MR. PRESIDENT:
I move
that Engrossed House Bill 1004 be amended to read as follows:
Page 99, between lines 12 and 13, begin a new paragraph and
insert:
"SECTION 97. IC 6-7.5 IS ADDED TO THE INDIANA CODE
AS A NEW ARTICLE TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2003]:
ARTICLE 7.5. COAL SEVERANCE TAX
Chapter 1. Definitions
Sec. 1. The definitions in this chapter apply throughout this
article.
Sec. 2. "Coal" includes any material composed predominantly
of hydrocarbons in a solid state.
Sec. 3. "Department" refers to the department of state revenue.
Sec. 4. "Economic interest" refers to the economic interest
required by Internal Revenue Code Section 611, in effect on
December 31, 1977, entitling the taxpayer to a depletion deduction
for income tax purposes.
Sec. 5. "Gross value" refers to gross income from property as
defined in Section 613(c) of the Internal Revenue Code and United
States Department of Treasury Regulations 1.613-3 and 1.613-4,
as in effect on December 31, 1977.
Sec. 6. "Related party" means two (2) or more persons,
organizations, or businesses owned or controlled directly or
indirectly by the same interest.
Sec. 7. "Reporting period" means the period in which each
taxpayer shall compute the taxpayer's tax liability and remit the
tax due to the department.
Sec. 8. "Severance" refers to the physical removal of coal from
the earth.
Sec. 9. "Taxpayer" includes a pass through entity.
Sec. 10. "Ton" means a short ton of two thousand (2,000)
pounds.
Chapter 2. Coal Severance Tax
Sec. 1. (a) As used in this chapter, "processing" includes the
following treatments to coal:
(1) Cleaning.
(2) Breaking.
(3) Dust allaying.
(4) Freeze prevention.
(5) Loading and unloading.
(6) Sizing.
(b) Processing does not include:
(1) an act performed by a final consumer if:
(A) the consumer is not a related party to the person who
severed or processed the coal; and
(B) the act is performed at the site where the coal is
consumed for the purpose of generating electricity; or
(2) the loading or unloading for shipment of coal that has not
been severed or treated in Indiana.
Sec. 2. As used in this chapter, "registered taxpayer" refers to
a taxpayer who holds a valid coal tax certificate of registration
under IC 6-7.5-4 during the period in which the taxpayer's coal is
sold.
Sec. 3. (a) A coal severance tax is imposed on each taxpayer
engaged in severing or processing coal in Indiana. Except as
provided in subsection (c), the coal severance tax is imposed at the
rate of four and five-tenths percent (4.5%) of the gross value of all
coal severed or processed during a reporting period.
(b) Each taxpayer shall report the gross value of the coal that
the taxpayer severed or processed during the preceding month at
the time and in the manner prescribed by the department.
However, the department may authorize a quarterly reporting
period.
(c) This subsection does not apply to a taxpayer who only
processes coal. The minimum tax for a reporting period is
determined by multiplying the total number of tons severed
during the reporting period by fifty cents ($0.50).
Sec. 4. (a) Gross value is reported as follows:
(1) If the coal is severed or processed, or both, and sold
during a reporting period, gross value equals the amount
received or receivable by the taxpayer.
(2) If the coal is severed or processed, or both, but not sold
during a reporting period, the gross value is determined as
follows:
(A) If the coal is to be sold under the terms of an existing
contract, the contract price is used to compute gross value.
(B) If no contract exists, the fair market value, for the
grade and quality of the coal is used to compute gross
value.
(3) If a transaction involves related parties, gross value is the
amount received or receivable from the first noncontrolled
sale by the related parties. However, if coal is sold to a
related party for consumption, gross value is an amount not
less than the fair market value for coal of similar grade and
quality.
(4) In the absence of a sale, gross value is the fair market
value for coal of a similar grade and quality.
(5) If severed coal is purchased for the purpose of processing
and resale, the gross value is the amount received or
receivable during the reporting period reduced by the
amount paid or payable to the registered taxpayer actually
severing the coal.
(6) If severed coal is purchased for the purpose of processing
and consumption, the gross value is the fair market value of
processed coal of similar grade and quality reduced by the
amount paid or payable to the registered taxpayer actually
severing the coal.
(b) Gross value may not be reduced by any taxes, including the
tax imposed under this chapter, royalties, sales commissions, or
other expenses.
Sec. 5. If a contract, either written or oral, is entered into by a
person, organization, or business that is engaged to mine or
process the coal but does not obtain title to or have an economic
interest in the coal, the party that owns the coal or has an
economic interest in the coal is the taxpayer.
Sec. 6. A party who receives only an arm's length royalty is not
considered to have an economic interest.
Sec. 7. Notwithstanding section 3 of this chapter, the severance
tax for coal used for burning solid waste is limited to the lesser of:
(1) fifty cents ($0.50) per ton; or
(2) four percent (4%) of the selling price per ton.
Chapter 3. Determination of Taxable Gross Value of Severed
Coal
Sec. 1. As used in this chapter, "direct costs of processing coal"
includes the following:
(1) Depreciation.
(2) Equipment rental.
(3) Fee processing.
(4) Fuel.
(5) Labor and associated expense.
(6) Maintenance.
(7) Refuse disposal.
Sec. 2. (a) As used in this chapter, "direct costs of severing
coal" includes the following:
(1) Contract mining.
(2) Cost depletion.
(3) Depreciation.
(4) Development.
(5) Equipment rental.
(6) Explosives.
(7) Fuel.
(8) Labor and associated expenses.
(9) Maintenance.
(10) Reclamation.
(11) Royalties that are based on tons severed.
(12) Wheelage.
(b) The direct costs of severing coal do includes transportation
expenses contained within contract mining.
Sec. 3. As used in this chapter, "overhead costs" includes the
following:
(1) Commissions.
(2) Freight yard and siding expense.
(3) General expenses.
(4) General insurance and supervision.
(5) General office expense.
(6) Idle time expense.
(7) Inventory adjustments.
(8) Mine closing expense.
(9) Officers' salaries.
(10) Percentage depletion.
(11) Quality analysis.
(12) Scale and weighman's expense.
(13) Transportation expense.
(14) Taxes including sales, coal severance, property,
franchises, and state income taxes.
(15) All other expenses that are not directly attributable to
severing or processing coal.
Sec. 4. A taxpayer that severs coal in Indiana and partially or
wholly processes the coal outside of Indiana, or severs coal outside
of Indiana and partially or wholly processes the coal in Indiana,
shall determine and report the gross value of the coal. The taxable
portion of the gross value of the coal equals the following:
STEP ONE: Determine the direct cost of severing or
processing the coal in Indiana.
STEP TWO: Determine the direct cost of severing or
processing the coal outside of Indiana.
STEP THREE: Add the amounts determined in STEP ONE
and STEP TWO.
STEP FOUR: Divide the amount determined in STEP ONE
by the amount determined in STEP THREE.
STEP FIVE: Multiply the amount determined in STEP
FOUR by the gross value of the coal.
Sec. 5. A taxpayer that determines taxable gross value under
section 4 of this chapter shall submit supporting computation and
classifications of cost with each severance tax return. However, the
department may authorize the taxpayer to submit the supporting
information on a basis other than monthly.
Chapter 4. Certificate of Registration and Administration
Sec. 1. (a) A taxpayer engaged in severing or processing coal
shall file an application for a certificate of registration on a form
prescribed by the department.
(b) Each application must be signed by the taxpayer or an
agent of the taxpayer. If the taxpayer is a partnership or
association, the application must be signed by a member. If the
taxpayer is a corporation, the application must be signed by an
executive officer or other person specifically authorized by the
corporation to sign the application.
Sec. 2. A taxpayer must submit a severance tax return on a
form prescribed by the department before the twentieth day of the
month after the reporting period in which coal is severed or
processed. The taxpayer must submit the amount of severance tax
due with the severance tax return. The taxpayer must submit a
return for each reporting period even though there may be no
severance tax liability.
Sec. 3. If a taxpayer fails to comply with the provisions of this
chapter or a rule adopted under this chapter, the department may
suspend or revoke the taxpayer's certificate of registration.
Sec. 4. A taxpayer, including an officer of a corporation, who
severs or processes coal in Indiana without obtaining a certificate
of registration, or after a certificate of registration has been
revoked, commits a Class B misdemeanor.
Sec. 5. (a) The department may authorize the taxpayer
processing the coal to report and pay the tax that would be due
from the taxpayer severing the coal.
(b) An authorization under subsection (a) must be in the form
of an agreement executed by the taxpayer processing the coal, the
taxpayer severing the coal, and the department. The agreement
must be on a form prescribed by the department.
(c) The agreement must be signed by the taxpayer and the
commissioner of the department. If the taxpayer is a partnership
or association, the application must be signed by a member. If the
taxpayer is a corporation, the application must be signed by an
executive officer or other person specifically authorized by the
corporation to sign the application.
(d) The agreement may be terminated by a party after thirty
(30) days written notice to the other parties. However, the
department may terminate the agreement immediately upon
written notice to the other parties if either the taxpayer severing
the coal or the taxpayer processing the coal fails to comply with
the terms of the agreement.
Sec. 6. (a) The department shall provide to all registered
taxpayers that sell severed or processed coal that will subsequently
be claimed as a reduction from gross value for purchased coal
under
IC 6-7.5-2-4
(5) a certificate prescribed by the department
for the processor of the coal to verify the processor's reduction
from gross value for purchased coal.
(b) If a processor purchases coal that has been severed outside
of Indiana, the processor shall obtain a certificate from the person
severing the coal on a form prescribed by the department to verify
the purchased coal.
Sec. 7. (a) A reduction for purchased coal may not be allowed
for purchases of coal originating from persons severing coal in
Indiana who have not registered to report and pay the tax imposed
under this article.
(b) A reduction for purchased coal may not be allowed for
purchases of coal that cannot be traced to the person who severed
the coal outside of Indiana.
Sec. 8. The department shall adopt rules under
IC 4-22-2
to
implement this article.
Chapter 5. Payment of Tax
Sec. 1. (a) Each taxpayer charged with the duty to file reports
and pay the coal severance tax imposed under this article shall
post a cash or corporate surety bond in an amount prescribed by
the department.
(b) The department may bring an action for a restraining order
or a temporary or permanent injunction to restrain or enjoin the
taxpayer's business until the bond is posted. The department may
bring the action in the Marion county circuit Court or in the
circuit court of the county in which the taxpayer's business is
located.
Sec. 2 . The department may suspend or revoke a taxpayer's
certificate of registration if the taxpayer fails to comply with the
provisions of this chapter.
Sec. 3. (a) If a taxpayer:
(1) fails to pay the full amount of tax imposed under this
article as shown on the taxpayer's return by the due date for
the return or for the payment;
(2) fails to report the tax due under this article;
(3) falsifies a return required under this article; or
(4) incurs a deficiency upon the determination of the
department;
the taxpayer is subject to a penalty and interest on the unpaid tax.
(b) Interest applies at the rate established in
IC 6-8.1-10-1
from
the date the tax becomes delinquent until the date the tax is paid.
(c) A taxpayer described in subsection (a) is subject to a penalty
in an amount determined by the department under
IC 6-8.1-10.
Sec. 4. (a) Not withstanding any other provisions of this article,
the president, vice president, secretary, treasurer, or other person
holding an equivalent corporate office of a corporation subject to
the provisions of this article shall be personally liable, jointly and
severally, for the tax imposed under this article.
(b) The following events do not discharge the personal liability
of an officer described in subsection (a):
(1) The dissolution of the corporation.
(2) The withdrawal of the corporation from Indiana.
(3) The officer's cessation of holding office.
(c) The personal liability applies to each person holding
corporate office at the time the taxes become due.
(d) A person that does not have authority in the management
of the business or financial affairs of the corporation at the time
the taxes are imposed may not be held personally liable for the tax
imposed under this article.
Sec. 5. A taxpayer that fails to:
(1) file returns required under this article;
(2) remit the tax due under this article; or
(3) falsifies or alters a certificate or other form required
under this article;
commits a Class B misdemeanor.
Chapter 6. Use of Tax
Sec. 1. (a) A special account within the state general fund is
established for taxes collected under this article. The department
shall transfer the taxes that are collected under this article each
month to the account.
(b) The treasurer of state shall distribute the money in the
account to each county in which coal is severed or processed. The
treasurer of state shall distribute to each county an amount
proportional to the amount of severance tax imposed in the
county.
(c) The treasurer shall hold all amounts of collections received
under subsection (a) during a particular month and shall
distribute the amounts required under subsection (b) on the fifth
day of the immediately following month.
(d) Money in this account at the end of a state fiscal year does
not revert to the state general fund.
Sec. 2. A distribution from the account established under
section 1 of this chapter shall be made by warrants issued by the
auditor of state to the treasurer of state ordering the appropriate
payments.
Sec. 3. A county treasurer shall deposit money received under
this chapter in the county general fund. Money received under this
chapter may be used to pay expenses incurred in the maintenance
of county highways.".
Page 102, between lines 8 and 9, begin a new paragraph and insert:
SOURCE: IC 8-18-8-5; (97)IN0496.1.2. -->
"SECTION 102. IC
8-18-8-5
IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JANUARY 1, 2003]: Sec. 5. (a) Except as
provided in subsection (c), all expenses incurred in the maintenance
of county highways shall be paid out of funds from the gasoline tax,
special fuel tax, coal severance tax, and the motor vehicle registration
fees that are paid to the counties by the state, and from funds derived
from the:
(1) county motor vehicle excise surtax;
(2) county wheel tax;
(3) county adjusted gross income tax;
(4) county option income tax;
(5) riverboat admission tax (IC 4-33-12); or
(6) riverboat wagering tax (IC 4-33-13).
(b) Except as provided in subsection (c), no ad valorem property
tax may be levied by any county for the maintenance of county
highways, except in an emergency and by unanimous vote of the
county fiscal body.
(c) The county fiscal body may appropriate money from the county