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Thursday, September 24, 2009

Ind. Law - More on: Words matter, regardless of a legislator's, or legislature's, intent

Just yesterday the ILB posted this lengthy entry, detailing imprecise language in the voter ID law, the property tax caps, the seat belt law, the Aquasource law, the 2007 health insurance law, the budget bills, etc.

Today Jennifer Tangeman of the Logansport Pharos-Tribune has a terrific story headlined "Are nursing homes now tax-exempt? Lawmaker, attorney disagree on law’s impact":

A Logansport lawmaker says he doesn’t believe an amendment to this year’s state budget opened the door to tax refunds for nursing homes across the state.

State Rep. Rich McClain says the exemption applies only to those entities that are indeed not-for-profit organizations. The for-profit language in the amendment, he said, applies only to those nonprofit organizations that failed to file for their nonprofit status on time.

McClain said he researched the details of the bill with a staff member in the House Ways and Means Committee after hearing from constituents who were concerned by reports out of last week’s meeting of the Cass County Council.

County council president Ralph Anderson had announced at the meeting that a law had been passed to allow for-profit nursing homes to file for an exemption from property taxes.

County Assessor Judy Lewis said she understood that any for-profit nursing home could apply to receive future tax exemptions, as well as a refund for already-paid taxes back to the year 2000.

“They can ask for all of the money back from the last 10 years,” Lewis said.

McClain said that wasn’t the intent of the amendment.

“In this special session budget bill was a statement that basically says if you are a not-for-profit and you did not file, you have until Sept. 1 of this year to file that, but you have to be a not-for-profit, or 501(c)3, to get that special tax exemption,” he said.

Law firms across the state, however, have been filing for the exemption for for-profit nursing homes. Pete Mallers, an attorney with Beers Mallers Backs and Salin LLC of Fort Wayne, filed on behalf of Logansport’s Woodbridge Health Campus, and he contends for-profit homes are eligible for the exemption.

“Indiana law changed a number of years ago in a court decision that opened up the exemption status for nonprofit nursing homes as well as for-profit nursing homes,” Mallers said. “But the Indiana General Assembly passed legislation last summer that broadened the scope of that and allowed tax-exempt entities that had not previously filed for the tax exempt status to file for refunds.”

Mallers said the statute was clear in stating that for-profit nursing homes can file.

“It has been Indiana law for a number of years,” he said. “And many, many people were not aware of that. Filing for the exemption is completely within the confines of the law. Otherwise it would not have been done.”

According to Mallers, the only difference is that now those entities can apply for a decade’s worth of refunds.

Lewis noted that disagreement could have a huge impact on the county budget. She noted that the refunds for Woodbridge Health Campus and Camelot Care Centers would total around $30 million.

McClain said similar cases have already been turned down by Indiana Tax Court, and he predicts any local cases will have a similar outcome.

“A for-profit home filed for the exemption in Hamilton County, and the state tax court determined they were not due that status,” McClain said.

He said there was also a $40 million case in Allen County that is still in litigation. He said the law firms were trying to make their cases from certain terminology in the bill.

“Property tax is a complicated tax,” he said. “I know of nobody in the state of Indiana that has filed and won. That’s the reason you have the not-for-profit status.”

State Sen. Randy Head said he intended to research the issue in greater depth.

“This is obviously something we have to address,” he said. “It is definitely an issue I want to look into further.”

Where is this alleged exemption language? I've looked through the massive "budget" bill, HEA 1001ss. So far, the only thing that looks to be close is SECTION 479, a noncode provision.

Posted by Marcia Oddi on September 24, 2009 09:16 AM
Posted to Indiana Law