real property to the same extent as if they had been assessed without regard to the tax deferral permitted under this chapter. The lien attaches at the same time that the lien would have attached if the taxes had not been
(b) The lien, to the extent that it exceeds, in total, ten percent (10%) of the fair market value of the qualified real property, is inferior to all other liens of record.
Sec. 18. An amount that is deferred under this chapter is subject to interest computed at the federal short term rate determined under Section 6621 of the Internal Revenue Code for one (1) year following the date that the amount would otherwise be due if payment of the tax liability had not been deferred. The deferred amount and interest is not subject to interest in subsequent years as long as the deferral stays continuously in effect.
Sec. 19. A grant of a tax deferral under this chapter is nullified if changes in income, net combined financial worth, ownership of property, or other factors occur before or during the taxable year for which an application or annual certification is filed that have the effect of exceeding or violating the limitations and conditions of the tax deferral.
Sec. 20. (a) Subject to sections 21 and 22 of this chapter, the accumulated amount of property taxes that is deferred under this chapter, plus interest at the rate determined under section 18 of this chapter, is first due and payable to the county treasurer of the county where the qualified real property is located on the earlier of:
(1) the date that the qualified real property is sold; or
(2) one (1) year after the last owner who qualifies for a tax deferral under this chapter dies.
(b) Deferred property taxes are not subject to penalty if paid not later than the due date determined under this section.
Sec. 21. If:
(1) the qualified real property is owned jointly; and
(2) all the owners are qualified for a tax deferral under this chapter before the death of a joint owner;
the death of a joint owner does not disqualify the survivor or survivors from continued tax deferrals.
Sec. 22. If the real property ceases to qualify for tax deferral under this chapter for any reason other than the occurrence of an event described in section 20 of this chapter, accumulated deferred tax and interest is first due and payable on the later of:
(1) the next regular installment date determined under IC 6-1.1-22-9 after the disqualifying event occurs; or
(2) the regular installment date when the property tax would otherwise be first due and payable as determined without
regard to this chapter.
Sec. 23. An amount that is not paid by the date that it is due under this chapter shall be treated as delinquent taxes. The penalties provided for the failure to pay delinquent taxes begin to accrue after the next regular installment date for property taxes that are first due and payable in that year.
Sec. 24. Upon receipt of a payment of deferred taxes and interest, regardless of whether the payment is voluntarily made or made as the result of an action to collect delinquent taxes, the county treasurer shall deposit the amount collected in a county tax deferral revolving fund. Money in the county tax deferral revolving fund may be used only under section 27 of this chapter to replace taxes subject to deferral.
Sec. 25. For purposes of computing the ad valorem property tax levy limits or tax rate limits imposed under IC 6-1.1-18.5-3 or another provision, a taxing unit's ad valorem property tax levy for a particular calendar year includes that part of the levy deferred under this chapter in the year that it is deferred.
Sec. 26. (a) The department of state revenue shall distribute from the state general fund to the county treasurer an amount equal to the amount of the deferred taxes certified under IC 6-1.1-22-5 for the year, less the amount in the county's tax deferral revolving fund that is available to replace taxes subject to deferral.
(b) The distributions shall be made on the same schedule as property tax replacement credits under IC 6-1.1-21-4 and IC 6-1.1-21-10.
(c) The amounts distributed under subsection (a) shall be treated as an estimated distribution to replace deferred taxes. Any error in the amount distributed under this section shall be corrected on the next settlement date after the error is discovered.
(d) The amounts necessary to make the distributions required by this section are annually appropriated from the state general fund.
Sec. 27. (a) A county treasurer shall distribute the sum of:
(1) the amounts distributed from the state under section 26 of this chapter; and
(2) the amount in the county's tax deferral revolving fund that is available to replace taxes subject to deferral;
among taxing units as if the amounts had been collected as property taxes.
(b) An amount distributed under this section is available for use
by a taxing unit to the same extent and in the same manner as if the
amount had been collected as taxes.
(c) Any error in the amount distributed under this section shall be corrected on the next settlement date after the error is discovered.