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Some Indiana Local Government Entities May Qualify for Loans Due to Past Misapplied Maximum Fund Rate Calculations

Qualified Indiana local government entities – school corporations, cities, towns, counties and library districts – may wish to review their 2012 or prior year budgets due to misapplication of the maximum capital projects fund rate calculation under Indiana statute (Indiana Code 6-1.1-18-12).

Of immediate note is that changes made to this law during the 2012 Session of the Indiana General Assembly allow Indiana local governmental entities to obtain an interest free loan from the State of Indiana for what such entity should have received in 2012 in such rate-capped funds after applying the corrected calculation. The window on obtaining this money this year will be closing in less than 30 days.

The issue originally came to light after Barnes & Thornburg LLP’s representation of two school districts, DeKalb County Eastern Consolidated School District and, most recently, the Metropolitan School District of Pike Township in appeals before the Indiana Tax Court. The misapplications, which were calculated by the Indiana Department of Local Government Finance (DLGF) cost these governmental units more than $1 million per year, collectively.

In both of these cases, the Indiana Tax Court agreed with the firm's conclusions that the DLGF's interpretation of the statute was incorrect and ordered those miscalculations to be corrected in the future budget years. On May 4, 2012, the Indiana Supreme Court denied the DLGF's request to review these Tax Court decisions.

Attorneys involved believe many of the qualified Indiana local governmental entities have been the victim of one or more of these same miscalculations in connection with their 2012 or prior budgets.

© 2020 BARNES & THORNBURG LLPNational Law Review, Volume II, Number 136


About this Author

Randal Kaltenmark, Barnes Thornburg Law Firm, Indianapolis, Tax Law Attorney

Randal J. Kaltenmark is a partner in Barnes & Thornburg LLP's Indianapolis, Indiana office. He concentrates his practice in federal, state, and local tax controversies and audits, as well as tax planning for both public and private clients, including joint mergers, mergers, and acquisitions. Mr. Kaltenmark represents clients in audit and administrative proceedings before the Internal Revenue Service and state/local tax authorities. He also represents clients in appeals to both federal and state courts, including the United States and Indiana Tax Courts. Mr. Kaltenmark is experienced in...