2016 Indiana Legislative Update

indiana legislative update

2018 Edition  |  Table of Contents
 

Tax Administration
By Donna L. Niesen, CPA and Stephen Royster, CPA

Affected Code Section: Ind. Code § 4-10-13-3 (deletion)
Effective Date: July 1, 2018
Enacted By: House Bill 1003 § 4
Explanation: Deletes provision requiring the department of state revenue to prepare and publish each year a report which contains a recital of the number of taxpayers, the amount of gross collections, the amount of net collections, the amount of refunds, the amount of collection analysis, the amount of administrative costs, and the amount of delinquencies by type of tax collected.

Affected Code Section: Ind. Code § 5-13-9-11 (amendment)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 3
Explanation: Defines “clearinghouse” as the clearinghouse registered with the department of state revenue under Ind. Code § 6-8.1-9.5-3.5. Provides that the treasurer of state shall establish an account in the investment pool for the operator of the clearinghouse, and the treasurer shall hold amounts paid by the department of state revenue for deposit in the clearinghouse operator’s account in the investment pool. Provides that upon signed written request of the operator of the clearinghouse, the treasurer of state shall distribute the money in the operator’s account: (1) to the operator of the clearinghouse; or (2) to specific investment pool accounts of political subdivisions represented by the clearinghouse, if the written request submitted under this subsection specifies: (A) the political subdivision to which the funds are to be disbursed; (B) the specific amount of the funds to be disbursed; and (C) the specific investment pool account the disbursement is owed. Specifies that the clearinghouse shall assume any legal or administrative claims filed against a disbursement made by the treasurer of state that complies with this section. Provides that any interest accrued in the investment pool shall be distributed to the political subdivisions at a rate equal to the percentage owed to that political subdivision based on the overall setoff paid by the department of state revenue. Provides that no interest shall accrue under this subdivision on any fees owed to the clearinghouse under Ind. Code § 6-8.1-9.5-10(b).

Affected Code Section: Ind. Code Article 6-8.1 (amendments)
Effective Date: Upon Passage
Enacted By: Senate Bill 6 §§ 80, 81, 82
Explanation: Makes technical corrections.

Affected Code Section: Ind. Code § 6-8.1-9-14 (amendment)
Effective Date: July 1, 2018
Enacted By: House Bill 1003 § 30
Explanation: Provides that the commissioner of the department of state revenue shall report, not later than March 1, 2023, and every fifth year thereafter, to the governor, the budget director, and the legislative council the following information concerning the implementation of the centralized debt collection program: (1) the number of debts collected during the reporting period; (2) the dollar amounts of debts collected; and (3) an estimate of the future costs and benefits that may be associated with the debt collection program.

Affected Code Section: Ind. Code § 6-8.1-9-14 (amendment)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 4
Explanation: Removes the requirement that a claimant agency described in Ind. Code § 6-8.1-9.5-1(1)(B) have an interlocal agreement with a clearinghouse; rather requiring that such agency only have an agreement with a clearinghouse that: (A) is established under Ind. Code § 6-8.1-9.5-3.5; and (B) has a formal agreement with the department of state revenue for central debt collection. Adds a reference to a clearinghouse as the potential recipient for funds collected from a debtor within thirty (30) days after the end of the month in which the funds were collected by the department of state revenue.

Affected Code Section: Ind. Code § 6-8.1-9-14 (deletion)
Effective Date: July 1, 2018
Enacted By: House Bill 1288 § 21
Explanation: Repeals the statute authorizing the department of state revenue to carry out a centralized debt collection program for use by state agencies to collect delinquent amounts owed to state agencies.

Affected Code Section: Ind. Code § 6-8.1-9.5-1 (amendment)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 5
Explanation: Revises the definition of “claimant agency” to include a political subdivision that has an agreement with a clearinghouse established under Ind. Code § 6-8.1-9.5-3.5 and deletes the requirement that a claimant agency be a unit of local government whose agreement with a clearinghouse is an interlocal agreement. Adds the definition of “clearinghouse” to include a clearinghouse registered with the department of state revenue under Ind. Code § 6-8.1-9.5-3.5(c). Deletes the definition of “unit of local government” and adds definitions of “investment pool” to have the meaning set forth in Ind. Code § 5-13-9-11 and “political subdivision” to have the meaning set forth in Ind. Code § 36-1-2-13.

Affected Code Section: Ind. Code § 6-8.1-9.5-3 (amendment)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 6
Explanation: Provides that to obtain a set off by the department of state revenue, a claimant agency must direct the clearinghouse with which the claimant agency has an agreement to file an application for the set off on behalf of the claimant agency before a date determined by the department of state revenue and published on the department’s Internet website. Deletes reference to a claimant agency that has an interlocal agreement under Ind. Code § 6-8.1-9.5-3.5(d) which has been amended to delete references to interlocal agreements.

Affected Code Section: Ind. Code § 6-8.1-9.5-3.5 (amendment)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 7
Explanation: Replaces a reference to “units of local government exclusively in Indiana” with the newly defined “political subdivisions.” Removes references to “interlocal” agreements. Provides that the department of state revenue may only recognize one (1) clearinghouse to represent political subdivisions at any given time. Provides that a political subdivision may enter into an agreement with a clearinghouse registered to carry out activities on behalf of the political subdivision as authorized in the agreement.

Affected Code Section: Ind. Code § 6-8.1-9.5-3.7 (deletion)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 8
Explanation: Repeals the requirements by which a unit of local government may submit a debt for a set off of a tax refund under Ind. Code § 6-8.1-9.5-3(a)(2).

Affected Code Section: Ind. Code § 6-8.1-9.5-5 (amendment)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 9
Explanation: Provides that a clearinghouse must within fifteen (15) days of the receipt of the notice that a debtor is entitled to a tax refund send written notice to the debtor and the department of state revenue of its intent to have the tax refund set off. Specifies that an agreement described in Ind. Code § 6-8.1-9.5-3.5(d) may provide that the clearinghouse is responsible for sending written notice to the debtor on behalf of a claimant agency.

Affected Code Section: Ind. Code § 6-8.1-9.5-6 (amendment)
Effective Date: July 1, 2018
Enacted By: House Bill 1406 § 4
Explanation: Provides that a debtor who receives written notice pursuant to Ind. Code § 6-8.1-9.5-5 is entitled to contest the claimant agency’s right to the debt and set off at a hearing only if the debtor, not later than thirty (30) days after the date the written notice was mailed to the debtor, mails to the claimant agency written notice that the debtor intends to contest the claimant agency’s right to the debt.

Affected Code Section: Ind. Code § 6-8.1-9.5-7 (amendment)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 11
Explanation: Requires claimant agencies that are political subdivisions who receive notice of a debtor’s intent to contest the claim to a debt and set off to send written notice of and hold a hearing regarding the debtor’s notice. Provides that a notice issued by a political subdivision for a hearing must state substantially the following: (1) The political subdivision’s basis for the claim to the debt and set off. (2) The date on which the political subdivision submitted the debt owed by the debtor for a tax refund set off under this chapter. (3) The date, time, and place at which the political subdivision will conduct the hearing. (4) The procedures under which the hearing will be conducted. (5) A statement that in addition to the amount of the debt owed by the debtor, the total amount of the set off of the debtor’s tax refund may include the following fees for processing the set off of the debtor’s tax refund, as applicable: (A) The collection fee described in Ind. Code § 6-8.1-9.5-10(a). (B) One (1) or more local collection assistance fees described in Ind. Code § 6-8.1-9.5-10(b).

Affected Code Section: Ind. Code § 6-8.1-9.5-8 (amendment)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 12
Explanation: Provides that when the claimant agency certifies to the department of state revenue the amount owed by the debtor to the claimant agency that is subject to set off, the department of state revenue shall set off the appropriate amount and pay it to the appropriate claimant agency, or to the clearinghouse for deposit in the clearinghouse’s account in the investment pool established under Ind. Code § 5-13-9-11(e).

Affected Code Section: Ind. Code § 6-8.1-9.5-10 (amendment)
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 13
Explanation: Clarifies that subsection (b) applies to a claimant agency that is a political subdivision, and provides that a fee collected under this subsection shall be distributed by the department of state revenue to: (1) the nonprofit entity with which the department of state revenue has entered into a contract under Ind. Code § 6-8.1-9.5-3.5(b); or (2) at the direction of the nonprofit entity, the nonprofit entity’s account held by the investment pool.

Affected Code Section: Ind. Code § 6-8.1-9.5-12 (deletion)
Effective Date: July 1, 2018
Enacted By: House Bill 1288 § 22
Explanation: Makes technical changes.

Affected Code Section: Non-Code Section
Effective Date: Upon Passage
Enacted By: Senate Bill 438 § 1
Explanation: Urges the legislative council to assign to an appropriate interim study committee the task of studying issues relating to effective legislative oversight, including: (1) modernization of state government reporting framework to integrate financial, performance, and enterprise risk management; and (2) establishment of periodic and systematic performance reviews of state programs to ensure that state programs are implemented and administered efficiently, effectively, and in a manner consistent with legislative intent.

Affected Code Section: Non-Code Section
Effective Date: Upon Passage
Enacted By: Senate Bill 438 § 2
Explanation: Urges the legislative council to assign to an appropriate interim study committee the task of studying issues relating to the benefits of implementing internal control procedures for state government that ensure verification of the number of work hours reported or billed to the state by a person who is: (1) performing work under a state contract; or (2) a state employee.

Affected Code Section: Non-Code Section
Effective Date: January 1, 2018 (retroactive)
Enacted By: House Bill 1262 § 14
Explanation: Provides that notices to debtors that were issued by a unit of local government (before the elimination of the term by Ind. Code § 6-8.1-9.5-1, as amended by this act) before January 1, 2018, in anticipation of the effective date of Ind. Code § 6-8.1-9.5-3.7 on January 1, 2018, are legalized and validated to the extent that the notices to debtors conformed with the requirements of Ind. Code § 6-8.1-9.5-3.7 (as repealed by this act). Also provides that notices to debtors that are legal and valid under subsection (a) shall be construed as legal and valid notices to debtors under Ind. Code § 6-8.1-9.5-7.

 

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 Stephen 
Stephen Royster is a director in Katz, Sapper & Miller’s State and Local Tax Group. Stephen provides services in tax consulting and preparation in the areas of multistate income and sales taxes, business incentives, controversy services and other state taxes.