(a)As used in this section:
"Base period wages" means the following:
(1)In the case of a taxpayer other than a pass through entity,
wages paid or payable by a taxpayer to its employees during the
year that ends on the last day of the month that immediately
precedes the month in which an enterprise zone is established, to
the extent that the wages would have been qualified wages if the
enterprise zone had been in effect for that year. If the taxpayer did
not engage in an active trade or business during that year in the
area that is later designated as an enterprise zone, then the base
period wages equal zero (0). If the taxpayer engaged in an active
trade or business during only part of that year in an area that is
later designated as an enterprise zone, then the department shall
determin
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(a) As used in this section:
"Base period wages" means the following:
(1) In the case of a taxpayer other than a pass through entity,
wages paid or payable by a taxpayer to its employees during the
year that ends on the last day of the month that immediately
precedes the month in which an enterprise zone is established, to
the extent that the wages would have been qualified wages if the
enterprise zone had been in effect for that year. If the taxpayer did
not engage in an active trade or business during that year in the
area that is later designated as an enterprise zone, then the base
period wages equal zero (0). If the taxpayer engaged in an active
trade or business during only part of that year in an area that is
later designated as an enterprise zone, then the department shall
determine the amount of base period wages.
(2) In the case of a taxpayer that is a pass through entity, base
period wages equal zero (0).
"Enterprise zone" means an enterprise zone created under IC 5-28-15.
"Enterprise zone adjusted gross income" means adjusted gross
income of a taxpayer that is derived from sources within an enterprise
zone. Sources of adjusted gross income shall be determined with
respect to an enterprise zone, to the extent possible, in the same manner
that sources of adjusted gross income are determined with respect to
the state of Indiana under IC 6-3-2-2.
"Enterprise zone gross income" means gross income of a taxpayer
that is derived from sources within an enterprise zone.
"Enterprise zone insurance premiums" means insurance premiums
derived from sources within an enterprise zone.
"Monthly base period wages" means base period wages divided by
twelve (12).
"Qualified employee" means an individual who is employed by a
taxpayer and who:
(1) has the individual's principal place of residence in the
enterprise zone in which the individual is employed;
(2) performs services for the taxpayer, ninety percent (90%) of
which are directly related to the conduct of the taxpayer's trade or
business that is located in an enterprise zone;
(3) performs at least fifty percent (50%) of the individual's
services for the taxpayer during the taxable year in the enterprise
zone; and
(4) in the case of an individual who is employed by a taxpayer
that is a pass through entity, was first employed by the taxpayer
after December 31, 1998.
"Qualified increased employment expenditures" means the
following:
(1) For a taxpayer's taxable year other than the taxpayer's taxable
year in which the enterprise zone is established, the amount by
which qualified wages paid or payable by the taxpayer during the
taxable year to qualified employees exceeds the taxpayer's base
period wages.
(2) For the taxpayer's taxable year in which the enterprise zone is
established, the amount by which qualified wages paid or payable
by the taxpayer during all of the full calendar months in the
taxpayer's taxable year that succeed the date on which the
enterprise zone was established exceed the taxpayer's monthly
base period wages multiplied by that same number of full
calendar months.
"Qualified state tax liability" means a taxpayer's total income tax
liability incurred under:
(1) IC 6-3-1 through IC 6-3-7 (adjusted gross income tax) with
respect to enterprise zone adjusted gross income;
(2) IC 27-1-18-2 (insurance premiums tax) with respect to
enterprise zone insurance premiums;
(3) IC 6-5.5 (the financial institutions tax); and
(4) IC 6-8-15 (nonprofit agricultural organization health coverage
tax);
as computed after the application of the credits that, under IC 6-3.1-1-2, are to be applied before the credit provided by this section.
"Qualified wages" means the wages paid or payable to qualified
employees during a taxable year.
"Taxpayer" includes a pass through entity.
(b) A taxpayer is entitled to a credit against the taxpayer's qualified
state tax liability for a taxable year in the amount of the lesser of:
(1) the product of ten percent (10%) multiplied by the qualified
increased employment expenditures of the taxpayer for the
taxable year; or
(2) one thousand five hundred dollars ($1,500) multiplied by the
number of qualified employees employed by the taxpayer during
the taxable year.
(c) The amount of the credit provided by this section that a taxpayer
uses during a particular taxable year may not exceed the taxpayer's
qualified state tax liability for the taxable year. If the credit provided by
this section exceeds the amount of that tax liability for the taxable year
it is first claimed, then the excess may be carried back to preceding
taxable years or carried over to succeeding taxable years and used as
a credit against the taxpayer's qualified state tax liability for those
taxable years. Each time that the credit is carried back to a preceding
taxable year or carried over to a succeeding taxable year, the amount
of the carryover is reduced by the amount used as a credit for that
taxable year. Except as provided in subsection (e), the credit provided
by this section may be carried forward and applied in the ten (10)
taxable years that succeed the taxable year in which the credit accrues.
The credit provided by this section may be carried back and applied in
the three (3) taxable years that precede the taxable year in which the
credit accrues.
(d) A credit earned by a taxpayer in a particular taxable year shall
be applied against the taxpayer's qualified state tax liability for that
taxable year before any credit carryover or carryback is applied against
that liability under subsection (c).
(e) Notwithstanding subsection (c), if a credit under this section
results from wages paid in a particular enterprise zone, and if that
enterprise zone terminates in a taxable year that succeeds the last
taxable year in which a taxpayer is entitled to use the credit carryover
that results from those wages under subsection (c), then the taxpayer
may use the credit carryover for any taxable year up to and including
the taxable year in which the enterprise zone terminates.
(f) A taxpayer is not entitled to a refund of any unused credit.
(g) A taxpayer that:
(1) does not own, rent, or lease real property outside of an
enterprise zone that is an integral part of its trade or business; and
(2) is not owned or controlled directly or indirectly by a taxpayer
that owns, rents, or leases real property outside of an enterprise
zone;
is exempt from the allocation and apportionment provisions of this
section.
(h) If a pass through entity is entitled to a credit under subsection (b)
but does not have state tax liability against which the tax credit may be
applied, an individual who is a shareholder, partner, beneficiary, or
member of the pass through entity is entitled to a tax credit equal to:
(1) the tax credit determined for the pass through entity for the
taxable year; multiplied by
(2) the percentage of the pass through entity's distributive income
to which the shareholder, partner, beneficiary, or member is
entitled.
The credit provided under this subsection is in addition to a tax credit
to which a shareholder, partner, beneficiary, or member of a pass
through entity is entitled. However, a pass through entity and an
individual who is a shareholder, partner, beneficiary, or member of a
pass through entity may not claim more than one (1) credit for the
qualified expenditure.