Introduced Version
SENATE BILL No. 488
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.1-34.
Synopsis: Tax credit for hiring certain individuals. Provides a
nonrefundable tax credit to a small business for employing an
individual who is receiving unemployment benefits or returning from
military service (qualified new employee). Provides that the small
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, 2012, through June 30, 2012). Provides that the
employee must be hired full time. Provides that the credit applies only
to taxable years beginning in 2013 through 2015. Provides that the
credit is $3,000 per qualified new employee limited to $100,000 per
small business. Provides that the small business may carry any excess
credit over to not more than three subsequent taxable years. Provides
that the small 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, 2013 (retroactive).
Randolph
January 14, 2013, read first time and referred to Committee on Tax and Fiscal Policy.
Introduced
First Regular Session 118th General Assembly (2013)
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SENATE BILL No. 488
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 6-3.1-34; (13)IN0488.1.1. -->
SECTION 1. IC 6-3.1-34 IS ADDED TO THE INDIANA CODE
AS A
NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
JANUARY 1, 2013 (RETROACTIVE)]:
Chapter 34. Small Business Job Creation Tax Credit
Sec. 1. As used in this chapter, "base employment period" of a
small business refers to a six (6) month period beginning January
1, 2012. However, if a small business began doing business in
Indiana after January 1, 2012, the term refers to the initial period
before January 1, 2013, 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, 2013.
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 6-5.5 (the financial institutions tax); and
(3) 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, "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 2013, 2014, and 2015.
(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. If a small business is entitled to a tax credit in a taxable
year under section 9 of this chapter, the amount of the tax credit 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 the 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 amounts of three thousand dollars ($3,000)
and one hundred thousand dollars ($100,000) 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 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, 2012.
(2) Be, at the time the small business initially employs the
individual after December 31, 2012:
(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 the 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 the 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, 2021.
SOURCE: ; (13)IN0488.1.2. -->
SECTION 2.
An emergency is declared for this act.