Citations Affected: IC 6-3.1; noncode.
Synopsis: Tax credit for brownfield program. Allows a credit against
state tax liability for certain voluntary environmental remediation costs.
Provides that the maximum amount of the credit for a particular
remediation project is $100,000. Limits the total amount of credits that
may be granted in each state fiscal year to $1,000,000. Provides that the
credit amount for each year shall be deducted from the environmental
remediation revolving loan fund subaccount to replenish the state
general fund. Provides that the department of environmental
management shall share administrative duties with the Indiana
development finance authority. Provides that no new tax credits are
allowed for tax years beginning after December 31, 2003.
Effective: January 1, 2002.
January 11, 2001, read first time and referred to Committee on Finance.
February 8, 2001, amended, reported favorably _ Do Pass.
February 15, 2001, read second time, amended, ordered engrossed.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
SECTION 1. 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. Voluntary Remediation Tax Credit
Sec. 1. As used in this chapter, "brownfield" has the meaning set
forth in IC 13-11-2-19.3.
Sec. 2. 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);
(2) a partnership;
(3) a limited liability company; or
(4) a limited liability partnership.
Sec. 3. As used in this chapter, "qualified investment" means
costs that:
(1) are incurred to conduct a voluntary remediation under
IC 13-25-5 that involves the remediation of a brownfield;
(2) may not be recovered by a taxpayer from another person
after the taxpayer has made a good faith effort to recover the
costs; and
(3) are approved by the department of environmental
management and the Indiana development finance authority
under section 12 of this chapter.
Sec. 4. As used in this chapter, "state tax liability" means a
taxpayer's total tax liability incurred under:
(1) IC 6-2.1 (the gross income tax);
(2) IC 6-2.5 (the state gross retail and use tax);
(3) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(4) IC 6-3-8 (the supplemental net income tax);
(5) IC 6-5-10 (the bank tax);
(6) IC 6-5-11 (the savings and loan association tax);
(7) IC 6-5.5 (the financial institutions tax); and
(8) IC 27-1-18-2 (the 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. 5. (a) A taxpayer is entitled to a credit equal to the amount
determined under section 6 of this chapter against the taxpayer's
state tax liability for a taxable year if the following requirements
are satisfied:
(1) The taxpayer does the following:
(A) Makes a qualified investment in that taxable year.
(B) Makes a good faith attempt to recover the costs of the
environmental damages from the liable parties.
(C) Submits a plan to the legislative body of the political
subdivision in which the property is located to redevelop
the property in a manner in which the legislative body
determines to be in the best interest of the community.
(2) The legislative body of the political subdivision in which
the property is located adopts a resolution under section 7 of
this chapter approving the credit.
(3) The department determines under section 15 of this
chapter that the taxpayer's return claiming the credit is filed
with the department before the maximum amount of credits
allowed under this chapter is met.
(b) The redevelopment plan must include a statement of public
benefits, which must include the following:
(1) A description of the proposed redevelopment.
(2) An estimate of the number of individuals who will be
employed or housed in the new development and an estimate
of the annual salaries of the employees.
(c) In determining whether the redevelopment is in the best
interest of the community, the legislative body must consider,
among other things, whether the proposed development promotes:
(1) the development of low to moderate income housing;
(2) the development of green space;
(3) the development of high technology businesses; or
(4) the creation or retention of high paying jobs.
Sec. 6. The amount of the credit allowed under this chapter is
equal to the lesser of:
(1) one hundred thousand dollars ($100,000); or
(2) ten percent (10%) multiplied by the qualified investment
made by the taxpayer during the taxable year.
Sec. 7. After the submission of a statement of benefits under
section 5 of this chapter, the legislative body may adopt a
resolution to approve a tax credit.
Sec. 8. Before adopting a resolution under section 7 of this
chapter, a legislative body shall publish notice of the proposed
resolution and the public hearing required under section 9 of this
chapter in accordance with IC 5-3-1. The published notice must
contain the substance of the proposed resolution.
Sec. 9. Before adopting a resolution under section 7 of this
chapter, the legislative body must review the statement of benefits
required under section 5 of this chapter and conduct a public
hearing on the proposed tax credit.
Sec. 10. (a) The legislative body shall determine whether to
approve a tax credit allowed under this chapter.
(b) A legislative body may approve a credit only if the following
findings are made in the affirmative:
(1) The taxpayer:
(A) has never had an ownership interest in an entity that
contributed; and
(B) has not contributed;
to contamination (as defined in IC 13-11-2-43) that is the
subject of the voluntary remediation, as determined under the
written standards adopted by the department of
environmental management and the Indiana development
finance authority.
(2) The proposed improvement or property will be located in
a zone (as defined in IC 6-1.1-42-4).
(3) The estimate of the value of the remediation and
redevelopment is reasonable for projects of that nature.
(4) The estimate of the number of individuals who will be
housed or employed or whose employment will be retained
can be reasonably expected to result from the proposed
remediation and redevelopment.
(5) The estimate of the annual salaries of those individuals
who will be employed or whose employment will be retained
can be reasonably expected to result from the proposed
remediation and redevelopment.
(6) Any other benefits about which information was requested
are benefits that can be reasonably expected to result from the
proposed remediation and redevelopment.
(7) The totality of benefits is sufficient to justify the credit.
Sec. 11. (a) If the amount determined under section 6 of this
chapter in a taxable year exceeds the taxpayer's state tax liability
for that taxable year, the taxpayer may carry the excess over for
not more than the immediately following five (5) 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.
(b) A taxpayer is not entitled to a carryback or a refund of any
unused credit.
Sec. 12. (a) To be entitled to a credit under this chapter, a
taxpayer must request the department of environmental
management and the Indiana development finance authority to
determine if costs incurred in a voluntary remediation involving a
brownfield are qualified investments.
(b) The request under subsection (a) must be made before the
costs are incurred.
(c) The department of environmental management and the
Indiana development finance authority shall certify costs incurred
in a voluntary remediation as a qualified investment to the extent
that the costs:
(1) result from work performed in Indiana to conduct a
voluntary remediation under IC 13-25-5 that involves the
remediation of a brownfield;
(2) may not be recovered by the taxpayer from another
person after the taxpayer has made a good faith effort to
recover the costs; and
(3) result in taxable income to any other Indiana taxpayer;
as determined under the standards adopted by the department of
environmental management.
(d) Upon completion of a voluntary remediation that has been
certified as a qualified investment under subsection (c), the
taxpayer shall notify the department of environmental
management and request certification of the completion of the
voluntary remediation.
Sec. 13. (a) 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.
(b) The taxpayer shall submit the following to the department
of state revenue:
(1) The certification of the qualified investment by the
department of environmental management and the Indiana
development finance authority and the certification of the
completion of the voluntary remediation by the department of
environmental management.
(2) Proof of payment of the certified qualified investment.
(3) Proof of the legislative body's approval of the credit.
(4) Information that the department determines is necessary
for the calculation of the credit provided by this chapter.
Sec. 14. (a) If a pass through entity is entitled to a credit under
this chapter but does not have state tax liability against which the
tax credit may be applied, a shareholder, a partner, or a member
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, partner, or member is
entitled.
(b) The credit provided under subsection (a) is in addition to a
tax credit to which a shareholder, partner, or member of a pass
through entity is otherwise entitled under this chapter. However,
a pass through entity and a shareholder, partner, or member of the
pass through entity may not claim more than one (1) credit for the
same qualified expenditure.
Sec. 15. (a) The amount of tax credits allowed under this chapter
may not exceed one million dollars ($1,000,000) in a state fiscal
year unless the Indiana development finance authority determines
under subsection (e) that money is available for additional tax
credits in a particular state fiscal year. However, if the maximum
amount of tax credits allowed under this subsection exceeds the
amount available in the subaccount of the environmental
remediation revolving loan fund (IC 13-19-5), the maximum
amount of tax credits allowed under this subsection is reduced to
the amount available.
(b) The department shall record the time of filing of each return
claiming a credit under section 13 of this chapter and shall, except
as provided in subsection (c), grant the credit to the taxpayer, if the
taxpayer otherwise qualifies for a tax credit under this chapter, in
the chronological order in which the return is filed in the state
fiscal year.
(c) If the total credits approved under this section equal the
maximum amount allowable in a state fiscal year, a return
claiming the credit thereafter filed in that same fiscal year may not
be approved. However, if an applicant for whom a credit has been
approved fails to file the information required by section 13 of this
chapter, an amount equal to the credit previously allowed or set
aside for the applicant may be allowed to the next eligible applicant
or applicants until the total amount has been allowed. 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.
(d) The department of state revenue shall report the total credits
granted under this chapter for each state fiscal year to the Indiana
development finance authority. The Indiana development finance
authority shall transfer to the state general fund an amount equal
to the total credits granted from the subaccount of the
environmental remediation revolving loan fund (IC 13-19-5).
(e) At the end of each state fiscal year, the Indiana development
finance authority may determine whether money is available in the
subaccount of the environmental remediation revolving loan fund
(IC 13-19-5) to provide tax credits in excess of the amount set forth
in subsection (a) in the subsequent state fiscal year.
(f) Before December 31 of each year, the Indiana development
finance authority may assess the demand for tax credits under this
chapter and determine whether the need for other brownfield
activities is greater than the need for tax credits. If the Indiana
development finance authority determines that the need for other
brownfield activities is greater than the need for tax credits, the
authority may set aside up to three-fourths (3/4) of the amount of
allowable tax credits for the subsequent state fiscal year and use it
for other brownfield projects.
(g) Except as provided in subsection (h), the Indiana
development finance authority may use money set aside under
subsection (f) for any permissible purpose.
(h) Money specifically appropriated for tax credits may not be
set aside for another use.
Sec. 16. A tax credit may not be allowed under this chapter for
a taxable year that begins after December 31, 2003. However, this
section does not affect the ability of a taxpayer to carry forward
the excess of a tax credit claimed for taxable years 2002 or 2003
under section 11 of this chapter.
Sec. 17. The Indiana development finance authority, after
consulting with the department of environmental management and
the budget agency and without complying with IC 4-22-2, may
adopt guidelines to govern the administration of this chapter.
SECTION 2. [EFFECTIVE JANUARY 1, 2002] IC 6-3.1-20, as
added by this act, applies to taxable years beginning after
December 31, 2001.
SECTION 3. An emergency is declared for this act.