Indiana Adopts New Local Income Tax Structure

(this was provided to us by Joshua Claybourn Legal Counsel in Jackson Kelly’s Evansville office)

Indiana has adopted legislation repealing existing categories of county income taxes (including the County Adjusted Gross Income Tax (“CAGIT”), the County Option Income Tax (“COIT”) and the County Economic Development Income Tax (“EDIT” or “CEDIT”)) and replacing them with a new, more unified county income tax structure with three rate components of a Local Income Tax.

The existing local taxes are repealed effective 1 January 2017, and the taxes in effect on 1 May 2016, will be consolidated into the new law. As part of the transition to the new structure, a municipality may not adopt any ordinances under the former taxes after 30 June 2016.

There are three rate components of the reorganized local income tax: (1) expenditure rate, (2) property tax relief rate, and (3) special purpose rate. The revenue collected from a rate component may be used only for the purpose established in the statute. Each rate component serves a function similar to an existing local option income tax.

The expenditure rate component may be used for school corporations and civil taxing units, certified shares, public safety, and economic development, and the rate is set at a maximum 2.5% of adjusted gross income (except for Marion County, the rate for which is 2.75%). The property tax relief component is used to fund a property tax credit to reduce property tax liabilities, and the rate is set at a maximum 1.25% of adjusted gross income. Finally, the special purpose rate component is a distinct rate implemented for a specific purpose by a particular county and the rate can vary. Excluding the special purpose rate, the maximum local income tax rate is 3.75% of adjusted gross income for all counties (except Marion County, which has a maximum rate of 4%).

FOOTNOTE: We would like to thank Joshua Claybourn Legal Counsel in Jackson Kelly’s Evansville office for sending this extremely informative article.   Mr. Claybourn advises clients in matters of business and corporate law, governmental services, and public finance at Jackson and Kelly’s law firm, Evansville.

Jennifer Nelson for www.theindianalawyer.com

A mother that has prevented her son from seeing his father since 2009 and purposefully disobeyed parenting time orders and contempt orders must be sanctioned, the Indiana Court of Appeals ruled Friday.

Since 2002, a year after P.B. was born, father M.L.B. and mother D.L.B. have been in court either challenging, seeking enforcement of or modification of parenting time orders and contempt orders. Mother and P.B. have alleged father to have abused the boy on several occasions, but following investigations by the Indiana Department of Child Services and the local police department, no charges or actions were filed against father.

At issue in In re the Paternity of P.B., M.L.B. v. D.L.B., 03A05-1601-JP-46, is father’s appeal of the order of Bartholomew Circuit Court denying his petition to enforce previous parenting time and reunification orders and his petition to hold mother in contempt for her failure to cooperate with those orders.

In July 2015, Special Judge Jonathan Webster noted in order that P.B. hasn’t seen his father in five years, but mother and P.B. refuse to allow father to see the teen. Mother has made it clear that she will not abide by any court order that forces the teen to visit his father. Webster questioned how he could force a 6-foot, 14-year-old boy to visit his father when he didn’t want to, so he denied father’s petition.

“While we sympathize with the dilemma with which the trial court was faced, the proper solution was not to refuse to enforce its orders. Instead, the trial court should have used its authority to ensure that its orders are obeyed and not disregarded as mere suggestions. No one, especially not a parent, should be under the impression that compliance with the trial court’s parenting time order is optional,” Judge Paul Mathias wrote.

“The trial court abused its discretion in concluding that Mother was not in contempt for her admitted refusal to follow the clear mandate of the trial court’s earlier orders. If Father is to be deprived of his right to parenting time with his son, the law requires a finding that such parenting time would endanger his physical health or significantly impair his emotional development, but no such finding is in the record. We therefore reverse the trial court’s order and remand with instructions that the trial court enter a contempt sanction against Mother that will be sufficient to enforce its parenting time order.”