Citations Affected: IC 6-3.1; IC 15-9-2-3; IC 15-9-5.
Synopsis: Various energy incentives. Provides various energy related
tax incentives. Establishes a biomass grant program. Appropriates
money to the Purdue University technical assistance program.
Effective: July 1, 2007; January 1, 2008.
January 23, 2007, read first time and referred to Committee on Technology, Research and
Development.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation and to make an appropriation.
JANUARY 1, 2008]:
Chapter 32. Renewable Energy Systems Tax Credits
Sec. 1. As used in this chapter, biomass" means any organic
matter that is available on a renewable basis, including
agricultural crops and agricultural wastes and residues, wood and
wood wastes and residues, animal wastes, municipal wastes, and
aquatic plants.
Sec. 2. As used in this chapter, "biomass heating system" means
a heating system that:
(1) produces heat through the combustion of biomass; and
(2) is certified by the United States Environmental Protection
Agency to meet applicable emission standards.
Sec. 3. As used in this chapter, "geothermal energy heating and
cooling system" means a system that is designed to use the natural
heat from the earth to provide hot water, produce electricity, or
generate heating or cooling.
Sec. 4. As used in this chapter, "pass through entity" means:
(1) a corporation that is exempt from the adjusted gross
income tax under IC 6-3-2-2.8(2);
(2) a partnership;
(3) a limited liability company; or
(4) a limited liability partnership.
Sec. 5. As used in this chapter, "renewable energy system"
means:
(1) a biomass heating system;
(2) a geothermal heating and cooling system; or
(3) a qualified wind energy system.
Sec. 6. As used in this chapter, "state tax liability" means the
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
chapter.
Sec. 7. As used in this chapter, "taxpayer" means:
(1) an individual filing a single return;
(2) a married couple filing a joint return; or
(3) a business;
that has any state tax liability.
Sec. 8. As used in this chapter, "qualified wind energy system"
means a device that uses the wind to generate not more than one
hundred (100) kilowatts.
Sec. 9. (a) This subsection applies only to a taxpayer who installs
a geothermal heating and cooling system during a taxable year.
Subject to section 13 of this chapter, a taxpayer is entitled to a
credit against the taxpayer's state tax liability for a taxable year
equal to the lesser of:
(1) twenty-five percent (25%) of the amount of expenditures
for a geothermal heating and cooling system incurred by the
taxpayer during the taxable year; or
(2) the following applicable amount:
(A) Two thousand five hundred dollars ($2,500), in the case
of a taxpayer who installs a geothermal heating and
cooling system for a structure containing fewer than ten
thousand (10,000) square feet.
(B) Five thousand dollars ($5,000), in the case of a taxpayer
who installs a geothermal heating and cooling system for
a structure containing at least ten thousand (10,000)
square feet.
(b) This subsection applies only to a taxpayer who installs a
biomass heating system during a taxable year. Subject to section 13
of this chapter, a taxpayer is entitled to a credit against the
taxpayer's state tax liability for a taxable year equal to the lesser
of:
(1) twenty percent (20%) of the amount of expenditures for a
biomass heating system incurred by the taxpayer during the
taxable year; or
(2) the following applicable amount:
(A) Two thousand five hundred dollars ($2,500), in the case
of a taxpayer who installs a biomass heating system for a
structure containing fewer than ten thousand (10,000)
square feet.
(B) Five thousand dollars ($5,000), in the case of a taxpayer
who installs a biomass heating system for a structure
containing at least ten thousand (10,000) square feet.
(c) This subsection applies only to a taxpayer who installs a
wind turbine during a taxable year. Subject to section 13 of this
chapter, a taxpayer is entitled to a credit against the taxpayer's
state tax liability for a taxable year equal to the lesser of:
(1) fifteen percent (15%) of the amount of expenditures for a
qualified wind energy system incurred by the taxpayer during
the taxable year; or
(2) the following applicable amount:
services from the program; and
(2) the amount of qualified costs incurred by the qualified
taxpayer in the taxable year;
must be certified by the program.
Sec. 8. (a) If a pass through entity is entitled to a credit under
this chapter but does not have state tax liability against which the
credit may be applied, an individual who is a shareholder, partner,
or member of the pass through entity is entitled to a credit equal
to:
(1) the credit determined for the pass through entity for the
taxable year; multiplied by
(2) the percentage of the pass through entity's distributable
income to which the individual is entitled.
(b) The credit provided under subsection (a) is in addition to a
tax credit to which a shareholder, partner, or member of a pass
through entity is otherwise entitled under this chapter. However,
a pass through entity and an individual who is a shareholder,
partner, or member of the pass through entity may not claim more
than one (1) credit for the same qualified costs.
Sec. 9. The amount of a credit claimed under this chapter may
not exceed a qualified taxpayer's state tax liability. A taxpayer is
not entitled to a carryback, carryover, or refund of an unused
credit.
Sec. 10. A taxpayer may not sell, assign, convey, or otherwise
transfer the tax credit provided by this chapter.
Sec. 11. The amount of tax credits allowed under this chapter
may not exceed two million five hundred thousand dollars
($2,500,000) in a state fiscal year.
Sec. 12. To receive the credit provided by 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 the certifications required
under section 7 of this chapter and any other information that the
department determines is necessary for the calculation of the credit
provided by this chapter.
wood wastes and residues, animal wastes, municipal wastes, and
aquatic plants.
Sec. 2. As used in this chapter, "corporation" means the Indiana
economic development corporation established by IC 5-28-3-1.
Sec. 3. As used in this chapter, "Indiana coal" has the meaning
set forth in IC 4-4-30-4.
Sec. 4. As used in this chapter, "Indiana fuel" means:
(1) biomass produced in Indiana;
(2) Indiana coal; or
(3) petroleum coke produced in Indiana.
Sec. 5. As used in this chapter, "office" means the office of
energy and defense development.
Sec. 6. As used in this chapter, "qualified investment" means a
taxpayer's expenditures for:
(1) all real and tangible personal property incorporated in
and used as part of a facility used to produce energy from
Indiana fuel; and
(2) transmission equipment and other real and personal
property located at the site of the energy production facility
that is employed specifically to serve the energy production
facility.
Sec. 7. As used in this chapter, "pass through entity" means:
(1) a corporation that is exempt from the adjusted gross
income tax under IC 6-3-2-2.8(2);
(2) a partnership;
(3) a limited liability company; or
(4) a limited liability partnership.
Sec. 8. As used in this chapter, "petroleum coke" means a
carbonaceous solid derived from the process of refining oil.
Sec. 9. As used in this chapter, "state tax liability" means the
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
chapter.
Sec. 10. As used in this chapter, "taxpayer" means any person,
corporation, limited liability company, partnership, or other entity
that:
(1) has any state tax liability; and
(2) makes a qualified investment.
Sec. 11. (a) A taxpayer that:
(1) is awarded a tax credit under this chapter by the office;
and
(2) complies with the conditions set forth in this chapter and
the agreement entered into by the corporation and the
taxpayer under this chapter;
is entitled to a credit against the taxpayer's state tax liability for a
taxable year in which the taxpayer places into service an energy
production facility using Indiana fuel and for the taxable years
provided in section 13 of this chapter.
(b) A tax credit awarded under this chapter must be applied
against the taxpayer's state tax liability in the following order:
(1) Against the taxpayer's liability incurred under IC 6-3-1
through IC 6-3-7 (the adjusted gross income tax).
(2) Against the taxpayer's liability incurred under IC 6-5.5
(the financial institutions tax).
(3) Against the taxpayer's liability incurred under
IC 27-1-18-2 (the insurance premiums tax).
Sec. 12. The amount of the credit to which a taxpayer is entitled
for a qualified investment is equal to the lesser of the following:
(1) The product of:
(A) the amount of the taxpayer's qualified investment;
multiplied by
(B) ten percent (10%).
(2) Fifty million dollars ($50,000,000).
Sec. 13. (a) A credit awarded under section 11 of this chapter
must be taken in ten (10) annual installments, beginning with the
year in which the taxpayer places into service the taxpayer's
energy production facility.
(b) The amount of an annual installment of the credit awarded
under section 11 of this chapter is equal to the quotient of:
(1) the credit amount determined under section 12 of this
chapter; divided by
(2) ten (10).
Sec. 14. (a) If a pass through entity is entitled to a credit under
this chapter but does not have state tax liability against which the
credit may be applied, an individual who is a shareholder, partner,
or member of the pass through entity is entitled to a credit equal
to:
(1) the credit determined for the pass through entity for the
taxable year; multiplied by
(2) the percentage of the pass through entity's distributable
income to which the individual is entitled.
(b) The credit provided under subsection (a) is in addition to a
tax credit to which a shareholder, partner, or member of a pass
through entity is otherwise entitled under this chapter. However,
a pass through entity and an individual who is a shareholder,
partner, or member of the pass through entity may not claim more
than one (1) credit for the same qualified investment.
Sec. 15. The amount of a credit claimed under this chapter may
not exceed a qualified taxpayer's state tax liability. A taxpayer is
not entitled to a carryback, carryover, or refund of an unused
credit.
Sec. 16. A taxpayer may not sell, assign, convey, or otherwise
transfer the tax credit provided by this chapter.
Sec. 17. (a) A person that proposes to place a new energy
production facility using Indiana fuel into service may apply to the
corporation before the taxpayer makes the qualified investment to
enter into an agreement for a tax credit under this chapter. The
corporation shall prescribe the form of the application.
(b) The office shall provide any technical assistance requested
by the corporation in the administration of this chapter.
Sec. 18. After receipt of an application, the corporation may
enter into an agreement with the applicant for a credit under this
chapter if the corporation determines that the taxpayer's proposed
investment satisfies the requirements of this chapter.
Sec. 19. (a) The corporation shall enter into an agreement with
an applicant that is awarded a credit under this chapter. The
agreement must include all the following:
(1) A detailed description of the project that is the subject of
the agreement.
(2) The first taxable year for which the credit may be claimed.
(3) The amount of the tax credit that, subject to section 15 of
this chapter, will be allowed for each taxable year.
(4) A requirement that the taxpayer shall maintain operations
at the project location for at least ten (10) years during the
term that the tax credit is available.
(5) A requirement that the taxpayer shall pay an average
wage to its employees at the energy production facility, other
than highly compensated employees, in each taxable year that
a tax credit is available, that equals at least one hundred
twenty-five percent (125%) of the average county wage in the
county in which the energy production facility is located.
(6) A requirement that the taxpayer will maintain at the
location where the qualified investment is made, during the
term of the tax credit, a total payroll that is at least equal to
the payroll that existed on the date that the taxpayer placed
the energy production facility into service.
(7) A requirement that one hundred percent (100%) of the
fuel used at the energy production facility must be Indiana
fuel.
(8) A requirement that the energy production facility will
comply with any energy efficiency or emission standard
recommended by the office and imposed by the corporation.
(b) A taxpayer must comply with the terms of the agreement
described in subsection (a) to receive an annual installment of the
tax credit awarded under this chapter. The corporation shall
annually determine whether the taxpayer is in compliance with the
agreement. If the corporation determines that the taxpayer is in
compliance, the corporation shall issue a certificate of compliance
to the taxpayer.
Sec. 20. To receive the credit awarded by 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 a copy of the taxpayer's
certificate of compliance issued under section 19 of this chapter,
and all information that the department determines is necessary
for the calculation of the credit provided by this chapter.
in a state fiscal year may not exceed two million dollars
($2,000,000).
Sec. 10. This chapter expires July 1, 2009.