2016 Indiana Legislative Update

indiana legislative update

2018 Edition  |  Table of Contents
 

Income Tax
By Donna L. Niesen, CPA, and Amy Zimmer

Affected Code Section: Ind. Code Article 6-3 (amendments); Ind. Code Article 6-3.1 (amendments)
Effective Date: Upon Passage
Enacted By: Senate Bill 6 §§ 69, 70, 71, 72, 73
Explanation: Makes technical corrections.

Affected Code Section: Ind. Code § 6-3-2-21.7 (amendment)
Effective Date: July 1, 2018
Enacted By: House Bill 1003 § 24
Explanation: Relating to exempt income for fees and royalties received for qualified patents. Removes the requirement that on or before December 1 of each year, the department of state revenue shall provide an evaluation report to the legislative council, the budget committee, and the Indiana economic development corporation containing the following information: (1) the number of taxpayers claiming an exemption under this section; (2) the sum of all the exemptions claimed under this section; (3) the North American Industry Classification System code for each taxpayer claiming an exemption under this section; and (4) any other information the department considers appropriate, including the number of qualified patents for which an exemption was claimed under this section. Instead provides that the department shall determine, record, and retain the North American Industry Classification System code for each taxpayer claiming an exemption under this section.

Affected Code Section: Ind. Code § 6-3.1-13-24 (amendment)
Effective Date: July 1, 2018
Enacted By: House Bill 1003 § 25
Explanation: Amends the economic development for a growing economy tax credit evaluation requirements. Provides that the Indiana economic development corporation shall include a report on the evaluation in the economic incentives and compliance report submitted under Ind. Code Chapter 5-28-28 for the calendar year in which the evaluation is completed.

Affected Code Section: Ind. Code § 6-3.1-13-28 (deletion)
Effective Date: July 1, 2018
Enacted By: House Bill 1003 § 26
Explanation: Repeals section which required the department of state revenue to submit each year to the budget committee a report specifying the amount of credits granted under Ind. Code § 6-3.1-13 during the immediately preceding state fiscal year.

Affected Code Section: Ind. Code § 6-3.1-26-25 (amendment)
Effective Date: July 1, 2018
Enacted By: House Bill 1003 § 27
Explanation: Amends the Hoosier business investment tax credit. Removes the reporting requirements. Provides that the department of state revenue shall submit information to the Indiana economic development corporation concerning the use of the credit for logistics investments under this chapter. Provides that the information submitted by the department of state revenue must include specific information regarding the previous calendar year (as opposed to fiscal year) for logistics investments. Provides that the Indiana economic development corporation shall include information received or compiled under this section in the economic incentives and compliance report submitted under Ind. Code Chapter 5-28-28 for the calendar year in which the evaluation is completed.

Affected Code Section: Ind. Code § 27-1-15.8-1 (amendment)
Effective Date: July 1, 2018
Enacted By: House Bill 1301 § 6
Explanation: Adds definitions with regard to surplus lines insurance producers. Adds definitions for “affiliate” and “affiliated group.” Adds the definition of “control” to mean (1) ownership or power to vote at least twenty-five percent (25%) of any class of voting securities; or (2) power to determine the election of a majority of the directors or trustees; of an entity. Adds the definition of “home state” to mean the following: (1) With respect to an insured: (A) the state in which the insured maintains: (i) the insured’s principal place of business; or (ii) if the insured is an individual, the insured’s principal residence; or (B) if one hundred percent (100%) of the insured risk is located outside the state described in clause (A), the state to which the greatest percentage of the insured’s taxable premium for the insurance contract is allocated. (2) With respect to an affiliated group, if more than one (1) insured from the affiliated group is a named insured on a single nonadmitted insurance policy or contract, the home state determined under subdivision (1) of the member of the affiliated group that has the largest percentage of premium attributed to the member under the nonadmitted insurance policy or contract. Adds a definition of “nonadmitted insurance policy or contract” to mean an insurance policy or contract that is issued by an insurer that is not authorized to transact the business of insurance under the law of the home state. Adds a definition of “principal place of business” with respect to determining the home state of an insured, to mean the state where the (1) insured maintains the insured’s headquarters; and (2) insured’s officers direct, control, and coordinate the business activities of the insured.

Affected Code Section: Ind. Code § 27-1-15.8-4 (amendment)
Effective Date: July 1, 2018
Enacted By: House Bill 1301 § 7
Explanation: Provides that a surplus lines producer licensed under Ind. Code Chapter 27-1-15.8 shall, on or before February 1 (as opposed to on or before February 1 and August 1) of each year, collect from the insured and remit to the department of insurance an amount equal to two and five tenths percent (2.5%) of all gross premiums upon all policies and contracts procured in a listed manner for the preceding twelve (12) month period ending December 31. Adds to the list of taxable policies and contracts those that are acquired for insureds whose home state is Indiana.

Affected Code Section: Ind. Code Article 27-18 (deletion)
Effective Date: July 1, 2018
Enacted By: House Bill 1301 § 34
Explanation: Repeals the Surplus Lines Insurance Compact.

 

Note: We expected the legislature to address federal tax reform during the regular session, however the complexity of the topic coupled with the short session resulted in its conclusion without resolution. Because of the importance of this topic, Governor Holcomb has called a special session to convene in May. Stay tuned for more information on this topic.

 

Connect with Donna 
Donna L. Niesen is a partner in Katz, Sapper & Miller’s State and Local Tax Group. Donna helps keep clients up-to-date on the multitude of tax rules and requirements in all 50 states. She guides them in the right direction as they address complex issues that emerge on the state and local levels.

Connect with Amy 
Amy Zimmer is a state and local tax manager in Katz, Sapper & Miller’s State and Local Tax Group. She provides a variety of tax compliance and consulting services in the areas of property tax, multistate sales and income taxes and other state taxes.