CHAPTER 7. ENTERPRISE ZONE LOAN INTEREST CREDIT
IC 6-3.1-7
Chapter 7. Enterprise Zone Loan Interest Credit
IC 6-3.1-7-1
Definitions
Sec. 1. As used in this chapter:
"Enterprise zone" means an enterprise zone created underIC 5-28-15.
"Pass through entity" means a:
(1) corporation that is exempt from the adjusted gross incometax under IC 6-3-2-2.8(2);
(2) partnership;
(3) trust;
(4) limited liability company; or
(5) limited liability partnership.
"Qualified loan" means a loan made to an entity that uses the loanproceeds for:
(1) a purpose that is directly related to a business located in anenterprise zone;
(2) an improvement that increases the assessed value of realproperty located in an enterprise zone; or
(3) rehabilitation, repair, or improvement of a residence.
"State tax liability" means a taxpayer's total tax liability that isincurred under:
(1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
(2) IC 27-1-18-2 (the insurance premiums tax); and
(3) IC 6-5.5 (the financial institutions tax);
as computed after the application of the credits that, underIC 6-3.1-1-2, are to be applied before the credit provided by thischapter.
"Taxpayer" means any person, corporation, limited liabilitycompany, partnership, or other entity that has any state tax liability.The term includes a pass through entity.
As added by P.L.51-1984, SEC.1. Amended by P.L.9-1986, SEC.7;P.L.80-1989, SEC.8; P.L.347-1989(ss), SEC.15; P.L.8-1993,SEC.87; P.L.120-1999, SEC.4; P.L.192-2002(ss), SEC.97;P.L.4-2005, SEC.51.
IC 6-3.1-7-2
Eligible taxpayers; amount of credit; pass through entities
Sec. 2. (a) A taxpayer is entitled to a credit against the taxpayer'sstate tax liability for a taxable year if the taxpayer:
(1) receives interest on a qualified loan in that taxable year;
(2) pays the registration fee charged to zone businesses underIC 5-28-15-5;
(3) provides the assistance to urban enterprise associationsrequired from zone businesses under IC 5-28-15-5(b); and
(4) complies with any requirements adopted by the board of theIndiana economic development corporation under IC 5-28-15for taxpayers claiming the credit under this chapter.However, if a taxpayer is located outside of an enterprise zone,subdivision (4) does not require the taxpayer to reinvest its incentivesunder this section within the enterprise zone, except as provided insubdivisions (2) and (3).
(b) The amount of the credit to which a taxpayer is entitled underthis section is five percent (5%) multiplied by the amount of interestreceived by the taxpayer during the taxable year from qualified loans.
(c) If a pass through entity is entitled to a credit under subsection(a) but does not have state tax liability against which the tax creditmay be applied, an individual who is a shareholder, partner,beneficiary, or member of the pass through entity is entitled to a taxcredit equal to:
(1) the tax credit determined for the pass through entity for thetaxable year; multiplied by
(2) the percentage of the pass through entity's distributiveincome to which the shareholder, partner, beneficiary, ormember is entitled.
The credit provided under this subsection is in addition to a tax creditto which a shareholder, partner, beneficiary, or member of a passthrough entity is entitled. However, a pass through entity and anindividual who is a shareholder, partner, beneficiary, or member ofa pass through entity may not claim more than one (1) credit for thequalified expenditure.
As added by P.L.51-1984, SEC.1. Amended by P.L.120-1999, SEC.5;P.L.73-2000, SEC.2; P.L.4-2005, SEC.52.
IC 6-3.1-7-3
Credit carryover
Sec. 3. (a) If the amount determined under section 2(b) of thischapter for a particular taxpayer and a particular taxable yearexceeds the taxpayer's state tax liability for that taxable year, then thetaxpayer may carry the excess over to the immediately succeedingtaxable years. Except as provided in subsection (b), the creditcarryover may not be used for any taxable year that begins more thanten (10) years after the date on which the qualified loan from whichthe credit results is made. The amount of the credit carryover froma taxable year shall be reduced to the extent that the carryover is usedby the taxpayer to obtain a credit under this chapter for anysubsequent taxable year.
(b) Notwithstanding subsection (a), if a loan is a qualified loan asthe result of the use of the loan proceeds in a particular enterprisezone, and if the phase-out period of that enterprise zone terminatesin a taxable year that succeeds the last taxable year in which ataxpayer is entitled to use credit carryover that results from that loanunder subsection (a), then the taxpayer may use the credit carryoverfor any taxable year up to and including the taxable year in which thephase-out period of the enterprise zone terminates.
As added by P.L.51-1984, SEC.1.
IC 6-3.1-7-4 Credit; allocation to state tax liability
Sec. 4. (a) A credit to which a taxpayer is entitled under thischapter shall be applied against taxes owed by the taxpayer in thefollowing order:
(1) First, against the taxpayer's adjusted gross income taxliability (IC 6-3-1 through IC 6-3-7) for the taxable year.
(2) Second, against the taxpayer's insurance premiums taxliability (IC 27-1-18-2) for the taxable year.
(3) Third, against the taxpayer's financial institutions taxliability (IC 6-5.5) for the taxable year.
(b) If the tax paid by the taxpayer under a tax provision listed insubsection (a) is a credit against the liability or a deduction indetermining the tax base under another Indiana tax provision, thecredit or deduction shall be computed without regard to the credit towhich a taxpayer is entitled under this chapter.
As added by P.L.51-1984, SEC.1. Amended by P.L.80-1989, SEC.9;P.L.192-2002(ss), SEC.98.
IC 6-3.1-7-5
Claiming of credit on annual state tax return
Sec. 5. To receive the credit provided by this chapter, a taxpayermust claim the credit on his annual state tax return or returns in themanner prescribed by the department. The taxpayer shall submit tothe department all information that the department determines isnecessary for the calculation of the credit provided by this chapterand for the determination of whether a loan is a qualified loan.
As added by P.L.51-1984, SEC.1.
IC 6-3.1-7-6
Disallowance of credit
Sec. 6. (a) If the department determines that the proceeds from aloan are used for a purpose other than the purpose stated at the timea credit was claimed under this chapter for interest on that loan, andif that stated purpose caused the department to designate the loan asa qualified loan, then the department shall disallow the creditallowed under this chapter for interest on that loan.
(b) A taxpayer shall pay to the department the amount of anycredit disallowed under this section.
As added by P.L.51-1984, SEC.1.
IC 6-3.1-7-7
Tax credit report
Sec. 7. The department shall annually compile and report to theIndiana economic development corporation the followinginformation:
(1) The number of tax credits claimed under this chapter forreturns processed during the preceding state fiscal year.
(2) The total amount of the claims for tax credits described insubdivision (1).
(3) For each enterprise zone, the number and amount of the
claims for tax credits described in subdivision (1) that areattributable to loans made to businesses located in the enterprisezone.
As added by P.L.214-2005, SEC.17.