Reprinted

April 3, 2009





ENGROSSED

HOUSE BILL No. 1398

_____


DIGEST OF HB 1398 (Updated April 2, 2009 2:44 pm - DI 92)



Citations Affected: IC 5-22; IC 6-2.5; IC 15-11; IC 15-15; IC 21-31; noncode.

Synopsis: Ethanol incentives. Requires state educational institutions to purchase mid-level blends of gasoline and ethanol, E85, and blended biodiesel fuel to the extent possible. Provides that the E85 sales tax deduction applies only to reporting periods beginning on January 1 and ending before April 1. Specifies procedures for administering the deduction. Transfers administration of the deduction from the department of revenue to the state budget agency. Provides that the amount of money expended on administering Indiana corn market development statutes in a state fiscal year may not exceed 10% of the total amount of assessments, grants, and gifts received by the corn marketing council in that year. Establishes the retail merchant E85 deduction reimbursement fund. Requires the Indiana corn marketing council's annual transfers to the retail merchant E85 deduction reimbursement fund to be in amounts calculated to restore a balance of $500,000. Adjusts corn checkoff refund and audit requirements. Adds school corporations and state educational institutions to the list of governmental entities that are eligible to apply to the department of agriculture for a grant under the E85 fueling station grant program.

Effective: Upon passage; July 1, 2009; August 1, 2009.





Grubb, Friend, Pearson , Oxley
(SENATE SPONSORS _ GARD, STUTZMAN, DEIG)




    January 13, 2009, read first time and referred to Committee on Agriculture and Rural Development.
    February 17, 2009, amended, reported _ Do Pass.
    February 23, 2009, read second time, amended, ordered engrossed.
    February 24, 2009, engrossed.
    February 25, 2009, read third time, passed. Yeas 98, nays 1.

SENATE ACTION

    March 5, 2009, read first time and referred to Committee on Energy and Environmental Affairs.
    March 17, 2009, amended, reported favorably _ Do Pass.
    April 2, 2009, read second time, amended, ordered engrossed.





Reprinted

April 3, 2009

First Regular Session 116th General Assembly (2009)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2008 Regular Session of the General Assembly.


ENGROSSED

HOUSE BILL No. 1398



    A BILL FOR AN ACT to amend the Indiana Code concerning taxation.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 5-22-5-8; (09)EH1398.2.1. -->     SECTION 1. IC 5-22-5-8, AS AMENDED BY P.L.6-2005, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 8. (a) This section does not apply to a political subdivision, except a school corporation (as defined in IC 20-18-2-16(a)).
    (b) As used in this section, "blended biodiesel" has the meaning set forth in IC 6-3.1-27-2.
    (c) As used in this section, "diesel fueled vehicle" refers to a vehicle that is capable of using diesel to fuel its primary motor.
    (c) (d) As used in this section, "ethanol" means agriculturally derived ethyl alcohol.
    (d) As used in this section, "gasohol" means gasoline that contains:
        (1) at least ten percent (10%) ethanol; or
        (2) ethyl tertiary butyl ether (ETBE) additives derived from ethanol.
     (e) As used in this section, "E85" has the meaning set forth in IC 6-6-1.1-103.
    (e) (f) As used in this section, "gasoline fueled vehicle" refers to a vehicle that is capable of using gasoline to fuel its primary motor.
     (g) As used in this section "mid-level blend fuel" means a fuel blend consisting of:
        (1) at least twenty percent (20%) but not more than seventy-three percent (73%) ethanol; and
        (2) gasoline as the balance.

    (f) (h) As used in this section, "vehicle" includes the following:
        (1) An automobile.
        (2) A truck.
        (3) A tractor.
    (g) (i) Except as provided by subsection (i), subsections (k) and (l), a governmental body shall whenever possible purchase gasohol mid-level blend fuel or E85 to fuel the gasoline fueled vehicles owned or operated by the governmental body.
    (h) (j) Except as provided by subsection (i), subsections (k) and (l), a governmental body shall whenever possible purchase blended biodiesel fuel to fuel the diesel fueled vehicles owned or operated by the governmental body.
    (i) (k) The following vehicles are exempt from the requirements of subsections (g) (i) and (h): (j):
        (1) A vehicle that is leased by the governmental body for thirty (30) days or less.
        (2) A vehicle whose official operating manual, as issued by the manufacturer of the vehicle, contains a statement that the use of gasohol or blended biodiesel fuel will damage the engine of the vehicle.
        (3) (2) A vehicle that:
            (A) is primarily powered by an electric motor; or
            (B) can use only propane, compressed or liquified natural gas, or methanol as its fuel source.
     (l) The following vehicles are exempt from the requirements of subsection (i) or (j), whichever is appropriate:
        (1) A gasoline fueled vehicle in which the use of mid-level blend fuel or E85 has not been approved by the manufacturer.

         (2) A diesel fueled vehicle in which the use of blended biodiesel fuel has not been approved by the manufacturer.
        (3) A gasoline fueled vehicle in which the use of mid-level blend fuel is prohibited by the federal Clean Air Act (42 U.S.C. 7401 et seq.).

SOURCE: IC 6-2.5-7-5; (09)EH1398.2.2. -->     SECTION 2. IC 6-2.5-7-5, AS AMENDED BY P.L.146-2008, SECTION 315, IS AMENDED TO READ AS FOLLOWS

[EFFECTIVE JULY 1, 2009]: Sec. 5. (a) Each retail merchant who dispenses gasoline or special fuel from a metered pump shall, in the manner prescribed in IC 6-2.5-6, report to the department the following information:
        (1) The total number of gallons of gasoline sold from a metered pump during the period covered by the report.
        (2) The total amount of money received from the sale of gasoline described in subdivision (1) during the period covered by the report.
        (3) That portion of the amount described in subdivision (2) which represents state and federal taxes imposed under this article, IC 6-6-1.1, or Section 4081 of the Internal Revenue Code.
        (4) The total number of gallons of special fuel sold from a metered pump during the period covered by the report.
        (5) The total amount of money received from the sale of special fuel during the period covered by the report.
        (6) That portion of the amount described in subdivision (5) that represents state and federal taxes imposed under this article, IC 6-6-2.5, or Section 4041 of the Internal Revenue Code.
        (7) The total number of gallons of E85 sold from a metered pump during the period covered by the report.
    (b) Concurrently with filing the report, the retail merchant shall remit the state gross retail tax in an amount which equals six and fifty-four hundredths percent (6.54%) of the gross receipts, including state gross retail taxes but excluding Indiana and federal gasoline and special fuel taxes, received by the retail merchant from the sale of the gasoline and special fuel that is covered by the report and on which the retail merchant was required to collect state gross retail tax. The retail merchant shall remit that amount regardless of the amount of state gross retail tax which the merchant has actually collected under this chapter. However, the retail merchant is entitled to deduct and retain the amounts prescribed in subsection (c), IC 6-2.5-6-10, and IC 6-2.5-6-11.
    (c) A retail merchant is entitled to deduct from the amount of state gross retail tax required to be remitted under subsection (b) the amount determined under STEP THREE of the following formula:
        STEP ONE: Determine:
            (A) the sum of the prepayment amounts made during the period covered by the retail merchant's report; minus
            (B) the sum of prepayment amounts collected by the retail merchant, in the merchant's capacity as a qualified distributor, during the period covered by the retail merchant's report.


        STEP TWO: Subject to subsection (d), subsections (d) and (f), for qualified reporting periods beginning after June 30, 2009, and ending before July 1, 2020, determine the product of:
            (A) eighteen cents ($0.18); multiplied by
            (B) the number of gallons of E85 sold at retail by the retail merchant during the period covered by the retail merchant's report.
        STEP THREE: Add the amounts determined under STEPS ONE and TWO.
For purposes of this section, a prepayment of the gross retail tax is presumed to occur on the date on which it is invoiced.
    (d) The total amount of deductions allowed under subsection (c) STEP TWO may not exceed one million dollars ($1,000,000) the amount of money that the budget agency determines is available in the retail merchant E85 deduction reimbursement fund established under IC 15-15-12-30.5 for the deductions for all retail merchants in all a particular qualified reporting periods. period. A retail merchant is not required to apply for an allocation of deductions under subsection (c) STEP TWO. If the department determines that the sum of:
        (1) the deductions that would otherwise be reported under subsection (c) STEP TWO for a reporting period; plus
        (2) the total amount of deductions granted under subsection (c) STEP TWO in all preceding reporting periods;
will exceed one million dollars ($1,000,000), Before August 1 of each year, the budget agency shall estimate whether the amount of deductions from the immediately preceding qualified reporting period that are subject to reimbursement under IC 15-15-12-30.5(f) and the deductions expected to be reported under subsection (c) STEP TWO for the qualified reporting periods beginning after December 31 and ending before April 1 of the following year will exceed the amount of money available in the retail merchant E85 deduction reimbursement fund for the deductions. If the budget agency determines that the amount of money in the retail merchant E85 deduction reimbursement fund is insufficient to cover the amount of the deductions expected to be reported, the department budget agency shall publish in the Indiana Register a notice that the deduction program under subsection (c) STEP TWO is terminated after the date specified suspended with respect to the qualified reporting periods occurring in the following calendar year in the notice and that no additional deductions will be granted for retail transactions occurring after the date specified in the notice. in the

qualified reporting periods occurring in the following calendar year.
     (e) As used in this section, "qualified reporting period" refers to a reporting period beginning after December 31 and ending before April 1 of each year.
     (f) The budget agency may suspend the deduction program under subsection (c) STEP TWO for a particular year at any time during a qualified reporting period if the budget agency determines that the amount of money in the retail merchant E85 deduction reimbursement fund and the amount of money that will be transferred to the fund on July 1 will not be sufficient to reimburse the deductions expected to occur before the deduction program for the year ends on March 31. The budget agency shall immediately provide notice to the participating retail merchants of the decision to suspend the deduction program for that year.

SOURCE: IC 15-11-11-6.5; (09)EH1398.2.3. -->     SECTION 3. IC 15-11-11-6.5, AS ADDED BY P.L.91-2008, SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 6.5. As used in this chapter, "unit" means a city, town, county, or township, school corporation (as defined in IC 20-18-2-16(a)), or state educational institution (as defined in IC 21-7-13-32).
SOURCE: IC 15-15-12-29; (09)EH1398.2.4. -->     SECTION 4. IC 15-15-12-29, AS ADDED BY P.L.2-2008, SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 29. (a) The council shall pay all expenses incurred under this chapter with money from the assessments remitted to the council under this chapter.
    (b) The council may invest all money the council receives under this chapter, including gifts or grants that are given for the express purpose of implementing this chapter, in the same way allowed by law for public funds.
    (c) The council may expend money from assessments and from investment income not needed for expenses for market development, promotion, and research.
    (d) The council may not use money received, collected, or accrued under this chapter for any purpose other than the implementation of purposes authorized by this chapter. The amount of money expended on administering this chapter in a state fiscal year may not exceed ten percent (10%) of the total amount of assessments, grants, and gifts received by the council in that state fiscal year.
SOURCE: IC 15-15-12-30.5; (09)EH1398.2.5. -->     SECTION 5. IC 15-15-12-30.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 30.5. (a) The retail merchant E85

deduction reimbursement fund is established. The fund consists of:
        (1) assessments transferred by the council for deposit in the fund under section 32.5 of this chapter;
        (2) gifts; and
        (3) grants.
    (b) Except as provided in subsection (g), money in the fund may only be used for the purposes described in subsection (d).

     (c) On May 1, the budget agency shall determine the sum of all retail merchant deductions allowed under IC 6-2.5-7-5(d) in the immediately preceding qualified reporting period (as defined in IC 6-2.5-7-5(e)).
     (d) The budget agency shall transfer the amount determined under subsection (c) from the fund for deposit. The amount transferred under this subsection shall be deposited in the same manner as state gross retail and use taxes are required to be deposited under IC 6-2.5-10-1.
     (e) The treasurer of state shall invest the money in the fund not currently needed to meet the obligations of the fund in the same manner as other public money may be invested. Interest that accrues from these investments shall be deposited in the fund.
     (f) If the amount of money in the fund on May 1 is insufficient to reimburse the state for all retail merchant deductions allowed under IC 6-2.5-7-5(d) in the immediately preceding qualified reporting period (as defined in IC 6-2.5-7-5(e)), the budget agency shall deduct from any amounts transferred for deposit into the fund in the remainder of that calendar year an amount sufficient to cure the insufficiency. The budget agency shall transfer any amounts deducted under this subsection for deposit in the same manner as state gross retail and use taxes are required to be deposited under IC 6-2.5-10-1.
    (g) If the retail merchant E85 deduction program is terminated, any balance in the fund must be transferred to the council.

SOURCE: IC 15-15-12-32.5; (09)EH1398.2.6. -->     SECTION 6. IC 15-15-12-32.5 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 32.5. (a) On July 1, 2010, the council shall transfer five hundred thousand dollars ($500,000) to the budget agency for deposit in the retail merchant E85 deduction reimbursement fund established by section 30.5 of this chapter.
     (b) On July 1, 2011, and each year thereafter, the council shall transfer to the budget agency for deposit in the retail merchant E85 deduction reimbursement fund established by section 30.5 of this chapter an amount equal to the difference between:
        (1) five hundred thousand dollars ($500,000); minus
        (2) the balance remaining in the fund on June 30.
However, the amount transferred under this subsection may not exceed five hundred thousand dollars ($500,000).

SOURCE: IC 15-15-12-33; (09)EH1398.2.7. -->     SECTION 7. IC 15-15-12-33, AS ADDED BY P.L.2-2008, SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 33. (a) If a producer has sold corn and the state assessment was deducted from the sale price of the corn, the producer may secure a refund equal to the amount deducted upon filing a written application.
    (b) A producer's application for a refund under this section must be made to the council not more than one hundred eighty (180) days after the state assessment is deducted from the sale price of the producer's corn.
    (c) The council shall provide application forms to a first purchaser for purposes of this section upon request and make application forms available on the council's Internet web site. Before July 1, 2009, a first purchaser shall provide an application form to each producer along with each settlement form that shows a deduction. After June 30, 2009, a first purchaser shall make application forms available in plain view at the first purchaser's place of business.
    (d) Proof that an assessment has been deducted from the sale price of a producer's corn must be attached to each application for a refund submitted under this section by a producer. The proof that an assessment was deducted may be in the form of a duplicate or an original copy of the purchase invoice or settlement sheet from the first purchaser. The claim refund form and proof of assessment may be mailed or faxed to the council. The refund form must clearly state how to request a refund, the address where the form may be mailed, and the fax number where the form may be faxed.
    (e) If a refund is due under this section, the council shall remit the refund to the producer not later than thirty (30) days after the date the producer's completed application and proof of assessment are received.
SOURCE: IC 15-15-12-34; (09)EH1398.2.8. -->     SECTION 8. IC 15-15-12-34, AS ADDED BY P.L.2-2008, SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 34. The checkoff assessment and remittance record refund form must:
        (1) be in a format that allows a corn producer to submit the same form for an assessment refund;
        (2) (1) contain the address and fax number of the location to which the assessment refund form may be sent;
        (3) (2) contain information concerning procedures to claim an

assessment refund; and
        (4) (3) contain any other information determined necessary by the council.

SOURCE: IC 15-15-12-35; (09)EH1398.2.9. -->     SECTION 9. IC 15-15-12-35, AS ADDED BY P.L.2-2008, SECTION 6, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 35. (a) A first purchaser shall keep detailed records of all assessments collected and remitted under this chapter for at least three (3) years.
    (b) Upon request, a first purchaser shall supply the council with any information from records kept under subsection (a).
    (c) The council may periodically audit a first purchaser's checkoff assessment and remittance records kept under subsection (a). An audit must be conducted by:
         (1) a qualified public accountant of the council's choosing; or
         (2) an auditor who is familiar with the:
            (A) storage;
            (B) conditioning;
            (C) shipping; and
            (D) handling;
        of agricultural commodities.

and The costs of the audit shall be paid by the council.
SOURCE: IC 21-31-9-3; (09)EH1398.2.10. -->     SECTION 10. IC 21-31-9-3 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 3. (a) As used in this section, "blended biodiesel" has the meaning set forth in IC 6-3.1-27-2.
    (b) As used in this section, "diesel fueled vehicle" refers to a vehicle that is capable of using diesel to fuel its primary motor.
    (c) As used in this section, "ethanol" means agriculturally derived ethyl alcohol.
    (d) As used in this section, "E85" has the meaning set forth in IC 6-6-1.1-103.
    (e) As used in this section, "gasoline fueled vehicle" refers to a vehicle that is capable of using gasoline to fuel its primary motor.
    (f) As used in this section, "mid-level blend fuel" means a fuel blend consisting of:
        (1) at least twenty percent (20%) but not more than seventy-three percent (73%) ethanol; and
        (2) gasoline as the balance.
    (g) As used in this section, "vehicle" includes the following:
        (1) An automobile.
        (2) A truck.
        (3) A tractor.
    (h) Except as provided by subsections (j) and (k), a state educational institution shall whenever possible purchase mid-level blend fuel or E85 to fuel the gasoline fueled vehicles owned or operated by the state educational institution.
    (i) Except as provided by subsections (j) and (k), a state educational institution shall whenever possible purchase blended biodiesel fuel to fuel the diesel fueled vehicles owned or operated by the state educational institution.
    (j) The following vehicles are exempt from the requirements of subsections (h) and (i):
        (1) A vehicle that is leased by the state educational institution for thirty (30) days or less.
        (2) A vehicle that:
            (A) is primarily powered by an electric motor; or
            (B) can use only propane, compressed or liquified natural gas, or methanol as its fuel source.

     (k) The following vehicles are exempt from the requirements of subsection (h) or (i), whichever is appropriate:
         (1) A gasoline fueled vehicle in which the use of mid-level blend fuel or E85 has not been approved by the manufacturer.
        (2) A diesel fueled vehicle in which the use of blended biodiesel fuel has not been approved by the manufacturer.
        (3) A gasoline fueled vehicle in which the use of mid-level blend fuel is prohibited by the federal Clean Air Act (42 U.S.C. 7401 et seq.).

SOURCE: IC 6-2.5-7-5.5; (09)EH1398.2.11. -->     SECTION 11. IC 6-2.5-7-5.5 IS REPEALED [EFFECTIVE JULY 1, 2009].
SOURCE: IC 15-15-12-30; (09)EH1398.2.12. -->     SECTION 12. IC 15-15-12-30 IS REPEALED [EFFECTIVE AUGUST 1, 2009].
SOURCE: ; (09)EH1398.2.13. -->     SECTION 13. [EFFECTIVE AUGUST 1, 2009] (a) On August 1, 2009, the budget agency shall transfer any remaining balance in the Indiana corn market development account established under IC 15-15-12-30 (before its repeal) to the retail merchant E85 deduction reimbursement fund established by IC 15-15-12-30.5, as added by this act.
    (b) This SECTION expires January 1, 2010.

SOURCE: ; (09)EH1398.2.14. -->     SECTION 14. An emergency is declared for this act.