Citations Affected: IC 6-3; IC 6-3.1; noncode.
Synopsis: Health benefit plan credit. Allows certain employers to take
an adjusted gross income tax credit related to making a health benefit
plan available to the employers' employees.
Effective: January 1, 2008.
January 8, 2007, read first time and referred to Committee on Small Business and
Economic Development.
January 11, 2007, reported _ Do Pass; recommitted to Committee on Ways and Means
pursuant to Rule 127.
February 20, 2007, reported _ Do Pass.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
annuities under 45 U.S.C. 231 and which are not deductible under
subdivision (1).
(10) Add an amount equal to the deduction allowed under Section
221 of the Internal Revenue Code for married couples filing joint
returns if the taxable year began before January 1, 1987.
(11) Add an amount equal to the interest excluded from federal
gross income by the individual for the taxable year under Section
128 of the Internal Revenue Code if the taxable year began before
January 1, 1985.
(12) Subtract an amount equal to the amount of federal Social
Security and Railroad Retirement benefits included in a taxpayer's
federal gross income by Section 86 of the Internal Revenue Code.
(13) In the case of a nonresident taxpayer or a resident taxpayer
residing in Indiana for a period of less than the taxpayer's entire
taxable year, the total amount of the deductions allowed pursuant
to subdivisions (3), (4), (5), and (6) shall be reduced to an amount
which bears the same ratio to the total as the taxpayer's income
taxable in Indiana bears to the taxpayer's total income.
(14) In the case of an individual who is a recipient of assistance
under IC 12-10-6-1, IC 12-10-6-2.1, IC 12-15-2-2, or IC 12-15-7,
subtract an amount equal to that portion of the individual's
adjusted gross income with respect to which the individual is not
allowed under federal law to retain an amount to pay state and
local income taxes.
(15) In the case of an eligible individual, subtract the amount of
a Holocaust victim's settlement payment included in the
individual's federal adjusted gross income.
(16) For taxable years beginning after December 31, 1999,
subtract an amount equal to the portion of any premiums paid
during the taxable year by the taxpayer for a qualified long term
care policy (as defined in IC 12-15-39.6-5) for the taxpayer or the
taxpayer's spouse, or both.
(17) Subtract an amount equal to the lesser of:
(A) for a taxable year:
(i) including any part of 2004, the amount determined under
subsection (f); and
(ii) beginning after December 31, 2004, two thousand five
hundred dollars ($2,500); or
(B) the amount of property taxes that are paid during the
taxable year in Indiana by the individual on the individual's
principal place of residence.
(18) Subtract an amount equal to the amount of a September 11
terrorist attack settlement payment included in the individual's
federal adjusted gross income.
(19) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that owns property for which bonus
depreciation was allowed in the current taxable year or in an
earlier taxable year equal to the amount of adjusted gross income
that would have been computed had an election not been made
under Section 168(k) of the Internal Revenue Code to apply bonus
depreciation to the property in the year that it was placed in
service.
(20) Add an amount equal to any deduction allowed under
Section 172 of the Internal Revenue Code.
(21) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that placed Section 179 property (as
defined in Section 179 of the Internal Revenue Code) in service
in the current taxable year or in an earlier taxable year equal to
the amount of adjusted gross income that would have been
computed had an election for federal income tax purposes not
been made for the year in which the property was placed in
service to take deductions under Section 179 of the Internal
Revenue Code in a total amount exceeding twenty-five thousand
dollars ($25,000).
(22) Add an amount equal to the amount that a taxpayer claimed
as a deduction for domestic production activities for the taxable
year under Section 199 of the Internal Revenue Code for federal
income tax purposes.
(23) In the case of an individual who is employed by a
taxpayer that claims a credit under IC 6-3.1-31-9, add the
amount of the individual's eligible benefits as provided in
IC 6-3.1-31-15(a) or IC 6-3.1-31-15(b).
(b) In the case of corporations, the same as "taxable income" (as
defined in Section 63 of the Internal Revenue Code) adjusted as
follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Add an amount equal to any deduction or deductions allowed
or allowable pursuant to Section 170 of the Internal Revenue
Code.
(3) Add an amount equal to any deduction or deductions allowed
or allowable pursuant to Section 63 of the Internal Revenue Code
for taxes based on or measured by income and levied at the state
level by any state of the United States.
under Section 805 or Section 831(c) of the Internal Revenue Code
for taxes based on or measured by income and levied at the state
level by any state.
(4) Subtract an amount equal to the amount included in the
company's taxable income under Section 78 of the Internal
Revenue Code.
(5) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that owns property for which bonus
depreciation was allowed in the current taxable year or in an
earlier taxable year equal to the amount of adjusted gross income
that would have been computed had an election not been made
under Section 168(k) of the Internal Revenue Code to apply bonus
depreciation to the property in the year that it was placed in
service.
(6) Add an amount equal to any deduction allowed under Section
172 or Section 810 of the Internal Revenue Code.
(7) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that placed Section 179 property (as
defined in Section 179 of the Internal Revenue Code) in service
in the current taxable year or in an earlier taxable year equal to
the amount of adjusted gross income that would have been
computed had an election for federal income tax purposes not
been made for the year in which the property was placed in
service to take deductions under Section 179 of the Internal
Revenue Code in a total amount exceeding twenty-five thousand
dollars ($25,000).
(8) Add an amount equal to the amount that a taxpayer claimed as
a deduction for domestic production activities for the taxable year
under Section 199 of the Internal Revenue Code for federal
income tax purposes.
(d) In the case of insurance companies subject to tax under Section
831 of the Internal Revenue Code and organized under Indiana law, the
same as "taxable income" (as defined in Section 832 of the Internal
Revenue Code), adjusted as follows:
(1) Subtract income that is exempt from taxation under this article
by the Constitution and statutes of the United States.
(2) Add an amount equal to any deduction allowed or allowable
under Section 170 of the Internal Revenue Code.
(3) Add an amount equal to a deduction allowed or allowable
under Section 805 or Section 831(c) of the Internal Revenue Code
for taxes based on or measured by income and levied at the state
level by any state.
under Section 168(k) of the Internal Revenue Code to apply bonus
depreciation to the property in the year that it was placed in
service.
(4) Add an amount equal to any deduction allowed under Section
172 of the Internal Revenue Code.
(5) Add or subtract the amount necessary to make the adjusted
gross income of any taxpayer that placed Section 179 property (as
defined in Section 179 of the Internal Revenue Code) in service
in the current taxable year or in an earlier taxable year equal to
the amount of adjusted gross income that would have been
computed had an election for federal income tax purposes not
been made for the year in which the property was placed in
service to take deductions under Section 179 of the Internal
Revenue Code in a total amount exceeding twenty-five thousand
dollars ($25,000).
(6) Add an amount equal to the amount that a taxpayer claimed as
a deduction for domestic production activities for the taxable year
under Section 199 of the Internal Revenue Code for federal
income tax purposes.
(f) This subsection applies only to the extent that an individual paid
property taxes in 2004 that were imposed for the March 1, 2002,
assessment date or the January 15, 2003, assessment date. The
maximum amount of the deduction under subsection (a)(17) is equal
to the amount determined under STEP FIVE of the following formula:
STEP ONE: Determine the amount of property taxes that the
taxpayer paid after December 31, 2003, in the taxable year for
property taxes imposed for the March 1, 2002, assessment date
and the January 15, 2003, assessment date.
STEP TWO: Determine the amount of property taxes that the
taxpayer paid in the taxable year for the March 1, 2003,
assessment date and the January 15, 2004, assessment date.
STEP THREE: Determine the result of the STEP ONE amount
divided by the STEP TWO amount.
STEP FOUR: Multiply the STEP THREE amount by two
thousand five hundred dollars ($2,500).
STEP FIVE: Determine the sum of the STEP FOUR amount and
two thousand five hundred dollars ($2,500).
monthly payment to an insured during hospital confinement,
without regard to the actual expense of the confinement.
(8) Worker's compensation or similar insurance.
(9) A student health insurance policy.
Sec. 6. 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);
(2) partnership;
(3) limited liability company; or
(4) limited liability partnership.
Sec. 7. 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 (adjusted gross income tax);
(2) IC 6-5.5 (financial institutions tax); and
(3) IC 27-1-18-2 (insurance premiums tax);
as computed after the application of the credits that under
IC 6-3.1-1-2 are to be applied before the credit provided by this
chapter.
Sec. 8. As used in this chapter, "taxpayer" means an individual
or entity that:
(1) has state tax liability; and
(2) employs at least ten (10) full-time employees who are
located in Indiana.
Sec. 9. (a) An eligible taxpayer that, after December 31, 2007,
makes health insurance available to the eligible taxpayer's
employees and their dependents through at least one (1) health
benefit plan is entitled to a credit against the taxpayer's state tax
liability for the first two (2) taxable years in which the taxpayer
makes the health benefit plan available if the following
requirements are met:
(1) An employee's participation in the health benefit plan is at
the employee's election.
(2) If an employee chooses to participate in the health benefit
plan, the employee may pay the employee's share of the cost
of the plan using a wage assignment authorized under
IC 22-2-6-2.
(b) The credit allowed under this chapter for a taxable year
equals the lesser of:
(1) two thousand five hundred dollars ($2,500); or
(2) fifty dollars ($50) multiplied by the number of employees
enrolled in the health benefit plan during the taxable year.
Sec. 10. (a) An employer may pay or provide reimbursement for
all or part of the cost of a health benefit plan made available under
section 9 of this chapter.
(b) An employer that pays or provides reimbursement under
subsection (a) shall pay or provide reimbursement on an equal
basis for all full-time employees who elect to participate in the
health benefit plan.
Sec. 11. (a) If the amount of the credit determined under section
9 of this chapter for a taxpayer in a taxable year exceeds the
taxpayer's state tax liability for that taxable year, the taxpayer
may carry the excess over to the following taxable years. The
amount of the credit carryover from a taxable year is reduced to
the extent that the carryover is used by the taxpayer to obtain a
credit under this chapter for any subsequent taxable year. A
taxpayer is not entitled to a carryback.
(b) A taxpayer is not entitled to a refund of any unused credit.
Sec. 12. 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
to:
(1) the tax credit determined for the pass through entity for
the taxable year; multiplied by
(2) the percentage of the pass through entity's distributive
income to which the shareholder or partner is entitled.
Sec. 13. To receive the credit provided by this chapter, a
taxpayer must claim the credit on the taxpayer's state tax return
or returns in the manner prescribed by the department. The
taxpayer must submit to the department all information that the
department determines is necessary to calculate the credit
provided by this chapter and to determine the taxpayer's eligibility
for the credit.
Sec. 14. (a) A taxpayer claiming a credit under this chapter shall
continue to make health insurance available to the taxpayer's
employees through a health benefit plan for at least twenty-four
(24) consecutive months beginning on the day after the last day of
the taxable year in which the taxpayer first offers the health benefit
plan.
(b) If the taxpayer terminates the health benefit plan before the
expiration of the period required under subsection (a), the
taxpayer shall repay the department the amount of the credit
received under section 9 of this chapter.
Sec. 15. (a) An employee of a taxpayer that claims a credit under
this chapter shall include in the employee's state adjusted gross
income (as defined in IC 6-3-1-3.5(a)) the employee's eligible
benefits for:
(1) the first taxable year in which the taxpayer offers the
health benefit plan; and
(2) the taxable year immediately following the first taxable
year in which the taxpayer offers the health benefit plan.
(b) For each taxable year following the taxable year described
in subsection (a)(2), a percentage of an employee's eligible benefits
is included in the employee's state adjusted gross income (as
defined in IC 6-3-1-3.5(a)) as follows:
(1) For an employee whose annual income derived from the
taxpayer is forty thousand dollars ($40,000) or less, zero
percent (0%).
(2) For an employee whose annual income derived from the
taxpayer is greater than forty thousand dollars ($40,000) and
less than eighty thousand dollars ($80,000), fifty percent
(50%).
(3) For an employee whose annual income derived from the
taxpayer is eighty thousand dollars ($80,000) or greater, one
hundred percent (100%).
(c) A taxpayer that claims a credit under this chapter shall
notify each of the taxpayer's employees of the amount included in
the employee's state adjusted gross income (as defined in
IC 6-3-1-3.5(a)) under subsection (a) at the same time the taxpayer
provides the employee with the employee's W-2 federal income tax
withholding statement for the taxable year.