Introduced Version




HOUSE BILL No. 1088

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 6-3-4-17; IC 6-3.5; IC 6-8.1.

Synopsis: County and municipal income taxes. Allows a county to use an additional county adjusted gross income tax rate or county option income tax rate to reduce all property tax levies imposed by the county by granting property tax replacement credits against those property tax levies to all taxpayers. Allows a municipality to adopt a municipal income tax if the municipality is located in such a county. Requires an adopting municipality to provide property tax relief for property owners in the municipality by freezing the levy or providing general property tax replacement credits, homestead credits, or local property tax replacement credits for residential property, or any combination of the permitted forms of relief. Provides that the maximum municipal option income tax rate is the rate specified for the reduction of the county levies. Provides that the combined municipal and county rates may not exceed 1%. Requires the department of state revenue to include on the adjusted gross income tax return a requirement that the taxpayer identify the city or town, if any, where the taxpayer's principal place of residence is located.

Effective: July 1, 2012.



Thompson


    January 4, 2012, read first time and referred to Committee on Ways and Means.




Introduced

Second Regular Session 117th General Assembly (2012)


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 2011 Regular Session of the General Assembly.

HOUSE BILL No. 1088


    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 6-3-4-17; (12)IN1088.1.1. -->     SECTION 1. IC 6-3-4-17, AS AMENDED BY P.L.42-2011, SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 17. (a) Beginning after December 31, 2010, the department and the office of management and budget shall:
        (1) develop a quarterly report that summarizes the amount reported to and processed by the department under section 4.1(h) of this chapter, section 15.7(a)(3) of this chapter, IC 6-3.5-1.1-18(c), IC 6-3.5-6-22(c), and IC 6-3.5-7-18(c) for each county; and
        (2) make the quarterly report available to county auditors within forty-five (45) days after the end of the calendar quarter.
     (b) Beginning after December 31, 2013, the department and the office of management and budget shall:
        (1) develop a quarterly report that summarizes the amount reported to and processed by the department under IC 6-3.5-10-22(c) for each city and town; and
        (2) make the quarterly report available to city and town fiscal

officers within forty-five (45) days after the end of the calendar quarter.

SOURCE: IC 6-3.5-1.1-26; (12)IN1088.1.2. -->     SECTION 2. IC 6-3.5-1.1-26, AS AMENDED BY P.L.172-2011, SECTION 75, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 26. (a) A county council may impose a tax rate under this section to provide property tax relief to taxpayers in the county. A county council is not required to impose any other tax before imposing a tax rate under this section.
    (b) A tax rate under this section may be imposed in increments of five hundredths of one percent (0.05%) determined by the county council. Except as provided in subsection (f)(5), a tax rate under this section may not exceed one percent (1%). The sum of the tax rates imposed:
        (1) by a county under this section; and
        (2) by a municipality located in the county under IC 6-3.5-10;
may not exceed one percent (1%).
    (c) A tax rate under this section is in addition to any other tax rates imposed under this chapter and does not affect the purposes for which other tax revenue under this chapter may be used.
    (d) If a county council adopts an ordinance to impose or increase a tax rate under this section, the county auditor shall send a certified copy of the ordinance to the department and the department of local government finance by certified mail.
    (e) A tax rate under this section may be imposed, increased, decreased, or rescinded by a county council at the same time and in the same manner that the county council may impose or increase a tax rate under section 24 of this chapter.
    (f) Tax revenue attributable to a tax rate under this section may be used for any combination of the following purposes, as specified by ordinance of the county council:
        (1) Except as provided in subsection (j), the tax revenue may be used to provide local property tax replacement credits at a uniform rate to all taxpayers in the county. The local property tax replacement credits shall be treated for all purposes as property tax levies. The county auditor shall determine the local property tax replacement credit percentage for a particular year based on the amount of tax revenue that will be used under this subdivision to provide local property tax replacement credits in that year. A county council may not adopt an ordinance determining that tax revenue shall be used under this subdivision to provide local property tax replacement credits at a uniform rate to all taxpayers in the county unless the county council has done the following:
            (A) Made available to the public the county council's best estimate of the amount of property tax replacement credits to be provided under this subdivision to homesteads, other residential property, commercial property, industrial property, and agricultural property.
            (B) Adopted a resolution or other statement acknowledging that some taxpayers in the county that do not pay the tax rate under this section will receive a property tax replacement credit that is funded with tax revenue from the tax rate under this section.
        (2) The tax revenue may be used to uniformly provide the homestead credit percentage in the county. The homestead credits shall be treated for all purposes as property tax levies. The homestead credits do not reduce the basis for determining any state homestead credit. The homestead credits shall be applied to the net property taxes due on the homestead after the application of all other assessed value deductions or property tax deductions and credits that apply to the amount owed under IC 6-1.1. The county auditor shall determine the homestead credit percentage for a particular year based on the amount of tax revenue that will be used under this subdivision to provide homestead credits in that year.
        (3) The tax revenue may be used to provide local property tax replacement credits at a uniform rate for all qualified residential property (as defined in IC 6-1.1-20.6-4 before January 1, 2009, and as defined in section 1 of this chapter after December 31, 2008) in the county. The local property tax replacement credits shall be treated for all purposes as property tax levies. The county auditor shall determine the local property tax replacement credit percentage for a particular year based on the amount of tax revenue that will be used under this subdivision to provide local property tax replacement credits in that year.
        (4) This subdivision applies only to Lake County. The Lake County council may adopt an ordinance providing that the tax revenue from the tax rate under this section is used for any of the following:
            (A) To reduce all property tax levies imposed by the county by the granting of property tax replacement credits against those property tax levies.
            (B) To provide local property tax replacement credits in Lake County in the following manner:
                (i) The tax revenue under this section that is collected from

taxpayers within a particular municipality in Lake County (as determined by the department based on the department's best estimate) shall be used only to provide a local property tax credit against property taxes imposed by that municipality.
                (ii) The tax revenue under this section that is collected from taxpayers within the unincorporated area of Lake County (as determined by the department) shall be used only to provide a local property tax credit against property taxes imposed by the county. The local property tax credit for the unincorporated area of Lake County shall be available only to those taxpayers within the unincorporated area of the county.
            (C) To provide property tax credits in the following manner:
                (i) Sixty percent (60%) of the tax revenue under this section shall be used as provided in clause (B).
                (ii) Forty percent (40%) of the tax revenue under this section shall be used to provide property tax replacement credits against property tax levies of the county and each township and municipality in the county. The percentage of the tax revenue distributed under this item that shall be used as credits against the county's levies or against a particular township's or municipality's levies is equal to the percentage determined by dividing the population of the county, township, or municipality by the sum of the total population of the county, each township in the county, and each municipality in the county.
        The Lake County council shall determine whether the credits under clause (A), (B), or (C) shall be provided to homesteads, to all qualified residential property, or to all taxpayers. The department of local government finance, with the assistance of the budget agency, shall certify to the county auditor and the fiscal body of the county and each township and municipality in the county the amount of property tax credits under this subdivision. Except as provided in subsection (g), the tax revenue under this section that is used to provide credits under this subdivision shall be treated for all purposes as property tax levies.
         (5) The tax revenue may be used to reduce all property tax levies imposed by the county by granting property tax replacement credits against those property tax levies to all taxpayers. The tax revenue under this section that is used to provide property tax replacement credits under this

subdivision shall be treated for all purposes as property tax levies. The following apply if a county uses tax revenue to provide property tax replacement credits under this subdivision:
            (A) The additional tax rate that may be used for this purpose must be specified by the ordinance of the county council.
            (B) The additional tax rate that may be used for this purpose may not exceed five-tenths of one percent (0.5%).
            (C) The sum of all additional tax rates imposed under this section for all purposes permitted by this subsection may not exceed five-tenths of one percent (0.5%).
The county council may adopt an ordinance changing the purposes for which tax revenue attributable to a tax rate under this section shall be used in the following year.
    (g) The tax rate under this section and the tax revenue attributable to the tax rate under this section shall not be considered for purposes of computing:
        (1) the maximum income tax rate that may be imposed in a county under section 2 of this chapter or any other provision of this chapter;
        (2) the maximum permissible property tax levy under IC 6-1.1-18.5-3; or
        (3) the credit under IC 6-1.1-20.6.
    (h) Tax revenue under this section shall be treated as a part of the receiving civil taxing unit's or school corporation's property tax levy for that year for purposes of fixing the budget of the civil taxing unit or school corporation and for determining the distribution of taxes that are distributed on the basis of property tax levies. To the extent the county auditor determines that there is income tax revenue remaining from the tax under this section after providing the property tax replacement credits, the excess shall be credited to a dedicated county account and may be used only for property tax replacement credits under this section in subsequent years.
    (i) The department of local government finance and the department of state revenue may take any actions necessary to carry out the purposes of this section.
    (j) A taxpayer that owns an industrial plant located in Jasper County is ineligible for a local property tax replacement credit under this section against the property taxes due on the industrial plant if the assessed value of the industrial plant as of March 1, 2006, exceeds twenty percent (20%) of the total assessed value of all taxable property

in the county on that date. The general assembly finds that the provisions of this subsection are necessary because the industrial plant represents such a large percentage of Jasper County's assessed valuation.

SOURCE: IC 6-3.5-1.5-4; (12)IN1088.1.3. -->     SECTION 3. IC 6-3.5-1.5-4 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 4. (a) This section applies to a municipality that imposes a municipal option income tax under IC 6-3.5-10.
     (b) The budget agency shall, before July 1 of each year, jointly calculate the municipal option income tax rate (as applicable) that must be imposed in a county to raise income tax revenue in the following year equal to the result of:
        (1) the department of local government finance's estimate of maximum permissible ad valorem property tax levies calculated under IC 6-1.1-18.5 for the municipality for the ensuing calendar year; minus
        (2) the maximum permissible ad valorem property tax levy calculated under IC 6-1.1-18.5 for the municipality for the current calendar year.
    (c) In the case of a municipality that wishes to use tax revenue received under IC 6-3.5-10 to freeze its levy for the first time, the department of local government finance and the budget agency shall jointly estimate the amount that will be calculated under subsection (b) in the second year after the tax rate is first imposed. The department of local government finance and the budget agency shall calculate the tax rate under IC 6-3.5-10 that must be imposed in the municipality in the second year after the tax rate is first imposed to raise income tax revenue equal to the estimate under this subsection.
    (d) The budget agency and the department of local government finance shall make the calculations under subsections (b) and (c) based on the best information available at the time the calculation is made.
SOURCE: IC 6-3.5-6-32; (12)IN1088.1.4. -->     SECTION 4. IC 6-3.5-6-32, AS AMENDED BY P.L.172-2011, SECTION 78, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 32. (a) A county income tax council may impose a tax rate under this section to provide property tax relief to taxpayers in the county. A county income tax council is not required to impose any other tax before imposing a tax rate under this section.
    (b) A tax rate under this section may be imposed in increments of five-hundredths of one percent (0.05%) determined by the county income tax council. Except as provided in subsection (f)(5), a tax rate

under this section may not exceed one percent (1%). The sum of the tax rates imposed:
        (1) by a county under this section; and
        (2) by a municipality located in the county under IC 6-3.5-10;
may not exceed one percent (1%).
    (c) A tax rate under this section is in addition to any other tax rates imposed under this chapter and does not affect the purposes for which other tax revenue under this chapter may be used.
    (d) If a county income tax council adopts an ordinance to impose or increase a tax rate under this section, the county auditor shall send a certified copy of the ordinance to the department, the budget agency, and the department of local government finance by certified mail.
    (e) A tax rate under this section may be imposed, increased, decreased, or rescinded at the same time and in the same manner that the county income tax council may impose or increase a tax rate under section 30 of this chapter.
    (f) Tax revenue attributable to a tax rate under this section may be used for any combination of the following purposes, as specified by ordinance of the county income tax council:
        (1) The tax revenue may be used to provide local property tax replacement credits at a uniform rate to all taxpayers in the county. The local property tax replacement credits shall be treated for all purposes as property tax levies. The county auditor shall determine the local property tax replacement credit percentage for a particular year based on the amount of tax revenue that will be used under this subdivision to provide local property tax replacement credits in that year. A county income tax council may not adopt an ordinance determining that tax revenue shall be used under this subdivision to provide local property tax replacement credits at a uniform rate to all taxpayers in the county unless the county council has done the following:
            (A) Made available to the public the county council's best estimate of the amount of property tax replacement credits to be provided under this subdivision to homesteads, other residential property, commercial property, industrial property, and agricultural property.
            (B) Adopted a resolution or other statement acknowledging that some taxpayers in the county that do not pay the tax rate under this section will receive a property tax replacement credit that is funded with tax revenue from the tax rate under this section.
        (2) The tax revenue may be used to uniformly increase (before

January 1, 2011) or uniformly provide (after December 31, 2010) the homestead credit percentage in the county. The homestead credits shall be treated for all purposes as property tax levies. The homestead credits do not reduce the basis for determining any state homestead credit. The homestead credits shall be applied to the net property taxes due on the homestead after the application of all other assessed value deductions or property tax deductions and credits that apply to the amount owed under IC 6-1.1. The county auditor shall determine the homestead credit percentage for a particular year based on the amount of tax revenue that will be used under this subdivision to provide homestead credits in that year.
        (3) The tax revenue may be used to provide local property tax replacement credits at a uniform rate for all qualified residential property (as defined in IC 6-1.1-20.6-4 before January 1, 2009, and as defined in section 1 of this chapter after December 31, 2008) in the county. The local property tax replacement credits shall be treated for all purposes as property tax levies. The county auditor shall determine the local property tax replacement credit percentage for a particular year based on the amount of tax revenue that will be used under this subdivision to provide local property tax replacement credits in that year.
        (4) This subdivision applies only to Lake County. The Lake County council may adopt an ordinance providing that the tax revenue from the tax rate under this section is used for any of the following:
            (A) To reduce all property tax levies imposed by the county by the granting of property tax replacement credits against those property tax levies.
            (B) To provide local property tax replacement credits in Lake County in the following manner:
                (i) The tax revenue under this section that is collected from taxpayers within a particular municipality in Lake County (as determined by the department based on the department's best estimate) shall be used only to provide a local property tax credit against property taxes imposed by that municipality.
                (ii) The tax revenue under this section that is collected from taxpayers within the unincorporated area of Lake County (as determined by the department) shall be used only to provide a local property tax credit against property taxes imposed by the county. The local property tax credit for the

unincorporated area of Lake County shall be available only to those taxpayers within the unincorporated area of the county.
            (C) To provide property tax credits in the following manner:
                (i) Sixty percent (60%) of the tax revenue under this section shall be used as provided in clause (B).
                (ii) Forty percent (40%) of the tax revenue under this section shall be used to provide property tax replacement credits against property tax levies of the county and each township and municipality in the county. The percentage of the tax revenue distributed under this item that shall be used as credits against the county's levies or against a particular township's or municipality's levies is equal to the percentage determined by dividing the population of the county, township, or municipality by the sum of the total population of the county, each township in the county, and each municipality in the county.
        The Lake County council shall determine whether the credits under clause (A), (B), or (C) shall be provided to homesteads, to all qualified residential property, or to all taxpayers. The department of local government finance, with the assistance of the budget agency, shall certify to the county auditor and the fiscal body of the county and each township and municipality in the county the amount of property tax credits under this subdivision. Except as provided in subsection (g), the tax revenue under this section that is used to provide credits under this subdivision shall be treated for all purposes as property tax levies.
         (5) The tax revenue may be used to reduce all property tax levies imposed by the county by granting property tax replacement credits against those property tax levies to all taxpayers. The tax revenue under this section that is used to provide property tax replacement credits under this subdivision shall be treated for all purposes as property tax levies. The following apply if a county uses tax revenue to provide property tax replacement credits under this subdivision:
            (A) The additional tax rate that may be used for this purpose must be specified by the ordinance of the county income tax council.
            (B) The additional tax rate that may be used for this purpose may not exceed five-tenths of one percent (0.5%).
            (C) The sum of all additional tax rates imposed under this

section for all purposes permitted by this subsection may not exceed five-tenths of one percent (0.5%).
The county income tax council may adopt an ordinance changing the purposes for which tax revenue attributable to a tax rate under this section shall be used in the following year.
    (g) The tax rate under this section shall not be considered for purposes of computing:
        (1) the maximum income tax rate that may be imposed in a county under section 8 or 9 of this chapter or any other provision of this chapter;
        (2) the maximum permissible property tax levy under IC 6-1.1-18.5-3; or
        (3) the credit under IC 6-1.1-20.6.
    (h) Tax revenue under this section shall be treated as a part of the receiving civil taxing unit's or school corporation's property tax levy for that year for purposes of fixing the budget of the civil taxing unit or school corporation and for determining the distribution of taxes that are distributed on the basis of property tax levies. To the extent the county auditor determines that there is income tax revenue remaining from the tax under this section after providing the property tax replacement, the excess shall be credited to a dedicated county account and may be used only for property tax replacement under this section in subsequent years.
    (i) The department of local government finance, and the department of state revenue may take any actions necessary to carry out the purposes of this section.
    (j) Notwithstanding any other provision, in Lake County the county council (and not the county income tax council) is the entity authorized to take actions concerning the tax rate under this section.

SOURCE: IC 6-3.5-10; (12)IN1088.1.5. -->     SECTION 5. IC 6-3.5-10 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]:
     Chapter 10. Municipal Option Income Tax
    Sec. 1. This chapter applies to a municipality located in a county that does both of the following:
        (1) Adopts an additional tax rate under one (1) of the following:
            (A) IC 6-3.5-1.1-26.
            (B) IC 6-3.5-6-32.
        (2) Specifies by ordinance that all or part of the additional tax rate will be used for the purpose specified by one (1) of the following:
            (A) IC 6-3.5-1.1-26(f)(5).
            (B) IC 6-3.5-6-32(f)(5).
    Sec. 1.5. (a) A power granted by this chapter to adopt an ordinance to:
        (1) impose, increase, decrease, or rescind a tax or tax rate; or
        (2) grant, increase, decrease, rescind, or change a homestead credit or property tax replacement credit authorized under this chapter;
may be exercised at any time in a year before November 1 of that year.
    (b) An ordinance authorized by this chapter that imposes or increases a tax or a tax rate takes effect as follows:
        (1) An ordinance adopted after December 31 of the immediately preceding year and before October 1 of the current year takes effect October 1 of the current year.
        (2) An ordinance adopted after September 30 and before October 16 of the current year takes effect November 1 of the current year.
        (3) An ordinance adopted after October 15 and before November 1 of the current year takes effect December 1 of the current year.
    (c) An ordinance authorized by this chapter that decreases or rescinds a tax or a tax rate takes effect as follows:
        (1) An ordinance adopted after December 31 of the immediately preceding year and before October 1 of the current year takes effect on the later of October 1 of the current year or the first day of the month in the current year as the month in which the last increase in the tax or tax rate occurred.
        (2) An ordinance adopted after September 30 and before October 16 of the current year takes effect on the later of November 1 of the current year or the first day of the month in which the last increase in the tax or tax rate occurred.
        (3) An ordinance adopted after October 15 and before November 1 of the current year takes effect December 1 of the current year.
    (d) An ordinance authorized by this chapter that grants, increases, decreases, rescinds, or changes a homestead credit or property tax replacement credit authorized under this chapter takes effect for and applies to property taxes first due and payable in the year immediately following the year in which the ordinance is adopted.
    Sec. 2. As used in this chapter, "adjusted gross income" has the meaning set forth in IC 6-3-1-3.5.
    Sec. 3. As used in this chapter, "department" refers to the department of state revenue.
    Sec. 4. As used in this chapter, "fiscal body" means:
        (1) the common council, for a city; and
        (2) the town council, for a town.
    Sec. 5. As used in this chapter, "municipal option income tax" refers to the tax authorized by this chapter.
    Sec. 6. As used in this chapter, "municipal taxpayer", as the term relates to a particular municipality, means any individual who resides in that municipality on the date specified in section 18 of this chapter.
    Sec. 7. As used in this chapter, "municipality" means a city or town.
    Sec. 8. (a) The fiscal body of a municipality may adopt an ordinance to impose a municipal option income tax on the adjusted gross income of municipal taxpayers as provided in section 10 of this chapter.
    (b) A fiscal body shall hold at least one (1) public hearing on the proposed ordinance before the public hearing at which an ordinance is adopted under subsection (a). The fiscal body shall give public notice of the public hearing under IC 5-3-1.
    Sec. 9. (a) The municipal option income tax may be imposed on the adjusted gross income of municipal taxpayers in increments of five-hundredths of one percent (0.05%). However, the tax rate may not exceed the lesser of the following:
        (1) The additional tax rate imposed by the county in which the municipality is located under either of the following:
            (A) IC 6-3.5-1.1-26(f)(5).
            (B) IC 6-3.5-6-32(f)(5).
        (2) Five-tenths of one percent (0.5%).
    (b) The sum of the tax rates imposed:
        (1) by a municipality under this chapter; and
        (2) by the county in which the municipality is located under IC 6-3.5-1.1-26(f)(5) or IC 6-3.5-6-32(f)(5);
may not exceed one percent (1%).
    Sec. 10. To impose a municipal option income tax, the fiscal body of a municipality must adopt an ordinance. The ordinance must state substantially the following:
        "The ________ (insert name of municipality) ________ (insert City or Town) Council imposes the municipal option income

tax on the residents of ________ (insert name of municipality). The income tax is imposed at a rate of _____ percent (_____%).".
    Sec. 11. (a) The fiscal body of a municipality may increase or decrease the rate of a municipal option income tax. To increase or decrease the rate, the fiscal body must adopt an ordinance. The ordinance must state substantially the following:
        "The ________ (insert name of municipality) ________ (insert City or Town) Council increases (or decreases) the rate of the municipal option income tax. The tax rate is increased (or decreased) from (insert current rate) to (insert proposed rate).".
    (b) A fiscal body shall hold at least one (1) public hearing on the proposed ordinance before the public hearing at which the ordinance is adopted under subsection (a). The fiscal body shall give public notice of the public hearing under IC 5-3-1.
    Sec. 12. (a) The fiscal body of a municipality may rescind the municipal option income tax by adopting an ordinance to rescind the tax.
    (b) A fiscal body shall hold at least one (1) public hearing on the proposed ordinance before the public hearing at which the ordinance is adopted under subsection (a). The fiscal body shall give public notice of the public hearing under IC 5-3-1.
    Sec. 13. A municipal option income tax remains in effect until the date the tax is rescinded.
    Sec. 14. Immediately upon adoption of any ordinance under this chapter, the fiscal officer of the municipality shall send a certified copy of the ordinance to the department by certified mail.
    Sec. 15. (a) Revenue derived from the imposition of the municipal option income tax shall, in the manner prescribed by this section, be distributed to the municipality that imposed it.
    (b) Before August 2 of each calendar year, the budget agency shall certify to the fiscal officer of each adopting municipality the amount of municipal option income tax revenue that the budget agency determines has been:
        (1) received from municipal taxpayers of that municipality for the taxable year ending before the calendar year in which the determination is made; and
        (2) reported on annual returns or amended returns processed by the department in the state fiscal year ending before July 1 of the calendar year in which the determination is made;
as adjusted for refunds of municipal option income tax made in the

state fiscal year plus the amount of interest in the municipality's account that has accrued and has not been included in a certification made in a preceding year. The amount certified is the municipality's certified distribution for the following calendar year.
    (c) The amount certified under subsection (b) shall be adjusted under subsections (d), (e), and (f). The budget agency shall provide each municipality's fiscal body with an informative summary of the calculations used to determine the certified distribution. The summary of calculations must include:
        (1) the amount reported on individual income tax returns processed by the department during the previous fiscal year;
        (2) adjustments for overdistributions in prior years;
        (3) adjustments for clerical or mathematical errors in prior years;
        (4) adjustments for tax rate changes; and
        (5) the amount of excess account balances to be distributed under section 16 of this chapter.
    (d) The budget agency shall certify an amount less than the amount determined under subsection (b) if the budget agency determines that the reduced distribution is necessary to offset overpayments made in a calendar year before the calendar year of the distribution. The budget agency may reduce the amount of the certified distribution over several calendar years so that any overpayments are offset over several years rather than in one (1) lump sum.
    (e) The budget agency shall adjust the certified distribution of a municipality to correct for any clerical or mathematical errors made in any previous certification under this section. The budget agency may reduce the amount of the certified distribution over several calendar years so that any adjustment under this subsection is offset over several years rather than in one (1) lump sum.
    (f) This subsection applies to a municipality that:
        (1) initially imposes the municipal option income tax; or
        (2) increases the municipal option income tax rate;
under this chapter in the same calendar year in which the budget agency makes a certification under this section. The budget agency shall adjust the certified distribution of a municipality to provide for a distribution in the immediately following calendar year and in each calendar year thereafter. The budget agency shall provide for a full transition to certification of distributions as provided in

subsection (b)(1) through (b)(2).
    (g) On the first business day in May of each year, one-half (1/2) of each municipality's certified distribution for the calendar year shall be distributed from its account to the municipality's fiscal officer. The other one-half (1/2) shall be distributed on the first business day in November of that calendar year.
    Sec. 16. (a) A special account within the state general fund shall be established for each municipality adopting a municipal option income tax. Revenue derived from the imposition of the municipal option income tax shall be deposited in that municipality's special account in the state general fund. Money in the special account is appropriated to make the distributions required by this chapter.
    (b) Income earned on money held in a municipality's special account under subsection (a) becomes a part of that account.
    (c) Revenue remaining in a municipality's special account at the end of a state fiscal year does not revert to any other account in the state general fund.
    (d) Before October 2 of each year, the department shall submit a report to each municipality's fiscal officer indicating the balance in the municipality's special account as of the cutoff date set by the budget agency.
    (e) If the budget agency determines that a sufficient balance exists in a municipality's account that exceeds the amount necessary, when added to other money that will be deposited in the account after the date of the determination, to make certified distributions to the municipality in the ensuing year, the budget agency shall make a supplemental distribution to the municipality from the municipality's special account. A determination under this subsection must be made before October 2.
    (f) A supplemental distribution described in subsection (e) must be:
        (1) made in January of the following calendar year; and
        (2) allocated in the same manner as certified distributions for deposit in a municipality's rainy day fund established under IC 36-1-8-5.1.
    Sec. 17. A municipality may use distributions received under this chapter to provide property tax relief for property owners in the municipality using any combination of the following:
        (1) Freezing the municipality's levy in an amount determined under IC 6-3.5-1.5-4.
        (2) Providing local property tax replacement credits at a uniform rate to all taxpayers located in the municipality.

        (3) Providing local homestead credits to all homesteads located in the municipality.
        (4) Providing local property tax replacement credits at a uniform rate for all qualified residential property (as defined in IC 6-3.5-6-1) located in the municipality.
    Sec. 18. (a) For purposes of this chapter, an individual shall be treated as a municipal taxpayer of the municipality in which the individual:
        (1) maintains a residence, if the individual maintains only one (1) residence in Indiana;
        (2) if subdivision (1) does not apply, registers to vote;
        (3) if subdivisions (1) and (2) do not apply, registers the individual's personal automobile; or
        (4) if subdivisions (1), (2), and (3) do not apply, spends the majority of the individual's time in Indiana during the taxable year in question.
    (b) Whether an individual is a municipal taxpayer is determined on January 1 of the calendar year in which the individual's taxable year commences. If an individual changes the location of the individual's residence to another location in Indiana during a calendar year, the individual's liability for municipal option income tax is not affected.
    Sec. 19. If a municipal option income tax is not in effect during an individual taxpayer's entire taxable year, the amount of municipal option income tax that the taxpayer owes for that taxable year equals the product of:
        (1) the amount of the municipal option income tax the taxpayer would owe if the tax had been imposed during the taxpayer's entire taxable year; multiplied by
        (2) a fraction, of which:
            (A) the numerator equals the number of days during the taxpayer's taxable year that the municipal option income tax was in effect; and
            (B) the denominator equals the total number of days in the taxpayer's taxable year.
    Sec. 20. (a) If, for a particular taxable year, a municipal taxpayer is allowed, or a municipal taxpayer and the municipal taxpayer's spouse who file a joint return are allowed, a credit for the elderly or the totally disabled under Section 22 of the Internal Revenue Code, the municipal taxpayer is entitled, or the municipal taxpayer and the municipal taxpayer's spouse are entitled, to a credit against their municipal option income tax liability for that

same taxable year. The amount of the credit equals the lesser of the following:
        (1) The product of:
            (A) the credit for the elderly or the totally disabled for the same taxable year; multiplied by
            (B) a fraction, of which:
                (i) the numerator is the municipal option income tax rate imposed against the municipal taxpayer or the municipal taxpayer and the municipal taxpayer's spouse; and
                (ii) the denominator is fifteen-hundredths (0.15).
        (2) The amount of municipal option income tax imposed on the municipal taxpayer or the municipal taxpayer and the municipal taxpayer's spouse.
    (b) If a municipal taxpayer and the municipal taxpayer's spouse file a joint return and are subject to different municipal option income tax rates for the same taxable year, they shall compute the credit under this section by using the formula provided in subsection (a), except that they shall use the average of the two (2) tax rates imposed against them as the numerator referred to in subsection (a)(1)(B).
    Sec. 21. If, for any taxable year, a municipal taxpayer is subject to different tax rates for the municipal option income tax imposed by a municipality, the taxpayer's municipal option income tax rate for that municipality and that taxable year is the rate determined in the last STEP of the following STEPS:
        STEP ONE: Multiply the number of months in the taxpayer's taxable year that precede July 1 by the rate in effect before the rate change.
        STEP TWO: Multiply the number of months in the taxpayer's taxable year that follow June 30 by the rate in effect after the rate change.
        STEP THREE: Divide the sum of the amounts determined under STEPS ONE and TWO by twelve (12).
    Sec. 22. (a) Except as otherwise provided in this chapter, all provisions of the adjusted gross income tax law (IC 6-3) concerning:
        (1) definitions;
        (2) declarations of estimated tax;
        (3) filing of returns;
        (4) remittances;
        (5) incorporation of the provisions of the Internal Revenue Code;

        (6) penalties and interest;
        (7) exclusion of military pay credits for withholding; and
        (8) exemptions and deductions;
apply to the imposition, collection, and administration of the municipal option income tax. The municipal option income tax is a listed tax and an income tax for purposes of IC 6-8.1.
    (b) IC 6-3-1-3.5(a)(5), IC 6-3-3-3, IC 6-3-3-5, and IC 6-3-5-1 do not apply to the municipal option income tax.
    (c) Each employer shall report to the department the amount of withholdings attributable to the municipal taxpayers for each municipality in which the municipal option income tax is in effect. This report shall be submitted annually with the employer's withholding report.
SOURCE: IC 6-8.1-1-1; (12)IN1088.1.6. -->     SECTION 6. IC 6-8.1-1-1, AS AMENDED BY P.L.182-2009(ss), SECTION 247, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 1. "Listed taxes" or "taxes" includes only the pari-mutuel taxes (IC 4-31-9-3 through IC 4-31-9-5); the riverboat admissions tax (IC 4-33-12); the riverboat wagering tax (IC 4-33-13); the slot machine wagering tax (IC 4-35-8); the type II gambling game excise tax (IC 4-36-9); the gross income tax (IC 6-2.1) (repealed); the utility receipts and utility services use taxes (IC 6-2.3); the state gross retail and use taxes (IC 6-2.5); the adjusted gross income tax (IC 6-3); the supplemental net income tax (IC 6-3-8) (repealed); the county adjusted gross income tax (IC 6-3.5-1.1); the county option income tax (IC 6-3.5-6); the county economic development income tax (IC 6-3.5-7); the municipal option income tax (IC 6-3.5-10); the auto rental excise tax (IC 6-6-9); the financial institutions tax (IC 6-5.5); the gasoline tax (IC 6-6-1.1); the alternative fuel permit fee (IC 6-6-2.1); the special fuel tax (IC 6-6-2.5); the motor carrier fuel tax (IC 6-6-4.1); a motor fuel tax collected under a reciprocal agreement under IC 6-8.1-3; the motor vehicle excise tax (IC 6-6-5); the commercial vehicle excise tax (IC 6-6-5.5); the excise tax imposed on recreational vehicles and truck campers (IC 6-6-5.1); the hazardous waste disposal tax (IC 6-6-6.6); the cigarette tax (IC 6-7-1); the beer excise tax (IC 7.1-4-2); the liquor excise tax (IC 7.1-4-3); the wine excise tax (IC 7.1-4-4); the hard cider excise tax (IC 7.1-4-4.5); the malt excise tax (IC 7.1-4-5); the petroleum severance tax (IC 6-8-1); the various innkeeper's taxes (IC 6-9); the various food and beverage taxes (IC 6-9); the county admissions tax (IC 6-9-13 and IC 6-9-28); 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.

SOURCE: IC 6-8.1-5-2; (12)IN1088.1.7. -->     SECTION 7. IC 6-8.1-5-2, AS AMENDED BY P.L.182-2009(ss), SECTION 251, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 2. (a) Except as otherwise provided in this section, the department may not issue a proposed assessment under section 1 of this chapter more than three (3) years after the latest of the date the return is filed, or either of the following:
        (1) The due date of the return.
        (2) In the case of a return filed for the state gross retail or use tax, the gasoline tax, the special fuel tax, the motor carrier fuel tax, the oil inspection fee, or the petroleum severance tax, the end of the calendar year which contains the taxable period for which the return is filed.
    (b) If a person files a utility receipts tax return (IC 6-2.3), an adjusted gross income tax (IC 6-3), supplemental net income tax (IC 6-3-8) (repealed), county adjusted gross income tax (IC 6-3.5-1.1), county option income tax (IC 6-3.5-6), municipal option income tax (IC 6-3.5-10), or financial institutions tax (IC 6-5.5) return that understates the person's income, as that term is defined in the particular income tax law, by at least twenty-five percent (25%), the proposed assessment limitation is six (6) years instead of the three (3) years provided in subsection (a).
    (c) In the case of the motor vehicle excise tax (IC 6-6-5), the tax shall be assessed as provided in IC 6-6-5-5 and IC 6-6-5-6 and shall include the penalties and interest due on all listed taxes not paid by the due date. A person that fails to properly register a vehicle as required by IC 9-18 and pay the tax due under IC 6-6-5 is considered to have failed to file a return for purposes of this article.
    (d) In the case of the commercial vehicle excise tax imposed under IC 6-6-5.5, the tax shall be assessed as provided in IC 6-6-5.5 and shall include the penalties and interest due on all listed taxes not paid by the due date. A person that fails to properly register a commercial vehicle as required by IC 9-18 and pay the tax due under IC 6-6-5.5 is considered to have failed to file a return for purposes of this article.
    (e) In the case of the excise tax imposed on recreational vehicles and truck campers under IC 6-6-5.1, the tax shall be assessed as provided in IC 6-6-5.1 and must include the penalties and interest due on all listed taxes not paid by the due date. A person who fails to

properly register a recreational vehicle as required by IC 9-18 and pay the tax due under IC 6-6-5.1 is considered to have failed to file a return for purposes of this article. A person who fails to pay the tax due under IC 6-6-5.1 on a truck camper is considered to have failed to file a return for purposes of this article.
    (f) If a person files a fraudulent, unsigned, or substantially blank return, or if a person does not file a return, there is no time limit within which the department must issue its proposed assessment.
    (g) If any part of a listed tax has been erroneously refunded by the department, the erroneous refund may be recovered through the assessment procedures established in this chapter. An assessment issued for an erroneous refund must be issued:
        (1) within two (2) years after making the refund; or
        (2) within five (5) years after making the refund if the refund was induced by fraud or misrepresentation.
    (h) If, before the end of the time within which the department may make an assessment, the department and the person agree to extend that assessment time period, the period may be extended according to the terms of a written agreement signed by both the department and the person. The agreement must contain:
        (1) the date to which the extension is made; and
        (2) a statement that the person agrees to preserve the person's records until the extension terminates.
The department and a person may agree to more than one (1) extension under this subsection.
    (i) If a taxpayer's federal income tax liability for a taxable year is modified due to the assessment of a federal deficiency or the filing of an amended federal income tax return, then the date by which the department must issue a proposed assessment under section 1 of this chapter for tax imposed under IC 6-3 is extended to six (6) months after the date on which the notice of modification is filed with the department by the taxpayer.

SOURCE: IC 6-8.1-6-8; (12)IN1088.1.8. -->     SECTION 8. IC 6-8.1-6-8, AS ADDED BY P.L.182-2009(ss), SECTION 253, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 8. (a) Beginning after December 31, 2010, the department in cooperation with the department of local government finance and the budget agency shall provide information annually that:
        (1) identifies the total number of individual taxpayers that live within a particular incorporated city or town;
        (2) identifies the total individual adjusted gross income of those taxpayers; and
        (3) includes any other information that:
            (A) can be abstracted from the taxpayers' individual income tax returns; and
            (B) is necessary to obtain information concerning individual income taxation under IC 6-3.5-1.1, IC 6-3.5-6, and IC 6-3.5-7, and IC 6-3.5-10;
        as agreed to by the department and the legislative services agency.
    (b) As used in this subsection, "authorized agency" refers to the legislative services agency or the budget agency. As used in this subsection, "director" refers to the executive director of the legislative services agency or the director of the budget agency. The department shall provide access to the information described in subsection (a) in electronic format to an authorized agency:
        (1) upon receipt of a written request from the director of the authorized agency; and
        (2) upon the director's agreement that any information accessed (other than aggregate data) will be kept confidential and used solely for official purposes.
SOURCE: IC 6-8.1-6-9; (12)IN1088.1.9. -->     SECTION 9. IC 6-8.1-6-9 IS ADDED TO THE INDIANA CODE AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 9. Beginning with the individual adjusted gross income tax return for taxable years beginning in 2012, the department shall include on the adjusted gross income tax return a requirement that the taxpayer identify the city or town, if any, where the taxpayer's principal place of residence is located.