Citations Affected: IC 4-4; IC 5-13; IC 6-3.1; noncode.
Synopsis: State and local finance. Authorizes the Indiana development
finance authority (IDFA) to make loans and loan guaranties and to
issue bonds for certain industrial development projects. Authorizes the
board for depositories to buy bonds issued by IDFA for certain
purposes or to make loans or loan guaranties to IDFA under certain
conditions. Provides a credit against a taxpayer's state tax liability for
certain qualified capital investments made in Shelby County. Provides
that the amount of the credit is equal to 14% of the amount of the
qualified investment. Requires the department of commerce to certify
the investments as being eligible for the credit. Provides that if a
taxpayer receives a credit and does not make the qualified investment
for which the credit was granted within the time required, the
department of commerce may require the taxpayer to repay the
additional amount of state tax liability that would have been paid by the
taxpayer if the credit had not been granted, plus interest. Provides a
five year credit against state tax liability for a percentage of property
taxes paid by rerefined lubrication oil facilities. Requires the
department of commerce to determine if the taxpayer is entitled to the
credit.
Effective: January 1, 2001 (retroactive); upon passage.
January 16, 2001, read first time and referred to Committee on Energy and Economic
Development.
February 13, 2001, amended, reported favorably _ Do Pass; reassigned to Committee on
Finance.
March 1, 2001, amended, reported favorably _ Do Pass.
March 5, 2001, read second time, amended, ordered engrossed.
March 6, 2001, engrossed. Read third time, passed. Yeas 50, nays 0.
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
SECTION 1. IC 4-4-11-16.7 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 16.7. (a) The following funds shall be
deposited in the business development loan fund established under
section 16.5 of this chapter:
(1) Proceeds of bonds sold to or loans made to the authority
by the board for depositories under IC 5-13-12-12.
(2) Any fees received by the authority in connection with the
making of loans and loan guaranties under this section.
Deposits made under this subsection are in addition to other
amounts deposited in the fund under section 16.5(a) of this chapter.
(b) In addition to its powers under section 16.5 of this chapter,
and subject to subsection (d), the authority may make a loan or
loan guaranty from the business development loan fund to a
business located in Indiana if the authority makes a written finding
that the loan or loan guaranty would accomplish the purposes of
this chapter by enabling the business to carry out an industrial
development project that will do any of the following:
(1) Improve the technological capacity or productivity of the
business.
(2) Enhance the protection of Indiana's environment.
(3) Permit the business to expand facilities, establish new
facilities, or make site improvements or infrastructure
improvements.
(c) In addition to its powers under section 16.5 of this chapter,
and subject to subsection (d), the authority may make a loan or
loan guaranty from the business development loan fund to a
business located outside Indiana affecting a leading Indiana
business, if:
(1) the authority makes a written finding that the loan or loan
guaranty would accomplish the purposes of this chapter by
enabling the business to carry out an industrial development
project that will:
(A) improve the technological capacity or productivity of
the leading Indiana business;
(B) enhance the protection of Indiana's environment;
(C) permit the leading Indiana business to expand
facilities, establish new facilities, or make site or
infrastructure improvements; or
(D) permit a leading Indiana business to preserve or retain
jobs, prevent economic insecurity resulting from
unemployment or environmental pollution, or otherwise
preserve the health, safety, morals, and general welfare of
the state or the area of the state where the leading Indiana
business is headquartered; and
(2) the general assembly has provided for the making of the
loan or loan guaranty by specifically authorizing the making
of the loan or loan guaranty in the appropriation act and the
loan or loan guarantee is approved by the budget agency after
review by the budget committee.
(d) With respect to any loan or loan guaranty made under this
section, a loan or loan guaranty agreement with the authority must
contain the following terms:
(1) If a loan is made, a requirement that the loan proceeds be
used for specified purposes consistent with and in furtherance
of the purposes of the authority under this chapter, or if a
loan guaranty is made, a requirement that the proceeds of the
loan guaranteed be used for specified purposes consistent with
and in furtherance of the purposes of the authority under this
chapter.
(2) The term of the loan or loan guaranty, which must not be
later than ten (10) years from the date of the loan or loan
guaranty.
(3) If a loan is made, the repayment schedule for the loan.
(4) If a loan is made, the interest rate or rates of the loan,
which may include variations in the rate, but that may not be
less than the amount necessary to cover all costs and expenses
of the authority in making the loan.
(5) Any other terms and provisions that the authority
requires, including, subject to subsection (h), collateral or
security requirements for the loan or loan guaranty.
(e) Notwithstanding any other law, including IC 5-13-12, the
authority may borrow money from the board for depositories from
time to time, and issue its bonds as evidence of the loans, for the
purposes of funding the business development loan fund and
making loans to businesses under this section. Bonds sold to the
board for depositories and loans received from the board for
depositories shall be on the terms and subject to the provisions
agreed to by the authority and the board for depositories in bond
purchase agreements or loan agreements, which must include
provisions stating that any bond issued by the authority or any
loan received by the authority under this subsection shall not
constitute a debt, liability, or obligation of the state, or a pledge or
lending of credit of the faith and credit of the state, but shall be
payable solely as provided in the bond purchase agreement or loan
agreement, including the repayment proceeds of loans made by the
authority from the business development loan fund. This
subsection is all the authority the authority needs to issue bonds to,
and receive loans from, the board for depositories, and to enter
into bond purchase agreements and loan agreements. However, the
authority may not issue bonds under this subsection unless the
general assembly has provided for the issuance of the bonds by
specifically authorizing the issuance of the bonds in the
appropriation act, and the issuance of the bonds is approved by the
budget agency after review by the budget committee.
(f) As used in this section, "leading Indiana business" means a
business that:
(1) is headquartered in a county having a population of more
than sixty thousand (60,000) but less than sixty-four thousand
(64,000);
(2) is a Fortune 500 company, as of April 16, 2001, when
ranked by measures of revenues, profits, assets, stockholders'
equity, market value, profit and total return to investors;
(3) pays wages at levels that are not less than two hundred
percent (200%) of the county average wage, calculated by the
Indiana department of commerce, paid in the county in which
the business is headquartered; and
(4) is a global business participating in international markets.
(g) As used in this section, "loan" includes any financing lease
of personal property owned by the authority to a business
described in this section.
(h) The authority must be collateralized or secured on the same
basis as a lender providing commercial or other conventional
financing for the industrial development project or a related
project being undertaken in connection with the industrial
development project, provided that, if in the authority's judgment
it is necessary or desirable to assure better commercial or
conventional financing terms and thereby better assure the success
of the industrial development project or related project, the
authority is authorized to accept a junior and subordinate
collateral or security position. However, the authority's collateral
or security position must be senior and prior to the collateral or
security interest of another state participating in the industrial
development project or related project. As used in this section,
"another state" includes any authority, board, commission, or
instrumentality of the other state and a political subdivision or
other governmental or quasi-governmental unit of the other state.
This subsection does not apply if the authority owns personal
property and leases it to a business described in this section, under
subsection (g).
(i) The aggregate principal amount of bonds, loans, and loan
guaranties the authority may make under this section is limited to
thirty-five million dollars ($35,000,000).
(j) In addition to its other powers under this section, the
authority may make a loan guaranty as contemplated by this
section jointly with the board for depositories and, in addition to
using moneys in the business development loan fund, the authority
may use not more than two million dollars ($2,000,000) of moneys
in the industrial development guaranty fund to fund the joint loan
guaranty.
(k) In addition to its other powers under section 15 of this
chapter, the authority may:
(1) sell and guarantee leases and loans; and
the board for depositories in this chapter, and notwithstanding any
other law, including sections 7 and 8 of this chapter, the board may
buy bonds issued by the Indiana development finance authority or
make loans to the Indiana development finance authority to fund
the business development loan fund and to finance industrial
development projects in accordance with IC 4-4-11. The term of
bonds or loans shall not exceed ten (10) years. The board may not
buy any bond or make any loan under this section unless:
(1) the authority finds and certifies to the board for
depositories that the related industrial development project is
in furtherance of the purposes of the Indiana development
finance authority and complies with IC 4-4-11; and
(2) the general assembly has provided for the purchase of the
bonds or the making of the loan by specifically authorizing the
purchase of bonds or the making of the loan in the
appropriation act and the purchase or loan is approved by the
budget agency after review by the budget committee.
Bonds purchased by the board for depositories shall be on the
terms and subject to the provisions agreed to by the board for
depositories and the Indiana development finance authority in
bond purchase agreements. Loans made by the board for
depositories shall be on the terms and subject to the provisions
agreed to by the board for depositories and the Indiana
development finance authority in loan agreements. This section is
all the authority the board for depositories needs to buy bonds
issued by the Indiana development finance authority, to make loans
to the Indiana development finance authority, and to enter into
bond purchase agreements and loan agreements.
(b) In addition to the authority given to the board for
depositories in this chapter, and notwithstanding any other law,
including sections 7 and 8 of this chapter, the board may guaranty
bonds issued by the Indiana development finance authority and
loans and loan guaranties made by the Indiana development
finance authority for industrial development projects in
accordance with IC 4-4-11. In addition, the board for depositories
may make a loan guaranty jointly with the Indiana development
finance authority as provided by IC 4-4-11-16.7. The term of loan
guaranties shall not exceed ten (10) years. The board may not make
any loan guaranty under this section unless:
(1) the authority finds and certifies to the board for
depositories that the related industrial development project is
in furtherance of the purposes of the Indiana development
finance authority and complies with IC 4-4-11; and
(2) the general assembly has provided for the guaranty by
specifically authorizing the guaranty in the appropriation act
and the guaranty is approved by the budget agency after
review by the budget committee.
Loan guaranties made by the board for depositories shall be on the
terms and subject to the provisions agreed to by the board for
depositories and the Indiana development finance authority in loan
guaranty agreements. This section is all the authority the board for
depositories needs to make loan guaranties and to enter into
guaranty agreements.
(c) The principal amount of bonds, loans, and loan guaranties
the board for depositories may buy or make under this section is
limited to thirty-five million dollars ($35,000,000). A bond
purchase agreement, a loan agreement, or a loan guaranty
agreement made under this section does not constitute a debt,
liability, or obligation of the state, or a pledge or lending of the
faith and credit of the state, but shall be paid or provided for in the
bond purchase agreement, loan agreement, or loan guaranty
agreement and from the public deposit insurance fund as a special
fund, and all such agreements shall contain therein a statement to
the effect that the agreements are not obligations of the state of
Indiana, or of any political subdivision thereof, but are payable
solely as provided for in the agreements and from the public
deposit insurance fund as a special fund.
(d) This section expires July 1, 2002.
SECTION 3. IC 6-3.1-13.5 IS ADDED TO THE INDIANA CODE
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2001 (RETROACTIVE)]:
Chapter 13.5. Capital Investment Tax Credit
Sec. 1. As used in this chapter, "department" refers to the
department of commerce.
Sec. 2. 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) trust;
(4) limited liability company; or
(5) limited liability partnership.
Sec. 3. As used in this chapter, "qualified investment" means the
amount of the taxpayer's expenditures for:
(1) the purchase of new manufacturing or production
equipment;
(2) the purchase of new computers and related equipment;
(3) costs associated with the modernization of existing
manufacturing facilities;
(4) onsite infrastructure improvements;
(5) the construction of new manufacturing facilities;
(6) costs associated with retooling existing machinery and
equipment; and
(7) costs associated with the construction of special purpose
buildings and foundations for use in the computer, software,
biological sciences, or telecommunications industry;
that are certified by the department under section 10 of this
chapter as being eligible for the credit under this chapter, if the
equipment, machinery, facilities improvements, facilities,
buildings, or foundations are installed or used in a county having
a population of more than forty thousand (40,000) but less than
forty-one thousand (41,000).
Sec. 4. As used in this chapter, "state tax liability" means a
taxpayer's total tax liability that is incurred under:
(1) IC 6-2.1 (the gross income tax);
(2) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(3) IC 6-3-8 (the supplemental net income tax);
(4) IC 6-5-10 (the bank tax);
(5) IC 6-5-11 (the savings and loan association tax);
(6) IC 27-1-18-2 (the insurance premiums tax); and
(7) 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. 5. As used in this chapter, "taxpayer" means a person,
corporation, partnership, or other entity that has any state tax
liability.
Sec. 6. (a) Subject to the provisions of this chapter, a taxpayer
is entitled to a credit against the taxpayer's state tax liability for a
taxable year if the taxpayer makes a qualified investment in that
year.
(b) The amount of the credit to which a taxpayer is entitled is
the qualified investment made by the taxpayer during the taxable
year multiplied by fourteen percent (14%).
Sec. 7. A taxpayer may claim the credit under this chapter only
if:
(1) the average wage paid by the taxpayer to its Indiana
employees within the county in which the qualifying
investment is made exceeds the average wage paid in that
county; or
(2) the taxpayer certifies to the department and provides
proof as determined by the department that, as a result of the
qualifying investment, the average wage paid by the taxpayer
to its Indiana employees within the county in which the
qualifying investment is made will exceed the average wage
paid in that county.
Sec. 8. (a) If a pass through entity does not have state income tax
liability against which the tax credit provided by this chapter 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.
(b) The credit provided under subsection (a) is in addition to a
tax credit to which a shareholder or partner of a pass through
entity is otherwise entitled under this chapter.
Sec. 9. (a) The total value of a tax credit under this chapter shall
be divided equally over seven (7) years, beginning with the year in
which the credit is granted. If the amount of credit provided under
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 not more than three (3) subsequent taxable years.
The amount of the credit carryover from a taxable year shall be
reduced to the extent that the carryover is used by the taxpayer to
obtain a credit under this chapter for any subsequent taxable year.
(b) A taxpayer is not entitled to a carryback or refund of any
unused credit.
Sec. 10. (a) To be entitled to a credit under this chapter, a
taxpayer must request the department of commerce to determine
whether an expenditure is a qualified investment.
(b) To make a request under subsection (a), a taxpayer must file
with the department a notice of intent to claim the credit under this
chapter. A taxpayer must file the notice with the department not
later than February 15 of the calendar year following the calendar
year in which the expenditure is made.
(c) After receiving a notice of intent to claim the credit, the
department shall review the notice and determine whether the
expenditure is a qualified investment and whether the taxpayer is
entitled to claim the credit. The department shall, before April 1 of
the calendar year in which the notice is received, send to the
taxpayer and to the department of state revenue a letter:
(1) certifying that the taxpayer is entitled to claim the credit
under this chapter for the expenditure; or
(2) stating the reason why the taxpayer is not entitled to claim
the credit.
Sec. 11. 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 of
state revenue. A taxpayer claiming a credit under this chapter shall
submit to the department of state revenue a copy of the
certification letter provided under section 10 of this chapter. The
taxpayer shall submit to the department of state revenue all
information that the department of state revenue determines is
necessary for the calculation of the credit provided by this chapter
and for the determination of whether an expenditure was for a
qualified investment.
Sec. 12. (a) If a taxpayer receives a credit under this chapter, the
equipment, machinery, facilities improvements, facilities,
buildings, or foundations for which the credit was granted must be
fully installed or completed not more than five (5) years after the
department issues a letter under section 10 of this chapter
certifying that the taxpayer is entitled to claim the credit.
(b) If a taxpayer receives a credit under this chapter and does
not make the qualified investment (or a portion of the qualified
investment) for which the credit was granted within the time
required by subsection (a), the department may require the
taxpayer to repay the following:
(1) The additional amount of state tax liability that would
have been paid by the taxpayer if the credit had not been
granted for the qualified investment (or portion of the
qualified investment) that was not made by the taxpayer
within the time required by subsection (a).
(2) Interest at a rate established under IC 6-8.1-10-1(c) on the
additional amount of state tax liability referred to in
subdivision (1).
Sec. 13. The department and the department of state revenue
shall adopt rules to carry out this chapter.
SECTION 4. IC 6-3.1-22 IS ADDED TO THE INDIANA CODE
AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2001 (RETROACTIVE)]:
processing facility.
Sec. 6. (a) The amount of the credit to which a taxpayer is
entitled under this chapter equals the product of:
(1) the percentage prescribed in subsection (b); multiplied by
(2) the amount of the ad valorem property taxes, excluding
interest and penalties, paid by the taxpayer in the taxable year
on the tangible property described in section 5 of this chapter.
(b) The percentage of the credit referred to in subsection (a)(1)
is as follows:
YEAR PERCENTAGE
OF THE CREDIT
2001 100%
2002 80%
2003 60%
2004 40%
2005 20%
Sec. 7. If a pass through entity is entitled to a credit under
section 5 of this chapter but does not have state tax liability against
which the tax credit may be applied, a shareholder, partner, or
member 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, partner, or member is
entitled.
Sec. 8. A taxpayer is entitled to carry forward, for a period not
to exceed two (2) years, any unused credit under section 6 or 7 of
this chapter.
Sec. 9. To be entitled to a credit under this chapter, a taxpayer
must request the department of commerce to determine if the
taxpayer is entitled to the credit under this chapter. A taxpayer
must make the request to the department of commerce in the
manner and on forms prescribed by the department of commerce.
Sec. 10. This chapter expires January 1, 2006.
SECTION 5. [EFFECTIVE JANUARY 1, 2001 (RETROACTIVE)]
A taxpayer is not entitled to carry forward an used credit under
IC 6-3.1-22, as added by this act, to a taxable year beginning after
December 31, 2007.
SECTION 6. [EFFECTIVE JANUARY 1, 2001 (RETROACTIVE)]
IC 6-3.1-22, as added by this act, applies to taxable years beginning
after December 31, 2000.