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Indiana - More Tax Regulations for Big Box Stores?

by Morgan Thomas, Chicago, October 2015


Indiana enacted a new law this year requiring big box retail and other "special purpose" properties to be assessed using only the cost approach to value. Some local government officials feel more regulations are needed so these properties don't receive large tax breaks.


New Law


Senate Enrolled Act 436 requires the cost approach to value properties with a building size of at least 50,000 square feet and an effective age of ten years or less.


The law places restrictions on appeals, limiting property value comparisons to buildings that were used for similar purposes and have been for sale less than a year.


Not a Total Fix


President of the Indiana County Assessors Association Judy Sharp told the Indianapolis Business Journal the law change was "a Band-Aid, but not a total fix." She complained that the law is too open ended.


Marion County Assessor Joseph O'Connor agreed saying that when big-box properties get a large reduction in value, it's usually on the back of homeowners and other taxpayers. Marion County has been ordered to refund more than $2 million to Meijer after the company won an appeal cutting its 2012 assessed value of $19.7 million by nearly two-thirds. The decision is being appealed to the Indiana Tax Court.


Law May be Reviewed


Senator Brandt Hershman who sponsored SEA 436 said the issue could be reviewed during the 2016 legislative session. But he said time is needed to test the effectiveness of the new law.


"If this is the precursor to a pattern of continuing decisions, that's something we would take into account," Hershman explained.


Indiana's new law is being closely watched by other states. Michigan lawmakers are debating legislation to end perceived special property tax discounts for big-box retail stores. Some legislators feel it's unfair to other business property that is not assessed the same way.