NUMBER ONE IN A SERIES: SAFEGUARDING PUBLIC ASSETS
March 14, 2022
Property Tax Shortfalls are Common. Here’s how to Recover the Revenue.
July 19, 2022
Written by: Curtis L. Coonrod, CPA, and Benjamin W. Roeger, CPA
[Written: 10/19/21, Revised: 5/20/22]
Property tax draws for most cities, towns, townships, and counties are reduced by rate cap credits. Rate cap credits are usually allocated in proportion to the size of each fund that has a property tax levy, except for debt service funds. However, the city or other local unit can change that allocation.
For example, suppose the Assistance Fund has $10,000 of rate cap credits and needs more money. The local government can reduce all or some of the Assistance Fund rate cap credits – up to the full $10,000 and increase the rate cap credits by a like amount in other funds.
The result?
Up to $10,000 of additional revenue into the Assistance Fund.
What to watch out for: The reallocation should be made by the time the draws are received and deposited. Once a tax draw has been deposited into a fund, an additional appropriation (see below) is required to transfer it to another fund. Also, before increasing the rate cap credits, in any fund, make sure that the fund can still collect enough revenue to cover its expenditures for the current year.
No statute requires a Board resolution, but we recommend one be obtained. We also recommend sending a copy of the resolution and/or a letter from the local office to the County Auditor and the DLGF, so that they can take the reallocation into account in their future calculations.
For more information, visit the DLGF website at https://www.in.gov/dlgf/.
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If you have questions or would like further information, please contact us at roeger@coonrodcpa.com
This article is intended to provide information of general interest to local government officials in Indiana. The information is not guaranteed to be applicable or appropriate in particular circumstances. Local officials should consult competent professionals before acting on any information contained in this article. We are not attorneys. The advice of a legal nature should be sought only from qualified attorneys.
We inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for (I) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
Copyright © 2021 C. L. Coonrod & Company, CPA P.C.
