SENATE BILL No. 351
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.1-25.
Synopsis: Indiana displaced worker tax credit. Provides that a
taxpayer that hires an Indiana displaced worker is eligible to claim a
credit against state tax liability if the taxpayer: (1) pays the worker at
least the federal minimum wage; and (2) is not an affiliate, parent, or
subsidiary of or successor in interest to the worker's previous employer.
Provides that the credit is equal to 10% of the annual compensation due
to the worker. Provides that if the taxpayer does not retain the worker
for at least three years, the taxpayer must pay the amount of the credit
to the state.
Effective: January 1, 2007.
January 10, 2006, read first time and referred to Committee on Tax and Fiscal Policy.
Second Regular Session 114th General Assembly (2006)
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SENATE BILL No. 351
A BILL FOR AN ACT to amend the Indiana Code concerning
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 6-3.1-25; (06)IN0351.1.1. -->
SECTION 1. IC 6-3.1-25 IS ADDED TO THE INDIANA CODE
AS A NEW
CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2007]:
Chapter 25. Tax Credit for the Employment of Displaced
Sec. 1. As used in this chapter, "full-time job" means a position
that requires at least thirty-five (35) hours of work each week and
that is held during the entire year by an Indiana resident.
Sec. 2. (a) As used in this chapter, "Indiana displaced worker"
means an Indiana resident who:
(1) was employed in one (1) full-time job in Indiana for at
least three (3) years; and
(2) lost the full-time job described in subdivision (1) due to
economic factors affecting the individual's employer.
(b) The term does not include an individual whose employment
was terminated for cause.
Sec. 3. As used in this chapter, "pass through entity" means a:
(1) corporation that is exempt from the adjusted gross income
tax under IC 6-3-2-2.8(2);
(4) limited liability company; or
(5) limited liability partnership.
Sec. 4. As used in this chapter, "state tax liability" means a
taxpayer's total tax liability that is incurred under:
(1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(2) IC 27-1-18-2 (the insurance premiums tax); and
(3) 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
Sec. 5. As used in this chapter, "taxpayer" means a person,
corporation, partnership, or other entity that has any state tax
Sec. 6. (a) Subject to this chapter, a taxpayer is entitled to a
credit against the taxpayer's state tax liability in the taxable year
during which the taxpayer hires an Indiana displaced worker.
(b) The amount of the credit allowed under this section is the
amount determined under STEP THREE of the following formula:
STEP ONE: Determine the total value of the wages and
benefits due each month to the Indiana displaced worker as of
the date the Indiana displaced worker is hired.
STEP TWO: Multiply the STEP ONE amount by twelve (12).
STEP THREE: Multiply the STEP TWO amount by ten
(c) A taxpayer is not entitled to claim the credit provided by this
section for rehiring an individual previously terminated by the
(d) A taxpayer may claim the credit under this chapter only if
the total value of the wages and benefits paid to the Indiana
displaced worker is equal to the following:
(1) In the case of an Indiana displaced worker whose hourly
salary is equal to or greater than one hundred thirty-four
percent (134%) of the federal minimum wage, at least
seventy-five percent (75%) of the total value of the wages and
benefits paid to the individual in the individual's previous
(2) In the case of an Indiana displaced worker whose hourly
salary is less than one hundred thirty-four percent (134%) of
the federal minimum wage, one hundred percent (100%) of
the total value of the wages and benefits paid to the individual
in the individual's previous employment.
(e) A taxpayer that is:
(1) an affiliate;
(2) a parent;
(3) a subsidiary; or
(4) a successor in interest;
of the taxpayer that is the immediate previous employer of the
Indiana displaced worker may not claim the credit under this
Sec. 7. To receive the credit provided by section 6 of this
chapter, a taxpayer must claim the credit on the taxpayer's annual
state tax return or returns in the manner prescribed by the
department. The taxpayer shall submit to the department proof of
the taxpayer's employment of an Indiana displaced worker and all
other information that the department determines is necessary for
the calculation of the credit provided by this chapter.
Sec. 8. If the amount of the credit provided by section 6 of this
chapter exceeds the taxpayer's state tax liability, the taxpayer may
carry forward the amount of the excess for five (5) successive
taxable years. The credit provided under this chapter is not
Sec. 9. If a taxpayer does not retain the Indiana displaced
worker for whom the taxpayer claims a credit under this chapter
for at least three (3) years, the taxpayer shall pay a penalty to the
department unless the Indiana displaced worker is terminated for
cause. The amount of the penalty is equal to the amount of the
credit taken under section 6 of this chapter.
Sec. 10. If a pass through entity does not have state income tax
liability against which the tax credit may be applied, a shareholder
or partner of the pass through entity is entitled to a tax credit equal
(1) the tax credit determined for the pass through entity for
the taxable year; multiplied by
(2) the percentage of the pass through entity's distributive
income to which the shareholder or partner is entitled.
SOURCE: ; (06)IN0351.1.2. -->
SECTION 2. [EFFECTIVE JANUARY 1, 2007] IC 6-3.1-25, as
added by this act, applies to taxable years beginning after
December 31, 2006.