Citations Affected: IC 4-4-30 ; IC 6-3.1-22.
Synopsis: School to career program tax credit. Establishes a certified
school to career program. Provides a two year credit against state tax
liability for wages paid to a participant in a certified school to career
Effective: January 1, 2001 (retroactive); July 1, 2001.
January 11, 2001, read first time and referred to Committee on Ways and Means.
A BILL FOR AN ACT to amend the Indiana Code concerning
individual who is at least sixteen (16) years of age and less than
twenty-four (24) years of age and who:
(1) is enrolled in a public or private secondary or postsecondary school; and
(2) participates in a certified school to career program as part of the individual's secondary school education.
Sec. 3. As used in this chapter, "sponsor" means a person, an association, a committee, or an organization operating a school to career program and in whose name the program is registered or approved.
Sec. 4. The department of workforce development, in conjunction with the department of education, may not approve a school to career program unless the following requirements are met:
(1) The program must be conducted under an organized, written plan embodying the terms and conditions of employment, job training, classroom instruction, and supervision of one (1) or more participants, subscribed to by a sponsor who has undertaken to carry out the school to career program.
(2) The program must comply with all state and federal laws pertaining to the workplace.
(3) The program must involve an institution of higher learning (as defined in IC 20-12-70-4 ).
(4) The certified program agreement must provide that the employer agrees to assign an employee to serve as a mentor for a participant. The mentor's occupation must be in the same career pathway as the career interests of the participant.
(5) The program must comply with any other requirement adopted by rule by the department of workforce development after consultation with the department of education.
Sec. 5. The certified program shall be conducted under a signed written agreement between each participant and the employer that contains at least the following provisions:
(1) The names and signatures of the participant and the sponsor or employer and the signature of a parent or guardian if the participant is a minor.
(2) A description of the career field in which the participant is to be trained and the beginning date and duration of the training.
(3) The employer's agreement to provide paid employment for
the participant at a base wage during the participant's junior
and senior years in high school and the participant's first year
of postsecondary education.
(4) The employer's agreement to assign an employee to serve as a mentor for a participant. The mentor's occupation must be in the same career pathway as the career interests of the participant.
(5) The participant and employer shall agree upon set minimum academic standards that the participant must maintain throughout the participant's secondary and postsecondary education.
(6) The base wage paid to the participant may not be less than the minimum wage prescribed by the federal Fair Labor Standards Act.
(7) In addition to the base wage paid to the participant, the employer shall pay an additional sum to be held in trust to be applied toward the participant's postsecondary education required for completion of the certified program. The additional amount must not be less than an amount determined by the department of workforce development to be sufficient to provide payment of tuition expenses toward completion of not more than two (2) academic years of the required postsecondary education component of the certified program at an institution of higher learning (as defined in IC 20-12-70-4 ). This amount shall be held in trust for the benefit of the participant under rules adopted by the department of workforce development. Payment into an ERISA approved fund for the benefit of the participant satisfies this requirement. The specific fund must be specified in the agreement.
(8) The participant's agreement to work for the employer for at least two (2) years following the completion of the participant's postsecondary education required by the certified program. However, the agreement may provide for additional education and work commitments beyond the two (2) years.
(9) If the participant does not complete the two (2) year employment obligation, the participant's agreement to repay to the employer the amount paid by the employer toward the participant's postsecondary education expenses under subdivision (7).
(10) If a participant does not complete the certified program
contemplated by the agreement after entering a
postsecondary education program, any unexpended funds
being held in trust for the participant's postsecondary
education shall be paid back to the employer. In addition, the
participant must repay to the employer amounts paid from
the trust that were expended on the participant's behalf for
(11) If a participant does not complete the certified program contemplated by the agreement before entering a postsecondary education program, one-half (1/2) of the money being held in trust for the participant's postsecondary education shall be paid to an institution of higher learning (as defined in IC 20-12-70-4 ) of the participant's choice to pay tuition or expenses of the participant. The other one-half (1/2) of the trust money shall be paid back to the employer. Any money to be transferred for the benefit of the participant that is not transferred within five (5) years for purposes of education at the designated postsecondary institution shall be paid back to the employer.
Sec. 6. The department of commerce, in consultation with the department of education, shall adopt rules under IC 4-22-2 to implement this chapter.
taxpayer's total tax liability that is incurred under:
(1) IC 6-2.1 (gross income tax);
(2) IC 6-3-1 through IC 6-3-7 (adjusted gross income tax);
(3) IC 6-3-8 (supplemental net income tax);
(4) IC 6-5-10 (bank tax);
(5) IC 6-5-11 (savings and loan association tax);
(6) IC 6-5.5 (financial institutions tax); and
(7) IC 27-1-18-2 (insurance premiums tax);
as computed after the application of the credits that under IC 6-3.1-1-2 are to be applied before the credit provided by this chapter.
Sec. 6. As used in this chapter, "taxpayer" means a person, corporation, or pass through entity that employs participants in a certified school to career program under IC 4-4-30.
Sec. 7. (a) A taxpayer is entitled to a credit against the taxpayer's state tax liability for the payroll expenditures by the taxpayer in the taxable year.
(b) Subject to the limitations under subsection (c) and section 11 of this chapter, the amount of the credit is equal to the taxpayer's payroll expenditures in the taxable year for a participant multiplied by twenty percent (20%).
(c) The credit is limited to the first four hundred (400) hours of payroll expenditures per participant for each calendar year the participant is in the certified school to career program, not to exceed two (2) years per participant.
Sec. 8. (a) If the amount determined under section 7(b) of this chapter for a taxpayer in a taxable year exceeds the taxpayer's state tax liability for that taxable year, the taxpayer may carry the excess over to the following taxable years. The amount of the credit carryover from a taxable year shall be reduced to the extent that the carryover is used by the taxpayer to obtain a credit under this chapter for any subsequent taxable year. A taxpayer is not entitled to a carryback.
(b) A taxpayer is entitled to a refund of any unused credit.
Sec. 9. If a pass through entity does not have state income tax liability against which the tax credit may be applied, a shareholder or partner of the pass through entity is entitled to a tax credit equal to:
(1) the tax credit determined for the pass through entity for the taxable year; multiplied by
(2) the percentage of the pass through entity's distributive income to which the shareholder or partner is entitled.
Sec. 10. To receive the credit provided by this chapter, a taxpayer must claim the credit on the taxpayer's state tax return in the manner prescribed by the department. The taxpayer must submit to the department proof of payment of the payroll expenditures and all information that the department determines is necessary for the calculation of the credit provided by this chapter.
Sec. 11. (a) The amount of tax credits approved under this chapter may not exceed five hundred thousand dollars ($500,000) in the period beginning July 1, 2001, and ending June 30, 2003.
(b) The department shall record the time of filing of each application for allowance of a credit under section 10 of this chapter and shall approve the applications, if they otherwise qualify for a tax credit under this chapter, in the chronological order in which the applications are filed in the state fiscal year.
(c) When the total credits approved under this section equal the maximum amount allowable in a state fiscal year, no application filed later for that same fiscal year shall be approved. However, if an applicant for whom a credit has been approved fails to file the statement of proof of payment required under section 10 of this chapter, an amount equal to the credit previously allowed or set aside for the applicant may be allowed to any subsequent applicant in the year. In addition, the department may, if the applicant so requests, approve a credit application, in whole or in part, with respect to the next succeeding state fiscal year.
Sec. 12. The credit provided by this chapter applies only to taxable years beginning after December 31, 2000, and ending before January 1, 2003.