Citations Affected: IC 6-3.1.
Synopsis: Employee certification tax credit. Provides that when an
employee receives certification of new knowledge or skills or that
results in the payment of higher wages to the employee, the employer
taxpayer is entitled to a tax credit against the employer's state tax
liability for a taxable year if the employer pays certain qualified wages
to the employee in the taxable year.
Effective: January 1, 2007.
January 9, 2006, read first time and referred to Committee on Employment and Labor.
January 25, 2006, amended, reported _ Do Pass. Refered to Committee on Ways and Means pursuant to House Rule 127.
A BILL FOR AN ACT concerning taxation.
(1) is continuously employed for at least sixteen (16) consecutive weeks during a taxable year;
(A) is employed for consideration for at least thirty-five (35) hours each week; or
(B) renders any other standard of service specified by contract or generally accepted by custom as full-time employment; and
(3) receives a certification from a certified training provider.
(b) Notwithstanding subsection (a), the term "employee" does not include an individual who has a direct or an indirect ownership interest of at least five percent (5%) in the profits, capital, or value of the employer, as determined in accordance with Section 1563 of the Internal Revenue Code and regulations prescribed under that Section.
Sec. 4. (a) As used in this chapter, "employer" means a taxpayer that employs an employee and pays qualified wages to the employee.
(b) Notwithstanding subsection (a), the term "employer" does not include a taxpayer that:
(1) is a nonprofit corporation;
(2) is an educational institution; or
(3) requires a gaming license or permit to operate under IC 4-31-5 or IC 4-33-6.
Sec. 5. As used in this chapter, "qualified wages" means the difference between:
(1) wages paid by an employer to an employee after the employee's certification; minus
(2) wages paid by an employer to an employee before the employee's certification.
Sec. 6. As used in this chapter, "state tax liability" means a taxpayer's total tax liability that is incurred under:
(1) IC 6-3 (the adjusted gross income tax);
(2) IC 6-2.5 (state gross retail and use tax);
(3) IC 6-5.5 (the financial institutions tax); and
(4) IC 27-1-18-2 (the 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. 7. As used in this chapter, "taxpayer" means a person, a corporation, a partnership, a limited liability corporation, a limited
liability partnership, or any other entity that has any state tax
Sec. 8. (a) A taxpayer is entitled to a credit against the taxpayer's state tax liability for a taxable year if the taxpayer pays qualified wages in the taxable year.
(b) The amount of the credit to which a taxpayer is entitled equals the product of fifty percent (50%) multiplied by all qualified wages paid by the employer during the taxable year. However, the credit amount claimed for a taxable year may not exceed the taxpayer's state tax liability for the taxable year.
(c) If the amount of the credit to which a taxpayer is entitled exceeds the taxpayer's state tax liability, the taxpayer may carry the excess credit over to the following taxable years. The amount of the credit carryover from a taxable year is reduced to the extent that the taxpayer uses the carryover to obtain a credit under this chapter for any subsequent taxable year.
(d) A taxpayer is not entitled to a carryback or refund of any unused credit.
Sec. 9. To receive the credit under this chapter, a taxpayer must claim the credit on the taxpayer's state tax return or returns in the manner prescribed by the department of state revenue. The taxpayer shall submit to the department of state revenue:
(1) proof of payment of qualified wages;
(2) proof of the certification of each employee to whom qualified wages are paid; and
(3) all information that the department of state revenue determines is necessary to:
(A) calculate the credit under this chapter; or
(B) determine whether wages are qualified wages. The department of workforce development shall review a determination under this clause.