Introduced Version
HOUSE BILL No. 1309
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-1.1.
Synopsis: Property tax payments for nonprofit hospitals. Requires a
nonprofit hospital to pay a certain amount to the county treasurer based
on the property tax liability that would be due based on the nonprofit
hospital's gross assessed value of exempt property if no exemptions
were applied, depending on the extent to which the nonprofit hospital's
average of aggregate prices charged in a year exceeds the nationwide
average of aggregate prices charged in the immediately preceding
calendar year. Requires a nonprofit hospital to submit information each
year concerning the nonprofit hospital's average of aggregate prices
charged.
Effective: January 1, 2025.
Smaltz
January 10, 2024, read first time and referred to Committee on Ways and Means.
2024 IN 1309—LS 6761/DI 125 Introduced
Second Regular Session of the 123rd General Assembly (2024)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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between statutes enacted by the 2023 Regular Session of the General Assembly.
HOUSE BILL No. 1309
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 6-1.1-10-16, AS AMENDED BY P.L.85-2019,
2 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2025]: Sec. 16. (a) Subject to IC 6-1.1-22.3, all or part
4 of a building is exempt from property taxation if it is owned, occupied,
5 and used by a person for educational, literary, scientific, religious, or
6 charitable purposes.
7 (b) A building is exempt from property taxation if it is owned,
8 occupied, and used by a town, city, township, or county for educational,
9 literary, scientific, fraternal, or charitable purposes.
10 (c) A tract of land, including the campus and athletic grounds of an
11 educational institution, is exempt from property taxation if:
12 (1) a building that is exempt under subsection (a) or (b) is situated
13 on it;
14 (2) a parking lot or structure that serves a building referred to in
15 subdivision (1) is situated on it; or
16 (3) the tract:
17 (A) is owned by a nonprofit entity established for the purpose
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1 of retaining and preserving land and water for their natural
2 characteristics;
3 (B) does not exceed five hundred (500) acres; and
4 (C) is not used by the nonprofit entity to make a profit.
5 (d) A tract of land is exempt from property taxation if:
6 (1) it is purchased for the purpose of erecting a building that is to
7 be owned, occupied, and used in such a manner that the building
8 will be exempt under subsection (a) or (b); and
9 (2) not more than four (4) years after the property is purchased,
10 and for each year after the four (4) year period, the owner
11 demonstrates substantial progress and active pursuit towards the
12 erection of the intended building and use of the tract for the
13 exempt purpose. To establish substantial progress and active
14 pursuit under this subdivision, the owner must prove the existence
15 of factors such as the following:
16 (A) Organization of and activity by a building committee or
17 other oversight group.
18 (B) Completion and filing of building plans with the
19 appropriate local government authority.
20 (C) Cash reserves dedicated to the project of a sufficient
21 amount to lead a reasonable individual to believe the actual
22 construction can and will begin within four (4) years.
23 (D) The breaking of ground and the beginning of actual
24 construction.
25 (E) Any other factor that would lead a reasonable individual to
26 believe that construction of the building is an active plan and
27 that the building is capable of being completed within eight (8)
28 years considering the circumstances of the owner.
29 If the owner of the property sells, leases, or otherwise transfers a tract
30 of land that is exempt under this subsection, the owner is liable for the
31 property taxes that were not imposed upon the tract of land during the
32 period beginning January 1 of the fourth year following the purchase
33 of the property and ending on December 31 of the year of the sale,
34 lease, or transfer. The county auditor of the county in which the tract
35 of land is located may establish an installment plan for the repayment
36 of taxes due under this subsection. The plan established by the county
37 auditor may allow the repayment of the taxes over a period of years
38 equal to the number of years for which property taxes must be repaid
39 under this subsection.
40 (e) Subject to IC 6-1.1-22.3, personal property is exempt from
41 property taxation if it is owned and used in such a manner that it would
42 be exempt under subsection (a) or (b) if it were a building.
2024 IN 1309—LS 6761/DI 125 3
1 (f) Subject to IC 6-1.1-22.3, a hospital's property that is exempt
2 from property taxation under subsection (a), (b), or (e) shall remain
3 exempt from property taxation even if the property is used in part to
4 furnish goods or services to another hospital whose property qualifies
5 for exemption under this section.
6 (g) Property owned by a shared hospital services organization that
7 is exempt from federal income taxation under Section 501(c)(3) or
8 501(e) of the Internal Revenue Code is exempt from property taxation
9 if it is owned, occupied, and used exclusively to furnish goods or
10 services to a hospital whose property is exempt from property taxation
11 under subsection (a), (b), or (e).
12 (h) This section does not exempt from property tax an office or a
13 practice of a physician or group of physicians that is owned by a
14 hospital licensed under IC 16-21-2 or other property that is not
15 substantially related to or supportive of the inpatient facility of the
16 hospital unless the office, practice, or other property:
17 (1) provides or supports the provision of charity care (as defined
18 in IC 16-18-2-52.5), including providing funds or other financial
19 support for health care services for individuals who are indigent
20 (as defined in IC 16-18-2-52.5(b) and IC 16-18-2-52.5(c)); or
21 (2) provides or supports the provision of community benefits (as
22 defined in IC 16-21-9-1), including research, education, or
23 government sponsored indigent health care (as defined in
24 IC 16-21-9-2).
25 However, participation in the Medicaid or Medicare program alone
26 does not entitle an office, practice, or other property described in this
27 subsection to an exemption under this section.
28 (i) A tract of land or a tract of land plus all or part of a structure on
29 the land is exempt from property taxation if:
30 (1) the tract is acquired for the purpose of erecting, renovating, or
31 improving a single family residential structure that is to be given
32 away or sold:
33 (A) in a charitable manner;
34 (B) by a nonprofit organization; and
35 (C) to low income individuals who will:
36 (i) use the land as a family residence; and
37 (ii) not have an exemption for the land under this section;
38 (2) the tract does not exceed three (3) acres; and
39 (3) the tract of land or the tract of land plus all or part of a
40 structure on the land is not used for profit while exempt under this
41 section.
42 (j) An exemption under subsection (i) terminates when the property
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1 is conveyed by the nonprofit organization to another owner.
2 (k) When property that is exempt in any year under subsection (i) is
3 conveyed to another owner, the nonprofit organization receiving the
4 exemption must file a certified statement with the auditor of the county,
5 notifying the auditor of the change not later than sixty (60) days after
6 the date of the conveyance. The county auditor shall immediately
7 forward a copy of the certified statement to the county assessor. A
8 nonprofit organization that fails to file the statement required by this
9 subsection is liable for the amount of property taxes due on the
10 property conveyed if it were not for the exemption allowed under this
11 chapter.
12 (l) If property is granted an exemption in any year under subsection
13 (i) and the owner:
14 (1) fails to transfer the tangible property within eight (8) years
15 after the assessment date for which the exemption is initially
16 granted; or
17 (2) transfers the tangible property to a person who:
18 (A) is not a low income individual; or
19 (B) does not use the transferred property as a residence for at
20 least one (1) year after the property is transferred;
21 the person receiving the exemption shall notify the county recorder and
22 the county auditor of the county in which the property is located not
23 later than sixty (60) days after the event described in subdivision (1) or
24 (2) occurs. The county auditor shall immediately inform the county
25 assessor of a notification received under this subsection.
26 (m) If subsection (l)(1) or (l)(2) applies, the owner shall pay, not
27 later than the date that the next installment of property taxes is due, an
28 amount equal to the sum of the following:
29 (1) The total property taxes that, if it were not for the exemption
30 under subsection (i), would have been levied on the property in
31 each year in which an exemption was allowed.
32 (2) Interest on the property taxes at the rate of ten percent (10%)
33 per year.
34 (n) The liability imposed by subsection (m) is a lien upon the
35 property receiving the exemption under subsection (i). An amount
36 collected under subsection (m) shall be collected as an excess levy. If
37 the amount is not paid, it shall be collected in the same manner that
38 delinquent taxes on real property are collected.
39 (o) Property referred to in this section shall be assessed to the extent
40 required under IC 6-1.1-11-9.
41 (p) A for-profit provider of early childhood education services to
42 children who are at least four (4) but less than six (6) years of age on
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1 the annual assessment date may receive the exemption provided by this
2 section for property used for educational purposes only if all the
3 requirements of section 46 of this chapter are satisfied. A for-profit
4 provider of early childhood education services that provides the
5 services only to children younger than four (4) years of age may not
6 receive the exemption provided by this section for property used for
7 educational purposes.
8 SECTION 2. IC 6-1.1-10-18.5, AS AMENDED BY P.L.197-2011,
9 SECTION 33, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
10 JANUARY 1, 2025]: Sec. 18.5. (a) This section does not exempt from
11 property tax an office or a practice of a physician or group of
12 physicians that is owned by a hospital licensed under IC 16-21-2 or
13 other property that is not substantially related to or supportive of the
14 inpatient facility of the hospital unless the office, practice, or other
15 property:
16 (1) provides or supports the provision of charity care (as defined
17 in IC 16-18-2-52.5), including funds or other financial support for
18 health care services for individuals who are indigent (as defined
19 in IC 16-18-2-52.5(b) and IC 16-18-2-52.5(c)); or
20 (2) provides or supports the provision of community benefits (as
21 defined in IC 16-21-9-1), including research, education, or
22 government sponsored indigent health care (as defined in
23 IC 16-21-9-2).
24 However, participation in the Medicaid or Medicare program, alone,
25 does not entitle an office, a practice, or other property described in this
26 subsection to an exemption under this section.
27 (b) Subject to IC 6-1.1-22.3, tangible property is exempt from
28 property taxation if it is:
29 (1) owned by an Indiana nonprofit corporation; and
30 (2) used by that corporation in the operation of a hospital licensed
31 under IC 16-21, a health facility licensed under IC 16-28, or in the
32 operation of a residential facility for the aged and licensed under
33 IC 16-28, or in the operation of a Christian Science home or
34 sanatorium.
35 (c) Property referred to in this section shall be assessed to the extent
36 required under IC 6-1.1-11-9.
37 SECTION 3. IC 6-1.1-22.3 IS ADDED TO THE INDIANA CODE
38 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
39 JANUARY 1, 2025]:
40 Chapter 22.3. Payments by Nonprofit Hospitals
41 Sec. 1. This chapter applies for assessment dates beginning after
42 December 31, 2024, for a nonprofit hospital operating in Indiana
2024 IN 1309—LS 6761/DI 125 6
1 that is subject to a payment imposed under this chapter.
2 Sec. 2. As used in this chapter, "average prices" means the
3 average of the aggregate:
4 (1) hospital inpatient prices;
5 (2) hospital outpatient prices; and
6 (3) practitioner services prices;
7 charged for patient care services.
8 Sec. 3. As used in this chapter, "Consumer Price Index" means
9 the Consumer Price Index for all Urban Consumers published by
10 the federal Bureau of Labor Statistics for the year.
11 Sec. 4. As used in this chapter, "nonprofit hospital" means a
12 nonprofit hospital (as defined in IC 16-21-9-3) licensed under
13 IC 16-21. However, the term does not include a county-owned
14 hospital or a nonprofit critical access hospital.
15 Sec. 5. As used in this chapter, "prices" has the meaning set
16 forth in IC 27-1-47.5-4.
17 Sec. 6. (a) Not later than July 1 each year, a nonprofit hospital
18 operating in Indiana shall submit to the county auditor, the
19 department, and the department of insurance a certified statement
20 of, and supporting documentation to demonstrate, the nonprofit
21 hospital's average prices charged between January 1 and July 1 of
22 the year.
23 (b) Not later than December 31 each year, a nonprofit hospital
24 operating in Indiana shall submit to the county auditor, the
25 department, and the department of insurance a certified statement
26 of, and supporting documentation to demonstrate, the nonprofit
27 hospital's average prices charged between July 1 and December 31
28 of the year.
29 (c) A statement and documentation must be filed in a form and
30 manner prescribed by the department.
31 Sec. 7. Not later than fifteen (15) days after receiving a
32 statement and documentation described in section 6(a) or 6(b) of
33 this chapter, the department of insurance shall verify the
34 documentation submitted and determine whether, and the extent
35 to which, the nonprofit hospital's average prices charged for the
36 applicable period described in section 6(a) or 6(b) of this chapter
37 exceed the nationwide average prices charged in the immediately
38 preceding calendar year, adjusted by the Consumer Price Index.
39 After making the determination, the department of insurance shall
40 provide the:
41 (1) nonprofit hospital's average prices charged in the
42 applicable period described in section 6(a) or 6(b) of this
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1 chapter;
2 (2) nationwide average prices charged in the immediately
3 preceding calendar year, adjusted by the Consumer Price
4 Index; and
5 (3) department of insurance's verification and determination
6 under this section;
7 to the department and the county auditor. The county auditor shall
8 use the information to determine whether any applicable amount
9 is owed by the nonprofit hospital under sections 8 through 11 of
10 this chapter.
11 Sec. 8. Notwithstanding any provision to the contrary, for
12 purposes of the first installment of property taxes that would
13 otherwise be due on May 10 under IC 6-1.1-22-9(a), if the nonprofit
14 hospital's average prices charged for the period described in
15 section 6(a) of this chapter are equal to or greater than:
16 (1) the nationwide average prices charged in the immediately
17 preceding calendar year, adjusted by the Consumer Price
18 Index; multiplied by
19 (2) two (2);
20 the nonprofit hospital shall, not later than July 31 of the year, pay
21 to the county treasurer an amount equal to the amount of property
22 tax liability that would be first due and payable in the year based
23 on the nonprofit hospital's gross assessed value of exempt property
24 on the assessment date in the previous year, if no exemptions were
25 applied, divided by two (2).
26 Sec. 9. Notwithstanding any provision to the contrary, for
27 purposes of the second installment of property taxes that would
28 otherwise be due on November 10 under IC 6-1.1-22-9(a), if the
29 nonprofit hospital's average prices charged for the period
30 described in section 6(b) of this chapter are equal to or greater
31 than:
32 (1) the nationwide average prices charged in the immediately
33 preceding calendar year, adjusted by the Consumer Price
34 Index; multiplied by
35 (2) two (2);
36 the nonprofit hospital shall, not later than January 31 of the
37 following year, pay to the county treasurer an amount equal to the
38 amount of property tax liability that would be first due and
39 payable in the year based on the nonprofit hospital's gross assessed
40 value of exempt property on the assessment date in the previous
41 year, if no exemptions were applied, divided by two (2).
42 Sec. 10. Notwithstanding any provision to the contrary, for
2024 IN 1309—LS 6761/DI 125 8
1 purposes of the first installment of property taxes that would
2 otherwise be due on May 10 under IC 6-1.1-22-9(a), if the nonprofit
3 hospital's average prices charged for the period described in
4 section 6(a) of this chapter are at least equal to the nationwide
5 average prices charged in the immediately preceding calendar
6 year, adjusted by the Consumer Price Index, but are less than the
7 nationwide average prices charged in the immediately preceding
8 calendar year, adjusted by the Consumer Price Index and
9 multiplied by two (2), the nonprofit hospital shall, not later than
10 July 31 of the year, pay to the county treasurer an amount equal to
11 the portion of the property tax liability that would be first due and
12 payable based on the nonprofit hospital's gross assessed value of
13 exempt property on the assessment date in the previous year, if no
14 exemptions were applied, as determined in STEP FOUR of the
15 following formula:
16 STEP ONE: Divide:
17 (A) the nonprofit hospital's average prices charged for the
18 period described in section 6(a) of this chapter; by
19 (B) the nationwide average of aggregate prices charged in
20 the immediately preceding calendar year, adjusted by the
21 Consumer Price Index;
22 rounded to the nearest one-hundredth (0.01).
23 STEP TWO: Determine the result of:
24 (A) the STEP ONE result; minus
25 (B) one (1).
26 STEP THREE: Multiply the STEP TWO result by the
27 nonprofit hospital's amount of property tax liability that
28 would be first due and payable in the year based on the
29 nonprofit hospital's gross assessed value of exempt property
30 on the assessment date in the previous year, if no exemptions
31 were applied.
32 STEP FOUR: Divide the STEP THREE result by two (2).
33 Sec. 11. Notwithstanding any provision to the contrary, for
34 purposes of the second installment of property taxes that would
35 otherwise be due on November 10 under IC 6-1.1-22-9(a), if the
36 nonprofit hospital's average prices charged for the period
37 described in section 6(b) of this chapter are at least equal to the
38 nationwide average prices charged in the immediately preceding
39 calendar year, adjusted by the Consumer Price Index, but are less
40 than the nationwide average prices charged in the immediately
41 preceding calendar year, adjusted by the Consumer Price Index
42 and multiplied by two (2), the nonprofit hospital shall, not later
2024 IN 1309—LS 6761/DI 125 9
1 than January 31 of the following year, pay to the county treasurer
2 an amount equal to the portion of the property tax liability that
3 would be first due and payable based on the nonprofit hospital's
4 gross assessed value of exempt property on the assessment date in
5 the previous year, if no exemptions were applied, as determined in
6 STEP FOUR of the following formula:
7 STEP ONE: Divide:
8 (A) the nonprofit hospital's average prices charged for the
9 period described in section 6(b) of this chapter; by
10 (B) the nationwide average of aggregate prices charged in
11 the immediately preceding calendar year, adjusted by the
12 Consumer Price Index;
13 rounded to the nearest one-hundredth (0.01).
14 STEP TWO: Determine the result of:
15 (A) the STEP ONE result; minus
16 (B) one (1).
17 STEP THREE: Multiply the STEP TWO result by the
18 nonprofit hospital's amount of property tax liability that
19 would be first due and payable in the year based on the
20 nonprofit hospital's gross assessed value of exempt property
21 on the assessment date in the previous year, if no exemptions
22 were applied.
23 STEP FOUR: Divide the STEP THREE result by two (2).
24 Sec. 12. Amounts paid under this chapter shall be apportioned
25 and distributed among the respective funds of each taxing unit in
26 the same manner and at the same time as property taxes are
27 apportioned and distributed and may be used for the same
28 purposes as property tax revenue. The amounts may not be
29 included in the calculation of the maximum permissible property
30 tax levy for a taxing unit that receives a part of an amount.
31 Sec. 13. Nothing in this chapter may be construed to prevent,
32 preclude, or in any way affect the consideration or application of
33 the nonprofit hospital's federal exempt status for purposes of any
34 other provision of the Indiana Code not specifically referenced in
35 this chapter.
2024 IN 1309—LS 6761/DI 125