Introduced Version






HOUSE BILL No. 1706

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 6-3-3 ; IC 6-3.5.

Synopsis: Education income tax credits. Provides income tax credits related to elementary and secondary education for the following expenditures: (1) Charitable contributions to foundations that provide tuition scholarships for nonpublic schools and home school students. (2) Donations to public schools for certain academic purposes. (3) Expenditures for dependents who attend nonpublic schools. (4) Expenditures for the home schooling of dependents. (5) Expenditures for out of school education of dependents who attend public schools. Phases in the amount of each type of credit over a three year period.

Effective: January 1, 2003 (retroactive).





Kruse




    January 21, 2003, read first time and referred to Committee on Ways and Means.







Introduced

First Regular Session 113th General Assembly (2003)


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.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2002 Regular or Special Session of the General Assembly.

HOUSE BILL No. 1706



    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 6-3-3-5.2; (03)IN1706.1.1. -->     SECTION 1. IC 6-3-3-5.2 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)]: Sec. 5.2. (a) As used in this section, "dependent" has the meaning set forth in Section 151(c)(1)(B) of the Internal Revenue Code.
    (b) As used in this section, "qualified home school expense" means an expense for academic instruction, including instructional materials, in the core curriculum areas of language arts, mathematics, science, social studies, or foreign language.
    (c) As used in this section, "qualified nonpublic school" means a nonpublic school (as defined in IC 20-10.1-1-3 ) that:
        (1) is an elementary or a secondary school;
        (2) does not discriminate on the basis of race, gender, color, familial status, or national origin; and
        (3) agrees to accept students who receive scholarships from a school scholarship organization.
    (d) As used in this section, "qualified nonpublic school expense"

means an expense for:
        (1) tuition;
        (2) academic instruction, including instructional materials, in the core curriculum areas of language arts, mathematics, science, social studies, or foreign language; or
        (3) school transportation.
    (e) As used in this section, "school scholarship organization" means a charitable organization in Indiana that meets the following requirements:
        (1) Is exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code.
        (2) Allocates at least ninety percent (90%) of its annual revenue for scholarships for one (1) or more of the following purposes:
            (A) To pay qualified nonpublic school expenses of students who attend qualified nonpublic schools.
            (B) To pay qualified home school expenses of students who are:
                (i) eligible for enrollment in a public school in kindergarten through grade 12;
                (ii) not enrolled in a school (public or nonpublic); and
                (iii) excused under IC 20-8.1-3-34 from compulsory school attendance.
        (3) Provides scholarships for more than one (1) nonpublic school or home school family unrelated by blood or marriage.
        (4) Files an annual financial report with the department of education established by IC 20-1-1.1-2 that:
            (A) the department of education makes available to the public free of charge; and
            (B) contains the following information:
                (i) The total dollar amount of donations the school scholarship organization received during the preceding year.
                (ii) The total dollar amount the school scholarship organization awarded in scholarships to individuals during the preceding year.
                (iii) Qualifications, if any, that the school scholarship organization requires for an individual to receive a scholarship, including grade level and family income qualifications.
    (f) A taxpayer may claim a credit against the adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7 for the taxable

year in an amount (subject to the applicable limitations provided by this section) equal to the total amount of charitable contributions:
        (1) made by the taxpayer during the year to a school scholarship organization; and
        (2) not designated by the taxpayer to be used for the direct benefit of a dependent of the taxpayer.
    (g) In the case of a taxpayer other than a corporation, the amount allowable as a credit under this section for any taxable year may not exceed five hundred dollars ($500) in the case of a single return or one thousand dollars ($1,000) in the case of a joint return.
    (h) In the case of a corporation, the amount allowable as a credit under this section for any taxable year may not exceed the lesser of:
        (1) ten percent (10%) of the corporation's total adjusted gross income tax liability under IC 6-3-1 through IC 6-3-7 for the year (as determined without regard to any credits against that tax liability); or
        (2) five hundred dollars ($500).
    (i) The credit under this section may not exceed the amount of the adjusted gross income tax liability imposed by IC 6-3-1 through IC 6-3-7 for the taxable year, reduced by the sum of all credits (as determined without regard to this section) allowed by IC 6-3-1 through IC 6-3-7.
    (j) For purposes of IC 1-1-1-8 , if this section is held invalid, sections 5.3 through 5.6 of this chapter are void.

SOURCE: IC 6-3-3-5.3; (03)IN1706.1.2. -->     SECTION 2. IC 6-3-3-5.3 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)]: Sec. 5.3. (a) As used in this section, "dependent" has the meaning set forth in Section 151(c)(1)(B) of the Internal Revenue Code.
    (b) As used in this section, "public school" has the meaning set forth in IC 20-10.1-1-2.
    (c) As used in this section, "qualified school expense" means expenses for academic instruction as determined by a majority of the teaching staff of a school:
        (1) including instructional materials in the core curriculum areas of language arts, mathematics, science, social studies, or foreign language; and
        (2) excluding teacher salaries.
    (d) A taxpayer may claim a credit against the adjusted gross

income tax imposed by IC 6-3-1 through IC 6-3-7 for the taxable year in an amount (subject to the applicable limitations provided by this section) equal to the aggregate amount of charitable contributions:
        (1) made by the taxpayer during the year to a public school;
        (2) designated by the taxpayer for use for a qualified school expense; and
        (3) not designated by the taxpayer to be used for the direct benefit of a dependent of the taxpayer.
    (e) In the case of a taxpayer other than a corporation, the credit under this section for any taxable year may not exceed one hundred dollars ($100) in the case of a single return or two hundred dollars ($200) in the case of a joint return.
    (f) In the case of a corporation, the credit under this section for any taxable year may not exceed the lesser of:
        (1) ten percent (10%) of the corporation's total adjusted gross income tax liability under IC 6-3-1 through IC 6-3-7 for the year (as determined without regard to any credits against that tax liability); or
        (2) one hundred dollars ($100).
    (g) The credit under this section may not exceed the amount of the adjusted gross income tax liability imposed by IC 6-3-1 through IC 6-3-7 for the taxable year, reduced by the sum of all credits (as determined without regard to this section) allowed by IC 6-3-1 through IC 6-3-7.
    (h) For purposes of IC 1-1-1-8 , if this section is held invalid, sections 5.2 and 5.4 through 5.6 of this chapter are void.

SOURCE: IC 6-3-3-5.4; (03)IN1706.1.3. -->     SECTION 3. IC 6-3-3-5.4 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)]: Sec. 5.4. (a) As used in this section, "dependent" has the meaning set forth in Section 151(c)(1)(B) of the Internal Revenue Code.
    (b) As used in this chapter, "nonpublic school" has the meaning set forth in IC 20-10.1-1-3.
    (c) As used in this chapter, "qualified education expense" means an expenditure for one (1) or more of the following incurred by a taxpayer and paid to others for a dependent who is enrolled in a nonpublic school:
        (1) Tuition.
        (2) Academic instruction, including instructional materials, in the core curriculum areas of language arts, mathematics, science, social studies, or foreign language.
        (3) School transportation.
    (d) As used in this chapter, "taxpayer" means an individual who has adjusted gross income tax liability.
    (e) A taxpayer may claim a credit against the adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7 for the taxable year in an amount (subject to the applicable limitations provided by this section) equal to the total amount of qualified education expense incurred by a taxpayer for a dependent of the taxpayer who is:
        (1) enrolled in a nonpublic school;
        (2) not a recipient of a scholarship from a school scholarship organization (as defined in section 5.2(e) of this chapter); and
        (3) not claimed for a credit under section 5.5 of this chapter.
    (f) In the case of a taxpayer other than a corporation, the credit under this section for any taxable year may not exceed one thousand dollars ($1,000) for each dependent described in subsection (e) in the case of a single return or a joint return.
    (g) A corporation may not receive a credit under this section for any taxable year.
    (h) The credit under this section may not exceed the amount of the adjusted gross income tax liability imposed by IC 6-3-1 through IC 6-3-7 for the taxable year, reduced by the sum of all credits (as determined without regard to this section) allowed by IC 6-3-1 through IC 6-3-7.
    (i) For purposes of IC 1-1-1-8 , if this section is held invalid, sections 5.2 through 5.3 and 5.5 through 5.6 of this chapter are void.

SOURCE: IC 6-3-3-5.5; (03)IN1706.1.4. -->     SECTION 4. IC 6-3-3-5.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)]: Sec. 5.5. (a) As used in this section, "dependent" has the meaning set forth in Section 151(c)(1)(B) of the Internal Revenue Code.
    (b) As used in this section, "qualified education expense" means expenses for academic instruction, including instructional materials, in the core curriculum areas of language arts, mathematics, science, social studies, or foreign language.
    (c) A taxpayer may claim a credit against the adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7 for the taxable year in an amount (subject to the applicable limitations provided by this section) equal to the total amount of qualified education expense incurred by a taxpayer for a dependent of the taxpayer who is:
        (1) eligible for enrollment in a public school in kindergarten through grade 12;
        (2) not enrolled in a school (public or nonpublic);
        (3) excused under IC 20-8.1-3-34 from compulsory school attendance;
        (4) not a recipient of a scholarship from a school scholarship organization (as defined in section 5.2(e) of this chapter); and
        (5) not claimed for a credit under section 5.4 of this chapter.
    (d) In the case of a taxpayer other than a corporation, the credit under this section for any taxable year may not exceed one thousand dollars ($1,000) for each dependent described in subsection (c) in the case of a single return or a joint return.
    (e) A corporation may not receive a credit under this section for any taxable year.
    (f) The credit under this section may not exceed the amount of the adjusted gross income tax liability
imposed by IC 6-3-1 through IC 6-3-7 for the taxable year, reduced by the sum of all credits (as determined without regard to this section) allowed by IC 6-3-1 through IC 6-3-7.
    (g) For purposes of IC 1-1-1-8 , if this section is held invalid, sections 5.2 through 5.4 and 5.6 of this chapter are void.

SOURCE: IC 6-3-3-5.6; (03)IN1706.1.5. -->     SECTION 5. IC 6-3-3-5.6 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)]: Sec. 5.6. (a) As used in this section, "dependent" has the meaning set forth in Section 151(c)(1)(B) of the Internal Revenue Code.
    (b) As used in this section, "public school" has the meaning set forth in IC 20-10.1-1-2.
    (c) As used in this section, "qualified education expense" means an expense for academic instruction incurred by a taxpayer for a dependent who is enrolled in a public school for a grade from kindergarten through grade 12. The academic instruction must be:
        (1) in grade or age appropriate curricula outside a regular school year or school day; and
        (2) in the core curriculum areas of language arts, mathematics, science, or social studies.
    (d) As used in this section, "taxpayer" means an individual who has any adjusted gross income tax liability.
    (e) A taxpayer may claim a credit against the adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7 for the taxable year in an amount (subject to the applicable limitations provided by this section) equal to the total amount of qualified education

expense incurred by a taxpayer for a dependent of the taxpayer who is enrolled in a public school for a grade from kindergarten through grade 12.
    (f) In the case of a taxpayer other than a corporation, the credit under this section for a taxable year may not exceed five hundred dollars ($500) for each dependent in the case of a single return or a joint return.
    (g) A corporation may not receive a credit under this section for any taxable year.
    (h) The credit under this section may not exceed the amount of the adjusted gross income tax liability imposed by IC 6-3-1 through IC 6-3-7 for the taxable year, reduced by the sum of all credits (as determined without regard to this section) allowed by IC 6-3-1 through IC 6-3-7.
    (i) For purposes of IC 1-1-1-8 , if this section is held invalid, sections 5.2 through 5.5 of this chapter are void.

SOURCE: IC 6-3.5-1.1-18; (03)IN1706.1.6. -->     SECTION 6. IC 6-3.5-1.1-18 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)]: Sec. 18. (a) Except as otherwise provided in this chapter, all provisions of the adjusted gross income tax law (IC 6-3) concerning:
        (1) definitions;
        (2) declarations of estimated tax;
        (3) filing of returns;
        (4) remittances;
        (5) incorporation of the provisions of the Internal Revenue Code;
        (6) penalties and interest;
        (7) exclusion of military pay credits for withholding; and
        (8) exemptions and deductions;
apply to the imposition, collection, and administration of the tax imposed by this chapter.
    (b) The provisions of IC 6-3-1-3.5 (a)(6), IC 6-3-3-3 , IC 6-3-3-5 , IC 6-3-3-5.2 , IC 6-3-3-5.3 , IC 6-3-3-5.4 , IC 6-3-3-5.5 , IC 6-3-3-5.6 , and IC 6-3-5-1 do not apply to the tax imposed by this chapter.
    (c) Notwithstanding subsections (a) and (b), each employer shall report to the department the amount of withholdings attributable to each county. This report shall be submitted annually along with the employer's annual withholding report.
SOURCE: IC 6-3.5-6-22; (03)IN1706.1.7. -->     SECTION 7. IC 6-3.5-6-22 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)]: Sec. 22. (a) Except as otherwise provided in subsection (b) and the other provisions of this chapter, all provisions of the adjusted gross income tax law (IC 6-3) concerning:
        (1) definitions;
        (2) declarations of estimated tax;
        (3) filing of returns;
        (4) deductions or exemptions from adjusted gross income;
        (5) remittances;
        (6) incorporation of the provisions of the Internal Revenue Code;
        (7) penalties and interest; and
        (8) exclusion of military pay credits for withholding;
apply to the imposition, collection, and administration of the tax imposed by this chapter.
    (b) The provisions of IC 6-3-1-3.5 (a)(6), IC 6-3-3-3 , IC 6-3-3-5 , IC 6-3-3-5.2 , IC 6-3-3-5.3 , IC 6-3-3-5.4 , IC 6-3-3-5.5 , IC 6-3-3-5.6 , and IC 6-3-5-1 do not apply to the tax imposed by this chapter.
    (c) Notwithstanding subsections (a) and (b), each employer shall report to the department the amount of withholdings attributable to each county. This report shall be submitted along with the employer's other withholding report.
SOURCE: IC 6-3.5-7-18; (03)IN1706.1.8. -->     SECTION 8. IC 6-3.5-7-18 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)]: Sec. 18. (a) Except as otherwise provided in this chapter, all provisions of the adjusted gross income tax law (IC 6-3) concerning:
        (1) definitions;
        (2) declarations of estimated tax;
        (3) filing of returns;
        (4) remittances;
        (5) incorporation of the provisions of the Internal Revenue Code;
        (6) penalties and interest;
        (7) exclusion of military pay credits for withholding; and
        (8) exemptions and deductions;
apply to the imposition, collection, and administration of the tax imposed by this chapter.
    (b) The provisions of IC IC 6-3-1-3.5(a)(6), IC 6-3-3-3 , IC 6-3-3-5 , IC 6-3-3-5.2 , IC 6-3-3-5.3 , IC 6-3-3-5.4 , IC 6-3-3-5.5 , IC 6-3-3-5.6 , and IC 6-3-5-1 do not apply to the tax imposed by this chapter.
    (c) Notwithstanding subsections (a) and (b), each employer shall report to the department the amount of withholdings attributable to each county. This report shall be submitted annually along with the employer's annual withholding report.
SOURCE: ; (03)IN1706.1.9. -->     SECTION 9. [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)] IC 6-3-3-5.2 , IC 6-3-3-5.3 , IC 6-3-3-5.4 , IC 6-3-3-5.5 , and IC 6-3-3-5.6 , all as added by this act, apply only to taxable years beginning after December 31, 2002.
SOURCE: ; (03)IN1706.1.10. -->     SECTION 10. [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)] (a) Notwithstanding IC 6-3-3-5.2 , as added by this act:
        (1) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.2 , as added by this act, for a taxable year beginning after December 31, 2002, and ending December 31, 2003, may not exceed two hundred dollars ($200) in the case of a single return or four hundred dollars ($400) in the case of a joint return;
        (2) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.2 , as added by this act, for a taxable year beginning after December 31, 2003, and ending December 31, 2004, may not exceed three hundred dollars ($300) in the case of a single return or six hundred dollars ($600) in the case of a joint return;
        (3) in the case of a corporation, the credit under IC 6-3-3-5.2 , as added by this act, for a taxable year beginning after December 31, 2002, and ending December 31, 2003, may not exceed the lesser of:
            (A) ten percent (10%) of the corporation's total adjusted gross income tax liability under IC 6-3-1 through IC 6-3-7 for the year (as determined without regard to any credits against that tax); or
            (B) two hundred dollars ($200); and
        (4) in the case of a corporation, the credit under IC 6-3-3-5.2 , as added by this act, for a taxable year beginning after December 31, 2003, and ending December 31, 2004, may not exceed the lesser of:
            (A) ten percent (10%) of the corporation's total adjusted gross income tax liability under IC 6-3-1 through IC 6-3-7 for the year (as determined without regard to any credits against that tax); or
            (B) three hundred dollars ($300).
    (b) This SECTION expires January 1, 2005.

SOURCE: ; (03)IN1706.1.11. -->     SECTION 11. [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)] (a) Notwithstanding IC 6-3-3-5.3 , as added by this act:
        (1) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.3 , as added by this act, for a taxable year beginning after December 31, 2002, and ending December 31, 2003, may not exceed fifty dollars ($50) in the case of a single return or one hundred dollars ($100) in the

case of a joint return;
        (2) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.3 , as added by this act, for a taxable year beginning after December 31, 2003, and ending December 31, 2004, may not exceed seventy-five dollars ($75) in the case of a single return or one hundred fifty dollars ($150) in the case of a joint return;
        (3) in the case of a corporation, the credit under IC 6-3-3-5.3 , as added by this act, for a taxable year beginning after December 31, 2002, and ending December 31, 2003, may not exceed the lesser of:
            (A) ten percent (10%) of the corporation's total adjusted gross income tax liability under IC 6-3-1 through IC 6-3-7 for the year (as determined without regard to any credits against that tax); or
            (B) fifty dollars ($50); and
        (4) in the case of a corporation, the credit under IC 6-3-3-5.3 , as added by this act, for a taxable year beginning after December 31, 2003, and ending December 31, 2004, may not exceed the lesser of:
            (A) ten percent (10%) of the corporation's total adjusted gross income tax liability under IC 6-3-1 through IC 6-3-7 for the year (as determined without regard to any credits against that tax); or
            (B) seventy-five dollars ($75).
    (b) This SECTION expires January 1, 2005.

SOURCE: ; (03)IN1706.1.12. -->     SECTION 12. [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)] (a) Notwithstanding IC 6-3-3-5.4 , as added by this act:
        (1) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.4 , as added by this act, for a taxable year beginning after December 31, 2002, and ending December 31, 2003, may not exceed four hundred dollars ($400) for each dependent in the case of a single return or in the case of a joint return; and
        (2) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.4 , as added by this act, for a taxable year beginning after December 31, 2003, and ending December 31, 2004, may not exceed seven hundred dollars ($700) for each dependent in the case of a single return or in the case of a joint return.
    (b) This SECTION expires January 1, 2005.

SOURCE: ; (03)IN1706.1.13. -->     SECTION 13. [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)] (a) Notwithstanding IC 6-3-3-5.5 , as added by this act:
        (1) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.5 , as added by this act, for a taxable year beginning after December 31, 2002, and ending December 31, 2003, may not exceed four hundred dollars ($400) for each dependent in the case of a single return or in the case of a joint return; and
        (2) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.5 , as added by this act, for a taxable year beginning after December 31, 2003, and ending December 31, 2004, may not exceed seven hundred dollars ($700) for each dependent in the case of a single return or in the case of a joint return.
    (b) This SECTION expires January 1, 2005.

SOURCE: ; (03)IN1706.1.14. -->     SECTION 14. [EFFECTIVE JANUARY 1, 2003 (RETROACTIVE)] (a) Notwithstanding IC 6-3-3-5.6 , as added by this act:
        (1) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.6 , as added by this act, for a taxable year beginning after December 31, 2002, and ending December 31, 2003, may not exceed one hundred fifty dollars ($150) for each dependent in the case of a single return or in the case of a joint return; and
        (2) in the case of a taxpayer other than a corporation, the credit under IC 6-3-3-5.6 , as added by this act, for a taxable year beginning after December 31, 2003, and ending December 31, 2004, may not exceed three hundred fifty dollars ($350) for each dependent in the case of a single return or in the case of a joint return.
    (b) This SECTION expires January 1, 2005.

SOURCE: ; (03)IN1706.1.15. -->     SECTION 15. An emergency is declared for this act.