Introduced Version






HOUSE BILL No. 1767

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 6-1.1-10-16; IC 6-1.1-36-7.

Synopsis: Property taxes. Extends the period during which certain property tax exemptions apply to a tract of land pending construction of a building to be used for exempt purposes. Allows the department of local government finance, with the approval of the attorney general and local officials, to compromise the amount of property taxes owed by certain educational, literary, scientific, religious, or charitable entities.

Effective: Upon passage.





Smith V




    January 26, 2007, read first time and referred to Committee on Ways and Means.







Introduced

First Regular Session 115th General Assembly (2007)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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HOUSE BILL No. 1767



    A BILL FOR AN ACT to amend the Indiana Code concerning taxation.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 6-1.1-10-16; (07)IN1767.1.1. -->     SECTION 1. IC 6-1.1-10-16 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 16. (a) All or part of a building is exempt from property taxation if it is owned, occupied, and used by a person for educational, literary, scientific, religious, or charitable purposes.
    (b) A building is exempt from property taxation if it is owned, occupied, and used by a town, city, township, or county for educational, literary, scientific, fraternal, or charitable purposes.
    (c) A tract of land, including the campus and athletic grounds of an educational institution, is exempt from property taxation if:
        (1) a building that is exempt under subsection (a) or (b) is situated on it;
        (2) a parking lot or structure that serves a building referred to in subdivision (1) is situated on it; or
        (3) the tract:
            (A) is owned by a nonprofit entity established for the purpose of retaining and preserving land and water for their natural

characteristics;
            (B) does not exceed five hundred (500) acres; and
            (C) is not used by the nonprofit entity to make a profit.
    (d) A tract of land is exempt from property taxation if:
        (1) it is purchased for the purpose of erecting a building that is to be owned, occupied, and used in such a manner that the building will be exempt under subsection (a) or (b); and
        (2) not more than three (3) five (5) years after the property is purchased, and for each year after the three (3) five (5) year period, the owner demonstrates substantial progress and active pursuit towards the erection of the intended building and use of the tract for the exempt purpose. To establish substantial progress and active pursuit under this subdivision, the owner must prove the existence of factors such as the following:
            (A) Organization of and activity by a building committee or other oversight group.
            (B) Completion and filing of building plans with the appropriate local government authority.
            (C) Cash reserves dedicated to the project of a sufficient amount to lead a reasonable individual to believe the actual construction can and will begin within three (3) five (5) years.
            (D) The breaking of ground and the beginning of actual construction.
            (E) Any other factor that would lead a reasonable individual to believe that construction of the building is an active plan and that the building is capable of being completed within six (6) ten (10) years considering the circumstances of the owner.
    (e) Personal property is exempt from property taxation if it is owned and used in such a manner that it would be exempt under subsection (a) or (b) if it were a building.
    (f) A hospital's property that is exempt from property taxation under subsection (a), (b), or (e) shall remain exempt from property taxation even if the property is used in part to furnish goods or services to another hospital whose property qualifies for exemption under this section.
    (g) Property owned by a shared hospital services organization that is exempt from federal income taxation under Section 501(c)(3) or 501(e) of the Internal Revenue Code is exempt from property taxation if it is owned, occupied, and used exclusively to furnish goods or services to a hospital whose property is exempt from property taxation under subsection (a), (b), or (e).
    (h) This section does not exempt from property tax an office or a

practice of a physician or group of physicians that is owned by a hospital licensed under IC 16-21-1 or other property that is not substantially related to or supportive of the inpatient facility of the hospital unless the office, practice, or other property:
        (1) provides or supports the provision of charity care (as defined in IC 16-18-2-52.5), including providing funds or other financial support for health care services for individuals who are indigent (as defined in IC 16-18-2-52.5(b) and IC 16-18-2-52.5(c)); or
        (2) provides or supports the provision of community benefits (as defined in IC 16-21-9-1), including research, education, or government sponsored indigent health care (as defined in IC 16-21-9-2).
However, participation in the Medicaid or Medicare program alone does not entitle an office, practice, or other property described in this subsection to an exemption under this section.
    (i) A tract of land or a tract of land plus all or part of a structure on the land is exempt from property taxation if:
        (1) the tract is acquired for the purpose of erecting, renovating, or improving a single family residential structure that is to be given away or sold:
            (A) in a charitable manner;
            (B) by a nonprofit organization; and
            (C) to low income individuals who will:
                (i) use the land as a family residence; and
                (ii) not have an exemption for the land under this section;
        (2) the tract does not exceed three (3) acres;
        (3) the tract of land or the tract of land plus all or part of a structure on the land is not used for profit while exempt under this section; and
        (4) not more than three (3) five (5) years after the property is acquired for the purpose described in subdivision (1), and for each year after the three (3) five (5) year period, the owner demonstrates substantial progress and active pursuit towards the erection, renovation, or improvement of the intended structure. To establish substantial progress and active pursuit under this subdivision, the owner must prove the existence of factors such as the following:
            (A) Organization of and activity by a building committee or other oversight group.
            (B) Completion and filing of building plans with the appropriate local government authority.
            (C) Cash reserves dedicated to the project of a sufficient

amount to lead a reasonable individual to believe the actual construction can and will begin within six (6) five (5) years of the initial exemption received under this subsection.
            (D) The breaking of ground and the beginning of actual construction.
            (E) Any other factor that would lead a reasonable individual to believe that construction of the structure is an active plan and that the structure is capable of being:
                (i) completed; and
                (ii) transferred to a low income individual who does not receive an exemption under this section;
            within six (6) ten (10) years considering the circumstances of the owner.
    (j) An exemption under subsection (i) terminates when the property is conveyed by the nonprofit organization to another owner. When the property is conveyed to another owner, the nonprofit organization receiving the exemption must file a certified statement with the auditor of the county, notifying the auditor of the change not later than sixty (60) days after the date of the conveyance. The county auditor shall immediately forward a copy of the certified statement to the county assessor. A nonprofit organization that fails to file the statement required by this subsection is liable for the amount of property taxes due on the property conveyed if it were not for the exemption allowed under this chapter.
    (k) If property is granted an exemption in any year under subsection (i) and the owner:
        (1) ceases to be eligible for the exemption under subsection (i)(4);
        (2) fails to transfer the tangible property within six (6) ten (10) years after the assessment date for which the exemption is initially granted; or
        (3) transfers the tangible property to a person who:
            (A) is not a low income individual; or
            (B) does not use the transferred property as a residence for at least one (1) year after the property is transferred;
the person receiving the exemption shall notify the county recorder and the county auditor of the county in which the property is located not later than sixty (60) days after the event described in subdivision (1), (2), or (3) occurs. The county auditor shall immediately inform the county assessor of a notification received under this subsection.
    (l) If subsection (k)(1), (k)(2), or (k)(3) applies, the owner shall pay, not later than the date that the next installment of property taxes is due, an amount equal to the sum of the following:


        (1) The total property taxes that, if it were not for the exemption under subsection (i), would have been levied on the property in each year in which an exemption was allowed.
        (2) Interest on the property taxes at the rate of ten percent (10%) per year.
    (m) The liability imposed by subsection (l) is a lien upon the property receiving the exemption under subsection (i). An amount collected under subsection (l) shall be collected as an excess levy. If the amount is not paid, it shall be collected in the same manner that delinquent taxes on real property are collected.
    (n) Property referred to in this section shall be assessed to the extent required under IC 6-1.1-11-9.
SOURCE: IC 6-1.1-36-7; (07)IN1767.1.2. -->     SECTION 2. IC 6-1.1-36-7 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 7. (a) The department of local government finance may cancel any property taxes assessed against real property owned by a county, township, city, or town if a petition requesting that the department cancel the taxes is submitted by the auditor, assessor, and treasurer of the county in which the real property is located.
    (b) The department of local government finance may cancel any property taxes assessed against real property owned by this state if a petition requesting that the department cancel the taxes is submitted by:
        (1) the governor; or
        (2) the chief administrative officer of the state agency which supervises the real property.
However, if the petition is submitted by the chief administrative officer of a state agency, the governor must approve the petition.
    (c) The department of local government finance may compromise the amount of property taxes, together with any interest or penalties on those taxes, assessed against the fixed or distributable property owned by a bankrupt railroad, which is under the jurisdiction of:
        (1) a federal court under 11 U.S.C. 1163;
        (2) Chapter X of the Acts of Congress Relating to Bankruptcy (11 U.S.C. 701-799); or
        (3) a comparable bankruptcy law.
    (d) After making a compromise under subsection (c) and after receiving payment of the compromised amount, the department of local government finance shall distribute to each county treasurer an amount equal to the product of:
        (1) the compromised amount; multiplied by
        (2) a fraction, the numerator of which is the total of the particular county's property tax levies against the railroad for the

compromised years, and the denominator of which is the total of all property tax levies against the railroad for the compromised years.
    (e) After making the distribution under subsection (d), the department of local government finance shall direct the auditors of each county to remove from the tax rolls the amount of all property taxes assessed against the bankrupt railroad for the compromised years.
    (f) The county auditor of each county receiving money under subsection (d) shall allocate that money among the county's taxing districts. The auditor shall allocate to each taxing district an amount equal to the product of:
        (1) the amount of money received by the county under subsection (d); multiplied by
        (2) a fraction, the numerator of which is the total of the taxing district's property tax levies against the railroad for the compromised years, and the denominator of which is the total of all property tax levies against the railroad in that county for the compromised years.
    (g) The money allocated to each taxing district shall be apportioned and distributed among the taxing units of that taxing district in the same manner and at the same time that property taxes are apportioned and distributed.
    (h) The department of local government finance may, with the approval of the attorney general, compromise the amount of property taxes, together with any interest or penalties on those taxes, assessed against property owned by a person that has a case pending under state or federal bankruptcy law. an entity referred to in subsection (i). Property taxes that are compromised under this section shall be distributed and allocated at the same time and in the same manner as regularly collected property taxes. The department of local government finance may compromise property taxes under this subsection only if:
        (1) a petition is filed with the department of local government finance that requests the compromise and that is signed and approved by the assessor, auditor, and treasurer of each county, and the assessor of each township, that is entitled to receive any part of the compromised taxes;
        (2) the compromise significantly advances the time of payment of the taxes; and
        (3) the compromise is in the best interest of the state and the taxing units that are entitled to receive any part of the compromised taxes.
     (i) Subject to subsection (j), subsection (h) applies to any of the

following:
        (1)
A person that has a case pending under state or federal bankruptcy law.
        (2) A nonprofit corporation that is organized for educational, literary, scientific, religious, or charitable purposes.
        (3) A local chapter of a corporation referred to in subdivision (2).
        (4) A person associated with a national entity organized for the purposes referred to in subdivision (2).
        (5) A church or church related entity regardless of the following:
            (A) The denomination of the church.
            (B) Whether the church is a nonprofit corporation.
    (j) To qualify for a compromise of property taxes under subsection (h), a person, a corporation, a local chapter, a church, or an entity referred to in subsection (i) is not required to be exempt from federal income taxation under Section 501 of the Internal Revenue Code.

    (i) (k) A taxing unit that receives funds under this section is not required to include the funds in its budget estimate for any budget year which begins after the budget year in which it receives the funds.
    (j) (l) A county treasurer, with the consent of the county auditor and the county assessor, may compromise the amount of property taxes, interest, or penalties owed in a county by an entity that has a case pending under Title 11 of the United States Code (Bankruptcy Code) by accepting a single payment that must be at least seventy-five percent (75%) of the total amount owed in the county.

SOURCE: ; (07)IN1767.1.3. -->     SECTION 3. [EFFECTIVE UPON PASSAGE] IC 6-1.1-10-16, as amended by this act, applies only to property taxes first due and payable after 2007.
SOURCE: ; (07)IN1767.1.4. -->     SECTION 4. An emergency is declared for this act.