Bill Text: IN SB0430 | 2011 | Regular Session | Introduced
Bill Title: Tax credit for hiring certain individuals.
Sponsorship: Partisan Bill (Democrat 2)
Status: (Introduced - Dead) 2011-01-18 - Senator R. Young added as second author [SB0430 Detail]
Download: Indiana-2011-SB0430-Introduced.html
Citations Affected: IC 6-3.1-34.
Synopsis: Tax credit for hiring certain individuals. Provides a
nonrefundable tax credit to a small business (less than 150 employees,
the majority of whom are in Indiana) for employing an individual who
is receiving unemployment benefits or returning from military service
(qualified employee). Provides that the business must employ a greater
number of full-time employees in Indiana in the taxable year than the
small business employed in Indiana, on average, in the small business's
base employment period (generally January 1, 2009, through June 30,
2009). Provides that the employee must be hired full time. Provides
that the credit applies only to taxable years beginning in 2011 through
2013. Provides that the credit is $3,000 per qualified employee limited
to $100,000 per business. Provides that the business may carry any
excess credit over to not more than three subsequent taxable years.
Provides that the business forfeits 50% of the amount of the tax credits
attributable to the employment of a qualified new employee, if within
18 months after the qualified new employee was initially hired: (1) the
qualified new employee is terminated, laid off, or otherwise reclassified
to a position that is not a full-time employment position with the small
business; or (2) the position created for the qualified new employee is
eliminated.
Effective: January 1, 2011 (retroactive).
January 12, 2011, read first time and referred to Committee on Tax and Fiscal Policy.
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A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Chapter 34. Small Business Job Creation Tax Credit
Sec. 1. As used in this chapter, "base employment period" of a small business refers a six (6) month period beginning January 1, 2009. However, if a small business began doing business in Indiana after January 1, 2009, the term refers to the initial period before January 1, 2011, in which the small business employed full-time employees in Indiana in the trade or business of the small business, not to exceed six (6) months.
Sec. 2. As used in this chapter, "department" refers to the department of state revenue or the department of insurance, whichever is obligated to administer the tax against which a tax credit is applied.
Sec. 3. As used in this chapter, "full-time employee" means an individual who:
(1) is employed for consideration for at least thirty-five (35) hours each week or who renders any other standard of service generally accepted by custom or specified by contract as full-time employment; and
(2) earns income for service described in subdivision (1) that is subject to withholding under IC 6-3 (before the application of any earned income tax credit) in an amount that is the equivalent of at least two hundred percent (200%) of the federal hourly minimum wage in effect during the week of employment.
Sec. 4. As used in this chapter, "qualified new employee" refers to a full-time employee described in section 14 of this chapter.
Sec. 5. As used in this chapter, "small business" refers to a small business (as defined in IC 5-28-2-6) that was in existence and employed full-time employees in Indiana in the trade or business of the small business before January 1, 2011.
Sec. 6. As used in this chapter, "state tax liability" means a taxpayer's total tax liability that is incurred under:
(1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(2) IC 27-1-18-2 (the insurance premiums tax); and
(3) 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. 7. As used in this chapter, "tax credit" refers to a tax credit granted by this chapter against state tax liability.
Sec. 8. As used in this chapter, "taxpayer" means an individual or entity that has state tax liability.
Sec. 9. (a) This section applies only to taxable years beginning in 2011, 2012, and 2013.
(b) Subject to this chapter, a small business that employs a qualified new employee in Indiana in a taxable year is eligible for a tax credit against the state tax liability imposed against the small business for the taxable year if, on average, the small business employed a greater number of full-time employees in Indiana in the taxable year than the small business employed in Indiana, on average, in the small business's base employment period.
Sec. 10. The amount of the tax credit to which a small business is entitled in a taxable year is equal to the lesser of the following:
(1) Three thousand dollars ($3,000) multiplied by the lesser of the following:
(A) The average number of qualified new employees that
the small business employed in Indiana during the taxable
year in the trade or business of the small business.
(B) The average number of additional full-time employees
that the small business employed in Indiana in the trade or
business of the small business during the taxable year that
exceeds the average number of full-time employees that the
small business employed in Indiana in trade or business of
the small business during the small business's base
employment period.
(2) One hundred thousand dollars ($100,000).
However, if the taxable year of the small business is less than
twelve (12) months, the three thousand dollar ($3,000) and one
hundred thousand dollar ($100,000) amounts are reduced in
proportion to the amount by which the taxable year of the small
business is shortened.
Sec. 11. (a) If the amount of a tax credit to which a small
business is entitled in a taxable year exceeds the small business's
state tax liability for that taxable year, the small business 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 small
business to obtain a credit under this chapter for any subsequent
taxable year.
(b) A small business is not entitled to a carryback or refund of
any unused credit.
Sec. 12. If a small business is a pass through entity that does not
have state tax liability against which a tax credit may be applied,
a shareholder, partner, fiduciary, or member of the pass through
entity is entitled to a tax credit equal to:
(1) the tax credit that the pass through entity would be
entitled to for the taxable year if the pass through entity were
a taxpayer; multiplied by
(2) the percentage of the pass through entity's distributive
income to which the shareholder, partner, fiduciary, or
member is entitled.
Sec. 13. To receive a tax credit, a taxpayer must claim the credit
on the taxpayer's annual state tax return or returns in the manner
prescribed by the department. The taxpayer shall maintain the
records required by the department for the period specified by the
department to substantiate the taxpayer's eligibility for a tax
credit.
Sec. 14. To be a qualified new employee in a particular taxable
year, an individual must meet all of the following criteria:
(1) Have been initially hired into a position as a full-time
employee by the small business for the first time after
December 31, 2010.
(2) Be, at the time the small business initially employs the
individual after December 31, 2010:
(A) an individual who is receiving state or federal
unemployment insurance benefits or has exhausted the
individual's eligibility for state or federal unemployment
insurance benefits since last becoming unemployed;
(B) a former member of the military services of the United
States who served on active duty in any branch of the
armed forces of the United States or National Guard and
who at no time received a discharge or separation under
other than honorable conditions, except corrected
separation or discharge to read "honorable" as evidenced
by appropriate records presented from the United States
Department of Defense or appropriate branch of the
military service; or
(C) an individual described in both clauses (A) and (B).
(3) Is not an individual who was employed by a related
member (as defined in IC 6-3.1-13-8) of the small business (or
another business entity that would be a related member (as
defined in IC 6-3.1-13-8) if the other entity were a
corporation) within twelve (12) months of being initially
employed by the small business.
(4) Is not a child, grandchild, parent, or spouse (other than a
spouse who is legally separated from the individual) of any
individual who is an employee of the small business or who
has a direct or an indirect ownership interest of at least five
percent (5%) in the profits, capital, or value of the small
business or a related member (as defined in IC 6-3.1-13-8) of
the small business (or another business entity that would be a
related member (as defined in IC 6-3.1-13-8) if the other
entity were a corporation). An ownership interest shall be
determined in accordance with Section 1563 of the Internal
Revenue Code and regulations prescribed under Section 1563
of the Internal Revenue Code.
Sec. 15. The tax credit to which a taxpayer would otherwise be
entitled under this chapter in a taxable year is reduced by the sum
of the following tax credits received for the same qualified new
employee:
(1) The economic development for a growing economy tax
credits (IC 6-3.1-13) allowable to the taxpayer in a taxable
year and attributable to the same employee for which a tax
credit would otherwise be granted under this chapter.
(2) The Hoosier business investment tax credits (IC 6-3.1-26)
allowable to the taxpayer in a taxable year and attributable to
the same employee for which a tax credit would otherwise be
granted under this chapter.
(3) The amount of federal or state training grants used in the
taxable year to train an employee for which a tax credit would
otherwise be granted under this chapter.
Sec. 16. A small business (or if section 12 of this chapter applies,
a shareholder, partner, or member of a small business) forfeits fifty
percent (50%) of the amount of the tax credits attributable to the
employment of a qualified new employee if within eighteen (18)
months after the qualified new employee was initially hired:
(1) the qualified new employee is terminated, laid off, or
otherwise reclassified to a position that is not a full-time
employment position with the small business; or
(2) the position created for the qualified new employee is
eliminated.
For purposes of this section, the replacement, within a reasonable
time as determined by the department, of a qualified new employee
with another qualified new employee shall be treated as continuous
employment of a qualified new employee from the date of the
hiring or rehiring of the initial qualified new employee.
Sec. 17. The amount due to the department from a forfeiture
under section 16 of this chapter shall be treated as due to the state
on the date the taxpayer's annual return or informational return
is due for the taxable year in which the reduction in employment
occurred.
Sec. 18. (a) Employment levels shall be determined using the
total number of employees reported by the small business on the
quarterly payroll report submitted by the small business to the
department of workforce development. The department of
workforce development shall give the information to the
department on the schedule and in the form requested by the
department.
(b) A small business shall use the method prescribed by the
department to determine the average number of full-time
employees or qualified new employees that the small business
employed during a period.
Sec. 19. The department may adopt rules under IC 4-22-2,
including emergency rules under IC 4-22-2-37.1, to implement this
chapter.
Sec. 20. This chapter expires January 1, 2020.
