CHAPTER 6. COUNTY OPTION INCOME TAX
IC 6-3.5-6
Chapter 6. County Option Income Tax
IC 6-3.5-6-1
Definitions
Sec. 1. As used in this chapter:
"Adjusted gross income" has the same definition that the term is
given in IC 6-3-1-3.5. However, in the case of a county taxpayer who
is not treated as a resident county taxpayer of a county, the term
includes only adjusted gross income derived from the taxpayer's
principal place of business or employment.
"Apartment complex" means real property consisting of at least
five (5) units that are regularly used to rent or otherwise furnish
residential accommodations for periods of at least thirty (30) days.
"Civil taxing unit" means any entity, except a school corporation,
that has the power to impose ad valorem property taxes. The term
does not include a solid waste management district that is not entitled
to a distribution under section 1.3 of this chapter. However, in the
case of a county in which a consolidated city is located, the
consolidated city, the county, all special taxing districts, special
service districts, included towns (as defined in IC 36-3-1-7), and all
other political subdivisions except townships, excluded cities (as
defined in IC 36-3-1-7), and school corporations shall be deemed to
comprise one (1) civil taxing unit whose fiscal body is the fiscal
body of the consolidated city.
"County income tax council" means a council established by
section 2 of this chapter.
"County taxpayer", as it relates to a particular county, means any
individual:
(1) who resides in that county on the date specified in section
20 of this chapter; or
(2) who maintains the taxpayer's principal place of business or
employment in that county on the date specified in section 20
of this chapter and who does not reside on that same date in
another county in which the county option income tax, the
county adjusted income tax, or the county economic
development income tax is in effect.
"Department" refers to the Indiana department of state revenue.
"Fiscal body" has the same definition that the term is given in
IC 36-1-2-6.
"Homestead" has the meaning set forth in IC 6-1.1-12-37.
"Qualified residential property" refers to any of the following:
(1) An apartment complex.
(2) A homestead.
(3) Residential rental property.
"Resident county taxpayer", as it relates to a particular county,
means any county taxpayer who resides in that county on the date
specified in section 20 of this chapter.
"Residential rental property" means real property consisting of not
more than four (4) units that are regularly used to rent or otherwise
furnish residential accommodations for periods of at least thirty (30)
days.
"School corporation" has the same definition that the term is given
in IC 6-1.1-1-16.
As added by P.L.44-1984, SEC.14. Amended by P.L.23-1986, SEC.9;
P.L.22-1988, SEC.4; P.L.96-1995, SEC.3; P.L.146-2008, SEC.335.
IC 6-3.5-6-1.1
Determination of allocation amount
Sec. 1.1. (a) For purposes of allocating the certified distribution
made to a county under this chapter among the civil taxing units in
the county, the allocation amount for a civil taxing unit is the amount
determined using the following formula:
STEP ONE: Determine the total property taxes that are first due
and payable to the civil taxing unit during the calendar year of
the distribution plus, for a county, an amount equal to the
welfare allocation amount.
STEP TWO: Determine the sum of the following:
(A) Amounts appropriated from property taxes to pay the
principal of or interest on any debenture or other debt
obligation issued after June 30, 2005, other than an
obligation described in subsection (b).
(B) Amounts appropriated from property taxes to make
payments on any lease entered into after June 30, 2005, other
than a lease described in subsection (c).
(C) The proceeds of any property that are:
(i) received as the result of the issuance of a debt
obligation described in clause (A) or a lease described in
clause (B); and
(ii) appropriated from property taxes for any purpose other
than to refund or otherwise refinance a debt obligation or
lease described in subsection (b) or (c).
STEP THREE: Subtract the STEP TWO amount from the STEP
ONE amount.
STEP FOUR: Determine the sum of:
(A) the STEP THREE amount; plus
(B) the civil taxing unit or school corporation's certified
distribution for the previous calendar year.
The allocation amount is subject to adjustment as provided in
IC 36-8-19-7.5. The welfare allocation amount is an amount equal to
the sum of the property taxes imposed by the county in 1999 for the
county's welfare fund and welfare administration fund and, if the
county received a certified distribution under IC 6-3.5-1.1 or this
chapter in 2008, the property taxes imposed by the county in 2008
for the county's county medical assistance to wards fund, family and
children's fund, children's psychiatric residential treatment services
fund, county hospital care for the indigent fund, and children with
special health care needs county fund.
(b) Except as provided in this subsection, an appropriation from
property taxes to repay interest and principal of a debt obligation is
not deducted from the allocation amount for a civil taxing unit if:
(1) the debt obligation was issued; and
(2) the proceeds appropriated from property taxes;
to refund or otherwise refinance a debt obligation or a lease issued
before July 1, 2005. However, an appropriation from property taxes
related to a debt obligation issued after June 30, 2005, is deducted if
the debt extends payments on a debt or lease beyond the time in
which the debt or lease would have been payable if the debt or lease
had not been refinanced or increases the total amount that must be
paid on a debt or lease in excess of the amount that would have been
paid if the debt or lease had not been refinanced. The amount of the
deduction is the annual amount for each year of the extension period
or the annual amount of the increase over the amount that would
have been paid.
(c) Except as provided in this subsection, an appropriation from
property taxes to make payments on a lease is not deducted from the
allocation amount for a civil taxing unit if:
(1) the lease was issued; and
(2) the proceeds were appropriated from property taxes;
to refinance a debt obligation or lease issued before July 1, 2005.
However, an appropriation from property taxes related to a lease
entered into after June 30, 2005, is deducted if the lease extends
payments on a debt or lease beyond the time in which the debt or
lease would have been payable if it had not been refinanced or
increases the total amount that must be paid on a debt or lease in
excess of the amount that would have been paid if the debt or lease
had not been refinanced. The amount of the deduction is the annual
amount for each year of the extension period or the annual amount
of the increase over the amount that would have been paid.
As added by P.L.207-2005, SEC.6. Amended by P.L.146-2008,
SEC.336; P.L.182-2009(ss), SEC.217.
IC 6-3.5-6-1.3
Districts not entitled to distribution
Sec. 1.3. (a) This section applies to a county solid waste
management district (as defined in IC 13-11-2-47) or a joint solid
waste management district (as defined in IC 13-11-2-113).
(b) A district may not receive a distribution under this chapter
unless a majority of the members of each of the county fiscal bodies
of the counties within the district passes a resolution approving the
distribution.
(c) A resolution passed by a county fiscal body under subsection
(b) may:
(1) expire on a date specified in the resolution; or
(2) remain in effect until the county fiscal body revokes or
rescinds the resolution.
As added by P.L.96-1995, SEC.4. Amended by P.L.1-1996, SEC.48;
P.L.70-2001, SEC.2.
IC 6-3.5-6-1.5
Time within which to adopt ordinance; effective date of ordinances
Sec. 1.5. (a) Notwithstanding any other provision of this chapter,
a power granted by this chapter to adopt an ordinance to:
(1) impose, increase, decrease, or rescind a tax or tax rate; or
(2) grant, increase, decrease, rescind, or change a homestead
credit or property tax replacement credit authorized under this
chapter;
may be exercised at any time in a year before November 1 of that
year.
(b) Notwithstanding any other provision of this chapter, an
ordinance authorized by this chapter that imposes or increases a tax
or a tax rate takes effect as follows:
(1) An ordinance adopted after December 31 of the immediately
preceding year and before October 1 of the current year takes
effect October 1 of the current year.
(2) An ordinance adopted after September 30 and before
October 16 of the current year takes effect November 1 of the
current year.
(3) An ordinance adopted after October 15 and before
November 1 of the current year takes effect December 1 of the
current year.
(c) Notwithstanding any other provision of this chapter, an
ordinance authorized by this chapter that decreases or rescinds a tax
or a tax rate takes effect as follows:
(1) An ordinance adopted after December 31 of the immediately
preceding year and before October 1 of the current year takes
effect on the later of October 1 of the current year or the first
day of the month in the current year as the month in which the
last increase in the tax or tax rate occurred.
(2) An ordinance adopted after September 30 and before
October 16 of the current year takes effect on the later of
November 1 of the current year or the first day of the month in
the current year as the month in which the last increase in the
tax or tax rate occurred.
(3) An ordinance adopted after October 15 and before
November 1 of the current year takes effect December 1 of the
current year.
(d) Notwithstanding any other provision of this chapter, an
ordinance authorized by this chapter that grants, increases, decreases,
rescinds, or changes a homestead credit or property tax replacement
credit authorized under this chapter takes effect for and applies to
property taxes first due and payable in the year immediately
following the year in which the ordinance is adopted.
As added by P.L.113-2010, SEC.63.
IC 6-3.5-6-2
County income tax council; established; powers
Sec. 2. (a) A county income tax council is established for each
county in Indiana. The membership of each county's county income
tax council consists of the fiscal body of the county and the fiscal
body of each city or town that lies either partially or entirely within
that county.
(b) Using procedures described in this chapter, a county income
tax council may adopt ordinances to:
(1) impose the county option income tax in its county;
(2) subject to section 12 of this chapter, rescind the county
option income tax in its county;
(3) increase the county option income tax rate for the county;
(4) freeze the county option income tax rate for its county;
(5) increase the homestead credit in its county; or
(6) subject to section 12.5 of this chapter, decrease the county
option income tax rate for the county.
(c) An ordinance adopted in a particular year under this chapter
to impose or rescind the county option income tax or to increase its
tax rate is effective July 1 of that year.
As added by P.L.44-1984, SEC.14. Amended by P.L.2-1989, SEC.14;
P.L.42-1994, SEC.4; P.L.267-2003, SEC.7.
IC 6-3.5-6-3
County income tax council; allocation of votes
Sec. 3. (a) In the case of a city or town that lies within more than
one (1) county, the county auditor of each county shall base the
allocations required by subsection (b) on the population of that part
of the city or town that lies within the county for which the
allocations are being made.
(b) Every county income tax council has a total of one hundred
(100) votes. Every member of the county income tax council is
allocated a percentage of the total one hundred (100) votes that may
be cast. The percentage that a city or town is allocated for a year
equals the same percentage that the population of the city or town
bears to the population of the county. The percentage that the county
is allocated for a year equals the same percentage that the population
of all areas in the county not located in a city or town bears to the
population of the county. On or before January 1 of each year, the
county auditor shall certify to each member of the county income tax
council the number of votes, rounded to the nearest one hundredth
(0.01), it has for that year.
As added by P.L.44-1984, SEC.14.
IC 6-3.5-6-4
Resolutions; transmittal to county auditor
Sec. 4. (a) A member of the county income tax council may
exercise its votes by passing a resolution and transmitting the
resolution to the auditor of the county. However, in the case of an
ordinance to impose, rescind, increase, decrease, or freeze the county
rate of the county option income tax, the member must transmit the
resolution to the county auditor by the appropriate time described in
section 8, 9, 10, or 11 of this chapter. The form of a resolution is as
follows:
"The ______________ (name of civil taxing unit's fiscal body)
casts its _____ votes _____ (for or against) the proposed
ordinance of the ______________ County Income Tax Council,
which reads as follows:".
(b) A resolution passed by a member of the county income tax
council exercises all votes of the member on the proposed ordinance,
and those votes may not be changed during the year.
As added by P.L.44-1984, SEC.14. Amended by P.L.42-1994, SEC.5.
IC 6-3.5-6-5
Ordinances; procedure for proposal; voting
Sec. 5. Any member of a county income tax council may present
an ordinance for passage. To do so, the member must pass a
resolution to propose the ordinance to the county income tax council
and distribute a copy of the proposed ordinance to the auditor of the
county. The auditor of the county shall treat any proposed ordinance
presented to the auditor under this section as a casting of all that
member's votes in favor of that proposed ordinance. Subject to the
limitations of section 6 of this chapter, the auditor of the county shall
deliver copies of a proposed ordinance the auditor receives to all
members of the county income tax council within ten (10) days after
receipt. Once a member receives a proposed ordinance from the
auditor of the county, the member shall vote on it within thirty (30)
days after receipt.
As added by P.L.44-1984, SEC.14. Amended by P.L.28-1997,
SEC.17.
IC 6-3.5-6-6
Ordinances; limitation of number; effect of passage on proposed
ordinances; proposed ordinances with same effect
Sec. 6. (a) A county income tax council may pass only one (1)
ordinance described in section 2(b)(1), 2(b)(2), 2(b)(3), 2(b)(4), or
2(b)(6) of this chapter in one (1) year. Once an ordinance described
in section 2(b)(1), 2(b)(2), 2(b)(3), 2(b)(4), or 2(b)(6) of this chapter
has been passed, the auditor of the county shall:
(1) cease distributing proposed ordinances of those types for the
rest of the year; and
(2) withdraw from the membership any other of those types of
proposed ordinances.
Any votes subsequently received by the auditor of the county on
proposed ordinances of those types during that same year are void.
(b) The county income tax council may not vote on, nor may the
auditor of the county distribute to the members of the county income
tax council, any proposed ordinance during a year, if previously
during that same year the auditor of the county received and
distributed to the members of the county income tax council a
proposed ordinance whose passage would have substantially the
same effect.
As added by P.L.44-1984, SEC.14. Amended by P.L.42-1994, SEC.6.
IC 6-3.5-6-7
Ordinances; hearing; notice
Sec. 7. (a) Before a member of the county income tax council may
propose an ordinance or vote on a proposed ordinance, the member
must hold a public hearing on the proposed ordinance and provide
the public with notice of the time and place where the public hearing
will be held.
(b) The notice required by subsection (a) must be given in
accordance with IC 5-3-1.
(c) The form of the notice required by this section must be in
substantially the following form:
"NOTICE OF COUNTY OPTION
INCOME TAX ORDINANCE VOTE.
The fiscal body of the _____________ (insert name of civil taxing unit) hereby declares that on __________ (insert date) at ______________ (insert the time of day) a public hearing will be held at _______________ (insert location) concerning the following resolution to propose an ordinance (or proposed ordinance) that is before the members of the county income tax council. Members of the public are cordially invited to attend the hearing for the purpose of expressing their views.
(Insert a copy of the proposed ordinance or resolution to propose an ordinance.)".
As added by P.L.44-1984, SEC.14.
IC 6-3.5-6-8
Imposition of tax; time; rate of tax; necessity and form of
ordinance; recording of votes
Sec. 8. (a) The county income tax council of any county in which
the county adjusted gross income tax will not be in effect on October
1 of a year under an ordinance adopted during a previous calendar
year may impose the county option income tax on the adjusted gross
income of county taxpayers of its county effective October 1 of that
same year.
(b) Except as provided in sections 30, 31, and 32 of this chapter,
the county option income tax may initially be imposed at a rate of
two-tenths of one percent (0.2%) on the resident county taxpayers of
the county and at a rate of five hundredths of one percent (0.05%) for
all other county taxpayers.
(c) To impose the county option income tax, a county income tax
council must, after March 31 but before August 1 of the year, pass an
ordinance. The ordinance must substantially state the following:
"The _____________ County Income Tax Council imposes the
county option income tax on the county taxpayers of
_____________ County. The county option income tax is
imposed at a rate of two-tenths of one percent (0.2%) on the
resident county taxpayers of the county and at a rate of five
hundredths of one percent (0.05%) on all other county
taxpayers. This tax takes effect October 1 of this year.".
(d) Except as provided in sections 30, 31, and 32 of this chapter,
if the county option income tax is imposed on the county taxpayers
of a county, then the county option income tax rate that is in effect
for resident county taxpayers of that county increases by one-tenth
of one percent (0.1%) on each succeeding October 1 until the rate
equals six-tenths of one percent (0.6%).
(e) The county option income tax rate in effect for the county
taxpayers of a county who are not resident county taxpayers of that
county is at all times one-fourth (1/4) of the tax rate imposed upon
resident county taxpayers.
(f) The auditor of a county shall record all votes taken on
ordinances presented for a vote under this section and immediately
send a certified copy of the results to the department by certified
mail.
As added by P.L.44-1984, SEC.14. Amended by P.L.35-1990,
SEC.16; P.L.224-2007, SEC.70.
IC 6-3.5-6-9
Increase of tax rate
Sec. 9. (a) If on March 31 of a calendar year the county option
income tax rate in effect for resident county taxpayers equals six
tenths of one percent (0.6%), excluding a tax rate imposed under
section 30, 31, or 32 of this chapter, the county income tax council
of that county may after March 31 and before August 1 of that year
pass an ordinance to increase its tax rate for resident county
taxpayers. If a county income tax council passes an ordinance under
this section, its county option income tax rate for resident county
taxpayers increases by one tenth of one percent (0.1%) each
succeeding October 1 until its rate reaches a maximum of one
percent (1%), excluding a tax rate imposed under section 30, 31, or
32 of this chapter.
(b) The auditor of the county shall record any vote taken on an
ordinance proposed under the authority of this section and
immediately send a certified copy of the results to the department by
certified mail.
As added by P.L.44-1984, SEC.14. Amended by P.L.35-1990,
SEC.17; P.L.224-2007, SEC.71.
IC 6-3.5-6-9.5
Repealed
(Repealed by P.L.2-1989, SEC.56.)
IC 6-3.5-6-10
Effect of adoption of county option income tax and county adjusted
gross income tax in same county
Sec. 10. If during a particular calendar year the county council of
a county adopts an ordinance to impose the county adjusted gross
income tax in its county on October 1 of that year and the county
option income tax council of the county adopts an ordinance to
impose the county option income tax in the county on October 1 of
that year, the county option income tax takes effect in that county
and the county adjusted gross income tax shall not take effect in that
county.
As added by P.L.44-1984, SEC.14. Amended by P.L.224-2007,
SEC.72.
IC 6-3.5-6-11
Freeze of tax rate; adoption, duration, and rescission of ordinance
Sec. 11. (a) This section does not apply to a tax rate imposed
under section 30 of this chapter.
(b) The county income tax council of any county may adopt an
ordinance to permanently freeze the county option income tax rates
at the rate in effect for its county on March 31 of a year.
(c) To freeze the county option income tax rates, a county income
tax council must, after March 31 but before August 1 of a year, adopt
an ordinance. The ordinance must substantially state the following:
"The __________ County Income Tax Council permanently
freezes the county option income tax rates at the rate in effect
on March 31 of the current year.".
(d) An ordinance adopted under the authority of this section
remains in effect until rescinded. The county income tax council may
rescind such an ordinance after March 31 but before August 1 of any
calendar year. Such an ordinance shall take effect October 1 of that
same calendar year.
(e) If a county income tax council rescinds an ordinance as
adopted under this section, the county option income tax rate shall
automatically increase by one-tenth of one percent (0.01%) until:
(1) the tax rate is again frozen under another ordinance adopted
under this section; or
(2) the tax rate equals six tenths of one percent (0.6%) (if the
frozen tax rate equaled an amount less than six tenths of one
percent (0.6%)) or one percent (1%) (if the frozen tax rate
equaled an amount in excess of six tenths of one percent
(0.6%)).
(f) The county auditor shall record any vote taken on an ordinance
proposed under the authority of this section and immediately send a
certified copy of the results to the department by certified mail.
As added by P.L.44-1984, SEC.14. Amended by P.L.35-1990,
SEC.18; P.L.224-2007, SEC.73.
IC 6-3.5-6-12
Duration of tax; rescission of tax; record of votes
Sec. 12. (a) The county option income tax imposed by a county
income tax council under this chapter remains in effect until
rescinded.
(b) Subject to subsection (c), the county income tax council of a
county may rescind the county option income tax by passing an
ordinance to rescind the tax after March 31 but before August 1 of
a year.
(c) A county income tax council may not rescind the county
option income tax or take any action that would result in a civil
taxing unit in the county having a smaller distributive share than the
distributive share to which it was entitled when it pledged county
option income tax, if the civil taxing unit or any commission, board,
department, or authority that is authorized by statute to pledge county
option income tax, has pledged county option income tax for any
purpose permitted by IC 5-1-14 or any other statute.
(d) The auditor of a county shall record all votes taken on a
proposed ordinance presented for a vote under the authority of this
section and immediately send a certified copy of the results to the
department by certified mail.
As added by P.L.44-1984, SEC.14. Amended by P.L.2-1989, SEC.15;
P.L.35-1990, SEC.19; P.L.28-1997, SEC.18; P.L.224-2007, SEC.74.
IC 6-3.5-6-12.5
Decrease in county option income tax rate; adoption of ordinance;
procedures
Sec. 12.5. (a) The county income tax council may adopt an
ordinance to decrease the county option income tax rate in effect.
(b) To decrease the county option income tax rate, the county
income tax council must adopt an ordinance after March 31 but
before August 1 of a year. The ordinance must substantially state the
following:
"The ______________ County Income Tax Council decreases
the county option income tax rate from __________ percent
(___ %) to __________ percent (___ %). This ordinance takes
effect October 1 of this year.".
(c) A county income tax council may not decrease the county
option income tax if the county or any commission, board,
department, or authority that is authorized by statute to pledge the
county option income tax has pledged the county option income tax
for any purpose permitted by IC 5-1-14 or any other statute.
(d) An ordinance adopted under this subsection takes effect
October 1 of the year in which the ordinance is adopted.
(e) The county auditor shall record the votes taken on an
ordinance under this subsection and shall send a certified copy of the
ordinance to the department by certified mail not more than thirty
(30) days after the ordinance is adopted.
(f) Notwithstanding IC 6-3.5-7, a county income tax council that
decreases the county option income tax in a year may not in the same
year adopt or increase the county economic development income tax
under IC 6-3.5-7.
As added by P.L.42-1994, SEC.7. Amended by P.L.224-2007,
SEC.75.
IC 6-3.5-6-13
Homestead credit percentage; determination
Sec. 13. (a) A county income tax council of a county in which the
county option income tax is in effect may adopt an ordinance to
provide a homestead credit for homesteads in its county.
(b) A county income tax council may not provide a homestead
credit percentage that exceeds the amount determined in the last
STEP of the following formula:
STEP ONE: Determine the amount of the sum of all property
tax levies for all taxing units in a county which are to be paid in
the county in 2003 as reflected by the auditor's abstract for the
2002 assessment year, adjusted, however, for any postabstract
adjustments which change the amount of the levies.
STEP TWO: Determine the amount of the county's estimated
property tax replacement under IC 6-1.1-21-3(a) (before its
repeal) for property taxes first due and payable in 2003.
STEP THREE: Subtract the STEP TWO amount from the STEP
ONE amount.
STEP FOUR: Determine the amount of the county's total county
levy (as defined in IC 6-1.1-21-2(g) before its repeal) for
property taxes first due and payable in 2003.
STEP FIVE: Subtract the STEP FOUR amount from the STEP
ONE amount.
STEP SIX: Subtract the STEP FIVE result from the STEP
THREE result.
STEP SEVEN: Divide the STEP THREE result by the STEP
SIX result.
STEP EIGHT: Multiply the STEP SEVEN result by
eight-hundredths (0.08).
STEP NINE: Round the STEP EIGHT product to the nearest
one-thousandth (0.001) and express the result as a percentage.
(c) The homestead credit percentage must be uniform for all
homesteads in a county.
(d) In the ordinance that establishes the homestead credit
percentage, a county income tax council may provide for a series of
increases or decreases to take place for each of a group of succeeding
calendar years.
(e) An ordinance may be adopted under this section after March
31 but before August 1 of a calendar year.
(f) An ordinance adopted under this section takes effect on
January 1 of the next succeeding calendar year.
(g) Any ordinance adopted under this section for a county is
repealed for a year if on January 1 of that year the county option
income tax is not in effect.
As added by P.L.44-1984, SEC.14. Amended by P.L.3-1989, SEC.41;
P.L.224-2003, SEC.247; P.L.97-2004, SEC.30; P.L.224-2007,
SEC.76; P.L.146-2008, SEC.337.
IC 6-3.5-6-13.5
County income tax council meetings to consider rate adjustment
Sec. 13.5. A county income tax council must before August 1 of
each odd-numbered year hold at least one (1) public meeting at
which the county income tax council discusses whether the county
option income tax rate under this chapter should be adjusted.
As added by P.L.182-2009(ss), SEC.218.
IC 6-3.5-6-14
Taxpayer subject to different tax rates; rate of tax
Sec. 14. If for any taxable year a county taxpayer is subject to
different tax rates for the county option income tax imposed by a
particular county, the taxpayer's county option income tax rate for
that county and that taxable year is the rate determined in the last
STEP of the following STEPS:
STEP ONE: Multiply the number of months in the taxpayer's
taxable year that precede October 1 by the rate in effect before
the rate change.
STEP TWO: Multiply the number of months in the taxpayer's
taxable year that follow September 30 by the rate in effect after
the rate change.
STEP THREE: Divide the sum of the amounts determined
under STEPS ONE and TWO by twelve (12).
As added by P.L.44-1984, SEC.14. Amended by P.L.224-2007,
SEC.77.
IC 6-3.5-6-15
Tax not in effect entire taxable year
Sec. 15. If the county option income tax is not in effect during a
county taxpayer's entire taxable year, the amount of county option
income tax that the county taxpayer owes for that taxable year equals
the product of:
(1) the amount of county option income tax the county taxpayer
would owe if the tax had been imposed during the county
taxpayer's entire taxable year; multiplied by
(2) a fraction. The numerator of the fraction equals the number
of days in the county taxpayer's taxable year during which the
county option income tax was in effect. The denominator of the
fraction equals the total number of days in the county taxpayer's
taxable year.
However, if the taxpayer files state income tax returns on a calendar
year basis, the fraction to be applied under this section is one-half
(1/2).
As added by P.L.44-1984, SEC.14.
IC 6-3.5-6-16
Deposit of revenue in special account
Sec. 16. (a) A special account within the state general fund shall
be established for each county that adopts the county option income
tax. Any revenue derived from the imposition of the county option
income tax by a county shall be deposited in that county's account in
the state general fund.
(b) Any income earned on money held in an account under
subsection (a) becomes a part of that account.
(c) Any revenue remaining in an account established under
subsection (a) at the end of a fiscal year does not revert to the state
general fund.
As added by P.L.44-1984, SEC.14.
IC 6-3.5-6-17
Calculation of certified distribution; summary of calculation;
notice to county auditor
Sec. 17. (a) 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 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 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), (e), and (f). The budget agency shall
provide the county council with an informative summary of the
calculations used to determine the certified distribution. The
summary of calculations must include:
(1) the amount reported on individual income tax returns
processed by the department during the previous fiscal year;
(2) adjustments for over distributions in prior years;
(3) adjustments for clerical or mathematical errors in prior
years;
(4) adjustments for tax rate changes; and
(5) the amount of excess account balances to be distributed
under IC 6-3.5-6-17.3.
The budget agency shall also certify information concerning the part
of the certified distribution that is attributable to a tax rate under
section 30, 31, or 32 of this chapter. This information must be
certified to the county auditor and to the department of local
government finance not later than September 1 of each calendar year.
The part of the certified distribution that is attributable to a tax rate
under section 30, 31, or 32 of this chapter may be used only as
specified in those provisions.
(c) The budget agency shall certify an amount less than the
amount determined under subsection (b) if 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 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 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 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 imposes, increases,
decreases, or rescinds a tax or tax rate under this chapter before
November 1 in the same calendar year in which the budget agency
makes a certification under this section. 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 budget agency 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). If the
county imposes, increases, decreases, or rescinds a tax or tax rate
under this chapter after the date for which a certification under
subsection (b) is based, the budget agency shall adjust the certified
distribution of the county after August 1 of the calendar year. The
adjustment shall reflect any other adjustment required under
subsections (c), (d), and (f). The adjusted certification shall be
treated as the county's "certified distribution" for the immediately
succeeding calendar year. The budget agency shall certify the
adjusted certified distribution to the county auditor for the county
and provide the county council with an informative summary of the
calculations that revises the informative summary provided in
subsection (b) and reflects the changes made in the adjustment.
(f) This subsection applies in the year a county initially imposes
a tax rate under section 30 of this chapter. Notwithstanding any other
provision, the budget agency shall adjust the part of the county's
certified distribution that is attributable to the tax rate under section
30 of this chapter to provide for a distribution in the immediately
following calendar year equal to the result of:
(1) the sum of the amounts determined under STEP ONE
through STEP FOUR of IC 6-3.5-1.5-1(a) in the year in which
the county initially imposes a tax rate under section 30 of this
chapter; multiplied by
(2) the following:
(A) In a county containing a consolidated city, one and
five-tenths (1.5).
(B) In a county other than a county containing a consolidated
city, two (2).
(g) 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.
(h) 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.
(i) 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.
As added by P.L.44-1984, SEC.14. Amended by P.L.23-1986,
SEC.10; P.L.178-2002, SEC.61; P.L.1-2003, SEC.42; P.L.267-2003,
SEC.8; P.L.207-2005, SEC.7; P.L.224-2007, SEC.78; P.L.146-2008,
SEC.338; P.L.182-2009(ss), SEC.219; P.L.113-2010, SEC.64.
IC 6-3.5-6-17.2
Annual report to county auditor
Sec. 17.2. Before October 2 of each year, the budget agency shall
submit a report to each county auditor indicating the balance in the
county's special account as of the cutoff date set by the budget
agency.
As added by P.L.178-2002, SEC.62. Amended by P.L.267-2003,
SEC.9; P.L.182-2009(ss), SEC.220.
IC 6-3.5-6-17.3
Distribution of excess balance; use
Sec. 17.3. (a) If the budget agency determines that a sufficient
balance exists in a county account in excess of the amount necessary,
when added to other money that will be deposited in the account
after the date of the determination, to make certified distributions to
the county in the ensuing year, the budget agency shall make a
supplemental distribution to a county from the county's special
account.
(b) A supplemental distribution described in subsection (a) must
be:
(1) made in January of the ensuing calendar year; and
(2) allocated in the same manner as certified distributions for
deposit in a civil unit's rainy day fund established under
IC 36-1-8-5.1.
(c) A determination under this section must be made before
October 2.
As added by P.L.178-2002, SEC.63. Amended by P.L.267-2003,
SEC.10; P.L.182-2009(ss), SEC.221.
IC 6-3.5-6-17.4
(Repealed by P.L.267-2003, SEC.16.)
IC 6-3.5-6-17.5
Repealed
(Repealed by P.L.267-2003, SEC.16.)
IC 6-3.5-6-17.6
Repealed
(Repealed by P.L.267-2003, SEC.16.)
IC 6-3.5-6-18
Use of revenue by county auditors; distribution of revenue to civil
taxing units and school corporations; qualified economic
development tax projects
Sec. 18. (a) The revenue a county auditor receives under this
chapter shall be used to:
(1) replace the amount, if any, of property tax revenue lost due
to the allowance of an increased homestead credit within the
county;
(2) fund the operation of a public communications system and
computer facilities district as provided in an election, if any,
made by the county fiscal body under IC 36-8-15-19(b);
(3) fund the operation of a public transportation corporation as
provided in an election, if any, made by the county fiscal body
under IC 36-9-4-42;
(4) make payments permitted under IC 36-7-14-25.5 or
IC 36-7-15.1-17.5;
(5) make payments permitted under subsection (i);
(6) make distributions of distributive shares to the civil taxing
units of a county; and
(7) make the distributions permitted under sections 27, 28, 29,
30, 31, 32, and 33 of this chapter.
(b) The county auditor shall retain from the payments of the
county's 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:
(1) the amount, if any, specified by the county fiscal body for
a particular calendar year under subsection (i), IC 36-7-14-25.5,
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; and
(2) the amount of an additional tax rate imposed under section
27, 28, 29, 30, 31, 32, or 33 of this chapter.
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
allocation amount for the civil taxing unit for the calendar year
in which the month falls. The denominator of the fraction
equals the sum of the allocation amounts of all the civil taxing
units of the county for the calendar year in which the month
falls.
(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 (other than revenues
attributable to a tax rate imposed under section 30, 31, or 32 of 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.
As added by P.L.44-1984, SEC.14. Amended by P.L.225-1986,
SEC.10; P.L.32-1986, SEC.2; P.L.84-1987, SEC.3; P.L.2-1989,
SEC.16; P.L.28-1993, SEC.7; P.L.273-1999, SEC.71; P.L.283-2001,
SEC.4; P.L.90-2002, SEC.296; P.L.120-2002, SEC.4; P.L.1-2003,
SEC.44; P.L.255-2003, SEC.4; P.L.207-2005, SEC.8; P.L.162-2006,
SEC.31; P.L.184-2006, SEC.6; P.L.1-2007, SEC.63; P.L.224-2007,
SEC.79; P.L.182-2009(ss), SEC.222.
IC 6-3.5-6-18.5
Distributive shares to civil taxing units in counties containing a
consolidated city
Sec. 18.5. (a) This section applies to a county containing a
consolidated city.
(b) Notwithstanding section 18(e) of this chapter, the distributive
shares that each civil taxing unit in a county containing a
consolidated city is entitled to receive during a month equals the
following:
(1) For the calendar year beginning January 1, 1995, calculate
the total amount of revenues that are to be distributed as
distributive shares during that month multiplied by the
following factor:
Center Township .0251
Decatur Township .00217
Franklin Township .0023
Lawrence Township .01177
Perry Township .01130
Pike Township .01865
Warren Township .01359
Washington Township .01346
Wayne Township .01307
Lawrence-City .00858
Beech Grove .00845
Southport .00025
Speedway .00722
Indianapolis/Marion County .86409
(2) Notwithstanding subdivision (1), for the calendar year
beginning January 1, 1995, the distributive shares for each civil
taxing unit in a county containing a consolidated city shall be
not less than the following:
Center Township $1,898,145
Decatur Township $164,103
Franklin Township $173,934
Lawrence Township $890,086
Perry Township $854,544
Pike Township $1,410,375
Warren Township $1,027,721
Washington Township $1,017,890
Wayne Township $988,397
Lawrence-City $648,848
Beech Grove $639,017
Southport $18,906
Speedway $546,000
(3) For each year after 1995, calculate the total amount of
revenues that are to be distributed as distributive shares during
that month as follows:
STEP ONE: Determine the total amount of revenues that
were distributed as distributive shares during that month in
calendar year 1995.
STEP TWO: Determine the total amount of revenue that the
department has certified as distributive shares for that month
under section 17 of this chapter for the calendar year.
STEP THREE: Subtract the STEP ONE result from the
STEP TWO result.
STEP FOUR: If the STEP THREE result is less than or
equal to zero (0), multiply the STEP TWO result by the ratio
established under subdivision (1).
STEP FIVE: Determine the ratio of:
(A) the maximum permissible property tax levy under
IC 6-1.1-18.5 for each civil taxing unit for the calendar
year in which the month falls, plus, for a county, the
welfare allocation amount; divided by
(B) the sum of the maximum permissible property tax
levies under IC 6-1.1-18.5 for all civil taxing units of the
county during the calendar year in which the month falls,
and an amount equal to the welfare allocation amount.
STEP SIX: If the STEP THREE result is greater than zero
(0), the STEP ONE amount shall be distributed by
multiplying the STEP ONE amount by the ratio established
under subdivision (1).
STEP SEVEN: For each taxing unit determine the STEP
FIVE ratio multiplied by the STEP TWO amount.
STEP EIGHT: For each civil taxing unit determine the
difference between the STEP SEVEN amount minus the
product of the STEP ONE amount multiplied by the ratio
established under subdivision (1). The STEP THREE excess
shall be distributed as provided in STEP NINE only to the
civil taxing units that have a STEP EIGHT difference greater
than or equal to zero (0).
STEP NINE: For the civil taxing units qualifying for a
distribution under STEP EIGHT, each civil taxing unit's
share equals the STEP THREE excess multiplied by the ratio
of:
(A) the maximum permissible property tax levy under
IC 6-1.1-18.5 for the qualifying civil taxing unit during the
calendar year in which the month falls, plus, for a county,
an amount equal to the welfare allocation amount; divided
by
(B) the sum of the maximum permissible property tax
levies under IC 6-1.1-18.5 for all qualifying civil taxing
units of the county during the calendar year in which the
month falls, and an amount equal to the welfare allocation
amount.
(c) The welfare allocation amount is an amount equal to the sum
of the property taxes imposed by the county in 1999 for the county's
welfare fund and welfare administration fund and the property taxes
imposed by the county in 2008 for the county's county medical
assistance to wards fund, family and children's fund, children's
psychiatric residential treatment services fund, county hospital care
for the indigent fund, children with special health care needs county
fund, plus, in the case of Marion County, thirty-five million dollars
($35,000,000).
As added by P.L.42-1994, SEC.10. Amended by P.L.98-1995, SEC.1;
P.L.273-1999, SEC.72; P.L.283-2001, SEC.5; P.L.120-2002, SEC.5;
P.L.255-2003, SEC.5; P.L.234-2005, SEC.5; P.L.146-2008,
SEC.339.
IC 6-3.5-6-18.6
Timing of income tax distributions within the county
Sec. 18.6. (a) The county auditor shall timely distribute the
certified distribution received under section 17 of this chapter to each
civil taxing unit that is a recipient of distributive shares as provided
by sections 18 and 18.5 of this chapter.
(b) A distribution is considered to be timely made if the
distribution is made not later than ten (10) working days after the
date the county treasurer receives the county's certified distribution
under section 17 of this chapter.
As added by P.L.26-2009, SEC.2.
IC 6-3.5-6-19
Calculation of distributive shares; allowable uses of revenue
Sec. 19. (a) Except as provided in sections 18(e) and 18.5(b)(3)
of this chapter, in determining the fractional share of distributive
shares the civil taxing units of a county are entitled to receive under
section 18 of this chapter during a calendar year, the department of
local government finance shall consider only property taxes imposed
on tangible property subject to assessment in that county.
(b) In determining the amount of distributive shares a civil taxing
unit is entitled to receive under section 18(g) of this chapter, the
department of local government finance shall consider only the
percentage of the civil taxing unit's budget that equals the ratio that
the total assessed valuation that lies within the civil taxing unit and
the county that has adopted the county option tax bears to the total
assessed valuation that lies within the civil taxing unit.
(c) The distributive shares to be allocated and distributed under
this chapter:
(1) shall be treated by each civil taxing unit as additional
revenue for the purpose of fixing the civil taxing unit's budget
for the budget year during which the distributive shares are to
be distributed to the civil taxing unit; and
(2) may be used for any lawful purpose of the civil taxing unit.
(d) In the case of a civil taxing unit that includes a consolidated
city, its fiscal body may distribute any revenue it receives under this
chapter to any governmental entity located in its county except an
excluded city, a township, or a school corporation.
As added by P.L.44-1984, SEC.14. Amended by P.L.225-1986,
SEC.11; P.L.273-1999, SEC.73; P.L.90-2002, SEC.297;
P.L.267-2003, SEC.11; P.L.118-2005, SEC.1.
IC 6-3.5-6-20
County residents; determination
Sec. 20. (a) For purposes of this chapter, an individual shall be
treated as a resident of the county in which he:
(1) maintains a home, if the individual maintains only one (1)
in Indiana;
(2) if subdivision (1) does not apply, is registered to vote;
(3) if subdivision (1) or (2) does not apply, registers his
personal automobile; or
(4) if subdivision (1), (2), or (3) does not apply, spends the
majority of his time spent in Indiana during the taxable year in
question.
(b) The residence or principal place of business or employment of
an individual is to be determined on January 1 of the calendar year
in which the individual's taxable year commences. If an individual
changes the location of his residence or principal place of
employment or business to another county in Indiana during a
calendar year, his liability for county option income tax is not
affected.
(c) Notwithstanding subsection (b), if an individual becomes a
county taxpayer for purposes of IC 36-7-27 during a calendar year
because the individual:
(1) changes the location of the individual's residence to a county
in which the individual begins employment or business at a
qualified economic development tax project (as defined in
IC 36-7-27-9); or
(2) changes the location of the individual's principal place of
employment or business to a qualified economic development
tax project and does not reside in another county in which the
county option income tax is in effect;
the individual's adjusted gross income attributable to employment or
business at the qualified economic development tax project is taxable
only by the county containing the qualified economic development
tax project.
As added by P.L.44-1984, SEC.14. Amended by P.L.42-1994,
SEC.11.
IC 6-3.5-6-21
Reciprocity