Introduced Version






HOUSE BILL No. 1389

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 6-3.1-24.

Synopsis: Education improvement tax credit. Provides an educational improvement tax credit to taxpayers who make contributions to public school support organizations or scholarship organizations.

Effective: January 1, 2003.





Bosma




    January 15, 2002, read first time and referred to Committee on Education.







Introduced

Second Regular Session 112th General Assembly (2002)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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HOUSE BILL No. 1389



    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 6-3.1-24; (02)IN1389.1.1. -->     SECTION 1. IC 6-3.1-24 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003]:
     Chapter 24. Educational Improvement Tax Credit
    Sec. 1. The purposes of this chapter are to:
        (1) ensure that all children in Indiana receive a high quality education;
        (2) empower the citizens of Indiana to obtain a high quality education at lower cost to taxpayers;
        (3) assist low income individuals and families in accessing the educational needs of their children; and
        (4) encourage the citizens of Indiana to support scholarship and public school support organizations.
    Sec. 2. As used in this chapter, "eligible student" means a student that is eligible to receive free or reduced price lunches under the national school lunch program.
    Sec. 3. As used in this chapter, "public school support

organization" means a nonprofit organization that:
        (1) is exempt from federal income taxation under Section 501 of the Internal Revenue Code;
        (2) contributes at least eighty percent (80%) of its annual receipts to a public school; and
        (3) provides aid to eligible public school students for:
            (A) purchases of:
                (i) books;
                (ii) tutors;
                (iii) computers; and
                (iv) educational software; or
            (B) participation in a public school enrichment program.
A public school support organization may provide not more than five hundred dollars ($500) in aid to an eligible student in a particular taxable year.
    Sec. 4. As used in this chapter, "scholarship organization" means a nonprofit organization that:
        (1) is exempt from federal income taxation under Section 501 of the Internal Revenue Code;
        (2) contributes at least eighty percent (80%) of its annual receipts to a scholarship program; and
        (3) provides scholarships to eligible students who wish to attend:
            (A) a public school outside the eligible student's legal settlement; or
            (B) a private school.
A scholarship awarded to an individual student may not exceed three thousand three hundred dollars ($3,300) in a particular taxable year.
    Sec. 5. As used in this chapter, "scholarship program" refers to a program that provides tuition to an eligible student to attend a public school. A scholarship program must include an application and review process approved by the department of education.
    Sec. 6. As used in this chapter, "state tax liability" means a taxpayer's total tax liability that is incurred under:
        (1) IC 6-2.1 (the gross income tax);
        (2) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
        (3) IC 6-3-8 (the supplemental net income tax);
        (4) IC 6-5-10 (the bank tax);
        (5) IC 6-5-11 (the savings and loan association tax);
        (6) IC 27-1-18-2 (the insurance premiums tax); and
        (7) IC 6-5.5 (the financial institutions 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. 7. As used in this chapter, "taxpayer" means any individual, corporation, limited liability company, partnership, or other entity that has state tax liability. The term includes a pass through entity.
    Sec. 8. A taxpayer that makes a contribution to a:
        (1) public school support organization; or
        (2) scholarship organization;
is entitled to a tax credit against the taxpayer's state tax liability under section 9 or 10 of this chapter.
    Sec. 9. (a) This section applies to a taxpayer who is an individual.
    (b) A taxpayer is entitled to a credit in a taxable year for a contribution made in that taxable year to a public school support organization or a scholarship organization.
    (c) The amount of the credit may not exceed the lesser of:
        (1) one thousand dollars ($1,000); or
        (2) seventy-five percent (75%) of the taxpayer's state tax liability.
    (d) Notwithstanding subsection (c), a husband and wife filing a joint adjusted gross income return for a particular taxable year are entitled in that taxable year to a credit not to exceed the lesser of:
        (1) two thousand dollars ($2,000); or
        (2) seventy-five percent (75%) of the combined state tax liability of the husband and wife.
    Sec. 10. (a) This section applies to a taxpayer that is not an individual.
    (b) A taxpayer is entitled to a credit in a taxable year for a contribution made in that taxable year to a public school support organization or a scholarship organization.
    (c) The amount of the credit may not exceed the lesser of:
        (1) one hundred thousand dollars ($100,000); or
        (2) seventy-five percent (75%) of the taxpayer's state tax liability.
    (d) The credit shall be applied against the taxpayer's state tax liability in the following order:
        (1) Gross income tax liability (IC 6-2.1) for the taxable year.
        (2) Adjusted gross income tax liability (IC 6-3-1 through IC 6-3-7 ) for the taxable year.
        (3) Supplemental net income tax liability (IC 6-3-8) for the

taxable year.
        (4) Bank tax liability (IC 6-5-10) or savings and loan association tax liability (IC 6-5-11) for the taxable year.
        (5) Insurance premiums tax liability (IC 27-1-18-2) for the taxable year.
    (e) If the tax paid by the taxpayer under a tax provision listed in subsection (d) is a credit against the liability or a deduction in determining the tax base under another Indiana tax provision, the credit or deduction shall be computed without regard to the credit to which a taxpayer is entitled under this chapter.
    (f) A taxpayer that is subject to the financial institutions tax may apply the credit provided by this chapter against the taxpayer's financial institutions tax liability for the taxable year.
    Sec. 11. (a) The total amount of credits allowed under this chapter may not exceed thirty million dollars ($30,000,000) for all taxpayers in a taxable year.
    (b) The total amount of credits allowed under this chapter for contributions to a scholarship organization may not exceed twenty million dollars ($20,000,000) for all taxpayers in a taxable year.
    (c) The total amount of credits allowed under this chapter for contributions to a public school support organization may not exceed ten million dollars ($10,000,000) for all taxpayers in a taxable year.
    Sec. 12. (a) If a pass through entity is entitled to a credit under section 10 of this chapter but does not have state tax liability against which the tax credit may be applied, an individual taxpayer who is a shareholder, partner, or 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 individual taxpayer is entitled.
    (b) The credit provided under subsection (a) is in addition to a tax credit to which an individual taxpayer who is a shareholder, partner, or member of a pass through entity is otherwise entitled under this chapter. However, a pass through entity and an individual taxpayer who is a shareholder, partner, or member of the pass through entity may not claim more than one (1) credit for the same investment.
    Sec. 13. To receive the credit provided under this chapter, a taxpayer must:
        (1) claim the credit on the taxpayer's annual state tax return

or returns in the manner prescribed by the department of state revenue; and
        (2) submit to the department all information that the department determines is necessary to calculate the credit under this chapter.
    Sec. 14. If the amount determined under section 9 or 10 of this chapter for a particular taxpayer and a particular taxable year exceeds the taxpayer's state tax liability for that taxable year, the taxpayer may carry the excess over to the immediately succeeding 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.

SOURCE: ; (02)IN1389.1.2. -->     SECTION 2. [EFFECTIVE JANUARY 1, 2003] IC 6-3.1-24 , as added by this act, applies to taxable years beginning after December 31, 2002.