Bill Text: IN SB0250 | 2010 | Regular Session | Engrossed
Bill Title: State and local taxes.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Engrossed - Dead) 2010-02-15 - Amendment 1 (Crawford), prevailed; Voice Vote [SB0250 Detail]
Download: Indiana-2010-SB0250-Engrossed.html
Citations Affected: IC 6-1.1; IC 6-2.5; IC 6-3.
Synopsis: State and local taxes. Amends the definition of federal
"Internal Revenue Code" used in Indiana statutes and rules to refer to
the Internal Revenue Code in effect on January 1, 2010. Requires that
two years be used for the net operating loss carryback period for
taxpayers (instead of the five years allowed under the federal Worker,
Homeownership, and Business Assistance Act of 2009). Eliminates a
law that provides that property taxes levied to pay debt service or make
lease payments for bonds or leases issued or entered into before July 1,
2008, are not subject to the circuit breaker credit in Lake County and
St. Joseph County. Makes changes in the gross retail and use tax laws
to conform to the requirements of the Streamlined Sales and Use Tax
Agreement.
Effective: November 6, 2009 (retroactive); January 1, 2010
(retroactive); July 1, 2010.
(HOUSE SPONSORS _ CRAWFORD, WELCH, ESPICH)
January 11, 2010, read first time and referred to Committee on Tax and Fiscal Policy.
January 19, 2010, reported favorably _ Do Pass.
January 21, 2010, read second time, ordered engrossed.
January 22, 2010, engrossed.
January 26, 2010, read third time, passed. Yeas 48, nays 2.
February 2, 2010, read first time and referred to Committee on Ways and Means.
February 11, 2010, amended, reported _ Do Pass.
February 15, 2010, read second time, amended, ordered engrossed.
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
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
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
(1) homestead exceeds one percent (1%);
(2) residential property exceeds two percent (2%);
(3) long term care property exceeds two percent (2%);
(4) agricultural land exceeds two percent (2%);
(5) nonresidential real property exceeds three percent (3%); or
(6) personal property exceeds three percent (3%);
of the gross assessed value of the property that is the basis for determination of property taxes for that calendar year.
(b) This subsection applies to property taxes
taxes imposed after being approved by the voters in a referendum or
local public question shall not be considered for purposes of
calculating a person's credit under this section.
(c) This subsection applies to property taxes first due and payable
after 2009. As used in this subsection, "eligible county" means only a
county for which the general assembly determines in 2008 that limits
to property tax liability under this chapter are expected to reduce in
2010 the aggregate property tax revenue that would otherwise be
collected by all units of local government and school corporations in
the county by at least twenty percent (20%). Property taxes imposed in
an eligible county to pay debt service or make lease payments for
bonds or leases issued or entered into before July 1, 2008, shall not be
considered for purposes of calculating a person's credit under this
section.
(1) the seller's cost of the property sold;
(2) the cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller;
(3) charges by the seller for any services necessary to complete the sale, other than delivery and installation charges;
(4) delivery charges; or
(5) consideration received by the seller from a third party if:
(A) the seller actually receives consideration from a party other than the purchaser and the consideration is directly related to a price reduction or discount on the sale;
(B) the seller has an obligation to pass the price reduction or discount through to the purchaser;
(C) the amount of the consideration attributable to the sale is fixed and determinable by the seller at the time of the sale of the item to the purchaser; and
(D) the price reduction or discount is identified as a third party price reduction or discount on the invoice received by the purchaser or on a coupon, certificate, or other documentation presented by the purchaser.
For purposes of subdivision (4), delivery charges are charges by the
seller for preparation and delivery of the property to a location
designated by the purchaser of property, including but not limited to
transportation, shipping, postage, handling, crating, and packing.
(b) "Gross retail income" does not include that part of the gross
receipts attributable to:
(1) the value of any tangible personal property received in a like
kind exchange in the retail transaction, if the value of the property
given in exchange is separately stated on the invoice, bill of sale,
or similar document given to the purchaser;
(2) the receipts received in a retail transaction which constitute
interest, finance charges, or insurance premiums on either a
promissory note or an installment sales contract;
(3) discounts, including cash, terms, or coupons that are not
reimbursed by a third party that are allowed by a seller and taken
by a purchaser on a sale;
(4) interest, financing, and carrying charges from credit extended
on the sale of personal property if the amount is separately stated
on the invoice, bill of sale, or similar document given to the
purchaser;
(5) any taxes legally imposed directly on the consumer that are
separately stated on the invoice, bill of sale, or similar document
given to the purchaser; or
(6) installation charges that are separately stated on the invoice,
bill of sale, or similar document given to the purchaser; or
(7) telecommunications nonrecurring charges.
(c) A public utility's or a power subsidiary's gross retail income
includes all gross retail income received by the public utility or power
subsidiary, including any minimum charge, flat charge, membership
fee, or any other form of charge or billing.
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2010]: Sec. 28.5. "Transferred
electronically" means obtained by a purchaser by means other
than tangible storage media.
(b) If the tax computed under subsection (a) carried to the third decimal place results in
(b) A person is a retail merchant making a retail transaction when the person:
(1) electronically transfers specified digital products to an end user; and
(2) grants to the end user the right of permanent use of the
specified digital products that is not conditioned upon continued
payment by the purchaser.
(c) The sale of a digital code that may be used to obtain a
product transferred electronically shall be taxed in the same
manner as the product transferred electronically. As used in this
subsection, a digital code means a method that permits a purchaser
to obtain at a later date a product transferred electronically.
(b) Rentals of durable medical equipment, mobility enhancing equipment, and other medical supplies and devices are exempt from the state gross retail tax, if the rentals are prescribed by a person licensed to issue the prescription.
(c) Sales of hearing aids are exempt from the state gross retail tax if the hearing aids are fitted or dispensed by a person licensed or registered for that purpose. In addition, sales of hearing aid parts, attachments, or accessories are exempt from the state gross retail tax. For purposes of this subsection, a hearing aid is a device which is worn on the body and which is designed to aid, improve, or correct defective human hearing.
(d) Sales of colostomy bags, ileostomy bags, and the medical equipment, supplies, and devices used in conjunction with those bags are exempt from the state gross retail tax.
(e) Sales of equipment and devices used to administer insulin are exempt from the state gross retail tax.
(f) Sales of equipment and devices used to monitor blood glucose level, including blood glucose meters and measuring strips, lancets, and other similar diabetic supplies, are exempt from the state gross retail tax, regardless of whether the equipment and devices are prescribed.
(b) For purposes of this section, the term "food and food ingredients for human consumption" includes the following items if sold without eating utensils provided by the seller:
(1) Food sold by a seller whose proper primary NAICS classification is manufacturing in sector 311, except subsector 3118 (bakeries).
(2) Food sold in an unheated state by weight or volume as a single item.
(3) Bakery items, including bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas.
(c) Except as otherwise provided by subsection (b), for purposes of this section, the term "food and food ingredients for human consumption" does not include:
(1) candy;
(2) alcoholic beverages;
(3) soft drinks;
(4) food sold through a vending machine;
(5) food sold in a heated state or heated by the seller;
(6) two (2) or more food ingredients mixed or combined by the seller for sale as a single item (other than food that is only cut, repackaged, or pasteurized by the seller, and eggs, fish, meat, poultry, and foods containing these raw animal foods requiring cooking by the consumer as recommended by the federal Food and Drug Administration in chapter 3, subpart 3-401.11 of its Food Code so as to prevent food borne illnesses);
(7) food sold with eating utensils provided by the seller, including plates, knives, forks, spoons, glasses, cups, napkins, or straws (for purposes of this subdivision, a plate does not include a container or packaging used to transport the food);
(8) tobacco; or
(9) dietary supplements.
for sales and use tax due each member state on all sales transactions it
processes for the seller except as set out in this section. A seller that
contracts with a certified service provider is not liable to the state for
sales or use tax due on transactions processed by the certified service
provider unless the seller misrepresented the type of items it sells or
committed fraud. In the absence of probable cause to believe that the
seller has committed fraud or made a material misrepresentation, the
seller is not subject to audit on the transactions processed by the
certified service provider. A seller is subject to audit for transactions
not processed by the certified service provider. The member states
acting jointly may perform a system check of the seller and review the
seller's procedures to determine if the certified service provider's
system is functioning properly and the extent to which the seller's
transactions are being processed by the certified service provider.
(b) A person that provides a certified automated system is
responsible for the proper functioning of that system and is liable to the
state for underpayments of tax attributable to errors in the functioning
of the certified automated system. A seller that uses a certified
automated system remains responsible and is liable to the state for
reporting and remitting tax.
(c) A seller that has a proprietary system for determining the amount
of tax due on transactions and has signed an agreement establishing a
performance standard for that system is liable for the failure of the
system to meet the performance standard.
(d) A certified service provider or a seller using a certified
automated system that obtains a certification or taxability matrix from
the department is not liable for sales or use tax collection errors that
result from reliance on the department's certification or taxability
matrix. If the department determines that an item or transaction is
incorrectly classified as to the taxability of the item or transaction, the
department shall notify the certified service provider or the seller using
a certified automated system of the incorrect classification. The
certified service provider or the seller using a certified automated
system must revise the incorrect classification within ten (10) days
after receiving notice of the determination from the department. If the
classification error is not corrected within ten (10) days after receiving
the department's notice, the certified service provider or the seller using
a certified automated system is liable for failure to collect the correct
amount of sales or use tax due and owing.
(e) If at least thirty (30) days are not provided between the
enactment of a statute changing the rate set forth in IC 6-2.5-2-2 and
the effective date of the rate change, the department shall relieve the
seller of liability for failing to collect tax at the new rate if:
(1) the seller collected the tax at the immediately preceding
effective rate; and
(2) the seller's failure to collect at the current rate does not extend
beyond thirty (30) days after the effective date of the rate change.
A seller is not eligible for the relief provided for in this subsection if
the seller fraudulently fails to collect at the current rate or solicits
purchases based on the immediately preceding effective rate.
(f) The department shall allow any monetary allowances that are
provided by the member states to sellers or certified service providers
in exchange for collecting the sales and use taxes as provided in article
VI of the agreement.
SECTION 12. IC 6-3-1-11, AS AMENDED BY P.L.182-2009(ss),
SECTION 188, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JANUARY 1, 2010 (RETROACTIVE)]: Sec. 11. (a) The
term "Internal Revenue Code" means the Internal Revenue Code of
1986 of the United States as amended and in effect on February 17,
2009. January 1, 2010.
(b) Whenever the Internal Revenue Code is mentioned in this
article, the particular provisions that are referred to, together with all
the other provisions of the Internal Revenue Code in effect on February
17, 2009, January 1, 2010, that pertain to the provisions specifically
mentioned, shall be regarded as incorporated in this article by reference
and have the same force and effect as though fully set forth in this
article. To the extent the provisions apply to this article, regulations
adopted under Section 7805(a) of the Internal Revenue Code and in
effect on February 17, 2009, January 1, 2010, shall be regarded as
rules adopted by the department under this article, unless the
department adopts specific rules that supersede the regulation.
(c) An amendment to the Internal Revenue Code made by an act
passed by Congress before February 17, 2009, January 1, 2010, that
is effective for any taxable year that began before January 1, 2009,
2010, and that affects:
(1) individual adjusted gross income (as defined in Section 62 of
the Internal Revenue Code);
(2) corporate taxable income (as defined in Section 63 of the
Internal Revenue Code);
(3) trust and estate taxable income (as defined in Section 641(b)
of the Internal Revenue Code);
(4) life insurance company taxable income (as defined in Section
801(b) of the Internal Revenue Code);
(5) mutual insurance company taxable income (as defined in
Section 821(b) of the Internal Revenue Code); or
(6) taxable income (as defined in Section 832 of the Internal
Revenue Code);
is also effective for that same taxable year for purposes of determining
adjusted gross income under section 3.5 of this chapter.
(b) Resident persons are entitled to a net operating loss deduction. The amount of the deduction taken in a taxable year may not exceed the taxpayer's unused Indiana net operating losses carried back or carried over to that year.
(c) An Indiana net operating loss equals the taxpayer's federal net operating loss for a taxable year as calculated under Section 172 of the Internal Revenue Code, adjusted for the modifications required by IC 6-3-1-3.5.
(d) The following provisions apply for purposes of subsection (c):
(1) The modifications that are to be applied are those modifications required under IC 6-3-1-3.5 for the same taxable year in which each net operating loss was incurred.
(2) An Indiana net operating loss includes a net operating loss that arises when the modifications required by IC 6-3-1-3.5 exceed the taxpayer's federal adjusted gross income (as defined in Section 62 of the Internal Revenue Code) for the taxable year in which the Indiana net operating loss is determined.
(e) Subject to the limitations contained in subsection (g), an Indiana net operating loss carryback or carryover shall be available as a deduction from the taxpayer's adjusted gross income (as defined in IC 6-3-1-3.5) in the carryback or carryover year provided in subsection (f).
(f) Carrybacks and carryovers shall be determined under this subsection as follows:
(1) An Indiana net operating loss shall be an Indiana net operating loss carryback to each of the carryback years preceding the taxable year of the loss.
(2) An Indiana net operating loss shall be an Indiana net operating loss carryover to each of the carryover years following the taxable year of the loss.
(3) Carryback years shall be determined by reference to the number of years allowed for carrying back a net operating loss under Section 172(b) of the Internal Revenue Code. However,
with respect to the carryback period for a net operating loss:
(A) for which an eligible small business, as defined in Section
172(b)(1)(H)(iv) of the Internal Revenue Code, a taxpayer
made an election to use five (5) years instead of two (2) years
under Section 172(b)(1)(H) of the Internal Revenue Code, two
(2) years shall be used instead of five (5) years; or
(B) that is a qualified disaster loss for which the taxpayer
elected to have the net operating loss carryback period with
respect to the loss year determined without regard to Section
172(b)(1)(J) of the Internal Revenue Code, five (5) years shall
be used.
(4) Carryover years shall be determined by reference to the
number of years allowed for carrying over net operating losses
under Section 172(b) of the Internal Revenue Code.
(5) A taxpayer who makes an election under Section 172(b)(3) of
the Internal Revenue Code to relinquish the carryback period with
respect to a net operating loss for any taxable year shall be
considered to have also relinquished the carryback of the Indiana
net operating loss for purposes of this section.
(g) The entire amount of the Indiana net operating loss for any
taxable year shall be carried to the earliest of the taxable years to which
(as determined under subsection (f)) the loss may be carried. The
amount of the Indiana net operating loss remaining after the deduction
is taken under this section in a taxable year may be carried back or
carried over as provided in subsection (f). The amount of the Indiana
net operating loss carried back or carried over from year to year shall
be reduced to the extent that the Indiana net operating loss carryback
or carryover is used by the taxpayer to obtain a deduction in a taxable
year until the occurrence of the earlier of the following:
(1) The entire amount of the Indiana net operating loss has been
used as a deduction.
(2) The Indiana net operating loss has been carried over to each
of the carryover years provided by subsection (f).
(b) Corporations and nonresident persons are entitled to a net operating loss deduction. The amount of the deduction taken in a taxable year may not exceed the taxpayer's unused Indiana net operating losses carried back or carried over to that year.
(c) An Indiana net operating loss equals the taxpayer's federal net
operating loss for a taxable year as calculated under Section 172 of the
Internal Revenue Code, derived from sources within Indiana and
adjusted for the modifications required by IC 6-3-1-3.5.
(d) The following provisions apply for purposes of subsection (c):
(1) The modifications that are to be applied are those
modifications required under IC 6-3-1-3.5 for the same taxable
year in which each net operating loss was incurred.
(2) The amount of the taxpayer's net operating loss that is derived
from sources within Indiana shall be determined in the same
manner that the amount of the taxpayer's adjusted income derived
from sources within Indiana is determined under section 2 of this
chapter for the same taxable year during which each loss was
incurred.
(3) An Indiana net operating loss includes a net operating loss that
arises when the modifications required by IC 6-3-1-3.5 exceed the
taxpayer's federal taxable income (as defined in Section 63 of the
Internal Revenue Code), if the taxpayer is a corporation, or when
the modifications required by IC 6-3-1-3.5 exceed the taxpayer's
federal adjusted gross income (as defined by Section 62 of the
Internal Revenue Code), if the taxpayer is a nonresident person,
for the taxable year in which the Indiana net operating loss is
determined.
(e) Subject to the limitations contained in subsection (g), an Indiana
net operating loss carryback or carryover shall be available as a
deduction from the taxpayer's adjusted gross income derived from
sources within Indiana (as defined in section 2 of this chapter) in the
carryback or carryover year provided in subsection (f).
(f) Carrybacks and carryovers shall be determined under this
subsection as follows:
(1) An Indiana net operating loss shall be an Indiana net operating
loss carryback to each of the carryback years preceding the
taxable year of the loss.
(2) An Indiana net operating loss shall be an Indiana net operating
loss carryover to each of the carryover years following the taxable
year of the loss.
(3) Carryback years shall be determined by reference to the
number of years allowed for carrying back a net operating loss
under Section 172(b) of the Internal Revenue Code. However,
with respect to the carryback period for a net operating loss:
(A) for which an eligible small business, as defined in Section
172(b)(1)(H)(iv) of the Internal Revenue Code, a taxpayer
made an election to use five (5) years instead of two (2) years
under Section 172(b)(1)(H) of the Internal Revenue Code, two
(2) years shall be used instead of five (5) years; or
(B) that is a qualified disaster loss for which the taxpayer
elected to have the net operating loss carryback period with
respect to the loss year determined without regard to Section
172(b)(1)(J) of the Internal Revenue Code, five (5) years shall
be used.
(4) Carryover years shall be determined by reference to the
number of years allowed for carrying over net operating losses
under Section 172(b) of the Internal Revenue Code.
(5) A taxpayer who makes an election under Section 172(b)(3) of
the Internal Revenue Code to relinquish the carryback period with
respect to a net operating loss for any taxable year shall be
considered to have also relinquished the carryback of the Indiana
net operating loss for purposes of this section.
(g) The entire amount of the Indiana net operating loss for any
taxable year shall be carried to the earliest of the taxable years to which
(as determined under subsection (f)) the loss may be carried. The
amount of the Indiana net operating loss remaining after the deduction
is taken under this section in a taxable year may be carried back or
carried over as provided in subsection (f). The amount of the Indiana
net operating loss carried back or carried over from year to year shall
be reduced to the extent that the Indiana net operating loss carryback
or carryover is used by the taxpayer to obtain a deduction in a taxable
year until the occurrence of the earlier of the following:
(1) The entire amount of the Indiana net operating loss has been
used as a deduction.
(2) The Indiana net operating loss has been carried over to each
of the carryover years provided by subsection (f).
(h) An Indiana net operating loss deduction determined under this
section shall be allowed notwithstanding the fact that in the year the
taxpayer incurred the net operating loss the taxpayer was not subject to
the tax imposed under section 1 of this chapter because the taxpayer
was:
(1) a life insurance company (as defined in Section 816(a) of the
Internal Revenue Code); or
(2) an insurance company subject to tax under Section 831 of the
Internal Revenue Code.
(i) In the case of a life insurance company that claims an operations
loss deduction under Section 810 of the Internal Revenue Code, this
section shall be applied by:
(1) substituting the corresponding provisions of Section 810 of the
Internal Revenue Code in place of references to Section 172 of
the Internal Revenue Code; and
(2) substituting life insurance company taxable income (as
defined in Section 801 the Internal Revenue Code) in place of
references to taxable income (as defined in Section 63 of the
Internal Revenue Code).
(j) For purposes of an amended return filed to carry back an Indiana
net operating loss:
(1) the term "due date of the return", as used in IC 6-8.1-9-1(a)(1),
means the due date of the return for the taxable year in which the
net operating loss was incurred; and
(2) the term "date the payment was due", as used in
IC 6-8.1-9-2(c), means the due date of the return for the taxable
year in which the net operating loss was incurred.
