As the clock struck midnight Wednesday, March 14, chaos ensued at the Indiana Statehouse. Having not addressed several important topics – such as school safety, school finance, and tax reform – during the 2018 Indiana legislative session, lawmakers looked around for guidance on what to do. Futile attempts were made to extend the session, ultimately leaving Gov. Holcomb no choice but to call the Indiana General Assembly back for a one-day special legislative session.
This special session ended May 14 with the passage of only five bills. These bills included several tax implications for Indiana taxpayers, the most important of which are the tax provisions relevant to the recent federal tax overhaul under the Tax Cuts and Jobs Act. While other states may be getting “creative” in their reactions to federal tax reform, Indiana merely chose to decouple from many tax reform provisions.
To learn more about these and other laws that passed during the 2018 special session, view the 2018 Indiana Legislative Update – Take 2 below. We hope you find this extension of our previously released 2018 Indiana Legislative Update helpful and informative. Please do not hesitate to reach out to one of our specialists in any given area with questions, comments, or even to get our take on what we think a particular law change will mean in the future. We are here to help.
Contents
Sales and Use Tax
Contact: Donna Niesen, CPA, April Meade, JD, and Stephen Royster, CPA
Affected Code Section: Ind. Code § 6-2.5-5-26 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1316 § 1
Explanation: Provides a sales tax exemption for sales of the following property by a public library or a charitable organization formed to support a public library: (1) Items in the library’s circulated and publicly available collections, including items from the library’s holdings. (2) Items that would typically be included in the library’s circulated and publicly available collections and that are donated by individuals or organizations to a public library or to a charitable organization formed to support a public library. Provides that this exemption does not apply to any other sales of tangible personal property by a public library.
Affected Code Section: Ind. Code § 6-2.5-5-52 (addition)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 18
Explanation: Provides a sales tax exemption for certain tangible personal property purchased and used by a person that operates a hot mix asphalt plant. Exempt personal property includes: (1) Trucks that are used to transport hot mix asphalt form the person’s asphalt plant to a job site. (2) Pavers that are used to spread that person’s hot mix asphalt. (3) Plant equipment directly used to directly produce that person’s hot mix asphalt. (4) Fuel used to operate trucks, pavers, or equipment described above. (5) Repair parts installed on trucks, pavers, or equipment described above.
Affected Code Section: Ind. Code § 6-2.5-8-1 (amendment)
Effective Date: Jan. 1, 2019
Enacted By: Special Session House Bill 1242 § 19
Explanation: Provides that the department of state revenue may require that certain information be provided or updated before the issuance or renewal of a registered retail merchant’s certificate. This information may include: (1) The ids and addresses of the retail merchant’s principal employees, agents, or representatives who engage in Indiana in the solicitation or negotiation of the retail transaction. (2) The location of all of the retail merchant’s places of business in Indiana, including offices and distribution houses. (3) Any other information that the department of state revenue requests.
Affected Code Section: Non-Code Section
Effective Date: Upon Passage
Enacted By: Special Session House Bill 1242 § 35
Explanation: Delays until July 1, 2019, the effective date of provisions concerning the sales taxation of renting rooms, lodgings, and accommodations for which a facilitator accepts payment, notwithstanding certain inconsistent provisions from the 2016 and 2017 legislative sessions.
Affected Code Section: Non-Code Section
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1316 § 16
Explanation: Provides that the exemption from the sales and use tax for the sale of tangible personal property under Ind. Code § 6-2.5-5-26(c) applies only to transactions occurring after June 30, 2018.
Income Tax
Contact: Donna Niesen, CPA, Amy Zimmer, and Stephen Royster, CPA
Affected Code Section: Ind. Code § 4-33-2-10.5 (addition); Ind. Code § 4-35-2-5.5 (addition)
Effective Date: Upon Passage; July 1, 2018
Enacted By: Special Session House Bill 1242 §§ 2, 9
Explanation: Defines “gaming activity information” as information related to table game and slot machine activity used to determine and confirm revenue and the computation of tax.
Affected Code Section: Ind. Code § 4-33-12-1 (deletion)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 4
Explanation: Repeals the riverboat admissions tax and supplemental wagering tax provisions scheduled to expire July 1, 2018.
Affected Code Section: Ind. Code § 4-33-12-1.5 (addition)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 5
Explanation: Establishes a supplemental wagering tax on the wagering occurring each day at a riverboat. Imposed on the licensed owner operating the riverboat. Provides that the amount of the supplemental wagering tax imposed for a particular day is determined by multiplying the riverboat’s adjusted gross receipts for that day by the quotient of: (1) the total riverboat admissions tax that the riverboat’s licensed owner paid beginning July 1, 2016, and ending June 30, 2017; divided by (2) the riverboat’s adjusted gross receipts beginning July 1, 2016, and ending June 30, 2017. Provides that the quotient used to determine the supplemental wagering tax liability of a licensed owner may not exceed the following when expressed as a percentage: (1) 4 percent before July 1, 2019. (2) 3.5 percent after June 30, 2019.
Affected Code Section: Ind. Code § 4-33-12-4 (amendment)
Effective Date: Upon Passage
Enacted By: Special Session House Bill 1242 § 6
Explanation: Provides that the following reporting requirements expire June 30, 2018: a licensed owner must report: (1) the daily amount of admissions taxes imposed (before its repeal) and the supplemental wagering taxes imposed to the department of state revenue at the time the taxes are paid; and (2) gaming activity information to the gaming commission daily on forms prescribed by the commission. Provides that a licensed owner shall pay the admissions taxes (before its repeal) and the supplemental wagering taxes to the department of state revenue on the twenty-fourth calendar day of each month. Provides that effective July 1, 2018, a licensed owner must report: (1) the daily amount of supplemental wagering taxes imposed to the department of state revenue at the time the taxes are paid; and (2) gaming activity information to the Indiana gaming commission daily on forms prescribed by the commission. Also provides that effective July 1, 2018, a licensed owner must pay the supplemental wagering taxes to the department of state revenue on the twenty-fourth calendar day of each month. Specifies that any taxes collected during the month but after the day on which the taxes are required to be paid to the department shall be paid to the department at the same time the following month’s taxes are due. Removes the requirement that payment be made by an electronic funds transfer by automated clearinghouse and instead requires payment to be made in a manner prescribed by the department of state revenue.
Affected Code Section: Ind. Code § 4-33-13-1.5 (amendment)
Effective Date: Upon Passage
Enacted By: Special Session House Bill 1242 § 7
Explanation: Provides that the graduated wagering tax shall be remitted on the twenty-fourth calendar day of each month (rather than one (1) day before the last business day of each month) for the wagering taxes collected that month. Provides that gaming activity information shall be reported to the gaming commission daily on forms prescribed by the commission. Removes the requirement that payment be made by an electronic funds transfer by automated clearinghouse and instead requires payment to be made in a manner prescribed by the department of state revenue.
Affected Code Section: Ind. Code § 4-35-8-1 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 10
Explanation: Provides that the graduated slot machine wagering tax shall be remitted to the department of state revenue on the twenty-fourth calendar day of each month. Specifies that any taxes collected during the month but after the day on which the taxes are required to be paid shall be paid to the department of state revenue at the same time the following month’s taxes are due. Provides that the licensee shall also report gaming activity information to the gaming commission daily on forms prescribed by the commission. Removes the provision allowing the department of state revenue to require payments to be made by electronic funds transfer. Instead, provides that the payment of the tax must be in a manner prescribed by the department of state revenue.
Affected Code Section: Ind. Code § 6-3-1-3.5 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 2
Explanation: Makes technical corrections. For individuals, removes the add-back of the deduction for domestic production activities for the taxable year under Internal Revenue Code (IRC) § 199. Provides other adjustments to an individual’s adjusted gross income as follows: (1) Subtract $1,000 and $1,500 for each of the exemptions provided by IRC § 151(c) as effective Jan. 1, 2017. (2) For taxable years beginning after Dec. 25, 2016, a taxpayer must add to its adjusted gross income an amount equal to the deduction for deferred foreign income that was claimed by the taxpayer for the taxable year under IRC § 965(c). (3) Effective Jan. 1, 2018, a taxpayer must subtract any interest expense paid or accrued in the current taxable year but not deducted as a result of the limitation imposed under IRC § 163(j)(1). Provides for an add-back of any interest expense paid or accrued in a previous taxable year but allowed as a deduction under IRC § 163 in the current taxable year. Specifies that for purposes of this subdivision, an interest expense is considered paid or accrued only in the first taxable year the deduction would have been allowable under IRC § 163 if the limitation under IRC § 163(j)(1) did not exist. (4) A taxpayer must subtract the amount included in the taxpayer’s gross income under IRC § 118(b)(2) for taxable years ending after Dec. 22, 2017.
For corporations, removes the add-back of the deduction for domestic production activities for the taxable year taken under IRC § 199. Provides that a corporation’s federal taxable income is adjusted as follows: (1) Add, to the extent required by Ind. Code § 6-3-2-20: (A) the amount of intangible expenses, as defined in Ind. Code § 6-3-2-20, for the taxable year that reduced the corporation’s taxable income for federal income tax purposes; and (B) any directly related interest expenses, as defined in Ind. Code § 6-3-2-20, that reduced the corporation’s adjusted gross income (determined without regard to this subdivision). Provides that the amount of interest that is considered to have reduced the corporation’s adjusted gross income equals: (i) the directly related interest expense that reduced the taxpayer’s federal taxable income (as defined in IRC § 63); plus (ii) any directly related interest expenses for which a subtraction is allowable under subdivision (15); minus (iii) any directly related interest expenses required to be added back under subdivision (15). (2) For taxable years beginning after Dec. 25, 2016: (A) for a corporation other than a real estate investment trust, add an amount equal to the amount reported by the taxpayer on IRC 965 Transition Tax Statement, line 1; and (B) for a real estate investment trust, add an amount equal to the deduction for deferred foreign income that was claimed by the taxpayer for the taxable year under IRC § 965(c), but only to the extent that the taxpayer included income pursuant to IRC § 965 in its taxable income for federal income tax purposes or is required to add back dividends paid under subdivision (9). (3) Add an amount equal to the deduction that was claimed by the taxpayer for the taxable year under IRC § 250(a)(1)(B) (attributable to global intangible low-taxed income). Provides that the taxpayer shall separately specify the amount of the reduction under IRC § 250(a)(1)(B)(i) and under IRC § 250(a)(1)(B)(ii). (4) Subtract any interest expense paid or accrued in the current taxable year but not deducted as a result of the limitation imposed under IRC § 163(j)(1). Provides for the addition of any interest expense paid or accrued in a previous taxable year but allowed as a deduction under IRC § 163 in the current taxable year. Provides that for purposes of this subdivision, an interest expense is considered paid or accrued only in the first taxable year the deduction would have been allowable under IRC § 163 if the limitation under IRC § 163(j)(1) did not exist. (5) Subtract the amount included in the taxpayer’s gross income under IRC § 118(b)(2) for taxable years ending after Dec. 22, 2017.
Removes the add-back to a life insurance company’s federal taxable income of the deduction for domestic production activities for the taxable year under IRC § 199. Provides that a life insurance company’s federal taxable income is adjusted as follows: (1) For taxable years beginning after Dec. 25, 2016, add an amount equal to the amount reported by the taxpayer on IRC 965 Transition Tax Statement, line 1. (2) Add an amount equal to the deduction that was claimed by the taxpayer for the taxable year under IRC § 250(a)(1)(B) (attributable to global intangible low-taxed income). Provides that the taxpayer shall separately specify the amount of the reduction under IRC § 250(a)(1)(B)(i) and under IRC § 250(a)(1)(B)(ii). (3) Subtract any interest expense paid or accrued in the current taxable year but not deducted as a result of the limitation imposed under IRC § 163(j)(1). Provides for the addition of any interest expense paid or accrued in a previous taxable year but allowed as a deduction under IRC § 163 in the current taxable year. Provides that for purposes of this subdivision, an interest expense is considered paid or accrued only in the first taxable year the deduction would have been allowable under IRC § 163 if the limitation under IRC § 163(j)(1) did not exist. (4) Subtract the amount included in the taxpayer’s gross income under IRC § 118(b)(2) for taxable years ending after Dec. 22, 2017.
Removes the add-back to an insurance company’s federal taxable income of the deduction for domestic production activities for the taxable year under IRC § 199. Provides that an insurance company’s federal taxable income is adjusted as follows: (1) For taxable years beginning after Dec. 25, 2016, add an amount equal to the amount reported by the taxpayer on IRC 965 Transition Tax Statement, line 1. (2) Add an amount equal to the deduction that was claimed by the taxpayer for the taxable year under IRC § 250(a)(1)(B) (attributable to global intangible low-taxed income). Provides that the taxpayer shall separately specify the amount of the reduction under IRC § 250(a)(1)(B)(i) and under IRC § 250(a)(1)(B)(ii). (3) Subtract any interest expense paid or accrued in the current taxable year but not deducted as a result of the limitation imposed under IRC § 163(j)(1). Provides for the addition of any interest expense paid or accrued in a previous taxable year but allowed as a deduction under IRC § 163 in the current taxable year. Provides that for purposes of this subdivision, an interest expense is considered paid or accrued only in the first taxable year the deduction would have been allowable under IRC § 163 if the limitation under IRC § 163(j)(1) did not exist. (4) Subtract the amount included in the taxpayer’s gross income under IRC § 118(b)(2) for taxable years ending after Dec. 22, 2017.
Removes the addition to trust and estate’s federal taxable income for an amount equal to the amount that a taxpayer claimed as a deduction for domestic production activities for the taxable year under IRC § 199. Provides that trusts and estate’s federal taxable income is adjusted as follows: (1) For taxable years beginning after Dec. 25, 2016, add an amount equal to: (A) the amount reported by the taxpayer on IRC 965 Transition Tax Statement, line 1; and (B) with regards to any amounts of income under IRC § 965 distributed by the taxpayer, the deduction under IRC § 965(c) attributable to such distributed amounts. Specifies that for purposes of this article, the amount required to be added back under clause (B) is not considered to be distributed or distributable to a beneficiary of the estate or trust for purposes of IRC § 651 and IRC § 661. (2) Subtract any interest expense paid or accrued in the current taxable year but not deducted as a result of the limitation imposed under IRC § 163(j)(1). Provides for the addition of any interest expense paid or accrued in a previous taxable year but allowed as a deduction under IRC § 163 in the current taxable year. Provides that for purposes of this subdivision, an interest expense is considered paid or accrued only in the first taxable year the deduction would have been allowable under IRC § 163 if the limitation under IRC § 163(j)(1) did not exist. (3) Add back the deduction for qualified business income that was claimed by the taxpayer for the taxable year under IRC § 199A. (4) Subtract the amount included in the taxpayer’s gross income under IRC § 118(b)(2) for taxable years ending after Dec. 22, 2017.
Adds language which states that specific subsections of Ind. Code § 6-3-1-3.5, as added or amended, may not be construed to require an add back or allow a deduction or exemption more than once for a particular add back, deduction, or exemption.
Affected Code Section: Ind. Code § 6-3-1-11 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 3
Explanation: Updates the definition of “Internal Revenue Code” to mean the Internal Revenue Code as amended and in effect on Feb. 11, 2018. Provides that the following acts are not effective for determining adjusted gross income: (1) the federal 21st Century Cures Act and (2) the federal Disaster Tax Relief and Airport and Airway Extension Act of 2017.
Affected Code Section: Ind. Code § 6-3-2-1 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1242 § 20
Explanation: References the expiration of Ind. Code § 6-3-2-1.5. Removes the calculation of tax imposed based on the number of months in the taxpayer’s taxable year and instead requires this calculation to be made based on the number of days in the taxpayer’s taxable year.
Affected Code Section: Ind. Code § 6-3-2-1.5 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 21
Explanation: Provides that the reduced tax rate for a corporation in a qualified military enhancement area applies only to a corporation that locates all or part of its operations in an area before Jan. 1, 2019. Specifies, however, that this subsection may not be construed to prevent the tax rate from applying to succeeding taxable years of a corporation after Dec. 31, 2018, if the corporation locates all or part of its operations in a qualified area before Jan. 1, 2019. Provides that the rate is equal to the lesser of 5 percent or the corporate tax rate that would otherwise apply. Provides that the tax rate shall be determined for each year the credit is claimed.
Affected Code Section: Ind. Code § 6-3-2-2 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 4
Explanation: With regard to corporations and nonresident persons and the definition of “adjusted gross income derived from sources within Indiana,” provides that for purposes of this section and Ind. Code § 6-3-2-2.2, the following apply: (1) For taxable years beginning after Dec. 25, 2016, if a taxpayer is required to include amounts in the taxpayer’s federal adjusted gross income, federal taxable income, or IRC 965 Transition Tax Statement, line 1 as a result of IRC § 965, the following apply: (A) For an entity that is not eligible to claim a deduction under Ind. Code § 6-3-2-12, these amounts shall not be receipts in any taxable year for the entity. (B) For an entity that is eligible to claim a deduction under Ind. Code § 6-3-2-12, these amounts shall be receipts in the year in which the amounts are reported by the entity as adjusted gross income under this article, but only to the extent of: (i) any amounts includible after application of Ind. Code § 6-3-1-3.5(b)(13), Ind. Code § 6-3-1-3.5(d)(12), and Ind. Code § 6-3-1-3.5(e)(12); minus (ii) the deduction taken under Ind. Code § 6-3-2-12 with regard to that income. Provides that this subdivision applies regardless of the taxable year in which the money or property was actually received. (2) If a taxpayer is required to include amounts in the taxpayer’s federal adjusted gross income or federal taxable income as a result of IRC § 951A the following apply: (A) For an entity that is not eligible to claim a deduction under Ind. Code § 6-3-2-12, the receipts that generated the income shall not be included as a receipt in any taxable year. (B) For an entity that is eligible to claim a deduction under Ind. Code § 6-3-2-12, the amounts included in federal gross income as a result of IRC § 951A, reduced by the deduction allowable under Ind. Code § 6-3-2-12 with regard to that income, shall be considered a receipt in the year in which the amounts are includible in federal taxable income. (3) Receipts do not include receipts derived from sources outside the United States to the extent the taxpayer is allowed a deduction or exclusion in determining both the taxpayer’s federal taxable income as a result of the federal Tax Cuts and Jobs Act of 2017 and the taxpayer’s adjusted gross income under this chapter. Provides that if any portion of the federal taxable income derived from these receipts is deductible under Ind. Code § 6-3-2-12, receipts shall be reduced by the proportion of the deduction allowable under Ind. Code § 6-3-2-12 with regard to that federal taxable income. Provides that receipts includible in a taxable year under subdivisions (1) and (2) shall be considered dividends from investments for apportionment purposes.
Affected Code Section: Ind. Code § 6-3-2-2.5 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 5
Explanation: For a resident person, replaces a reference to Ind. Code § 6-3-1-3.5(a)(24) with Ind. Code § 6-3-1-3.5(a)(26). Replaces a reference to Ind. Code § 6-3-1-3.5(f)(10) with Ind. Code § 6-3-1-3.5(f)(11). Adds Ind. Code § 6-3-1-3.5(f)(13) to the list of code sections which modifications are not included in calculating an Indiana net operating loss. Provides that an Indiana net operating loss may not be carried over for more than twenty (20) taxable years after the taxable year of the loss. Removes the requirement that carryover years be determined by reference to the number of years allowed for carrying over net operating losses under IRC § 172(b).
Affected Code Section: Ind. Code § 6-3-2-2.6 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 6
Explanation: For corporations and nonresident persons, replaces a reference to Ind. Code § 6-3-1-3.5(a)(24) with Ind. Code § 6-3-1-3.5(a)(26). Adds the following sections to the list of code sections which modifications are not included in calculating an Indiana net operating loss: (1) Ind. Code § 6-3-1-3.5(b)(17); (2) Ind. Code § 6-3-1-3.5(d)(16); (3) Ind. Code § 6-3-1-3.5(e)(16); (4) Ind. Code § 6-3-1-3.5(f)(11); and (5) Ind. Code § 6-3-1-3.5(f)(13). Provides that an Indiana net operating loss may not be carried over for more than twenty (20) taxable years after the taxable year of the loss. Removes the requirement that carryover years be determined by reference to the number of years allowed for carrying over net operating losses under IRC § 172(b). Removes the requirement that for a life insurance company, a net operating loss deduction be applied by substituting the corresponding provisions of IRC § 810 in place of references to IRC § 172. Makes technical corrections.
Affected Code Section: Ind. Code § 6-3-2-4 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 7
Explanation: Replaces a reference to Ind. Code § 6-3-1-3.5(a)(19) with Ind. Code § 6-3-1-3.5(a)(18).
Affected Code Section: Ind. Code § 6-3-2-12 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 8
Explanation: Amends the definition of “foreign source dividend” to include any amount that a taxpayer is required to include in its gross income for taxable year under IRC §§ 951, 951A, and, for taxable years beginning after Dec. 25, 2016, any amounts required to be included in adjusted gross income under this article after application of Ind. Code § 6-3-1-3.5(b)(13), Ind. Code § 6-3-1-3.5(d)(12), and Ind. Code § 6-3-1-3.5(e)(12), but prior to application of this section and does not include any amount that is treated as a dividend under IRC § 78. Specifies that the reference to amounts required to be included in adjusted gross income under this article after application of Ind. Code § 6-3-1-3.5(b)(13), Ind. Code § 6-3-1-3.5(d)(12), and Ind. Code § 6-3-1-3.5(e)(12) applies in the same taxable year that the taxpayer takes into account the increase in Subpart F income as a result of IRC § 965(a) and uses the deduction for deferred foreign income under IRC § 965(c).
Affected Code Section: Ind. Code § 6-3-3-12 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 9
Explanation: Provides that a contribution to a college choice 529 education savings plan does not apply to money that is credited to the 529 plan and then transferred to an ABLE account (as defined in IRC § 529A). Provides that qualified K-12 education expenses include expenses that are for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school located in Indiana and are permitted under IRC § 529. Provides that a qualified withdrawal does not include a withdrawal or distribution that will be used for expenses that are for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school unless the school is located in Indiana. Provides that in 2018, the state income tax credit for contributions to a college choice 529 education savings plan that will be used to pay for qualified K-12 education expenses is equal to the sum of 20 percent of the amount of the total contributions during the taxable year that will be used to pay for higher education expenses and are not qualified K-12 education expenses, plus the lesser of: (A) $500; or (B) 10 percent multiplied by the amount of the total contributions made during the taxable year that will be used to pay for qualified K-12 education expenses. Provides that in 2019 and thereafter, contributions to a college choice 529 education savings plan that will be used to pay for qualified K-12 education expenses are eligible for a credit equal to the sum of 20 percent of the contributions made during the taxable year that are designated to pay for higher education expenses that are not qualified K-12 education expense; plus 20 percent multiplied by the amount of the total contributions that are designated to pay for qualified K-12 education expenses. Provides that the credit for all contributions is subject to the $1,000 overall annual limit in existing law. Provides that beginning in 2019 a person making a contribution to or a withdrawal from a college choice 529 education savings plan must designate whether the contribution or withdrawal will be used for higher education or K-12 purposes. Provides that the Indiana education savings authority shall use sub-accounting to track the designations.
Affected Code Section: Ind. Code § 6-3-4-3 (amendment)
Effective Date: Jan. 1, 2019
Enacted By: Special Session House Bill 1242 § 23
Explanation: Provides that if the due date for a federal income tax return is extended by the Internal Revenue Service to a date that is later than the date specified for filing a return under Indiana law, the department of state revenue may extend the due date to the due date permitted for the federal income tax return.
Application Note: Current law provides that returns must be filed on or before the later of the following: (1) the fifteenth day of the fourth month following the close of the taxable year; or (2) for corporations whose federal tax return is due on or after the date set forth in subdivision (1), as determined without regard to any extensions, weekends, or holidays, the fifteenth day of the month following the due date of the federal tax return. When an individual receives an extension of their federal income tax return, Indiana law (Ind. Code § 6-8.1-6-1) provides that the corresponding due dates for the person’s Indiana income tax return is automatically extended for the same period as the federal extension, plus thirty (30) days.
Affected Code Section: Ind. Code § 6-3-4-8.2 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 24
Explanation: Removes the requirement that the tax withheld from winnings be paid to the department of state revenue before the close of the business day following the day the winnings are paid, actually or constructively. Instead, provides that the amount withheld for gambling winnings shall be paid to the department of state revenue on the twenty-fourth day of each month. Specifies that any taxes collected during the month but after the date of payment shall be paid by the next month’s payment due date.
Affected Code Section: Ind. Code § 6-3.1-1-3 (amendment)
Effective Date: Jan. 1, 2017 (retroactive)
Enacted By: Special Session House Bill 1316 § 10
Explanation: Provides that a taxpayer that is entitled to one or more specified economic development tax credits for the 2017 taxable year may elect to carry forward all or any portion of those credits and apply the tax credits in the 2018 taxable year. Requires a taxpayer to make an election in order to carry forward the tax credit on or before the taxpayer’s due date for filing a return for the taxable year ending after Dec. 31, 2017.
Affected Code Section: Ind. Code § 6-3.1-11-24 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 25
Explanation: Provides that in the case of a project that includes, as part of the project, the use and repurposing of two or more buildings and structures that are: (1) at least seventy-five (75) years old; and (2) located at a site at which manufacturing previously occurred over a period of at least seventy-five (75) years; a pass through entity may allocate an industrial recovery tax credit among its partners, beneficiaries, or members of the pass through entity as provided by written agreement. A copy of such agreement, a list of partners, beneficiaries, or members of the pass through entity, and their respective shares of the credit will be provided to the department of state revenue.
Affected Code Section: Ind. Code § 6-3.1-21-6 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 11
Explanation: Provides that if a taxpayer properly elects to determine the taxpayer’s earned income in accordance with the federal Bipartisan Budget Act of 2018 for purposes of the credit under IRC § 32 for a taxable year beginning after Dec. 31, 2016, the election shall be treated as being made for purposes of the credit under this chapter. Provides that the minimum earned income amounts and phase-out threshold amounts for the credit under this section are subject to the same cost of living adjustments provided in the Internal Revenue Code.
Affected Code Section: Ind. Code § 6-5.5-1-2 (amendment)
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 12
Explanation: In calculating the adjusted gross income for a financial institution, removes the add-back for a deduction for domestic production activities for the taxable year under IRC § 199. Adds a deduction from adjusted gross income for the amount included in the financial institution’s gross income under IRC § 118(b)(2) for taxable years ending after Dec. 22, 2017. Provides for the following adjustments: (A) Subtract the amount of any interest expense paid or accrued in the current taxable year but not deducted as a result of the limitation imposed under IRC § 163(j)(1). (B) Add any interest expense paid or accrued in a previous taxable year but allowed as a deduction under IRC § 163 in the current taxable year. Provides that for purposes of this subdivision, an interest expense is considered paid or accrued only in the first taxable year the deduction would have been allowable under IRC § 163 if the limitation under IRC § 163(j)(1) did not exist.
Regarding a credit union, provides that adjusted gross income is adjusted as follows: (A) Subtract the amount of any interest expense paid or accrued in the current taxable year but not deducted as a result of the limitation imposed under IRC § 163(j)(1). (B) Add any interest expense paid or accrued in a previous taxable year but allowed as a deduction under IRC § 163 in the current taxable year. Provides that for purposes of this subdivision, an interest expense is considered paid or accrued only in the first taxable year the deduction would have been allowable under IRC § 163 if the limitation under IRC § 163(j)(1) did not exist.
Affected Code Section: Non-Code Section
Effective Date: Jan. 1, 2018 (retroactive)
Enacted By: Special Session House Bill 1316 § 17
Explanation: Provides that the following code sections apply to taxable years beginning after Dec. 31, 2017, unless an earlier taxable year is specified in any of these provisions: Ind. Code § 6-3-1-3.5 (definition of “adjusted gross income”); Ind. Code § 6-3-2-2 (adjusted gross income as applied to corporations and nonresidents); Ind. Code § 6-3-2-2.5 (treatment of net operating losses of resident persons); Ind. Code § 6-3-2-2.6 (treatment of net operating losses of corporations and nonresident persons); Ind. Code § 6-3-2-4 (retirement income deduction for military pay); Ind. Code § 6-3-2-12 (“foreign source dividend” defined / deduction from adjusted gross income); and Ind. Code § 6-5.5-1-2 (definition of “adjusted gross income”).
Economic Development and Tax Credits
Contact: Tim Cook, JD, Katie Culp, and Garth Brazelton
Affected Code Section: Ind. Code § 5-10-1.1-4.5 (deletion)
Effective Date: July 1, 2018|
Enacted By: Special Session House Bill 1242 § 11
Explanation: Repeals the next level Indiana innovation and entrepreneurial fund.
Application Note: This relates to an investment product for the public employee deferred compensation plan, and is not to be confused with the Next Level Indiana Trust Fund program created to support venture capital in the State, which remains active.
Affected Code Section: Ind. Code § 5-10.2-2-3 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 12
Explanation: Removes the requirement that the board of trustees of the Indiana public retirement system maintain as an alternative investment program under the annuity savings account of the public employees’ retirement fund the funds for the next level Indiana innovation and entrepreneurial fund.
Affected Code Section: Ind. Code § 5-10.2-2-3.5 (deletion)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 13
Explanation: Repeals the provisions governing the establishment and maintenance of an alternative investment program within the annuity savings account of the public employees’ retirement fund that was idd the next level Indiana innovation and entrepreneurial fund.
Affected Code Section: Ind. Code § 6-1.1-40-4 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 14
Explanation: Provides that “new manufacturing equipment” must be installed before July 1, 2018, to qualify for a maritime opportunity districts deduction.
Affected Code Section: Ind. Code § 6-1.1-40-9 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 15
Explanation: Provides that the ports of Indiana commission shall not review a statement of benefits for new manufacturing equipment installed in a maritime opportunity district after June 30, 2018.
Affected Code Section: Ind. Code § 6-1.1-40-10 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 16
Explanation: Provides that the maritime opportunity district deduction for new manufacturing equipment applies only to new manufacturing equipment installed before July 1, 2018.
Affected Code Section: Ind. Code § 6-1.1-40-15 (addition)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 17
Explanation: Provides that the maritime opportunity districts credit under Ind. Code Chapter 6-1.1-40 expires Jan. 1, 2023.
Affected Code Section: Ind. Code § 6-3-2-1.5 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 21
Explanation: Provides that the reduced tax rate for a corporation in a qualified military enhancement area applies only to a corporation that locates all or part of its operations in an area before Jan. 1, 2019. Specifies, however, that this subsection may not be construed to prevent the tax rate from applying to succeeding taxable years of a corporation after Dec. 31, 2018, if the corporation locates all or part of its operations in a qualified area before Jan. 1, 2019. Provides that the rate is equal to the lesser of 5 percent or the corporate tax rate that would otherwise apply. Provides that the tax rate shall be determined for each year the credit is claimed.
Affected Code Section: Ind. Code § 6-3.1-1-3 (amendment)
Effective Date: Jan. 1, 2017 (retroactive)
Enacted By: Special Session House Bill 1316 § 10
Explanation: Provides that a taxpayer that is entitled to one or more specified economic development tax credits for the 2017 taxable year may elect to carry forward all or any portion of those credits and apply the tax credits in the 2018 taxable year. Requires a taxpayer to make an election in order to carry forward the tax credit on or before the taxpayer’s due date for filing a return for the taxable year ending after Dec. 31, 2017.
Affected Code Section: Ind. Code § 6-3.1-11-24 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 25
Explanation: Provides that in the case of a project that includes, as part of the project, the use and repurposing of two or more buildings and structures that are: (1) at least seventy-five (75) years old; and (2) located at a site at which manufacturing previously occurred over a period of at least seventy-five (75) years; a pass through entity may allocate an industrial recovery tax credit among its partners, beneficiaries, or members of the pass through entity as provided by written agreement. A copy of such agreement, a list of partners, beneficiaries, or members of the pass through entity, and their respective shares of the credit will be provided to the department of state revenue.
Property Tax
Contact: Chad Miller, CMI
Affected Code Section: Ind. Code § 6-1.1-20.3-2 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1315 § 3
Explanation: Removes the requirement that a “distressed political subdivision” be designated as a distressed political subdivision by the board or a school corporation designated as a distressed political subdivision.
Affected Code Section: Ind. Code § 6-1.1-40-4 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 14
Explanation: Provides that “new manufacturing equipment” must be installed before July 1, 2018, in order to qualify for a maritime opportunity districts deduction.
Affected Code Section: Ind. Code § 6-1.1-40-9 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 15
Explanation: Provides that the ports of Indiana commission shall not review a statement of benefits for new manufacturing equipment installed in a district after June 30, 2018.
Affected Code Section: Ind. Code § 6-1.1-40-10 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 16
Explanation: Provides that the maritime opportunity district deduction for new manufacturing equipment applies only to new manufacturing equipment installed before July 1, 2018.
Affected Code Section: Ind. Code § 6-1.1-40-15 (addition)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 17
Explanation: Provides that the maritime opportunity districts credit under Ind. Code Chapter 6-1.1-40 expires Jan. 1, 2023.
Affected Code Section: Ind. Code § 36-7-25-8 (addition)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 32
Explanation: Requires each redevelopment commission to annually present certain information for the governing bodies of all taxing units that have territory within an allocation area of the redevelopment commission. Provides that the presentation shall be made at a meeting of the redevelopment commission and must include the following information: (1) The commission’s budget with respect to the allocated property tax proceeds. (2) The long term plans for the allocation area. (3) The impact on each of the taxing units. Provides that the governing body of such a taxing unit may request that a member of the redevelopment commission appear before the governing body at a public meeting of the governing body.
Affected Code Section: Ind. Code § 36-10-3-38 (amendment)
Effective Date: July 1, 2018
Enacted By: Special Session House Bill 1242 § 33
Explanation: Requires, for a territory that was annexed by a municipality after June 1, 1976, and before March 4, 1988, one-half of the property taxes attributable to property taxes imposed by the park and recreation district on property that is within the annexed territory to be transferred to the annexing municipality’s parks and recreation department. Provides that the transfer must be made on June 1 and Dec. 1 of each calendar year beginning after Dec. 31, 2018.
Local Taxation
Contact: Donna Niesen, CPA, Amy Zimmer, and Stephen Royster, CPA
Affected Code Section: Ind. Code Chapter 6-9-48 (addition)
Effective Date: Upon Passage
Enacted By: Special Session House Bill 1242 § 30
Explanation: Authorizes Vigo County to adopt a county food and beverage tax. Provides that the tax rate may not exceed 1 percent. Provides that the tax shall be imposed, paid, and collected in the same manner that the state gross retail tax is imposed, paid, and collected under Ind. Code Article 6-2.5 but that the return to be filed with the payment of the tax may be made on a separate return or may be combined with the gross retail tax return, as prescribed by the department of state revenue. Specifies that the revenue from the tax shall be distributed to the capital improvement board and may be used by the board only for the acquisition, construction, improvement, maintenance, or financing of the following: (1) A convention center. (2) A facility that is used or will be used principally for convention or tourism related events or the arts. (3) Wayfinding improvements. Requires the construction or improvements to be made after June 30, 2018. (4) To pay the principal and interest on bonds issued to finance one of these purposes. Specifies that the tax expires Dec. 31, 2043.
Tax Administration
Contact: Donna Niesen, CPA, and Stephen Royster, CPA
Affected Code Section: Ind. Code § 4-30-9-7 (amendment)
Effective Date: Jan. 1, 2019
Enacted By: Special Session House Bill 1242 § 1
Explanation: Removes the requirement that a retailer provide the state lottery commission with a tax clearance statement from the department of state revenue certifying that the retailer does not owe delinquent state taxes. Instead, requires the state lottery commission to obtain this clearance statement before entering into a contract with a retailer.
Affected Code Section: Ind. Code § 6-8.1-1-1 (amendment)
Effective Date: July 1, 2018; Jan. 1, 2019
Enacted By: Special Session House Bill 1242 § 26, 27
Explanation: Replaced a citation to the riverboat admissions tax with a citation to the supplemental wagering tax in the definition of “listed taxes” and “taxes.”
Affected Code Section: Ind. Code § 6-8.1-3-17 (amendment)
Effective Date: Upon Passage
Enacted By: Special Session House Bill 1316 § 13
Explanation: Provides that the department of state revenue may waive interest and penalties if the general assembly enacts a change in a listed tax for a tax period that increases a taxpayer’s tax liability for that listed tax after the due date for that listed tax and tax period. Specifies, however, that such a waiver shall apply only to the extent of the increase in tax liability and only for a period not exceeding sixty (60) days after the change is enacted. Provides that the department may adopt rules, including emergency rules, or issue guidelines to carry this out.
Affected Code Section: Ind. Code § 6-8.1-9-1.5 (addition)
Effective Date: Jan. 1, 2019
Enacted By: Special Session House Bill 1242 § 28
Explanation: Provides that the department of state revenue may issue a refund or credit without a taxpayer filing a refund claim in the event of: (1) an error by the department; (2) an error determined by the department; or (3) a taxpayer’s overpayment determined by the department under an audit or investigation. Provides that the department of state revenue shall prescribe rules or guidelines to govern the circumstances under which it may issue a refund or credit under this section. Provides that the department may not issue a refund or credit if the statute of limitations has expired before the issuance of the refund or credit. Specifies that nothing in this section shall constitute a requirement that the department of state revenue issue a refund or credit for an overpayment.
Affected Code Section: Ind. Code § 6-8.1-10-1 (amendment)
Effective Date: Upon Passage
Enacted By: Special Session House Bill 1316 § 14
Explanation: Includes Ind. Code § 6-8.1-3-17(e), as added, as an exception for which the department of state revenue may waive the interest imposed for the failure to file a return. Ind. Code § 6-8.1-3-17(e) provides that the department of state revenue may waive interest and penalties if the general assembly enacts a change in a listed tax for a tax period that increases a taxpayer’s tax liability for that listed tax after the due date for that listed tax and tax period.
Affected Code Section: Ind. Code Chapter 6-8.1-17 (addition)
Effective Date: Jan. 1, 2019
Enacted By: Special Session House Bill 1242 § 29
Explanation: Provides that for taxable years beginning after Dec. 31, 2018, an income tax return preparer who prepares ten (10) or more income tax returns for compensation in a calendar year or who employs one (1) or more persons to prepare ten (10) or more income tax returns for compensation in a calendar year, may not provide tax preparation services for income tax returns unless the income tax return preparer provides a PTIN when the income tax return preparer submits an income tax return to the department of state revenue and signs the income tax return as a paid preparer. Provides that the department may impose a penalty of fifty dollars ($50) for each violation, but that this penalty may not exceed twenty-five thousand dollars ($25,000) in a calendar year. Provides that a penalty may not be imposed on a tax return preparer’s failure to provide its PTIN due to reasonable cause and not due to willful neglect, as determined by the department. Provides that the department may develop and by rule implement a program using PTINs as an oversight mechanism to assess returns to identify high error rates, patterns of suspected fraud, and unsubstantiated basis for tax positions by income tax return preparers. Provides that the department: (1) may investigate the actions of any income tax return preparer filing income tax returns; and (2) after a hearing, may bar or suspend an income tax return preparer from filing returns with the department for good cause. Provides that the department may establish formal and regular communication protocols with the commissioner of the Internal Revenue Service to share and exchange PTIN information for income tax return preparers who are suspected of fraud, who have been disciplined, or who are barred from filing tax returns with the department of the Internal Revenue Service. Specifies that the department may also establish communication protocols with other states to exchange similar enforcement or discipline information. Provides that the department may adopt rules for the administration and enforcement of this chapter.
Affected Code Section: Non-Code Section
Effective Date: Upon Passage
Enacted By: Special Session House Bill 1242 § 34
Explanation: Provides that for purposes of Ind. Code § 6-3-4-8.2(b), as amended by this act, the amounts withheld after June 30, 2018, and before July 25, 2018, are required to be paid to the department of state revenue on July 24, 2018.