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HOUSE BILL No. 1369

Citations Affected: IC 6-2.5-5-40; IC 6-3.1-4-1.

Synopsis: Tax credit for research conducted by university. Expands the sales tax exemption for research and development equipment to include any tangible personal property used for research and development. Increases the percentage of qualified research conducted in Indiana through a public or private college or university that is eligible for a research expense credit.

Effective: January 1, 2012 (retroactive); July 1, 2012.

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Heuer, Ellspermann, Kubacki, Stemler

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    January 10, 2012, read first time and referred to Committee on Ways and Means.

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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.

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

SOURCE: IC 6-2.5-5-40; (12)IN1369.1.1. -->     SECTION 1. IC 6-2.5-5-40, AS ADDED BY P.L.193-2005, SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 40. (a) As used in this chapter, "research and development activities" does not include any of the following:
        (1) Efficiency surveys.
        (2) Management studies.
        (3) Consumer surveys.
        (4) Economic surveys.
        (5) Advertising or promotions.
        (6) Research in connection with literary, historical, or similar projects.
        (7) Testing for purposes of quality control.
    (b) As used in this section, "research and development equipment" property" means tangible personal property that:
        (1) consists of or is a combination of:
            (A) laboratory equipment;
            (B) computers;

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            (C) computer software;
            (D) telecommunications equipment; or
            (E) testing equipment; or
            (F) any other tangible personal property;
        (2) has not previously been used in Indiana for any purpose; and
        (3) is acquired by the purchaser for the purpose of research and development activities devoted directly to experimental or laboratory research and development for:
            (A) new products;
            (B) new uses of existing products; or
            (C) improving or testing existing products.
    (c) A retail transaction:
        (1) involving research and development equipment property described in subsection (b)(1)(A), (b)(1)(B), (b)(1)(C), (b)(1)(D), or (b)(1)(E); and
        (2) occurring after June 30, 2007;
is exempt from the state gross retail tax.
     (d) A retail transaction:
        (1) involving research and development property that is not described in subsection (b)(1)(A), (b)(1)(B), (b)(1)(C), (b)(1)(D), or (b)(1)(E) but is described in subsection (b)(1)(F); and
        (2) occurring after June 30, 2012;
is exempt from the state gross retail tax. A retail transaction shall be considered as having occurred after June 30, 2012, to the extent that delivery of the property constituting selling at retail is made after that date to the purchaser or to the place of delivery designated by the purchaser. However, a transaction shall be considered as having occurred before July 1, 2012, to the extent that the agreement of the parties to the transaction was entered into before July 1, 2012, and payment for the property furnished in the transaction is made before July 1, 2012, notwithstanding the delivery of the property after June 30, 2012.

SOURCE: IC 6-3.1-4-1; (12)IN1369.1.2. -->     SECTION 2. IC 6-3.1-4-1, AS AMENDED BY P.L.193-2005, SECTION 12, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2012 (RETROACTIVE)]: Sec. 1. As used in this The following definitions apply throughout this chapter:
         (1) "Approved postsecondary educational institution" has the meaning set forth in IC 21-7-13-6(a).
         (2) "Base amount" means base amount (as defined in Section 41(c) of the Internal Revenue Code as in effect on January 1, 2001), modified by considering only Indiana qualified research

expenses and gross receipts attributable to Indiana in the calculation of the taxpayer's:
            (1) (A) fixed base percentage; and
            (2) (B) average annual gross receipts.
         (3) "Indiana college research" means qualified research (as defined in Section 41(d) of the Internal Revenue Code as in effect on January 1, 2001), conducted in Indiana after December 31, 2011, by a state educational institution or an approved postsecondary educational institution.
         (4) "Indiana qualified research expense" means qualified research expense that is incurred for research conducted in Indiana.
         (5) "Qualified research expense" means qualified research expense (as defined in Section 41(b) of the Internal Revenue Code as in effect on January 1, 2001). However, the percentage to be used under Section 41(b) of the Internal Revenue Code, as in effect on January 1, 2001, to calculate contract research expenses paid or incurred after December 31, 2011, for Indiana college research is one hundred percent (100%) instead of sixty-five percent (65%).
         (6) "Pass through entity" means:
            (1) (A) a corporation that is exempt from the adjusted gross income tax under IC 6-3-2-2.8(2);
            (2) (B) a partnership;
            (3) (C) a limited liability company; or
            (4) (D) a limited liability partnership.
         (7) "Research expense tax credit" means a credit provided under this chapter against any tax otherwise due and payable under IC 6-3.
         (8) "Taxpayer" means an individual, a corporation, a limited liability company, a limited liability partnership, a trust, or a partnership that has any tax liability under IC 6-3 (adjusted gross income tax).

SOURCE: ; (12)IN1369.1.3. -->     SECTION 3. An emergency is declared for this act.