HB 1365-1_ Filed 02/19/2004, 10:53

COMMITTEE REPORT




MADAM PRESIDENT:

    The Senate Committee on Finance, to which was referred House Bill No. 1365, has had the same under consideration and begs leave to report the same back to the Senate with the recommendation that said bill be AMENDED as follows:

SOURCE: Page 1, line 1; (04)AM136509.1. -->     Page 1, between the enacting clause and line 1, begin a new paragraph and insert:
SOURCE: IC 4-33-12-6; (04)AM136509.1. -->     "SECTION 1. IC 4-33-12-6, AS AMENDED BY P.L.92-2003, SECTION 53, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 6. (a) The department shall place in the state general fund the tax revenue collected under this chapter.
    (b) Except as provided by subsections (c) and (d) and IC 6-3.1-20-7, the treasurer of state shall quarterly pay the following amounts:
        (1) Except as provided in subsection (k), one dollar ($1) of the admissions tax collected by the licensed owner for each person embarking on a gambling excursion during the quarter or admitted to a riverboat that has implemented flexible scheduling under IC 4-33-6-21 during the quarter shall be paid to:
            (A) the city in which the riverboat is docked, if the city:
                (i) is located in a county having a population of more than one hundred ten thousand (110,000) but less than one hundred fifteen thousand (115,000); or
                (ii) is contiguous to the Ohio River and is the largest city in the county; and
            (B) the county in which the riverboat is docked, if the riverboat is not docked in a city described in clause (A).
        (2) Except as provided in subsection (k), one dollar ($1) of the admissions tax collected by the licensed owner for each person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the county in which the riverboat is docked. In the case of a county described in subdivision (1)(B), this one dollar ($1) is in addition to the one dollar ($1) received under subdivision (1)(B).
        (3) Except as provided in subsection (k), ten cents ($0.10) of the admissions tax collected by the licensed owner for each person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the county convention and visitors bureau or promotion fund for the county in which the riverboat is docked.
        (4) Except as provided in subsection (k), fifteen cents ($0.15) of the admissions tax collected by the licensed owner for each person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during a quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the state fair commission, for use in any activity that the commission is authorized to carry out under IC 15-1.5-3.
        (5) Except as provided in subsection (k), ten cents ($0.10) of the admissions tax collected by the licensed owner for each person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the division of mental health and addiction. The division shall allocate at least twenty-five percent (25%) of the funds derived from the admissions tax to the prevention and treatment of compulsive gambling.
        (6) Except as provided in subsection (k), section 7 of this chapter, sixty-five cents ($0.65) of the admissions tax collected by the licensed owner for each person embarking on a gambling excursion during the quarter or admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21 shall be paid to the Indiana horse racing commission

to be distributed as follows, in amounts determined by the Indiana horse racing commission, for the promotion and operation of horse racing in Indiana:
            (A) To one (1) or more breed development funds established by the Indiana horse racing commission under IC 4-31-11-10.
            (B) To a racetrack that was approved by the Indiana horse racing commission under IC 4-31. The commission may make a grant under this clause only for purses, promotions, and routine operations of the racetrack. No grants shall be made for long term capital investment or construction and no grants shall be made before the racetrack becomes operational and is offering a racing schedule. under section 7 of this chapter.
    (c) With respect to tax revenue collected from a riverboat located in a historic hotel district, the treasurer of state shall quarterly pay the following amounts:
        (1) Twenty-five percent (25%) of the admissions tax collected during the quarter shall be paid to the county treasurer of the county in which the riverboat is docked. The county treasurer shall distribute the money received under this subdivision as follows:
            (A) Twenty percent (20%) shall be quarterly distributed to the county treasurer of a county having a population of more than thirty-nine thousand six hundred (39,600) but less than forty thousand (40,000) for appropriation by the county fiscal body after receiving a recommendation from the county executive. The county fiscal body for the receiving county shall provide for the distribution of the money received under this clause to one (1) or more taxing units (as defined in IC 6-1.1-1-21) in the county under a formula established by the county fiscal body after receiving a recommendation from the county executive.
            (B) Twenty percent (20%) shall be quarterly distributed to the county treasurer of a county having a population of more than ten thousand seven hundred (10,700) but less than twelve thousand (12,000) for appropriation by the county fiscal body. The county fiscal body for the receiving county shall provide for the distribution of the money received under this clause to one (1) or more taxing units (as defined in IC 6-1.1-1-21) in the county under a formula established by the county fiscal body after receiving a recommendation from the county executive.


            (C) Sixty percent (60%) shall be retained by the county where the riverboat is docked for appropriation by the county fiscal body after receiving a recommendation from the county executive. The county fiscal body shall provide for the distribution of part or all of the money received under this clause to the following under a formula established by the county fiscal body:
                (i) A town having a population of more than two thousand two hundred (2,200) but less than three thousand five hundred (3,500) located in a county having a population of more than nineteen thousand three hundred (19,300) but less than twenty thousand (20,000).
                (ii) A town having a population of more than three thousand five hundred (3,500) located in a county having a population of more than nineteen thousand three hundred (19,300) but less than twenty thousand (20,000).
        (2) Sixteen percent (16%) of the admissions tax collected during the quarter shall be paid in equal amounts to each town that:
            (A) is located in the county in which the riverboat docks; and
            (B) contains a historic hotel.
        The town council shall appropriate a part of the money received by the town under this subdivision to the budget of the town's tourism commission.
        (3) Nine percent (9%) of the admissions tax collected during the quarter shall be paid to the historic hotel preservation commission established under IC 36-7-11.5.
        (4) Twenty-five percent (25%) of the admissions tax collected during the quarter shall be paid to the West Baden Springs historic hotel preservation and maintenance fund established by IC 36-7-11.5-11(b).
        (5) Twenty-five percent (25%) of the admissions tax collected during the quarter shall be paid to the department of commerce to be used by the department for the development and implementation of a regional economic development strategy to assist the residents of the county in which the riverboat is located and residents of contiguous counties in improving their quality of life and to help promote successful and sustainable communities. The regional economic development strategy must include goals concerning the following issues:
            (A) Job creation and retention.
            (B) Infrastructure, including water, wastewater, and storm

water infrastructure needs.
            (C) Housing.
            (D) Workforce training.
            (E) Health care.
            (F) Local planning.
            (G) Land use.
            (H) Assistance to regional economic development groups.
            (I) Other regional development issues as determined by the department.
    (d) With respect to tax revenue collected from a riverboat that operates from a county having a population of more than four hundred thousand (400,000) but less than seven hundred thousand (700,000), the treasurer of state shall quarterly pay the following amounts:
        (1) Except as provided in subsection (k), one dollar ($1) of the admissions tax collected by the licensed owner for each person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the city in which the riverboat is docked.
        (2) Except as provided in subsection (k), one dollar ($1) of the admissions tax collected by the licensed owner for each person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the county in which the riverboat is docked.
        (3) Except as provided in subsection (k), nine cents ($0.09) of the admissions tax collected by the licensed owner for each person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the county convention and visitors bureau or promotion fund for the county in which the riverboat is docked.
        (4) Except as provided in subsection (k), one cent ($0.01) of the admissions tax collected by the licensed owner for each person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the northwest Indiana law enforcement training center.
        (5) Except as provided in subsection (k), fifteen cents ($0.15) of the admissions tax collected by the licensed owner for each

person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during a quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the state fair commission for use in any activity that the commission is authorized to carry out under IC 15-1.5-3.
        (6) Except as provided in subsection (k), ten cents ($0.10) of the admissions tax collected by the licensed owner for each person:
            (A) embarking on a gambling excursion during the quarter; or
            (B) admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21;
        shall be paid to the division of mental health and addiction. The division shall allocate at least twenty-five percent (25%) of the funds derived from the admissions tax to the prevention and treatment of compulsive gambling.
        (7) Except as provided in subsection (k), section 7 of this chapter, sixty-five cents ($0.65) of the admissions tax collected by the licensed owner for each person embarking on a gambling excursion during the quarter or admitted to a riverboat during the quarter that has implemented flexible scheduling under IC 4-33-6-21 shall be paid to the Indiana horse racing commission to be distributed as follows, in amounts determined by the Indiana horse racing commission, for the promotion and operation of horse racing in Indiana:
            (A) To one (1) or more breed development funds established by the Indiana horse racing commission under IC 4-31-11-10.
            (B) To a racetrack that was approved by the Indiana horse racing commission under IC 4-31. The commission may make a grant under this clause only for purses, promotions, and routine operations of the racetrack. No grants shall be made for long term capital investment or construction, and no grants shall be made before the racetrack becomes operational and is offering a racing schedule. under section 7 of this chapter.
    (e) Money paid to a unit of local government under subsection (b)(1) through (b)(2), (c)(1) through (c)(2), or (d)(1) through (d)(2):
        (1) must be paid to the fiscal officer of the unit and may be deposited in the unit's general fund or riverboat fund established under IC 36-1-8-9, or both;
        (2) may not be used to reduce the unit's maximum levy under IC 6-1.1-18.5 but may be used at the discretion of the unit to reduce the property tax levy of the unit for a particular year;


        (3) may be used for any legal or corporate purpose of the unit, including the pledge of money to bonds, leases, or other obligations under IC 5-1-14-4; and
        (4) is considered miscellaneous revenue.
    (f) Money paid by the treasurer of state under subsection (b)(3) or (d)(3) shall be:
        (1) deposited in:
            (A) the county convention and visitor promotion fund; or
            (B) the county's general fund if the county does not have a convention and visitor promotion fund; and
        (2) used only for the tourism promotion, advertising, and economic development activities of the county and community.
    (g) Money received by the division of mental health and addiction under subsections (b)(5) and (d)(6):
        (1) is annually appropriated to the division of mental health and addiction;
        (2) shall be distributed to the division of mental health and addiction at times during each state fiscal year determined by the budget agency; and
        (3) shall be used by the division of mental health and addiction for programs and facilities for the prevention and treatment of addictions to drugs, alcohol, and compulsive gambling, including the creation and maintenance of a toll free telephone line to provide the public with information about these addictions. The division shall allocate at least twenty-five percent (25%) of the money received to the prevention and treatment of compulsive gambling.
    (h) This subsection applies to the following:
        (1) Each entity receiving money under subsection (b). subsection (b)(1) through (b)(5).
        (2) Each entity receiving money under subsection (d)(1) through (d)(2).
        (3) Each entity receiving money under subsection (d)(5) through (d)(7). (d)(6).
The treasurer of state shall determine the total amount of money paid by the treasurer of state to an entity subject to this subsection during the state fiscal year 2002. The amount determined under this subsection is the base year revenue for each entity subject to this subsection. The treasurer of state shall certify the base year revenue determined under this subsection to each entity subject to this subsection.
    (i) This subsection applies to an entity receiving money under subsection (d)(3) or (d)(4). The treasurer of state shall determine the

total amount of money paid by the treasurer of state to the entity described in subsection (d)(3) during state fiscal year 2002. The amount determined under this subsection multiplied by nine-tenths (0.9) is the base year revenue for the entity described in subsection (d)(3). The amount determined under this subsection multiplied by one-tenth (0.1) is the base year revenue for the entity described in subsection (d)(4). The treasurer of state shall certify the base year revenue determined under this subsection to each entity subject to this subsection.
    (j) This subsection does not apply to the Indiana horse racing commission or an entity receiving money under subsection (c). For state fiscal years beginning after June 30, 2002, the total amount of money distributed to an entity under this section during a state fiscal year may not exceed the entity's base year revenue as determined under subsection (h) or (i). If the treasurer of state determines that the total amount of money distributed to an entity under this section during a state fiscal year is less than the entity's base year revenue, the treasurer of state shall make a supplemental distribution to the entity under IC 4-33-13-5(g).
    (k) This subsection does not apply to the Indiana horse racing commission or an entity receiving money under subsection (c). For state fiscal years beginning after June 30, 2002, the treasurer of state shall pay that part of the riverboat admissions taxes that:
        (1) exceed a particular entity's base year revenue; and
        (2) would otherwise be due to the entity under this section;
to the property tax replacement fund instead of to the entity.

SOURCE: IC 4-33-12-7; (04)AM136509.2. -->     SECTION 2. IC 4-33-12-7 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 7. (a) This section applies only to the Indiana horse racing commission.
    (b) For state fiscal years beginning after June 30, 2003, the Indiana horse racing commission's base year revenue is forty-four million dollars ($44,000,000).
    (c) The total amount of money distributed to the Indiana horse racing commission under section 6 of this chapter during a state fiscal year may not exceed the racing commission's base year revenue.
For state fiscal years beginning after June 30, 2003, the treasurer of state shall pay that part of the riverboat admissions taxes that:
        (1) exceed the racing commission's base year revenue; and
        (2) would otherwise be due to the racing commission under section 6 of this chapter;
to the property tax replacement fund instead of to the racing commission.

     (d) If the treasurer of state determines that the total amount of money distributed to the Indiana horse racing commission under section 6 of this chapter during a state fiscal year is less than the racing commission's base year revenue, the treasurer of state shall make a supplemental distribution to the racing commission under IC 4-33-13-5(g).
    (e) Riverboat admissions taxes distributed to the Indiana horse racing commission under section 6 of this chapter and the supplemental distribution paid to the racing commission under IC 4-33-13-5(g) shall be paid as follows:
        (1) Forty percent (40%) for the following purposes:
            (A) Forty-eight percent (48%) for standardbred purposes as follows:
                (i) Ninety-eight and five-tenths percent (98.5%) for standardbred purses.
                (ii) One and five-tenths percent (1.5%) to the horsemen's association representing standardbred owners and trainers.
            (B) Forty-eight percent (48%) for thoroughbred purposes as follows:
                (i) Ninety-eight and five-tenths percent (98.5%) for thoroughbred purses.
                (ii) One and two-tenths percent (1.2%) for the horsemen's association representing thoroughbred owners and trainers.
                (iii) Three-tenths of one percent (0.3%) for the horsemen's association representing thoroughbred owners and breeders.
            (C) Four percent (4%) for quarter horse purposes as follows:
                (i) Ninety-five percent (95%) for quarter horse purses.
                (ii) Five percent (5%) for the horsemen's association representing quarter horse owners and trainers.
        (2) Forty percent (40%) to be divided equally between each racetrack that was approved by the racing commission under

IC 4-31. The commission may make a grant under this subdivision only for purses, promotions, and routine operations of the racetrack.
         (3) Twenty percent (20%) to the breed development funds established by the racing commission under IC 4-31-11-10 to be allocated as follows:
             (A) Forty-eight percent (48%) to the standardbred development fund.
            (B) Forty-eight percent (48%) to the thoroughbred development fund.
            (C) Four percent (4%) to the quarter horse development fund.

SOURCE: IC 4-33-13-5; (04)AM136509.3. -->     SECTION 3. IC 4-33-13-5, AS AMENDED BY P.L.224-2003, SECTION 47, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. (a) This subsection does not apply to tax revenue remitted by an operating agent operating a riverboat in a historic hotel district. After funds are appropriated under section 4 of this chapter, each month the treasurer of state shall distribute the tax revenue deposited in the state gaming fund under this chapter to the following:
        (1) The first thirty-three million dollars ($33,000,000) of tax revenues collected under this chapter shall be set aside for revenue sharing under subsection (e).
        (2) Subject to subsection (c), twenty-five percent (25%) of the remaining tax revenue remitted by each licensed owner shall be paid:
            (A) to the city that is designated as the home dock of the riverboat from which the tax revenue was collected, in the case of:
                (i) a city described in IC 4-33-12-6(b)(1)(A); or
                (ii) a city located in a county having a population of more than four hundred thousand (400,000) but less than seven hundred thousand (700,000); or
            (B) to the county that is designated as the home dock of the riverboat from which the tax revenue was collected, in the case of a riverboat whose home dock is not in a city described in clause (A).
        (3) Subject to subsection (d), the remainder of the tax revenue remitted by each licensed owner shall be paid to the property tax replacement fund. In each state fiscal year beginning after June 30, 2003, the treasurer of state shall make the transfer required by

this subdivision not later than the last business day of the month in which the tax revenue is remitted to the state for deposit in the state gaming fund. However, if tax revenue is received by the state on the last business day in a month, the treasurer of state may transfer the tax revenue to the property tax replacement fund in the immediately following month.
    (b) This subsection applies only to tax revenue remitted by an operating agent operating a riverboat in a historic hotel district. After funds are appropriated under section 4 of this chapter, each month the treasurer of state shall distribute the tax revenue deposited in the state gaming fund under this chapter as follows:
        (1) Thirty-seven and one half percent (37.5%) shall be paid to the property tax replacement fund established under IC 6-1.1-21.
        (2) Thirty-seven and one-half percent (37.5%) shall be paid to the West Baden Springs historic hotel preservation and maintenance fund established by IC 36-7-11.5-11(b). However, at any time the balance in that fund exceeds twenty million dollars ($20,000,000), the amount described in this subdivision shall be paid to the property tax replacement fund established under IC 6-1.1-21.
        (3) Five percent (5%) shall be paid to the historic hotel preservation commission established under IC 36-7-11.5.
        (4) Ten percent (10%) shall be paid in equal amounts to each town that:
            (A) is located in the county in which the riverboat docks; and
            (B) contains a historic hotel.
        The town council shall appropriate a part of the money received by the town under this subdivision to the budget of the town's tourism commission.
        (5) Ten percent (10%) shall be paid to the county treasurer of the county in which the riverboat is docked. The county treasurer shall distribute the money received under this subdivision as follows:
            (A) Twenty percent (20%) shall be quarterly distributed to the county treasurer of a county having a population of more than thirty-nine thousand six hundred (39,600) but less than forty thousand (40,000) for appropriation by the county fiscal body after receiving a recommendation from the county executive. The county fiscal body for the receiving county shall provide for the distribution of the money received under this clause to one (1) or more taxing units (as defined in IC 6-1.1-1-21) in the county under a formula established by the county fiscal

body after receiving a recommendation from the county executive.
            (B) Twenty percent (20%) shall be quarterly distributed to the county treasurer of a county having a population of more than ten thousand seven hundred (10,700) but less than twelve thousand (12,000) for appropriation by the county fiscal body after receiving a recommendation from the county executive. The county fiscal body for the receiving county shall provide for the distribution of the money received under this clause to one (1) or more taxing units (as defined in IC 6-1.1-1-21) in the county under a formula established by the county fiscal body after receiving a recommendation from the county executive.
            (C) Sixty percent (60%) shall be retained by the county where the riverboat is docked for appropriation by the county fiscal body after receiving a recommendation from the county executive. The county fiscal body shall provide for the distribution of part or all of the money received under this clause to the following under a formula established by the county fiscal body:
                (i) A town having a population of more than two thousand two hundred (2,200) but less than three thousand five hundred (3,500) located in a county having a population of more than nineteen thousand three hundred (19,300) but less than twenty thousand (20,000).
                (ii) A town having a population of more than three thousand five hundred (3,500) located in a county having a population of more than nineteen thousand three hundred (19,300) but less than twenty thousand (20,000).
    (c) For each city and county receiving money under subsection (a)(2)(A) or (a)(2)(C), (a)(2), the treasurer of state shall determine the total amount of money paid by the treasurer of state to the city or county during the state fiscal year 2002. The amount determined is the base year revenue for the city or county. The treasurer of state shall certify the base year revenue determined under this subsection to the city or county. The total amount of money distributed to a city or county under this section during a state fiscal year may not exceed the entity's base year revenue. For each state fiscal year beginning after June 30, 2002, the treasurer of state shall pay that part of the riverboat wagering taxes that:
        (1) exceeds a particular city or county's base year revenue; and


        (2) would otherwise be due to the city or county under this section;
to the property tax replacement fund instead of to the city or county.
    (d) Each state fiscal year the treasurer of state shall transfer from the tax revenue remitted to the property tax replacement fund under subsection (a)(3) to the build Indiana fund an amount that when added to the following may not exceed two hundred fifty million dollars ($250,000,000):
        (1) Surplus lottery revenues under IC 4-30-17-3.
        (2) Surplus revenue from the charity gaming enforcement fund under IC 4-32-10-6.
        (3) Tax revenue from pari-mutuel wagering under IC 4-31-9-3.
The treasurer of state shall make transfers on a monthly basis as needed to meet the obligations of the build Indiana fund. If in any state fiscal year insufficient money is transferred to the property tax replacement fund under subsection (a)(3) to comply with this subsection, the treasurer of state shall reduce the amount transferred to the build Indiana fund to the amount available in the property tax replacement fund from the transfers under subsection (a)(3) for the state fiscal year.
    (e) Before August 15 of 2003 and each year thereafter, the treasurer of state shall distribute the wagering taxes set aside for revenue sharing under subsection (a)(1) to the county treasurer of each county that does not have a riverboat according to the ratio that the county's population bears to the total population of the counties that do not have a riverboat. Except as provided in subsection (h), the county auditor shall distribute the money received by the county under this subsection as follows:
        (1) To each city located in the county according to the ratio the city's population bears to the total population of the county.
        (2) To each town located in the county according to the ratio the town's population bears to the total population of the county.
        (3) After the distributions required in subdivisions (1) and (2) are made, the remainder shall be retained by the county.
    (f) Money received by a city, town, or county under subsection (e) or (h) may be used for any of the following purposes:
        (1) To reduce the property tax levy of the city, town, or county for a particular year (a property tax reduction under this subdivision does not reduce the maximum levy of the city, town, or county under IC 6-1.1-18.5);
        (2) For deposit in a special fund or allocation fund created under IC 8-22-3.5, IC 36-7-14, IC 36-7-14.5, IC 36-7-15.1, and

IC 36-7-30 to provide funding for additional credits for property tax replacement in property tax increment allocation areas or debt repayment.
        (3) To fund sewer and water projects, including storm water management projects.
        (4) For police and fire pensions.
        (5) To carry out any governmental purpose for which the money is appropriated by the fiscal body of the city, town, or county. Money used under this subdivision does not reduce the property tax levy of the city, town, or county for a particular year or reduce the maximum levy of the city, town, or county under IC 6-1.1-18.5.
    (g) This subsection does not apply to an entity receiving money under IC 4-33-12-6(c). Before September 15 of 2003 and each year thereafter, the treasurer of state shall determine the total amount of money distributed to an entity under IC 4-33-12-6 during the preceding state fiscal year. If the treasurer of state determines that the total amount of money distributed to an entity under IC 4-33-12-6 during the preceding state fiscal year was less than the entity's base year revenue (as determined under IC 4-33-12-6 or IC 4-33-12-7), the treasurer of state shall make a supplemental distribution to the entity from taxes collected under this chapter and deposited into the property tax replacement fund. The amount of the supplemental distribution is equal to the difference between the entity's base year revenue (as determined under IC 4-33-12-6 or IC 4-33-12-7) and the total amount of money distributed to the entity during the preceding state fiscal year under IC 4-33-12-6.
    (h) This section applies only to a county containing a consolidated city. The county auditor shall distribute the money received by the county under subsection (d) as follows:
        (1) To each city, other than a consolidated city, located in the county according to the ratio that the city's population bears to the total population of the county.
        (2) To each town located in the county according to the ratio that the town's population bears to the total population of the county.
        (3) After the distributions required in subdivisions (1) and (2) are made, the remainder shall be paid in equal amounts to the consolidated city and the county.".

SOURCE: Page 1, line 15; (04)AM136509.1. -->     Page 1, delete lines 15 through 16, begin a new line block indented and insert:
        "(4) delivery charges;
        (5) installation charges; or".
    Page 1, line 17, strike "(6)" and insert " (4)".
    Page 2, between lines 27 and 28, begin a new line blocked left and insert:
" For purposes of subdivision (6), delivery charges are charges by the seller for preparation and delivery of the property to a location designated by the purchaser of property, including but not limited to transportation, shipping, postage, handling, crating, and packing.".
    Page 4, between lines 1 and 2, begin a new paragraph and insert:
SOURCE: IC 6-2.5-4-1; (04)AM136509.4. -->     "SECTION 4. IC 6-2.5-4-1, AS AMENDED BY P.L.257-2003, SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. (a) A person is a retail merchant making a retail transaction when he engages in selling at retail.
    (b) A person is engaged in selling at retail when, in the ordinary course of his regularly conducted trade or business, he:
        (1) acquires tangible personal property for the purpose of resale; and
        (2) transfers that property to another person for consideration.
    (c) For purposes of determining what constitutes selling at retail, it does not matter whether:
        (1) the property is transferred in the same form as when it was acquired;
        (2) the property is transferred alone or in conjunction with other property or services; or
        (3) the property is transferred conditionally or otherwise.
    (d) Notwithstanding subsection (b), a person is not selling at retail if he is making a wholesale sale as described in section 2 of this chapter.
    (e) The gross retail income received from selling at retail is only taxable under this article to the extent that the income represents:
        (1) the price of the property transferred, without the rendition of any service; and
        (2) except as provided in subsection (g), any bona fide charges which are made for preparation, fabrication, alteration, modification, finishing, completion, delivery, or other service performed in respect to the property transferred before its transfer and which are separately stated on the transferor's records.
For purposes of subdivision (2), charges for delivery are charges by the seller for preparation and delivery of the property to a location designated by the purchaser of property, including but not limited to

transportation, shipping, postage, handling, crating, and packing. transfer shall take place before delivery of the property to the purchaser.
    (f) Notwithstanding subsection (e):
        (1) in the case of retail sales of gasoline (as defined in IC 6-6-1.1-103) and special fuel (as defined in IC 6-6-2.5-22), the gross retail income received from selling at retail is the total sales price of the gasoline or special fuel minus the part of that price attributable to tax imposed under IC 6-6-1.1, IC 6-6-2.5, or Section 4041(a) or Section 4081 of the Internal Revenue Code; and
        (2) in the case of retail sales of cigarettes (as defined in IC 6-7-1-2), the gross retail income received from selling at retail is the total sales price of the cigarettes including the tax imposed under IC 6-7-1.
    (g) Gross retail income does not include income that represents charges for serving or delivering food and food ingredients furnished, prepared, or served for consumption at a location, or on equipment, provided by the retail merchant. However, the exclusion under this subsection only applies if the charges for the serving or delivery are stated separately from the price of the food and food ingredients when the purchaser pays the charges.".

SOURCE: Page 11, line 17; (04)AM136509.11. -->     Page 11, line 17, delete "Subject to subsection (g), add an amount equal to" and insert " Add an amount equal to any deduction allowed under Section 172 of the Internal Revenue Code.".
    Page 11, delete lines 18 through 22.
    Page 12, line 4, delete "Subject to subsection (g), add an amount equal to" and insert " Add an amount equal to any deduction allowed under Section 172 of the Internal Revenue Code.".
    Page 12, delete lines 5 through 9.
    Page 12, line 33, delete "Subject to subsection (g), add an amount equal to" and insert " Add an amount equal to any deduction allowed under Section 172 or Section 810 of the Internal Revenue Code.".
    Page 12, delete lines 34 through 38.
    Page 13, line 20, delete "Subject to subsection (g), add an amount equal to" and insert " Add an amount equal to any deduction allowed under Section 172 of the Internal Revenue Code.".
    Page 13, delete lines 21 through 25.
    Page 14, line 2, delete "Subject to subsection (g), add an amount equal to" and insert " Add an amount equal to any deduction allowed under Section 172 of the Internal Revenue Code.".
    Page 14, delete lines 3 through 7.
    Page 14, delete lines 26 through 42, begin a new paragraph and insert:
SOURCE: IC 6-3-2-2.5; (04)AM136509.8. -->     "SECTION 8. IC 6-3-2-2.5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2004 (RETROACTIVE)]: Sec. 2.5. (a) This section applies to a resident person. for a particular taxable year, if the taxpayer's adjusted gross income for that taxable year is reduced because of a deduction allowed under Section 172 of the Internal Revenue Code for a net operating loss. For purposes of section 1 of this chapter, the taxpayer's adjusted gross income, for the particular taxable year, is the remainder determined under STEP FOUR of the following formula:
        STEP ONE: Determine the taxpayer's adjusted gross income, for the taxable year, as calculated without the deduction for net operating losses provided by Section 172 of the Internal Revenue Code.
        STEP TWO: Determine, in the manner prescribed in subsection (b), the amount of the taxpayer's net operating losses that are deductible for the taxable year under Section 172 of the Internal Revenue Code, as adjusted to reflect the modifications required by IC 6-3-1-3.5.
        STEP THREE: Enter the larger of zero (0) or the amount determined under STEP TWO.
        STEP FOUR: Subtract the amount entered under STEP THREE from the amount determined under STEP ONE.
    (b) For purposes of STEP TWO of subsection (a), the modifications that are to be applied are those modifications required under IC 6-3-1-3.5 for the same taxable year during which each net operating loss was incurred. In addition, for purposes of STEP TWO of subsection (a), the following procedures apply:
        (1) The taxpayer's net operating loss for a particular taxable year shall be treated as a positive number.
        (2) A modification that is to be added to federal adjusted gross income or federal taxable income under IC 6-3-1-3.5 shall be treated as a negative number.
        (3) A modification that is to be subtracted from federal adjusted gross income or federal taxable income under IC 6-3-1-3.5 shall be treated as a positive number.
     (b) Resident persons are entitled to a net operating loss deduction. The amount of the deduction taken in a taxable year may not exceed the taxpayer's unused Indiana net operating

losses carried back or carried over to that year.
    (c) An Indiana net operating loss equals the taxpayer's federal net operating loss for a taxable year as calculated under Section 172 of the Internal Revenue Code, adjusted for the modifications required by IC 6-3-1-3.5.
    (d) The following provisions apply for purposes of subsection (c):
        (1) The modifications that are to be applied are those modifications required under IC 6-3-1-3.5 for the same taxable year in which each net operating loss was incurred.
        (2) An Indiana net operating loss includes a net operating loss that arises when the modifications required by IC 6-3-1-3.5 exceed the taxpayer's federal taxable income (as defined in Section 62 of the Internal Revenue Code) for the taxable year in which the Indiana net operating loss is determined.
    (e) Subject to the limitations contained in subsection (g), an Indiana net operating loss carryback or carryover shall be available as a deduction from the taxpayer's adjusted gross income (as defined in IC 6-3-1-3.5) in the carryback or carryover year provided in subsection (f).
    (f) Carrybacks and carryovers shall be determined under this subsection as follows:
        (1) An Indiana net operating loss shall be an Indiana net operating loss carryback to each of the carryback years preceding the taxable year of the loss.
        (2) An Indiana net operating loss shall be an Indiana net operating loss carryover to each of the carryover years following the taxable year of the loss.
        (3) Carryback years shall be determined by reference to the number of years allowed for carrying back a net operating loss under Section 172(b) of the Internal Revenue Code.
        (4) Carryover years shall be determined by reference to the number of years allowed for carrying over net operating losses under Section 172(b) of the Internal Revenue Code.
        (5) A taxpayer who makes an election under Section 172(b)(3) of the Internal Revenue Code to relinquish the carryback period with respect to a net operating loss for any taxable year shall be considered to have also relinquished the

carryback of the Indiana net operating loss for purposes of this section.
    (g) The entire amount of the Indiana net operating loss for any taxable year shall be carried to the earliest of the taxable years to which (as determined under subsection (f)) the loss may be carried. The amount of the Indiana net operating loss remaining after the deduction is taken under this section in a taxable year may be carried back or carried over as provided in subsection (f). The amount of the Indiana net operating loss carried back or carried over from year to year shall be reduced to the extent that the Indiana net operating loss carryback or carryover is used by the taxpayer to obtain a deduction in a taxable year until the occurrence of the earlier of the following:
        (1) The entire amount of the Indiana net operating loss has been used as a deduction.
        (2) The Indiana net operating loss has been carried over to each of the carryover years provided by subsection (f).

SOURCE: IC 6-3-2-2.6; (04)AM136509.9. -->     SECTION 9. IC 6-3-2-2.6, AS AMENDED BY P.L.192-2002(ss), SECTION 73, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2004 (RETROACTIVE)]: Sec. 2.6. (a) This section applies to a corporation or a nonresident person. for a particular taxable year, if the taxpayer's adjusted gross income for that taxable year is reduced because of a deduction allowed under Section 172 of the Internal Revenue Code for a net operating loss. For purposes of section 1 of this chapter, the taxpayer's adjusted gross income, for the particular taxable year, derived from sources within Indiana is the remainder determined under STEP FOUR of the following formula:
        STEP ONE: Determine, in the manner prescribed in section 2 of this chapter, the taxpayer's adjusted gross income, for the taxable year, derived from sources within Indiana, as calculated without the deduction for net operating losses provided by Section 172 of the Internal Revenue Code.
        STEP TWO: Determine, in the manner prescribed in subsection (b), the amount of the taxpayer's net operating losses that are deductible for the taxable year under Section 172 of the Internal Revenue Code, as adjusted to reflect the modifications required by IC 6-3-1-3.5, and that are derived from sources within Indiana.
        STEP THREE: Enter the larger of zero (0) or the amount determined under STEP TWO.
        STEP FOUR: Subtract the amount entered under STEP THREE

from the amount determined under STEP ONE.
    (b) For purposes of STEP TWO of subsection (a), the modifications that are to be applied are those modifications required under IC 6-3-1-3.5 for the same taxable year during which each net operating loss was incurred. In addition, for purposes of STEP TWO of subsection (a), the amount of a taxpayer's net operating losses that are derived from sources within Indiana shall be determined in the same manner that the amount of the taxpayer's income derived from sources within Indiana is determined, under section 2 of this chapter, for the same taxable year during which each loss was incurred. Also, for purposes of STEP TWO of subsection (a), the following procedures apply:
        (1) The taxpayer's net operating loss for a particular taxable year shall be treated as a positive number.
        (2) A modification that is to be added to federal adjusted gross income or federal taxable income under IC 6-3-1-3.5 shall be treated as a negative number.
        (3) A modification that is to be subtracted from federal adjusted gross income or federal taxable income under IC 6-3-1-3.5 shall be treated as a positive number.
        (4) A net operating loss under this section shall be considered even though in the year the taxpayer incurred the loss the taxpayer was not subject to the tax imposed under section 1 of this chapter because the taxpayer was:
            (A) a life insurance company (as defined in Section 816(a) of the Internal Revenue Code); or
            (B) an insurance company subject to tax under Section 831 of the Internal Revenue Code.
     (b) Corporations and nonresident persons are entitled to a net operating loss deduction. The amount of the deduction taken in a taxable year may not exceed the taxpayer's unused Indiana net operating losses carried back or carried over to that year.
    (c) An Indiana net operating loss equals the taxpayer's federal net operating loss for a taxable year as calculated under Section 172 of the Internal Revenue Code, derived from sources within Indiana and adjusted for the modifications required by IC 6-3-1-3.5.
    (d) The following provisions apply for purposes of subsection (c):
        (1) The modifications that are to be applied are those

modifications required under IC 6-3-1-3.5 for the same taxable year in which each net operating loss was incurred.
        (2) The amount of the taxpayer's net operating loss that is derived from sources within Indiana shall be determined in the same manner that the amount of the taxpayer's adjusted income derived from sources within Indiana is determined under section 2 of this chapter for the same taxable year during which each loss was incurred.
        (3) An Indiana net operating loss includes a net operating loss that arises when the modifications required by IC 6-3-1-3.5 exceed the taxpayer's federal taxable income (as defined in Section 63 of the Internal Revenue Code), if the taxpayer is a corporation, or when the modifications required by IC 6-3-1-3.5 exceed the taxpayer's federal adjusted gross income (as defined by Section 62 of the Internal Revenue Code), if the taxpayer is a nonresident person, for the taxable year in which the Indiana net operating loss is determined.
    (e) Subject to the limitations contained in subsection (g), an Indiana net operating loss carryback or carryover shall be available as a deduction from the taxpayer's adjusted gross income derived from sources within Indiana (as defined in section 2 of this chapter) in the carryback or carryover year provided in subsection (f).
    (f) Carrybacks and carryovers shall be determined under this subsection as follows:
        (1) An Indiana net operating loss shall be an Indiana net operating loss carryback to each of the carryback years preceding the taxable year of the loss.
        (2) An Indiana net operating loss shall be an Indiana net operating loss carryover to each of the carryover years following the taxable year of the loss.
        (3) Carryback years shall be determined by reference to the number of years allowed for carrying back a net operating loss under Section 172(b) of the Internal Revenue Code.
        (4) Carryover years shall be determined by reference to the number of years allowed for carrying over net operating losses under Section 172(b) of the Internal Revenue Code.
        (5) A taxpayer who makes an election under Section

172(b)(3) of the Internal Revenue Code to relinquish the carryback period with respect to a net operating loss for any taxable year shall be considered to have also relinquished the carryback of the Indiana net operating loss for purposes of this section.
    (g) The entire amount of the Indiana net operating loss for any taxable year shall be carried to the earliest of the taxable years to which (as determined under subsection (f)) the loss may be carried. The amount of the Indiana net operating loss remaining after the deduction is taken under this section in a taxable year may be carried back or carried over as provided in subsection (f). The amount of the Indiana net operating loss carried back or carried over from year to year shall be reduced to the extent that the Indiana net operating loss carryback or carryover is used by the taxpayer to obtain a deduction in a taxable year until the occurrence of the earlier of the following:
        (1) The entire amount of the Indiana net operating loss has been used as a deduction.
        (2) The Indiana net operating loss has been carried over to each of the carryover years provided by subsection (f).
    (h) An Indiana net operating loss deduction determined under this section shall be allowed notwithstanding the fact that in the year the taxpayer incurred the net operating loss the taxpayer was not subject to the tax imposed under section 1 of this chapter because the taxpayer was:
        (1) a life insurance company (as defined in Section 816(a) of the Internal Revenue Code); or
        (2) an insurance company subject to tax under Section 831 of the Internal Revenue Code.
    (i) In the case of a life insurance company that claims an operations loss deduction under Section 810 of the Internal Revenue Code, this section shall be applied by:
        (1) substituting the corresponding provisions of Section 810 of the Internal Revenue Code in place of references to Section 172 of the Internal Revenue; and
        (2) substituting life insurance company taxable income (as defined in Section 801 the Internal Revenue Code) in place of references to taxable income (as defined in Section 63 of the Internal Revenue Code).


    (j) For purposes of an amended return filed to carry back an Indiana net operating loss:
        (1) the term "due date of the return" as used in IC 6-8.1-9-1(a)(1) means the due date of the return for the taxable year in which the net operating loss was incurred; and
        (2) the term "date the payment was due" as used in IC 6-8.1-9-2(c) means the due date of the return for the taxable year in which the net operating loss was incurred.
".
    Delete pages 15 through 25.
SOURCE: Page 26, line 1; (04)AM136509.26. -->     Page 26, delete lines 1 through 21.
    Page 26, delete lines 39 through 42.
    Delete pages 27 through 31.
    Page 32, delete line 1.
    Page 34, delete lines 32 through 37.
    Page 34, delete line 42.
    Page 35, delete lines 1 through 8.
    Page 35, line 33, delete "The following provisions" and insert " IC 6-3-1-3.5, IC 6-3-2-2.5, and IC 6-3-2-2.6, all as amended by this act,".
    Page 35, line 34, delete ":" and insert " .".
    Page 35, delete lines 35 through 36, begin a new paragraph and insert:
    " (f) The following provisions apply to deductions for net operating losses that are claimed after December 31, 2003:
        (1) Deductions for net operating losses that are incurred in taxable years beginning after December 31, 2003, and are carried back or carried forward and deducted in taxable years ending before January 1, 2004, must be calculated under IC 6-3-2-2.5 and IC 6-3-2-2.6, both as amended by this act.
        (2) Deductions for net operating losses that were incurred in taxable years ending before January 1, 2004, and that are carried forward and deducted in taxable years ending after December 31, 2003, must be calculated under IC 6-3-2-2.5 and IC 6-3-2-2.6, both as amended by this act.
        (3) Deductions for net operating losses that were incurred in taxable years ending before January 1, 2004, and are carried back or carried forward and deducted in taxable years ending before January 1, 2004, must be calculated under the

versions of IC 6-3-2-2.5 and IC 6-3-2-2.6 that were in effect in the year the net operating loss was incurred.
        (4) Regardless of the applicable method of calculation in the year in which the net operating loss is deducted, any net operating loss available for carry forward shall be reduced by the amount of the net operating loss previously deducted in an earlier taxable year.
".
    Page 35, line 37, delete "(f)" and insert " (g)".
    Renumber all SECTIONS consecutively.
    (Reference is to HB 1365 as reprinted February 6, 2004.)

and when so amended that said bill do pass .

Committee Vote: Yeas 8, Nays 7.

____________________________________

Senator Borst, Chairperson


AM 136509/DI 44    2004