September 5, 2020

Remember, Local Income Can Be Deposited Where It Is Needed.

Local Income Tax (LIT) can be deposited into any fund.  Most townships determine at the time of the annual budget how much LIT to allocate to each fund.  However, the trustee can change the allocation at any time.  Unlike property tax, which has to be deposited into the fund for which it was levied, LIT can be deposited into any fund at any time. If a fund is running short of cash, the trustee is empowered to begin depositing more LIT into that fund, and less into funds that don’t need it. We don’t recommend changing past LIT deposits that have already been recorded.  It is better to change the current month deposit and any future LIT deposits going forward. […]
September 5, 2020

Here Is A Way to Shift Money Between Funds – Easily!

Trustees often wish they could shift money from one fund to another, but usually they are told they can’t. However, your township may have a way around that. If a fund receives a property tax levy, it may also be charged rate cap credits (circuit breaker credits).  Rate cap credits reduce the net revenue to the fund. The levy collections must be deposited into the fund for which they were raised.  However, the  rate cap credits can be allocated to almost any fund.  By reallocating the rate cap credits, the trustee can shift some revenue between funds. Example: Suppose your township has extra money in a cumulative fire building and equipment fund, and the money is needed in the township […]
September 5, 2020

Need Fire Equipment? Here is a Way to Find the Money!

Your township may be allowed to raise extra tax money to pay for firefighting apparatus and equipment.  That includes fire buildings. Even though township property taxes are limited by state law, the limit does not always apply to money raised for debt payments. Debt can be used to buy firefighting apparatus and equipment, and an additional tax can be levied to make the payments. Issuing bonds is expensive, but there is a cheaper way to finance firefighting apparatus and equipment. A special rule allows a township to obtain a relatively simple, cheap, loan or lease through a bank.  The term must be six years or less.  There are still a few legal hoops to jump through, including board approval, and […]
June 18, 2020

Townships May Accept Charitable Contributions

Townships can accept donations from individuals and treat them as charitable contributions. IRS will view as charitable any donation to “the United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions.” That means the contributor may deduct the amount on his or her tax return. Contributions of this kind usually come in response to a specific appeal by the Trustee for support of a particular program, but any voluntary contribution to a township can be treated as charitable. A tax deduction is allowed for contributions of physical items, such as food […]
June 5, 2020

The COVID-19 Pandemic will Affect Township Income Tax Revenue in Some Strange Ways.

It is obvious the shut-downs prompted by the pandemic will cut peoples incomes and therefore reduce income tax revenue to townships. However, the timing of the effect is not obvious. For example, in 2020, the pandemic should not affect township income tax revenue at all.  That is because 2020 local income tax (LIT) has already been certified for 2020. Townships will continue to receive 2020 LIT distributions as if there had been no pandemic. Also, surprisingly, 2021 LIT distributions should not be affected either.  Under current law, the 2021 LIT distributions will be certified based on 2019 tax returns processed by the Indiana Department of Revenue through June 30, 2020.  Since these returns are for 2019, before any shut-downs, the […]