SB 500-1_ Filed 01/26/2007, 13:04

COMMITTEE REPORT

MADAM PRESIDENT:

    The Senate Committee on Tax and Fiscal Policy, to which was referred Senate Bill No. 500, 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 3, line 11; (07)CR050001.3. -->     Page 3, between lines 11 and 12, begin a new paragraph and insert:
SOURCE: IC 6-2.5-3-2; (07)CR050001.3. -->     "SECTION 3. IC 6-2.5-3-2, AS AMENDED BY P.L.162-2006, SECTION 20, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 2. (a) An excise tax, known as the use tax, is imposed on the storage, use, or consumption of tangible personal property in Indiana if the property was acquired in a retail transaction, regardless of the location of that transaction or of the retail merchant making that transaction.
    (b) The use tax is also imposed on the storage, use, or consumption of a vehicle, an aircraft, or a watercraft, if the vehicle, aircraft, or watercraft:
        (1) is acquired in a transaction that is an isolated or occasional sale; and
        (2) is required to be titled, licensed, or registered by this state for use in Indiana.
    (c) The use tax is imposed on the addition of tangible personal property to a structure or facility, if, after its addition, the property becomes part of the real estate on which the structure or facility is located. However, the use tax does not apply to additions of tangible personal property described in this subsection, if:
        (1) the state gross retail or use tax has been previously imposed on the sale or use of that property; or
        (2) the ultimate purchaser or recipient of that property would have been exempt from the state gross retail and use taxes if that purchaser or recipient had directly purchased the property from the supplier for addition to the structure or facility.
    (d) The use tax is imposed on a person who:
        (1) manufactures, fabricates, or assembles tangible personal property from materials either within or outside Indiana; and
        (2) uses, stores, distributes, or consumes tangible personal property in Indiana.
    (e) Notwithstanding any other provision of this section, the use tax is not imposed on the keeping, retaining, or exercising of any right or power over tangible personal property, if:
        (1) the property is delivered into Indiana by or for the purchaser of the property;
        (2) the property is delivered in Indiana for the sole purpose of being processed, printed, fabricated, or manufactured into, attached to, or incorporated into other tangible personal property; and
        (3) the property is subsequently transported out of state for use solely outside Indiana.
    (f) As used in this subsection, "prepurchase evaluation" means an examination of an aircraft by a potential purchaser for the purpose of obtaining information relevant to the potential purchase of the aircraft. Notwithstanding any other provision of this section, the use tax is not imposed on the keeping, retaining, or exercising of any right or power over an aircraft, if:
        (1) the aircraft is titled, registered, or based (as defined in IC 6-6-6.5-1(m)) in another state or country;
        (2) the aircraft is delivered to Indiana by or for a nonresident owner or purchaser of the aircraft;
        (3) the aircraft is delivered to Indiana for the sole purpose of being repaired, refurbished, remanufactured, or subjected to a prepurchase evaluation; and
        (4) after completion of the repair, refurbishment, remanufacture, or prepurchase evaluation, the aircraft is transported to a destination outside Indiana.
".
SOURCE: Page 4, line 29; (07)CR050001.4. -->     Page 4, delete lines 29 through 36, begin a new paragraph and insert:
    " (e) A transaction in which a person acquires an aircraft for rental or leasing in the ordinary course of the person's business is not exempt from the state gross retail tax unless the person establishes, under guidelines adopted by the department in the manner provided in IC 4-22-2-37.1 for the adoption of emergency rules, that the annual amount of the lease revenue derived from leasing the aircraft is equal to or greater than fifteen percent (15%) of the greater of the original cost or the book value of the aircraft.".
    Page 5, between lines 23 and 24, begin a new paragraph and insert:
SOURCE: IC 6-2.5-5-39; (07)CR050001.8. -->     "SECTION 8. IC 6-2.5-5-39, AS AMENDED BY P.L.92-2006, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 39. (a) As used in this section, "cargo trailer" means a vehicle:
        (1) without motive power;
        (2) designed for carrying property;
        (3) designed for being drawn by a motor vehicle; and
        (4) having a gross vehicle weight rating of at least two thousand two hundred (2,200) pounds.
    (b) As used in this section, "recreational vehicle" means a vehicle with or without motive power equipped exclusively for living quarters for persons traveling upon the highways. The term includes a travel trailer, a motor home, a truck camper with a floor and facilities enabling it to be used as a dwelling, and a fifth wheel trailer.
    (c) A transaction involving a cargo trailer or a recreational vehicle or an aircraft is exempt from the state gross retail tax if:
        (1) the purchaser is a nonresident;
        (2) upon receiving delivery of the cargo trailer or recreational vehicle, or aircraft, the person transports it within thirty (30) days to a destination outside Indiana;
        (3) the cargo trailer or recreational vehicle or aircraft will be titled or registered for use in another state or country;
        (4) the cargo trailer or recreational vehicle or aircraft will not be titled or registered for use in Indiana; and
        (5) in the case of a transaction involving a cargo trailer or recreational vehicle, the cargo trailer or recreational vehicle will

be titled or registered in a state or country that provides an exemption from sales, use, or similar taxes imposed on a cargo trailer or recreational vehicle that is purchased in that state or country by an Indiana resident and will be titled or registered in Indiana.
A transaction involving a cargo trailer or recreational vehicle that does not meet the requirements of subdivision (5) is not exempt from the state gross retail tax.
    (d) A purchaser must claim an exemption under this section by submitting to the retail merchant an affidavit stating the purchaser's intent to:
        (1) transport the cargo trailer or recreational vehicle or aircraft to a destination outside Indiana within thirty (30) days after delivery; and
        (2) title or register the cargo trailer or recreational vehicle or aircraft for use in another state or country.
The department shall prescribe the form of the affidavit, which must include an affirmation by the purchaser under the penalties for perjury that the information contained in the affidavit is true. The affidavit must identify the state or country in which the cargo trailer or recreational vehicle or aircraft will be titled or registered.
    (e) The department shall provide the information necessary to determine a purchaser's eligibility for an exemption claimed under this section to retail merchants in the business of selling cargo trailers or recreational vehicles.

SOURCE: IC 6-2.5-5-42; (07)CR050001.9. -->     SECTION 9. IC 6-2.5-5-42 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 42. (a) A transaction involving an aircraft is exempt from the state gross retail tax if:
        (1) the purchaser is a nonresident;
        (2) the purchaser transports the aircraft to a destination outside Indiana within thirty (30) days after:
            (A) accepting delivery of the aircraft; or
            (B) a repair, refurbishment, or remanufacture of the aircraft is completed, if the aircraft remains in Indiana after the purchaser accepts delivery for the purpose of accomplishing the repair, refurbishment, or remanufacture of the aircraft;
        (3) the aircraft will be:
            (A) titled or registered in another state or country; or
            (B) if a state or country does not require a title or registration for aircraft, based (as defined in IC 6-6-6.5-1(m)) in that state or country; and
        (4) the aircraft will not be titled or registered in Indiana.
    (b) A purchaser must claim an exemption under subsection (a) by submitting to the seller an affidavit affirming the elements required by subsection (a). In addition, the affidavit must identify the state or country in which the aircraft will be titled, registered, or based.
    (c) Within sixty (60) days after:
        (1) a purchaser who claims an exemption under this section accepts delivery of the aircraft; or
        (2) a repair, refurbishment, or remanufacture of the aircraft subject to an exemption under this section is completed, if the aircraft remains in Indiana after the purchaser accepts delivery for the purpose of accomplishing the repair, refurbishment, or remanufacture of the aircraft;
the purchaser shall provide the seller with a copy of the purchaser's title or registration of the aircraft outside Indiana. If the state or country in which the aircraft is based does not require the aircraft to be titled or registered, the purchaser shall provide the seller with a copy of the aircraft registration application for the aircraft as filed with the Federal Aviation Administration.
    (d) The department shall prescribe the form of the affidavit required by subsection (b).

SOURCE: IC 6-2.5-5-43; (07)CR050001.10. -->     SECTION 10. IC 6-2.5-5-43 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 43. (a) As used in this section, "qualified football championship event" means the National Football League championship football game, referred to as the Super Bowl.
    (b) Transactions involving tangible personal property or services are exempt from the state gross retail tax if the following conditions are satisfied:
        (1) Either:
            (A) the National Football League acquires the property or service to facilitate the holding of a qualified football

championship event; or
            (B) a professional football team participating in a qualified football championship event acquires the property or service to facilitate the team's participation.
        (2) Before acquiring the property or service, the National Football League or professional football team applies for and receives from the department a state gross retail tax exemption certificate under this section. The department shall specify the period for which a
state gross retail tax exemption certificate issued under this section is valid.".

SOURCE: Page 12, line 27; (07)CR050001.12. -->     Page 12, between lines 27 and 28, begin a new paragraph and insert:
SOURCE: IC 6-3-3-12; (07)CR050001.14. -->     "SECTION 14. IC 6-3-3-12, AS ADDED BY P.L.192-2006, SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2007 (RETROACTIVE)]: Sec. 12. (a) As used in this section, "account" has the meaning set forth in IC 21-9-2-2.
    (b) As used in this section, "account beneficiary" has the meaning set forth in IC 21-9-2-3.

    (a) (c) As used in this section, "college choice 529 education savings plan" refers to a college choice 529 investment plan established under IC 21-9.
     (d) As used in this section, "non-qualified withdrawal" means a withdrawal or distribution from a college choice 529 education savings plan that is not a qualified withdrawal.
    (e) As used in this section, "qualified higher education expenses" has the meaning set forth in IC 21-9-2-19.5.
    (f) As used in this section, "qualified withdrawal" means a withdrawal or distribution from a college choice 529 education savings plan that is made:
        (1) to pay for qualified higher education expenses, excluding any withdrawals or distributions used to pay for qualified higher education expenses if the withdrawals or distributions are made from an account of a college choice 529 education savings plan that is terminated within twelve (12) months after the account is opened;
        (2) as a result of the death or disability of an account beneficiary;
        (3) because an account beneficiary received a scholarship that paid for all or part of the qualified higher education expenses

of the account beneficiary, to the extent that the withdrawal or distribution does not exceed the amount of the scholarship; or
        (4) by a college choice 529 education savings plan as the result of a transfer of funds by a college choice 529 education savings plan from one (1) third party custodian to another.

    (b) (g) As used in this section, "taxpayer" means:
        (1) an individual filing a single return; or
        (2) a married couple filing a joint return.
    (c) (h) A taxpayer is entitled to a credit against the taxpayer's adjusted gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable year equal to the least of the following:
        (1) Twenty percent (20%) of the excess of:
            (A) the
amount of each contribution total contributions made by the taxpayer to a college choice 529 education savings plan during the taxable year; over
            (B) the total amount of non-qualified withdrawals during the taxable year that were made from the account or accounts of a college choice 529 education savings plan to which the taxpayer has made contributions.

        (2) One thousand dollars ($1,000).
        (3) The amount of the taxpayer's adjusted gross income tax 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.
    (d) (i) A taxpayer is not entitled to a carryback, carryover, or refund of an unused credit.
    (e) (j) A taxpayer may not sell, assign, convey, or otherwise transfer the tax credit provided by this section.
    (f) (k) To receive the credit provided by this section, 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 all information that the department determines is necessary for the calculation of the credit provided by this section.
    (l) A taxpayer who claimed a credit provided by this section in any prior taxable year must repay a part of the credit in a taxable year in which any non-qualified withdrawal is made from a college choice 529 education savings plan to which the taxpayer

contributed. The amount the taxpayer must repay is equal to the lesser of:
         (1) twenty percent (20%) of the excess of:
            (A) the total amount of non-qualified withdrawals made during the taxable year from the account or accounts of a college choice 529 education savings plan to which the taxpayer has made contributions; over
            (B) the total amount of contributions made by the taxpayer to a college choice 529 education savings plan during the taxable year; or
        (2) the excess of:
            (A) the cumulative amount of all credits provided by this section that were claimed by a taxpayer for all prior taxable years beginning on or after January 1, 2007; over
            (B) the cumulative amount of repayments paid by the taxpayer under this subsection for all prior taxable years beginning on or after January 1, 2007.
    (m) Any required repayment under subsection (l) shall be reported by the taxpayer on the taxpayer's annual state income tax return for the taxable year in which the non-qualified withdrawal is made.
    (n) The executive director of the Indiana education savings authority shall submit or cause to be submitted to the department a copy of all information returns or statements issued to taxpayers for each taxable year with respect to:
        (1) withdrawals or distributions made from a college choice 529 education savings plan for the taxable year; or
        (2) account closings for the taxable year.
".

SOURCE: Page 17, line 21; (07)CR050001.17. -->     Page 17, between lines 21 and 22, begin a new paragraph and insert:
SOURCE: IC 6-6-6.5-1; (07)CR050001.21. -->     "SECTION 21. IC 6-6-6.5-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 1. As used in this chapter, unless the context clearly indicates otherwise:
    (a) "Aircraft" means a device which is designed to provide air transportation for one (1) or more individuals or for cargo.
    (b) "State" means the state of Indiana.
    (c) "Department" refers to the department of state revenue.
    (d) "Person" includes an individual, a partnership, a firm, a corporation, a limited liability company, an association, a trust, or an

estate, or a legal representative of such.
    (e) "Owner" means a person who holds or is required to obtain a certificate of registration from the Federal Aviation Administration for a specific aircraft. In the event an aircraft is the subject of an agreement for the conditional sale or lease with the right of purchase upon the performance of the conditions stated in the agreement and with an immediate right of possession of the aircraft vested in the conditional vendee or lessee, or in the event the mortgagor of an aircraft is entitled to possession, then the conditional vendee or lessee or mortgagor shall be deemed to be the owner for purposes of this chapter.
    (f) "Dealer" means a person who has an established place of business in this state, is required to obtain a certificate under IC 6-2.5-8-1 or IC 6-2.5-8-3 and is engaged in the business of manufacturing, buying, selling, or exchanging new or used aircraft.
    (g) "Maximum landing weight" means the maximum weight of the aircraft, accessories, fuel, pilot, passengers, and cargo that is permitted on landing under the best conditions, as determined for an aircraft by the appropriate federal agency or the certified allowable gross weight published by the manufacturer of the aircraft.
    (h) "Resident" means an individual or a fiduciary who resides or is domiciled within Indiana or any corporation or business association which maintains a fixed and established place of business within Indiana for a period of more than sixty (60) days in any one (1) year.
    (i) "Taxable aircraft" means an aircraft required to be registered with the department by this chapter.
    (j) "Regular annual registration date" means the last day of February of each year.
    (k) "Taxing district" means a geographic area within which property is taxed by the same taxing units and at the same total rate.
    (l) "Taxing unit" means an entity which has the power to impose ad valorem property taxes.
    (m) "Base" means the location or place where the aircraft is normally hangared, tied down, housed, parked, or kept, when not in use.
    (n) "Homebuilt aircraft" means an aircraft constructed primarily by an individual for personal use. The term homebuilt aircraft does not include an aircraft constructed primarily by a for-profit aircraft manufacturing business.


    (o) "Pressurized aircraft" means an aircraft equipped with a system designed to control the atmospheric pressure in the crew or passenger cabins.
    (p) "Establishing a base" means renting or leasing a hangar or tie down for a particular aircraft for at least thirty-one (31) days.
    (q) "Inventory aircraft" means an aircraft held for resale by a registered Indiana dealer.
    (r) "Repair station" means a person who holds a repair station certificate that was issued to the person by the Federal Aviation Administration under 14 CFR Part 145.
SOURCE: IC 6-6-6.5-2; (07)CR050001.22. -->     SECTION 22. IC 6-6-6.5-2 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2007]: Sec. 2. (a) Except as otherwise provided in this chapter, any resident of this state who owns an aircraft shall register the aircraft with the department not later than thirty-one (31) days after the purchase date.
    (b) Except as otherwise provided in this chapter, any nonresident who bases an aircraft in this state for more than sixty (60) days shall register the aircraft with the department under this chapter not later than sixty (60) days after establishing a base in Indiana.
    (c) Except as otherwise provided in this chapter, an Indiana resident who owns a homebuilt aircraft shall register the aircraft with the department not later than thirty-one (31) days after the date the Federal Aviation Administration has issued the certificate of registration and air worthiness certificate for the aircraft.
    (d) Notwithstanding subsection (b), if a nonresident bases an aircraft in Indiana with a dealer or repair station solely for repairing, remodeling, or refurbishing the aircraft, neither the nonresident nor the dealer or repair station is required to register the aircraft with the department under this chapter. However, the dealer or repair station shall file a report with the department the month after the end of each calendar quarter. The report must list only:
         (1) the dealer's name and address and of the dealer or repair station;
        (2) either:
            (A) the dealer's
certification number; or
            (B) the repair station's certificate number;
and
         (3) the N number of each aircraft that was based in this state for more than sixty (60) days during the preceding quarter.".
SOURCE: Page 21, line 23; (07)CR050001.21. -->     Page 21, after line 23, begin a new paragraph and insert:
SOURCE: ; (07)CR050001.29. -->     "SECTION 29. [EFFECTIVE JANUARY 1, 2007 (RETROACTIVE)] IC 6-3-3-12, as amended by this act, applies to taxable years beginning after December 31, 2006.
SOURCE: ; (07)CR050001.30. -->     SECTION 30. An emergency is declared for this act.".
    Renumber all SECTIONS consecutively.
    (Reference is to SB 500 as introduced.)

and when so amended that said bill do pass.

Committee Vote: Yeas 8, Nays 2.

____________________________________

    Kenley
Chairperson


CR050001/DI 73
2007