(a)In enacting this section, the general
assembly finds the following:
(1)The economy of northern Indiana has historically been heavily
dependent upon:
(A)the domestic steel industry, particularly the integrated steel
mill business, which produces steel from basic raw materials
through blast furnace and related operations; and
(B)the oil refining and petrochemical industry.
(2)Northern Indiana is the only area of Indiana with integrated
steelmaking facilities.
(3)During the last thirty (30) years, the domestic steel industry
has experienced significant financial difficulties. More than
one-half (1/2) of the integrated steel mills in the United States
were shut down or deintegrated, with the remainder requiring
significant investment and the addition of new processes to make
the facil
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(a) In enacting this section, the general
assembly finds the following:
(1) The economy of northern Indiana has historically been heavily
dependent upon:
(A) the domestic steel industry, particularly the integrated steel
mill business, which produces steel from basic raw materials
through blast furnace and related operations; and
(B) the oil refining and petrochemical industry.
(2) Northern Indiana is the only area of Indiana with integrated
steelmaking facilities.
(3) During the last thirty (30) years, the domestic steel industry
has experienced significant financial difficulties. More than
one-half (1/2) of the integrated steel mills in the United States
were shut down or deintegrated, with the remainder requiring
significant investment and the addition of new processes to make
the facilities economically competitive with newer foreign and
domestic steelmaking facilities and processes.
(4) The United States needs to protect the capacity of the oil
refining and petrochemical industry. No oil refineries have been
built in the United States since 1976.
(5) Given the economic conditions affecting older integrated
steelmaking facilities, integrated steel mills claimed abnormal
obsolescence in reporting the assessed value of equipment located
at the integrated steelmaking facilities that began operations
before 1970, thereby reporting the equipment's assessed value at
far below thirty percent (30%) of the equipment's total cost (far
below the "thirty percent (30%) floor" value generally applicable
to equipment exhibiting only normal obsolescence under the
current department of local government finance rules).
(6) Current law existing before January 1, 2003, obligates the
taxpayers making abnormal obsolescence claims to pay personal
property taxes based only on, and permits communities to
determine property tax budgets and rates based only on, the
reported personal property assessed values until the personal
property appeals are resolved. Consequently, as a result of
abnormal obsolescence claims, the property tax base of
communities in northern Indiana is severely reduced for an
indeterminate period (if not permanently). The prospect of future
appeals and their attendant problems on an ongoing basis must be
addressed.
(7) A new, optional method for valuing the equipment of
integrated steel mills and entities that are at least fifty percent
(50%) owned by an affiliate of an integrated steel mill ("related
entities") and the oil refining and petrochemical industry in
northern Indiana is needed. That optional method:
(A) recognizes the loss of value and difficulty in valuing
equipment at integrated steelmaking facilities and facilities of
the oil refining and petrochemical industry that commenced
operations decades ago and at the facilities of related entities;
(B) recognizes that depreciable personal property used in
integrated steelmaking and in oil refinery or petrochemical
operations and by related entities is affected by different
economic and market forces than depreciable personal property
used in other industries and certain other segments of the steel
industry and therefore experiences different amounts of
obsolescence and depreciation; and
(C) can be used to simply and efficiently arrive at a value
commensurate with that property's age, use, obsolescence, and
market circumstances instead of the current method and its
potentially contentious and lengthy appeals. Such an optional
method would benefit the communities where these older
facilities are located.
(8) Such an optional method would be to authorize a fifth pool in
the depreciation schedule for valuing the equipment of integrated
steel mills, related entities, and the oil refining and petrochemical
industry that reflects all adjustments to the value of that
equipment for depreciation and obsolescence, including abnormal
obsolescence, which precludes any taxpayer electing such a
method from taking any other obsolescence adjustment for the
equipment, and which applies only at the election of the taxpayer.
(9) The purpose for authorizing the Pool 5 method is to provide
a more simplified and efficient method for valuing the equipment
of integrated steel mills and the oil refining and petrochemical
industry that recognizes the loss of value and unusual problems
associated with the valuation of the equipment or facilities that
began operations before 1970 in those industries in northern
Indiana, as well as for valuing the equipment of related entities,
to stabilize local property tax revenue by eliminating the need for
abnormal obsolescence claims, and to encourage those industries
to continue to invest in northern Indiana, thereby contributing to
the economic life and well-being of communities in northern
Indiana, the residents of northern Indiana, and Indiana generally.
(10) The specific circumstances described in this section do not
exist throughout the rest of Indiana.
(b) For purposes of this section:
(1) "adjusted cost" refers to the adjusted cost established in 50
IAC 4.2-4-4 (as in effect on January 1, 2003);
(2) "depreciable personal property" has the meaning set forth in
50 IAC 4.2-4-1 (as in effect on January 1, 2003);
(3) "integrated steel mill" means a person, including a subsidiary
of a corporation, that produces steel by processing iron ore and
other raw materials in a blast furnace in Indiana;
(4) "oil refinery/petrochemical company" means a person that
produces a variety of petroleum products by processing an annual
average of at least one hundred thousand (100,000) barrels of
crude oil per day;
(5) "permanently retired depreciable personal property" has the
meaning set forth in 50 IAC 4.2-4-3 (as in effect on January 1,
2003);
(6) "pool" refers to a pool established in 50 IAC 4.2-4-5(a) (as in
effect on January 1, 2003);
(7) "special integrated steel mill or oil refinery/petrochemical
equipment" means depreciable personal property, other than
special tools and permanently retired depreciable personal
property:
(A) that:
(i) is owned, leased, or used by an integrated steel mill or an
entity that is at least fifty percent (50%) owned by an affiliate
of an integrated steel mill; and
(ii) falls within Asset Class 33.4 as set forth in IRS Rev. Proc.
87-56, 1987-2, C.B. 647; or
(B) that:
(i) is owned, leased, or used as an integrated part of an oil
refinery/petrochemical company or its affiliate; and
(ii) falls within Asset Class 13.3 or 28.0 as set forth in IRS
Rev. Proc. 87-56, 1987-2, C.B. 647;
(8) "special tools" has the meaning set forth in 50 IAC 4.2-6-2 (as
in effect on January 1, 2003); and
(9) "year of acquisition" refers to the year of acquisition
determined under 50 IAC 4.2-4-6 (as in effect on January 1,
2003).
(c) Notwithstanding 50 IAC 4.2-4-4, 50 IAC 4.2-4-6, and 50 IAC
4.2-4-7, a taxpayer may elect to calculate the true tax value of the
taxpayer's special integrated steel mill or oil refinery/petrochemical
equipment by multiplying the adjusted cost of that equipment by the
percentage set forth in the following table:
(d) The department of local government finance shall designate the
table under subsection (c) as "Pool No. 5" on the business personal
property tax return.
(e) The percentage factors in the table under subsection (c)
automatically reflect all adjustments for depreciation and obsolescence,
including abnormal obsolescence, for special integrated steel mill or oil
refinery/petrochemical equipment. The equipment is entitled to all
exemptions, credits, and deductions for which it qualifies.
(f) The minimum valuation limitations under section 29 of this
chapter do not apply to special integrated steel mill or oil
refinery/petrochemical equipment valued under this section. The value
of the equipment is not included in the calculation of that minimum
valuation limitation for the taxpayer's other assessable depreciable
personal property in the taxing district.
(g) An election to value special integrated steel mill or oil
refinery/petrochemical equipment under this section:
(1) must be made by reporting the equipment under this section
on a business personal property tax return;
(2) applies to all of the taxpayer's special integrated steel mill or
oil refinery/petrochemical equipment located in the state (whether
owned or leased, or used as an integrated part of the equipment);
and
(3) is binding on the taxpayer for the assessment date for which
the election is made.
The department of local government finance shall prescribe the forms
to make the election beginning with the March 1, 2003, assessment
date. Any special integrated steel mill or oil refinery/petrochemical
equipment acquired by a taxpayer that has made an election under this
section is valued under this section.
(h) If fifty percent (50%) or more of the adjusted cost of a taxpayer's
property that would, notwithstanding this section, be reported in a pool
other than Pool No. 5 is attributable to special integrated steel mill or
oil refinery/petrochemical equipment, the taxpayer may elect to
calculate the true tax value of all of that property as special integrated
steel mill or oil refinery/petrochemical equipment. The true tax value
of property for which an election is made under this subsection is
calculated under subsections (c) through (g).