Citations Affected: IC 6-3.5-6; IC 6-3.5-7-5.
Synopsis: Penal county option income tax. Allows a county to increase
its county income tax rate by 0.25% to finance county penal operations.
Provides that money distributed to finance county penal operations is
distributed before the rest of the county's distributive shares. Requires
a county penal facility that receives county option income tax revenue
to maintain its current level of operational funding from the county
general fund. Provides that the combined tax rate for a county that
imposes a county option income tax under these provisions and a
county economic development income tax may not exceed 1.25%.
Effective: July 1, 2005.
January 18, 2005, read first time and referred to Committee on Ways and Means.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
adopted before April 1 in the year in which the additional
penal county option income tax rate first takes effect.
(2) Designate the county option income tax revenue generated
by a part of the tax rate, not to exceed twenty-five hundredths
percent (0.25%), as penal county option income tax revenue
that will be used to pay the costs described in subsection (a).
An action to designate a part of the county option income tax
revenue as penal county option income tax revenue under this
subdivision must be adopted before April 1 in the year
immediately preceding the year in which it takes effect.
The total amount raised under subdivisions (1) and (2) may not
exceed the amount necessary to pay the costs described in
subsection (a).
(c) A copy of an ordinance adopted under this section must be
distributed to the county treasurer and the department.
(d) The county treasurer shall establish a county penal revenue
fund to be used only for purposes described in this section. County
option income tax revenues derived from the penal county option
income tax rate imposed under this section and the amount
designated as penal county option income tax revenue under
subsection (b)(2) shall be deposited in the county penal revenue
fund before making a distribution under section 17 of this chapter.
A county jail or another penal facility that receives money from a
county penal revenue fund may not decrease its operational
funding from the county general fund solely due to the receipt of
money from the county penal revenue fund.
(e) County option income tax revenues derived from the penal
county option income tax rate imposed under this section or
designated as penal county option income tax revenue under
subsection (b)(2):
(1) may be used only for the purposes described in this
section; and
(2) may not be considered by the department of local
government finance in determining the county's maximum
permissible property tax levy limit under IC 6-1.1-18.5.
(f) If the county council imposes an additional tax rate or makes
a designation under this section, the county council may decrease
or rescind the rate or designation in the same manner in which the
county council adopted the rate or designation.
section 10.5 of this chapter to pay the costs of financing the
operations of a jail or another penal facility operated by and
located in the county, revenue derived from the imposition of the
county option income tax shall, in the manner prescribed by this
section, be distributed to the county that imposed it. The amount that
is to be distributed to a county during an ensuing calendar year equals
the amount of county option income tax revenue that the department,
after reviewing the recommendation of the budget agency, determines
has been:
(1) received from that county for a taxable year ending in a
calendar year preceding the calendar year in which the
determination is made; and
(2) reported on an annual return or amended return processed by
the department in the state fiscal year ending before July 1 of the
calendar year in which the determination is made;
as adjusted (as determined after review of the recommendation of the
budget agency) for refunds of county option income tax made in the
state fiscal year.
(b) Before August 2 of each calendar year, the department, after
reviewing the recommendation of the budget agency, shall certify to the
county auditor of each adopting county the amount determined under
subsection (a) plus the amount of interest in the county's account that
has accrued and has not been included in a certification made in a
preceding year. The amount certified is the county's "certified
distribution" for the immediately succeeding calendar year. The amount
certified shall be adjusted, as necessary, under subsections (c), (d), and
(e). The department shall provide with the certification an informative
summary of the calculations used to determine the certified
distribution.
(c) The department shall certify an amount less than the amount
determined under subsection (b) if the department, after reviewing the
recommendation of the budget agency, determines that the reduced
distribution is necessary to offset overpayments made in a calendar
year before the calendar year of the distribution. The department, after
reviewing the recommendation of the budget agency, may reduce the
amount of the certified distribution over several calendar years so that
any overpayments are offset over several years rather than in one (1)
lump sum.
(d) The department, after reviewing the recommendation of the
budget agency, shall adjust the certified distribution of a county to
correct for any clerical or mathematical errors made in any previous
certification under this section. The department, after reviewing the
recommendation of the budget agency, may reduce the amount of the
certified distribution over several calendar years so that any adjustment
under this subsection is offset over several years rather than in one (1)
lump sum.
(e) This subsection applies to a county that initially imposed a tax
under this chapter in the same calendar year in which the department
makes a certification under this section. The department, after
reviewing the recommendation of the budget agency, shall adjust the
certified distribution of a county to provide for a distribution in the
immediately following calendar year and in each calendar year
thereafter. The department shall provide for a full transition to
certification of distributions as provided in subsection (a)(1) through
(a)(2) in the manner provided in subsection (c).
(f) One-twelfth (1/12) of each adopting county's certified
distribution for a calendar year shall be distributed from its account
established under section 16 of this chapter to the appropriate county
treasurer on the first day of each month of that calendar year.
(g) Upon receipt, each monthly payment of a county's certified
distribution shall be allocated among, distributed to, and used by the
civil taxing units of the county as provided in sections 18 and 19 of this
chapter.
(h) All distributions from an account established under section 16
of this chapter shall be made by warrants issued by the auditor of state
to the treasurer of state ordering the appropriate payments.
certified distribution, an amount equal to the revenue lost, if any, due
to the increase of the homestead credit within the county. This money
shall be distributed to the civil taxing units and school corporations of
the county as though they were property tax collections and in such a
manner that no civil taxing unit or school corporation shall suffer a net
revenue loss due to the allowance of an increased homestead credit.
(c) The county auditor shall retain the amount, if any, specified by
the county fiscal body for a particular calendar year under subsection
(i), IC 36-7-15.1-17.5, IC 36-8-15-19(b), and IC 36-9-4-42 from the
county's certified distribution for that same calendar year. The county
auditor shall distribute amounts retained under this subsection to the
county.
(d) All certified distribution revenues that are not retained and
distributed under subsections (b) and (c) shall be distributed to the civil
taxing units of the county as distributive shares.
(e) The amount of distributive shares that each civil taxing unit in
a county is entitled to receive during a month equals the product of the
following:
(1) The amount of revenue that is to be distributed as distributive
shares during that month; multiplied by
(2) A fraction. The numerator of the fraction equals the total
property taxes that are first due and payable to the civil taxing
unit during the calendar year in which the month falls, plus, for a
county, an amount equal to the property taxes imposed by the
county in 1999 for the county's welfare fund and welfare
administration fund. The denominator of the fraction equals the
sum of the total property taxes that are first due and payable to all
civil taxing units of the county during the calendar year in which
the month falls, plus an amount equal to the property taxes
imposed by the county in 1999 for the county's welfare fund and
welfare administration fund.
(f) The department of local government finance shall provide each
county auditor with the fractional amount of distributive shares that
each civil taxing unit in the auditor's county is entitled to receive
monthly under this section.
(g) Notwithstanding subsection (e), if a civil taxing unit of an
adopting county does not impose a property tax levy that is first due
and payable in a calendar year in which distributive shares are being
distributed under this section, that civil taxing unit is entitled to receive
a part of the revenue to be distributed as distributive shares under this
section within the county. The fractional amount such a civil taxing
unit is entitled to receive each month during that calendar year equals
the product of the following:
(1) The amount to be distributed as distributive shares during that
month; multiplied by
(2) A fraction. The numerator of the fraction equals the budget of
that civil taxing unit for that calendar year. The denominator of
the fraction equals the aggregate budgets of all civil taxing units
of that county for that calendar year.
(h) If for a calendar year a civil taxing unit is allocated a part of a
county's distributive shares by subsection (g), then the formula used in
subsection (e) to determine all other civil taxing units' distributive
shares shall be changed each month for that same year by reducing the
amount to be distributed as distributive shares under subsection (e) by
the amount of distributive shares allocated under subsection (g) for that
same month. The department of local government finance shall make
any adjustments required by this subsection and provide them to the
appropriate county auditors.
(i) Notwithstanding any other law, a county fiscal body may pledge
revenues received under this chapter to the payment of bonds or lease
rentals to finance a qualified economic development tax project under
IC 36-7-27 in that county or in any other county if the county fiscal
body determines that the project will promote significant opportunities
for the gainful employment or retention of employment of the county's
residents.
option income tax rate that are in effect on January 1 of a year
may equal up to one and twenty-five hundredths percent (1.25%);
if the county income tax council makes a determination to impose rates
under this subsection and section 22 of this chapter.
(h) For a county having a population of more than forty-one
thousand (41,000) but less than forty-three thousand (43,000), except
as provided in subsection (p), the county economic development
income tax rate plus the county adjusted gross income tax rate that are
in effect on January 1 of a year may not exceed one and thirty-five
hundredths percent (1.35%) if the county has imposed the county
adjusted gross income tax at a rate of one and one-tenth percent (1.1%)
under IC 6-3.5-1.1-2.5.
(i) For a county having a population of more than thirteen thousand
five hundred (13,500) but less than fourteen thousand (14,000), except
as provided in subsection (p), the county economic development
income tax rate plus the county adjusted gross income tax rate that are
in effect on January 1 of a year may not exceed one and fifty-five
hundredths percent (1.55%).
(j) For a county having a population of more than seventy-one
thousand (71,000) but less than seventy-one thousand four hundred
(71,400), except as provided in subsection (p), the county economic
development income tax rate plus the county adjusted gross income tax
rate that are in effect on January 1 of a year may not exceed one and
five-tenths percent (1.5%).
(k) This subsection applies to a county having a population of more
than twenty-seven thousand four hundred (27,400) but less than
twenty-seven thousand five hundred (27,500). Except as provided in
subsection (p), in addition to the rates permitted under subsection (b):
(1) the county economic development income tax may be imposed
at a rate of twenty-five hundredths percent (0.25%); and
(2) the sum of the county economic development income tax rate
and the county adjusted gross income tax rate that are in effect on
January 1 of a year may not exceed one and five-tenths percent
(1.5%);
if the county council makes a determination to impose rates under this
subsection and section 22.5 of this chapter.
(l) For a county having a population of more than twenty-nine
thousand (29,000) but less than thirty thousand (30,000), except as
provided in subsection (p), the county economic development income
tax rate plus the county adjusted gross income tax rate that are in effect
on January 1 of a year may not exceed one and five-tenths percent
(1.5%).
rates that would otherwise apply under this section.
However, the additional rate imposed under this subsection may not
exceed the amount necessary to mitigate the increased ad valorem
property taxes on homesteads (as defined in IC 6-1.1-20.9-1) resulting
from the deduction of the assessed value of inventory in the county
under IC 6-1.1-12-41 or IC 6-1.1-12-42.
(q) If the county economic development income tax is imposed as
authorized under subsection (p) at a rate that exceeds the maximum
rate that would otherwise apply under this section, the certified
distribution must be used for the purpose provided in section 25(e) or
26 of this chapter to the extent that the certified distribution results
from the difference between:
(1) the actual county economic development tax rate; and
(2) the maximum rate that would otherwise apply under this
section.
(r) This subsection applies only to a county described in section 27
of this chapter. Except as provided in subsection (p), in addition to the
rates permitted by subsection (b), the:
(1) county economic development income tax may be imposed at
a rate of twenty-five hundredths percent (0.25%); and
(2) county economic development income tax rate plus the county
option income tax rate that are in effect on January 1 of a year
may equal up to one and twenty-five hundredths percent (1.25%);
if the county council makes a determination to impose rates under this
subsection and section 27 of this chapter.
(s) Except as provided in subsection (p), the county economic
development income tax rate plus the county adjusted gross income tax
rate that are in effect on January 1 of a year may not exceed one and
five-tenths percent (1.5%) if the county has imposed the county
adjusted gross income tax under IC 6-3.5-1.1-3.3.
(t) This subsection applies to a county that imposes a penal
county option income tax rate under IC 6-3.5-6-10.5. The county
economic development tax rate plus the county option income tax
rate, if any, that are in effect on January of a year may not exceed
one and twenty-five hundredths percent (1.25%).