February 20, 2003
HOUSE BILL No. 1826
_____
DIGEST OF HB 1826
(Updated February 18, 2003 5:15 PM - DI 92)
Citations Affected: IC 6-1.1; IC 6-3.1; noncode.
Synopsis: Clawback of economic development incentives. Provides for
the loss of certain listed tax benefits for a business that commits a
criminal violation. Provides penalty for late filing of a tax abatement
deduction application. Authorizes the county auditor or the department
of local government finance to grant the deduction.
Effective: July 1, 2003.
Leonard
, Austin
January 23, 2003, read first time and referred to Committee on Ways and Means.
February 19, 2003, amended, reported _ Do Pass.
February 20, 2003
First Regular Session 113th General Assembly (2003)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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HOUSE BILL No. 1826
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 6-1.1-1-9.7; (03)HB1826.1.1. -->
SECTION 1. IC 6-1.1-1-9.7 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2003]: Sec. 9.7. As used in this article, "pass through entity"
means:
(1) a corporation that is or would be exempt from the
adjusted gross income tax under IC 6-3-2-2.8(2);
(2) a:
(A) partnership;
(B) limited liability company; or
(C) limited liability partnership;
that is not taxed as a corporation for federal income tax
purposes under the Internal Revenue Code.
SOURCE: IC 6-1.1-2.5; (03)HB1826.1.2. -->
SECTION 2. IC 6-1.1-2.5 IS ADDED TO THE INDIANA CODE
AS A
NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2003]:
Chapter 2.5. Loss of Tax Benefits
Sec. 1. The definitions in IC 6-3 apply throughout this chapter.
Sec. 2. As used in this chapter, "felony" means a crime that
would qualify as a felony if committed by an individual.
Sec. 3. As used in this chapter, "tax benefit" refers to the
following:
(1) An exemption granted under IC 6-1.1-10-29 (out-of-state
manufactured property exemption).
(2) A deduction granted under IC 6-1.1-12-41 (local option
inventory deduction).
(3) A deduction granted under IC 6-1.1-12-42 (statewide
inventory deduction).
(4) A deduction granted under IC 6-1.1-12.1 (tax abatement).
(5) Tax increment revenues (as defined in IC 12-19-1.5-7) in
an allocation area (as defined in IC 12-19-1.5-1) to the extent
the tax increment revenues were not pledged, with the
approval of the governing body (as defined in IC 12-19-1.5-3)
to pay an obligation (as defined in IC 12-19-1.5-4).
Sec. 4. (a) A tax benefit that is otherwise available to a
corporation in a taxable year is not available in a taxable year in
which the corporation commits a felony under the laws of Indiana
or the United States if:
(1) an act that is an element of the felony occurred in Indiana
at a location, related to sales, involving an investment, using
employees, or involving a business enterprise that accrued a
tax benefit; and
(2) the corporation is later convicted of the felony in a court
with criminal jurisdiction over the crime.
(b) The tax benefit that is lost under this section may not be
carried forward to a subsequent taxable year, carried back to a
previous taxable year, or refunded. If the tax benefit is part of a
multi-year tax benefit granted to a corporation, the corporation
also is not entitled to the tax benefit in any subsequent taxable
year.
(c) Collection of delinquent tax liability resulting from the
application of a tax benefit that is lost under this section is not
subject to the statute of limitations on the collection of delinquent
tax liability that otherwise applies to the collection of delinquent
tax liability. However, an action to collect a delinquent tax and any
related interest and penalties resulting from the application of this
section must be initiated not later than three (3) years after the
date that the corporation's conviction is final and unappealable.
(d) This section does not bar the corporation from reapplying
for the tax credit for the same or similar economic activity, if the
law granting the credit allows reapplication, or from obtaining a
tax credit for actions taken by the corporation that are unrelated
to the activity for which the original tax benefit was granted.
Sec. 5. A pass through entity shall be treated as a corporation
for the purposes of applying section 4 of this chapter.
Sec. 6. An individual shall be treated as a corporation for the
purposes of applying section 4 of this chapter to the extent that the
tax benefit is related to an activity conducted by the individual as
a sole proprietor:
(1) engaged in a trade or business; or
(2) for the production of income;
other than as an employee of another person, corporation, or pass
through entity.
SOURCE: IC 6-1.1-12.1-4.8; (03)HB1826.1.3. -->
SECTION 3. IC 6-1.1-12.1-4.8 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2003]: Sec. 4.8. (a) This section applies to any
deduction application that is filed with the county auditor or the
department of local government finance after the date required for
the deduction application.
(b) After June 30, 2003, the county auditor and department of
local government finance may accept the late filed deduction
application if the designating body granting the deduction adopts
a resolution that authorizes the acceptance of the deduction
application.
(c) A certified copy of the resolution must accompany the late
filed deduction application.
(d) The late filing of a deduction application results in a
reduction of the deduction as follows:
(1) Two percent (2%) if filed less than thirty (30) days after
the date required by law.
(2) Ten percent (10%) if filed thirty (30) or more days after
the date required by law.
SOURCE: IC 6-3.1-1-3; (03)HB1826.1.4. -->
SECTION 4. IC 6-3.1-1-3 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2003]: Sec. 3. As used in this article, "pass through entity"
means:
(1) a corporation that is or would be exempt from the
adjusted gross income tax under IC 6-3-2-2.8(2);
(2) a:
(A) partnership;
(B) limited liability company; or
(C) limited liability partnership;
that is not taxed as a corporation for federal income tax
purposes under the Internal Revenue Code.
SOURCE: IC 6-3.1-1.5; (03)HB1826.1.5. -->
SECTION 5. IC 6-3.1-1.5 IS ADDED TO THE INDIANA CODE
AS A
NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2003]:
Chapter 1.5. Loss of Tax Benefits
Sec. 1. As used in this chapter, "felony" means a crime that
would qualify as a felony if committed by an individual.
Sec. 2. As used in this chapter, "tax benefit" refers to the
following:
(1) Research expense credit under IC 6-3.1-4.
(2) Investment credit under IC 6-3.1-5.
(3) Enterprise zone interest credit under IC 6-3.1-7.
(4) Enterprise zone investment cost credit under IC 6-3.1-10.
(5) Industrial recovery tax credit under IC 6-3.1-11.
(6) Military base recovery tax credit under IC 6-3.1-11.5.
(7) Economic development for a growing economy tax credit
under IC 6-3.1-13.
(8) Capital investment tax credit under IC 6-3.1-13.5.
(9) Indiana riverboat building credit under IC 6-3.1-17.
(10) Rerefined lubrication oil facility credit under
IC 6-3.1-22.2.
(11) Voluntary remediation tax credit under IC 6-3.1-23.
Sec. 3. (a) A tax benefit granted by state law that is otherwise
available to a corporation in a taxable year is not available in a
taxable year in which the corporation commits a felony under the
laws of Indiana or the United States if:
(1) an act that is an element of the felony occurred in Indiana
at a location, related to sales, involving an investment, using
employees, or involving a business enterprise that accrued a
tax benefit; and
(2) the corporation is later convicted of the felony in a court
with criminal jurisdiction over the crime.
(b) The tax benefit that is lost under this section may not be
carried forward to a subsequent taxable year, carried back to a
previous taxable year, or refunded. If the tax benefit is part of a
multi-year tax benefit granted to a corporation, the corporation
also is not entitled to the tax benefit in any subsequent taxable
year.
(c) Collection of delinquent tax liability resulting from the
application of a tax benefit that is lost under this section is not
subject to the statute of limitations on the collection of delinquent
tax liability that otherwise applies to the collection of delinquent
tax liability. However, an action to collect a delinquent tax and any
related interest and penalties resulting from the application of this
section must be initiated not later than three (3) years after the
date that the corporation's conviction is final and unappealable.
(d) This section does not bar the corporation from reapplying
for the tax credit for the same or similar economic activity, if the
law granting the credit allows reapplication, or from obtaining a
tax credit for actions taken by the corporation that are unrelated
to the activity for which the original tax benefit was granted.
Sec. 4. A pass through entity shall be treated as a corporation
for the purposes of applying section 3 of this chapter.
Sec. 5. An individual shall be treated as a corporation for the
purposes of applying section 3 of this chapter to the extent that the
tax benefit is related to an activity conducted by the individual as
a sole proprietor:
(1) engaged in a trade or business; or
(2) for the production of income;
other than as an employee of another person, corporation, or pass
through entity.
SOURCE: ; (03)HB1826.1.6. -->
SECTION 6. [EFFECTIVE JULY 1, 2003]
(a) Subject to
subsection (c), IC 6-3.1-1.5, as added by this act, applies only to
taxable years beginning after December 31, 2003.
(b) Subject to subsection (c), IC 6-1.1-2.5, as added by this act,
applies only to property taxes first due and payable after
December 31, 2003.
(c) IC 6-1.1-2.5 and IC 6-3.1-1.5, both as added by this act, do
not apply to the following:
(1) Felonies committed before January 1, 2004.
(2) A multiyear tax benefit (as defined in IC 6-1.1-2.5 and
IC 6-3.1-1.5, both as added by this act), if receipt of the tax
benefits was conditioned on an agreement entered into before
January 1, 2004, by the taxpayer and a governmental entity.