Bill Text: IN HB1440 | 2011 | Regular Session | Introduced
Bill Title: Coal; aggregate and coal bed methane taxation.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2011-01-18 - First reading: referred to Committee on Ways and Means [HB1440 Detail]
Download: Indiana-2011-HB1440-Introduced.html
Citations Affected: IC 6-8-1; IC 6-8.1-1-1; IC 6-10; IC 8-18-8-5;
IC 14-14-3.
Effective: January 1, 2012.
January 18, 2011, read first time and referred to Committee on Ways and Means.
Digest Continued
petroleum tax on coal bed methane and the coal and aggregate
severance tax shall be distributed as follows: (1) 50% to the state
general fund. (2) 40% to the county in which the coal bed methane,
coal, or aggregate is removed or processed and the cities and towns of
the county based on population. (3) 10% to a new fund to make grants
for parks and recreation projects throughout Indiana. Provides that the
counties, cities, and towns must use the money from the distribution
only for local road and street purposes. Establishes a seven member
board comprised of two governor appointments who are voting
members, four legislative appointments who are nonvoting members,
and the director of the department of natural resources, who is a voting
member, to decide grant awards from the new parks and recreation
grant fund.
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A BILL FOR AN ACT to amend the Indiana Code concerning
taxation and to make an appropriation.
(1)
(2)
(A) six cents ($0.06) per one thousand (1,000) cubic feet (MCF) for natural gas that is not coal bed methane;
(B) twenty-five cents ($0.25) per one thousand (1,000) cubic feet (MCF) for coal bed methane; and
(C) forty-eight cents ($0.48) per barrel for oil;
is
such gas is piped to a landowner's private buildings for the landowner's
own use.
(b) Money paid into
(1) To the expenses of administering this chapter.
(2) To the oil and gas division of the department of natural resources for the purpose of administering IC 14-37.
(3) To research pertaining to exploration for, development of, and wise use of petroleum resources in Indiana.
(IC 6-9-13 and IC 6-9-28); the coal and aggregate severance tax
(IC 6-10); the regional transportation improvement income tax
(IC 8-24-17); the oil inspection fee (IC 16-44-2); the emergency and
hazardous chemical inventory form fee (IC 6-6-10); the penalties
assessed for oversize vehicles (IC 9-20-3 and IC 9-30); the fees and
penalties assessed for overweight vehicles (IC 9-20-4 and IC 9-30); the
underground storage tank fee (IC 13-23); the solid waste management
fee (IC 13-20-22); and any other tax or fee that the department is
required to collect or administer.
ARTICLE 10. COAL AND AGGREGATE SEVERANCE TAX
Chapter 1. Definitions
Sec. 1. The definitions in this chapter apply throughout this article.
Sec. 2. "Aggregate" means:
(1) sand;
(2) gravel;
(3) dimension stone;
(4) limestone;
(5) gypsum; or
(6) crushed stone.
Sec. 3. "Coal" includes any material composed predominantly of hydrocarbons in a solid state.
Sec. 4. "Department" refers to the department of state revenue.
Sec. 5. "Economic interest" refers to the economic interest required by Internal Revenue Code Section 611, as in effect December 31, 1977, entitling the taxpayer to a depletion deduction for income tax purposes.
Sec. 6. "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. 7. (a) "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 coal is consumed to generate electricity; or
(2) the loading or unloading for shipment of coal that has not been severed or treated in Indiana.
Sec. 8. "Registered taxpayer" refers to a taxpayer who holds a valid severance tax certificate of registration under IC 6-10-3 during the period in which the taxpayer's coal or aggregate is sold.
Sec. 9. "Related party" means two (2) or more persons, organizations, or businesses owned or controlled directly or indirectly by the same interest.
Sec. 10. "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. 11. "Severance" refers to either of the following:
(1) The physical removal of coal from the earth.
(2) The extraction, removal, or recovery of aggregate from natural deposits.
"Sever", "severed", and "severing" have corresponding meanings.
Sec. 12. "Taxpayer" includes a pass through entity.
Sec. 13. "Ton" means a short ton of two thousand (2,000) pounds.
Chapter 2. Determination of Tax Amount
Sec. 1. (a) A severance tax is imposed on each taxpayer engaged in:
(1) severing coal in Indiana;
(2) processing coal in Indiana; or
(3) severing aggregate in Indiana.
The tax applies to aggregate severed or coal severed or processed after December 31, 2011.
(b) Except as provided in subsections (c) and (d), the severance tax is imposed at the rate of four and five-tenths percent (4.5%) of the gross value of all:
(1) coal severed or processed; or
(2) aggregate severed;
during a reporting period.
(c) This subsection does not apply to a taxpayer who only processes coal. The minimum tax for a taxpayer's reporting period is determined by multiplying the total number of tons severed by
the taxpayer during the reporting period by fifty cents ($0.50).
(d) For coal used for burning solid waste, the severance tax is
the lesser of:
(1) fifty cents ($0.50) per ton; or
(2) four percent (4%) of the selling price per ton.
Sec. 2. Each taxpayer shall report the gross value of the coal or
aggregate 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.
Sec. 3. (a) Gross value is determined as follows:
(1) If the coal is severed or processed, or both, during a
reporting period and sold during the same reporting period,
gross value equals the amount received or receivable by the
taxpayer for the sale of the coal.
(2) If the coal is severed or processed, or both, during a
reporting period but not sold during the same 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 severed coal is purchased for 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.
(4) If severed coal is purchased for 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.
(5) If the aggregate is severed during a reporting period and
sold during the same reporting period, gross value equals the
amount received or receivable by the taxpayer for the sale of
the aggregate.
(6) If the aggregate is severed during a reporting period but
not sold during the same reporting period, the gross value is
determined as follows:
(A) If the aggregate is to be sold under the terms of a
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 aggregate is used to compute gross
value.
(7) 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 or aggregate is
sold to a related party for consumption, gross value is an
amount not less than the fair market value for coal or
aggregate of similar grade and quality.
(8) In the absence of a sale, gross value is the fair market
value for coal or aggregate of a similar grade and quality.
(b) Gross value may not be reduced by any taxes, including the
tax imposed under this chapter, royalties, sales commissions, or
other expenses.
Sec. 4. (a) If a contract, either written or oral, is entered into by
a person that:
(1) is engaged to sever or process coal or to sever aggregate;
and
(2) does not obtain title to or have an economic interest in the
coal or aggregate;
the party that owns the coal or aggregate or has an economic
interest in the coal or aggregate is the taxpayer.
(b) A party that receives only an arm's length royalty is not
considered to have an economic interest for purposes of subsection
(a).
Chapter 3. Certificate of Registration and Administration
Sec. 1. (a) A taxpayer engaged in severing aggregate or 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 this chapter or a rule
adopted under this chapter, the department may suspend or revoke
the taxpayer's certificate of registration.
Sec. 4. (a) A taxpayer, including an officer of a corporation, who
recklessly, knowingly, or intentionally 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.
(b) A taxpayer, including an officer of a corporation, who
recklessly, knowingly, or intentionally severs aggregate 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 a taxpayer processing
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 each taxpayer that is a
party to the agreement and by the commissioner of the
department. If a taxpayer is a partnership or association, the
application must be signed by a member. If a 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 6-10-2-3(a)(3) 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
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 from gross value for purchased coal
under IC 6-10-2-3(a)(3) 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 from gross value for purchased coal under
IC 6-10-2-3(a)(3) may not be allowed for purchases of coal that
cannot be traced to the person who severed the coal outside
Indiana.
Sec. 8. The department shall adopt rules under IC 4-22-2 to
implement this article.
Chapter 4. Payment of Tax
Sec. 1. (a) Each taxpayer charged with the duty to file reports
and pay the 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 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) Notwithstanding 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
this article is 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) Personal liability under subsection (a) applies to each person holding corporate office at the time the taxes become due.
(d) A person who 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 knowingly, recklessly, or intentionally:
(1) fails to file returns required under this article;
(2) fails to 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 5. Use of Tax Revenue
Sec. 1. (a) A special holding account within the state general fund is established for depositing taxes collected under this article and to receive transfers of petroleum severance taxes attributable to coal bed methane as provided in IC 6-8-1-27. The department shall deposit monthly the taxes that are collected under this article.
(b) Before the fifth working day of each month, the treasurer of state shall transfer and distribute the money in the account at the end of the preceding month as follows:
(1) Fifty percent (50%) to the general account of the state general fund.
(2) Forty percent (40%) to be allocated among the counties in which:
(A) coal is severed or processed;
(B) aggregate is severed; or
(C) coal bed methane is severed.
The treasurer of state shall distribute to the county treasurer the amount of severance taxes imposed in the county. The county treasurer shall allocate the severance taxes among the county and the cities and towns in the county as provided in section 3 of this chapter.
(3) Ten percent (10%) to the parks and recreation grant fund established by IC 14-14-3-6.
(c) Money in the account is appropriated to make the distributions to counties and to the parks and recreation fund as required by this chapter. Money in the 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) A county treasurer shall allocate the amount received under this chapter among the county and each city and town within the county based on population. For purposes of this section, a county's population is the population in the unincorporated area of the county. This allocation shall be made as part of the June and December settlement each year.
(b) Money allocated to a county, city, or town under this section shall be deposited in the unit's fund that is dedicated to highway, road, or street purposes. Money allocated to a county, city, or town under this section may be used only to pay expenses incurred in the improvement and maintenance of the county highways and local roads and streets.
(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).
(6) Riverboat wagering tax (IC 4-33-13).
(7) Petroleum severance taxes (IC 6-8-1) attributable to coal bed methane.
(8) Coal and aggregate severance tax (IC 6-10).
(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 general fund to the county highway department to pay for employees' personal services.
Chapter 3. Parks and Recreation Grants
Sec. 1. As used in this chapter, "board" refers to the parks and recreation grant board established by section 3 of this chapter.
Sec. 2. As used in this chapter, "fund" refers to the parks and recreation grant fund established by section 6 of this chapter.
Sec. 3. (a) The parks and recreation grant board is established.
(b) The board consists of the following seven (7) members:
(1) The director as an ex officio voting member who shall serve as the chairperson of the board.
(2) One (1) voting member appointed by the governor who must have an interest in and knowledge of parks and recreation.
(3) The executive director of the Indiana Park and Recreation Association, or its successor association if it does not exist, as an ex officio voting member.
(4) Four (4) nonvoting advisory members appointed as follows:
(A) Two (2) members, who are not members of the same political party, appointed by the president pro tempore of the senate with advice from the minority leader of the senate.
(B) Two (2) members, who are not members of the same political party, appointed by the speaker of the house of representatives with advice from the minority leader of the house of representatives.
(c) The term of office of a member of the board:
(1) is two (2) years; and
(2) continues until the member's successor is appointed and qualified.
(d) If a vacancy occurs in the appointed membership of the board, the appointing authority shall appoint a member to fill the vacancy for the remainder of the unexpired term.
(e) The director shall serve on the board without additional compensation.
(f) A voting member of the board or an adviser is not entitled to the minimum salary per diem provided by IC 4-10-11-2.1(b). A voting member of the board is, however, entitled to reimbursement for traveling expenses as provided under IC 4-13-1-4 and other expenses actually incurred in connection with the duties of the member as provided in the state policies and procedures established by the Indiana department of administration and approved by the budget agency.
(g) The board shall meet at least quarterly. The meetings of the board shall be held in accordance with IC 5-14-1.5.
(h) A majority of the voting members of the board constitutes a quorum for doing business. Two (2) votes are required for passage of any matter put to a vote.
Sec. 4. (a) The board shall establish procedures and requirements governing the conduct of the board's meetings.
(b) The chairperson of the board shall do the following:
(1) Act as the executive and operating officer of the board.
(2) Determine the time and place of meetings.
(3) Preside at meetings.
(4) Carry out the policy decisions of the board.
(5) Perform all other duties and functions assigned by the board or by law.
(c) The chairperson of the board shall afford any person attending a public meeting of the board an adequate opportunity to comment through the oral or written presentation of facts or argument.
Sec. 5. The board shall do the following:
(1) Develop a grant application procedure for requests for grants from the fund.
(2) Develop criteria for the awarding of grants from the fund.
(3) Provide a forum for discussion and deliberation on matters pertaining to making grants under this chapter.
(4) Apply for and accept gifts and grants, which must be deposited in the fund and used for the purposes of this chapter, and enter into lawful agreements that are required as a condition for receiving gifts, grants, or other money for the purposes of this chapter.
Sec. 6. (a) The parks and recreation grant fund is established to receive a part of the taxes collected under IC 6-8-1 and IC 6-10-5. The fund shall be administered by the board.
(b) Money in the fund is appropriated to make grants under this chapter. Money in the fund at the end of a state fiscal year does not revert to the state general fund.
(c) The fund may be used to provide grants to applicants for the following purposes:
(1) To strengthen Indiana's economy by focusing investment on parks and recreation projects.
(2) To accelerate job creation through training and education initiatives to enhance the skills and employment prospects of Indiana's workforce in the parks and recreation industry.
(3) To facilitate the development of parks and recreation sites throughout Indiana.
(4) To encourage public-private partnerships focused on development of parks and recreation projects.
Sec. 7. (a) A person may apply for a grant from the fund using the procedures established by the board. The board shall analyze grant applications based on the criteria adopted by the board and make an assessment of each grant request. The board shall give priority to applications that meet two (2) or more of the purposes listed in section 6 of this chapter.
(b) The board shall determine by majority vote whether an applicant is awarded a grant, including the amount of the grant, its duration, and any appropriate grant conditions.
(c) A grant may not exceed fifty percent (50%) of the applicant's project costs.
