Indiana tax cases can arise under one of several Indiana tax laws. Every individual and business in Indiana is subject to various state and local taxes, but few understand the reasons behind tax disputes. Learning about the different types of tax cases, Indiana Tax Court proceedings, and having a knowledgeable Indiana tax attorney can be key to successfully resolving your case.
Julie A. Camden is an experienced Indianapolis tax attorney and a founding partner of Camden & Meridew, P.C. In this blog, she offers insights into tax matters in Indiana and answers these common questions:
- How are Indiana residents taxed?
- Who manages Indiana taxpayer issues?
- How can I appeal a tax judgment in Indiana?
- What do I need to know about tax audits in Indiana?
- When are Indiana tax cases considered small claims?
- How do Indiana tax attorneys help taxpayers?
How Indiana Tax Cases Are Handled
Before we dive into the Q&A, here are some basics about the Indiana Tax Court structure and process.
The Indiana Tax Court handles cases that arise under Indiana tax laws including appeals, injunctions, and small claims. The court has exclusive jurisdiction over these cases, meaning only the tax court can hear cases involving Indiana tax disputes.
The tax court hears appeals of cases mostly in Indianapolis, but can also hear cases in Allen, St. Joseph, Lake, Marion, Vigo, Vanderburgh, and Jefferson Counties. All trials before the Indiana Tax Court are done without a jury.
Understanding the different types of Indiana tax cases heard by the Indiana Tax Court can help taxpayers better understand and prepare their own cases.
How Are Indiana Residents Taxed?
The major types of taxes Hoosiers pay each year are income tax, sales tax, property tax, and some various other taxes, such as gaming tax.
The individual income tax rate in Indiana is periodically adjusted as outlined in Indiana Code § 6-3-2-1. Residents of Indiana are taxed a flat state income rate, which means no matter how much an individual makes each year, every Hoosier is taxed at the same rate. In addition, each county in Indiana imposes its own local income tax rates, and these are also subject to recurring adjustments.
The Indiana sales tax (the tax you pay when you purchase goods and tangible personal property) is a flat seven percent, with exemptions for groceries and prescription drugs. Property taxes in Indiana vary by district and are determined by the assessed value of your property and the effective tax rate in your district.
Indiana taxpayers have the responsibility of filing timely tax returns, being familiar and complying with Indiana tax laws, providing notice of an address change, and asking for assistance with any tax questions or concerns.
Who Manages Indiana Taxpayer Issues?
The Indiana Department of Revenue (DOR) handles tax returns, audits, tax protests, and works with individuals, business owners, tax preparers and stakeholders. The DOR has more than 700 team members who administer more than 65 different tax types and process almost $30 billion of tax revenue.
The Indiana Board of Tax Review (IBTR) is the state agency that decides real and personal property tax assessment appeals. The board consists of three members who impartially review appeals concerning the following:
- Assessed value of tangible property;
- Property tax deductions;
- Property tax exemptions; and
- Property tax credits.
The IBTR cannot address appeals in which taxpayers are contesting only their tax bill and not their property’s tax assessment as well. The IBTR also reviews assessments determined by the Indiana Department of Local Government Finance.
The Indiana Department of Local Government Finance (DLGF) is responsible for ensuring property tax assessment and local government budgets are in accordance with Indiana law. This department creates property tax assessment rules and annually reviews and approves tax rates.
How Can I Appeal a Tax Judgment in Indiana?
Indiana taxpayers may find themselves in tax court because they are appealing a previous judgment regarding a tax decision from one of several different state or local agencies. The purpose of a tax appeal is to initiate an argument that the final decision of the Indiana Department of Revenue, the Indiana Board of Tax Review, or the Department of Local Government Finance was incorrect and should be changed.
To initiate an appeal, the taxpayer or the taxpayer’s attorney must file a petition with the Indiana Tax Court through the state courts’ e-filing system. One may file an appeal for the purpose of wanting a tax refund, appealing the denial of a refund, or appealing a certain property tax rate assessment.
Appeals of final orders from the DOR must be filed with the tax court within 90 days of the letter of findings or the denial of the refund, with an option to request an additional 90-day extension. Appeals from the IBTR or the DLGF generally must be filed within 45 days from the final determination appealed.
What Do I Need to Know about Tax Audits in Indiana?
Indiana taxpayers may find themselves subject to a tax audit by the Indiana Department of Revenue, usually when the DOR has conflicting or incomplete information. The purpose of tax audits in Indiana is to verify the accuracy of the information reported to the state and ensure individuals and businesses are following Indiana tax laws.
If you are audited by the Indiana DOR, you will receive a letter providing details about the nature of the audit and your auditor’s contact information. Next, the auditor should call or email you to gather preliminary information and explain the process. You will be scheduled for a pre-audit interview and given a list of records requested by the DOR. You may also be asked to complete a pre-audit questionnaire.
The audit procedures from this stage depend on the type of tax in question and the specifics of your situation, but the auditor may request information from you and should keep you informed throughout the process.
Once the auditor has collected all relevant information and assessed the case, you will be asked to attend a post-audit conference and a final conference, which may occur at the same time in some cases. In these conferences, the auditor will discuss their findings and you should have an opportunity to ask questions and express any concerns. After the final conference, you should receive formal written notice of the auditor’s determinations.
If you believe a tax audit has resulted in an improper assessment, you must first exhaust all administrative remedies with the Department of Revenue. After a final determination from the DOR, you may petition the Indiana Tax Court for an appeal.
When Are Indiana Tax Cases Considered Small Claims?
The Indiana Tax Court hears two different types of small claims regarding tax matters. These are cases involving relatively lesser amounts of money. First, the tax court hears cases about Department of Revenue refunds that do not exceed $5,000 for any year. Second, the court hears appeals from Indiana Board of Tax Revenue assessed value final determinations that do not exceed $45,000.
How Do Indiana Tax Attorneys Help Taxpayers?
Taxpayers often try to handle tax issues themselves, only to find out that the issue is too burdensome to handle alone. Taxes can be difficult to manage and hard to understand, but an experienced Indiana tax attorney can guide you through the process and fight for a positive resolution.
Whether you live in central Indiana or elsewhere around the state, an Indianapolis tax attorney at Camden & Meridew, P.C. is ready to help. For help with Indiana tax cases including refund disputes, audits, and small claims, contact Camden & Meridew by calling 317-770-000 or filling out our online contact form to schedule a consultation.