Introduced Version
HOUSE BILL No. 2127
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-1.1;
IC 6-3.1-20.
Synopsis: Tax credit for raw materials and parts. Provides a credit
beginning in 2002 against a taxpayer's state tax liability for property
taxes paid on raw materials and parts that are to be incorporated into
completed goods that will be shipped out of state. Provides that the
credit is initially equal to 10% of the property taxes paid, and that the
credit increases over ten years until the credit may be claimed for 100%
of property taxes paid in 2011 and thereafter. Provides that if the credit
exceeds a taxpayer's liability, the taxpayer may carry over the excess to
subsequent taxable years. Provides that a taxpayer that receives an
enterprise zone inventory credit may elect to apply the raw materials
tax credit against either the taxpayer's state tax liability or the
taxpayer's property tax liability.
Effective: January 1, 2002.
Klinker, Bauer, Espich
January 17, 2001, read first time and referred to Committee on Ways and Means.
Introduced
First Regular Session 112th General Assembly (2001)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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HOUSE BILL No. 2127
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 6-1.1-10-29; (01)IN2127.1.1. -->
SECTION 1.
IC 6-1.1-10-29
, AS AMENDED BY P.L.260-1999,
SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2002]: Sec. 29. (a) As used in this section,
"manufacturer" or "processor" means a person that performs an
operation or
a continuous series of operations on raw materials, goods,
or other personal property to alter the raw materials, goods, or other
personal property into a new or changed state or form. The operation
may be performed by hand, machinery, or a chemical process directed
or controlled by an individual. The terms include a person that:
(1) dries or prepares grain for storage or delivery; or
(2) publishes books or other printed materials.
(b) Personal property owned by a manufacturer or processor is
exempt from property taxation if the owner is able to show by adequate
records that the property:
(1)
is stored and remains in its original package in an in-state
warehouse for the purpose of shipment, without further
processing, will be used in an operation or a continuous series
of operations to alter the personal property into a new or
changed state or form and the resulting personal property will
be shipped, or will be incorporated into personal property
that will be shipped, to an out-of-state destination; or
(2) consists of books or other printed materials that are stored at
an in-state commercial printer's facility for the purpose of
shipment, without further processing, to an out-of-state
destination.
(c) Personal property that is manufactured in Indiana and that would
be exempt under subsection (b), except that it is not stored in its
original package, is exempt from property taxation if the owner can
establish in accordance with exempt inventory procedures, regulations,
and rules of the state board of tax commissioners that:
(1) the property is ready for shipment without additional
manufacturing or processing, except for packaging; and
(2) either:
(A) the property will be damaged or have its value impaired if
it is stored in its original package; or
(B) the final packaging of finished inventory items is not
practical until receipt of a final customer order because
fulfillment of the customer order requires the accumulation of
a number of distinct finished inventory items into a single
shipping package.
A person may use an allocation percentage to claim an exemption
under subdivision (1) for a part of the person's personal property
if a person's business records substantiate that the allocation
percentage accurately reflects the part of the personal property
that will be altered into a new or changed state or form and then
will be shipped, or will be incorporated into personal property that
will be shipped, to an out-of-state destination. The percentage may
include personal property that is sold to another processor or
manufacturer if the personal property is incorporated into the
personal property of the buyer and that personal property is
shipped out of state.
(d) (c) A manufacturer or processor that possesses personal property
owned by another person may claim an exemption under subsection (b)
or (c) if:
(1) the manufacturer or processor includes the property on the
manufacturer's or processor's personal property tax return; and
(2) the manufacturer or processor is able to show that the owner
of the personal property would otherwise have qualified for an
exemption under subsection (b). or (c).
SOURCE: IC 6-1.1-20.8-4; (01)IN2127.1.2. -->
SECTION 2.
IC 6-1.1-20.8-4
IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2002]: Sec. 4. A person that claims the
credit provided by section 1 of this chapter may claim the raw
materials tax credit provided by
IC 6-3.1-20-7.
SOURCE: IC 6-3.1-20; (01)IN2127.1.3. -->
SECTION 3.
IC 6-3.1-20
IS ADDED TO THE INDIANA CODE
AS A
NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2002]:
Chapter 20. Credit for Property Taxes Paid on Raw Materials
and Parts
Sec. 1. As used in this chapter, "assessed value" means the
assessed value of raw materials and parts under IC 6-1.1.
Sec. 2. As used in this chapter, "manufacturer" or "processor"
means a person that performs an operation or a continuous series
of operations on raw materials, goods, or other personal property
to alter the raw materials, goods, or other personal property into
a new or changed state or form. The operation may be performed
by hand, machinery, or a chemical process directed or controlled
by an individual.
Sec. 3. As used in this chapter, "pass through entity" means:
(1) a corporation that is exempt from the adjusted gross
income tax under IC 6-3-2-2.8(2); or
(2) a partnership.
Sec. 4. As used in this chapter, "raw materials and parts" means
personal property that:
(1) is not exempt under
IC 6-1.1-10
; and
(2) is owned by a manufacturer or processor if the owner is
able to show by adequate records that the property will be
used in an operation or a continuous series of operations to
alter the personal property into a new or changed state or
form and the resulting personal property will be shipped to an
out-of-state destination.
Sec. 5. As used in this chapter, "state tax liability" means a
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 6-5.5 (financial institutions tax); and
(5)
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
manufacturer or processor that has state tax liability.
Sec. 7. (a) A taxpayer is entitled to a credit for a taxable year for
the ad valorem property taxes paid by the taxpayer in the taxable
year on raw materials and parts.
(b) The amount of the credit is equal to the product of:
(1) the appropriate percentage specified in subsection (c);
multiplied by
(2) the amount of property taxes paid on raw materials and
parts by the taxpayer during the taxable year.
(c) The percentage described in subsection (b)(1) is determined
by the calendar year in which the property taxes on raw materials
and parts are paid and is set forth in the following table:
CALENDAR YEAR PERCENTAGE
2002 10%
2003 20%
2004 30%
2005 40%
2006 50%
2007 60%
2008 70%
2009 80%
2010 90%
2011 and thereafter 100%
(d) If a taxpayer pays property taxes in two (2) different
calendar years during the taxpayer's same taxable year, the
taxpayer shall apply the appropriate percentage specified for each
calendar year to the property taxes paid in each calendar year to
compute the credit for the taxable year.
Sec. 8. (a) A taxpayer that receives an enterprise zone inventory
credit under
IC 6-1.1-20.8
may elect to apply the credit available
under section 7 of this chapter against the taxpayer's:
(1) state tax liability; or
(2) property tax liability;
for a taxable year.
(b) A taxpayer that does not receive an enterprise zone
inventory credit under
IC 6-1.1-20.8
shall apply the credit under
section 7 of this chapter against the taxpayer's state tax liability.
Sec. 9. (a) If the amount determined under section 7 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 not entitled to a refund of any unused credit.
Sec. 10. 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. 11. A person may use an allocation percentage to claim a
credit under section 10(1) of this chapter for a part of the person's
personal property if a person's business records substantiate that
the allocation percentage accurately reflects the portion of the
personal property that will be altered into a new or changed state
or form and then will be shipped to an out-of-state destination.
Sec. 12. A manufacturer or processor that possesses personal
property owned by another person may claim the credit under this
chapter if:
(1) the manufacturer or processor includes the property on
the manufacturer's or processor's personal property tax
return; and
(2) the manufacturer or processor is able to show that the
owner of the personal property would otherwise have
qualified for the credit under this chapter.
Sec. 13. To receive the credit provided by this chapter, a
taxpayer must claim the credit on the taxpayer's state tax return
or returns in the manner prescribed by the department. The
taxpayer shall submit to the department proof of payment of an ad
valorem property tax and all information that the department
determines is necessary for the calculation of the credit provided
by this chapter.
SOURCE: ; (01)IN2127.1.4. -->
SECTION 4. [EFFECTIVE JANUARY 1, 2002]
IC 6-3.1-20
, as
added by this act, applies only to taxable years that begin after
December 31, 2001.