Indiana 2023 Regular Session

Indiana House Bill HB1373 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2	Introduced Version
3	3	HOUSE BILL No. 1373
4	4	_____
5	5	DIGEST OF INTRODUCED BILL
6	6	Citations Affected: IC 6-3.1-36.5.
7	7	Synopsis: Railroad investment tax credit. Provides that a railroad
8	8	company that is classified as a Class II or Class III carrier is entitled to
9	9	a credit against the railroad company's state income tax liability equal
10	10	to 50% of the amount of qualified railroad expenditures or qualified
11	11	new rail infrastructure expenditures made by the railroad company
12	12	during the taxable year. Provides that: (1) for qualified railroad
13	13	expenditures, the credit may not exceed an amount equal to the product
14	14	of: (A) $5,000; multiplied by (B) the number of miles of railroad track
15	15	owned or leased in Indiana by the taxpayer as of the close of the
16	16	taxable year; and (2) the total amount of credits authorized for qualified
17	17	railroad expenditures may not exceed $9,500,000 annually. Provides
18	18	that: (1) for qualified new rail infrastructure expenditures, the amount
19	19	of the credit may not exceed $500,000 for each project; and (2) the
20	20	total amount of credits authorized for qualified new rail infrastructure
21	21	expenditures may not exceed $10,000,000 annually.
22	22	Effective: January 1, 2023 (retroactive).
23	23	Heine
24	24	January 17, 2023, read first time and referred to Committee on Ways and Means.
25	25	2023 IN 1373—LS 7132/DI 129 Introduced
26	26	First Regular Session of the 123rd General Assembly (2023)
27	27	PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
28	28	Constitution) is being amended, the text of the existing provision will appear in this style type,
29	29	additions will appear in this style type, and deletions will appear in this style type.
30	30	Additions: Whenever a new statutory provision is being enacted (or a new constitutional
31	31	provision adopted), the text of the new provision will appear in this style type. Also, the
32	32	word NEW will appear in that style type in the introductory clause of each SECTION that adds
33	33	a new provision to the Indiana Code or the Indiana Constitution.
34	34	Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
35	35	between statutes enacted by the 2022 Regular Session of the General Assembly.
36	36	HOUSE BILL No. 1373
37	37	A BILL FOR AN ACT to amend the Indiana Code concerning
38	38	taxation.
39	39	Be it enacted by the General Assembly of the State of Indiana:
40	40	1 SECTION 1. IC 6-3.1-36.5 IS ADDED TO THE INDIANA CODE
41	41	2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
42	42	3 JANUARY 1, 2023 (RETROACTIVE)]:
43	43	4 Chapter 36.5. Railroad Investment Tax Credit
44	44	5 Sec. 1. As used in this chapter, "department" refers to the
45	45	6 department of state revenue.
46	46	7 Sec. 2. (a) As used in this chapter, "eligible customer" means a
47	47	8 person that uses any railroad or railroad related property,
48	48	9 facilities, or structures located wholly or partly in Indiana to
49	49	10 directly or indirectly transport property, commodities, or goods.
50	50	11 (b) The term includes a person that:
51	51	12 (1) is served by a Class II or Class III railroad; or
52	52	13 (2) stores railcars on any railroad in Indiana.
53	53	14 Sec. 3. As used in this chapter, "eligible taxpayer" means any:
54	54	15 (1) short line railroad company located wholly or partly in
55	55	16 Indiana that is classified by the United States Surface
56	56	17 Transportation Board as a Class II or Class III railroad; or
57	57	2023 IN 1373—LS 7132/DI 129 2
58	58	1 (2) owner or lessee of a rail siding, industrial spur, or industry
59	59	2 track located on or adjacent to:
60	60	3 (A) a Class II or Class III railroad in Indiana; or
61	61	4 (B) a qualified rural county.
62	62	5 Sec. 4. As used in this chapter, "eligible vendor" means a person
63	63	6 that provides railroad related services directly to an eligible
64	64	7 taxpayer.
65	65	8 Sec. 5. As used in this chapter, "person" means an individual,
66	66	9 corporation, partnership, limited liability company, limited
67	67	10 liability partnership, business trust, estate, trust, association,
68	68	11 cooperative, or any other legal entity.
69	69	12 Sec. 6. As used in this chapter, "qualified new rail infrastructure
70	70	13 expenditures" means gross expenditures that an eligible taxpayer
71	71	14 makes for the construction of new track infrastructure such as:
72	72	15 (1) industrial leads;
73	73	16 (2) switches;
74	74	17 (3) spurs;
75	75	18 (4) sidings;
76	76	19 (5) rail loading docks; and
77	77	20 (6) transloading structures;
78	78	21 that are involved with servicing new customer locations or
79	79	22 expansions by a Class II or Class III railroad in Indiana or a
80	80	23 qualified rural county.
81	81	24 Sec. 7. (a) As used in this chapter, "qualified railroad
82	82	25 expenditures" means gross expenditures for maintenance,
83	83	26 reconstruction, or replacement of railroad infrastructure, such as:
84	84	27 (1) track;
85	85	28 (2) roadbed;
86	86	29 (3) bridges;
87	87	30 (4) grade crossings;
88	88	31 (5) signals; and
89	89	32 (6) industrial leads, including sidings and track related
90	90	33 structures;
91	91	34 that are owned or leased by a Class II or Class III railroad located
92	92	35 in Indiana.
93	93	36 (b) The term does not include expenditures used to generate a
94	94	37 federal tax credit or expenditures funded by a state or federal
95	95	38 grant.
96	96	39 Sec. 7.5. As used in this chapter, "qualified rural county" means
97	97	40 a county in Indiana with a population of not more than three
98	98	41 hundred thousand (300,000).
99	99	42 Sec. 8. (a) As used in this chapter, "railroad related services"
100	100	2023 IN 1373—LS 7132/DI 129 3
101	101	1 includes the following:
102	102	2 (1) Transport of freight by rail.
103	103	3 (2) Loading and unloading of freight transported by rail.
104	104	4 (3) Railroad bridge services.
105	105	5 (4) Railroad track construction.
106	106	6 (5) The provision of railroad track material or equipment.
107	107	7 (6) Locomotive or freight train car leasing or rental.
108	108	8 (7) The provision of railroad financial services, including
109	109	9 banking or insurance.
110	110	10 (8) Maintenance of a railroad's right-of-way, including
111	111	11 vegetation control.
112	112	12 (9) Freight train car repair, rehabilitation, or
113	113	13 remanufacturing repair services.
114	114	14 (b) The list set forth in subsection (a) is not an exhaustive list of
115	115	15 the activities that constitute railroad related services.
116	116	16 Sec. 9. As used in this chapter, "state tax liability" means an
117	117	17 eligible taxpayer's total tax liability that is incurred under:
118	118	18 (1) IC 6-3-1 through IC 6-3-7 (the adjusted gross income tax);
119	119	19 and
120	120	20 (2) IC 6-5.5 (the financial institutions tax);
121	121	21 as computed after the application of the credits that under
122	122	22 IC 6-3.1-1-2 are to be applied before the credit provided by this
123	123	23 chapter.
124	124	24 Sec. 9.5. As used in this chapter, "tax exempt entity" means a
125	125	25 government agency or an organization that is recognized as exempt
126	126	26 under Section 501(c)(3) of the Internal Revenue Code.
127	127	27 Sec. 10. (a) Subject to subsections (b) and (c) and section 11 of
128	128	28 this chapter, an eligible taxpayer is entitled to a credit against the
129	129	29 eligible taxpayer's state tax liability for a taxable year equal to fifty
130	130	30 percent (50%) of an eligible taxpayer's qualified railroad
131	131	31 expenditures and qualified new rail infrastructure expenditures.
132	132	32 (b) For qualified railroad expenditures, the credit may not
133	133	33 exceed an amount equal to the product of:
134	134	34 (1) five thousand dollars ($5,000); multiplied by
135	135	35 (2) the number of miles of railroad track owned or leased in
136	136	36 Indiana by the eligible taxpayer as of the close of the taxable
137	137	37 year.
138	138	38 The total amount of credits authorized for qualified railroad
139	139	39 expenditures may not exceed nine million five hundred thousand
140	140	40 dollars ($9,500,000) annually.
141	141	41 (c) For qualified new rail infrastructure expenditures, the
142	142	42 amount of the credit may not exceed five hundred thousand dollars
143	143	2023 IN 1373—LS 7132/DI 129 4
144	144	1 ($500,000) for each new rail served customer project of an eligible
145	145	2 taxpayer. The total amount of credits authorized for qualified new
146	146	3 rail infrastructure expenditures may not exceed ten million dollars
147	147	4 ($10,000,000) annually.
148	148	5 Sec. 11. (a) A taxpayer wishing to obtain a credit under this
149	149	6 chapter must first apply to the department for certification
150	150	7 following the completion of the project for which qualified railroad
151	151	8 expenditures or qualified new rail infrastructure expenditures
152	152	9 were incurred. The department shall prescribe the form and
153	153	10 manner of the application for certification.
154	154	11 (b) The application must contain each of the following
155	155	12 components:
156	156	13 (1) The number of miles of railroad track owned or leased in
157	157	14 Indiana by the taxpayer.
158	158	15 (2) The amount of:
159	159	16 (A) the qualified railroad expenditures;
160	160	17 (B) the qualified new rail infrastructure expenditures; or
161	161	18 (C) any combination of expenditures described clauses (A)
162	162	19 and (B);
163	163	20 incurred by the taxpayer for a particular project.
164	164	21 (c) The department shall evaluate a taxpayer's eligibility for a
165	165	22 tax credit under this chapter, and, if the taxpayer meets the
166	166	23 requirements for the credit, certify that the:
167	167	24 (1) taxpayer is an eligible taxpayer; and
168	168	25 (2) taxpayer's expenditures are qualified railroad
169	169	26 expenditures or qualified new rail infrastructure
170	170	27 expenditures.
171	171	28 Sec. 12. (a) To receive the credit allowed under this chapter, an
172	172	29 eligible taxpayer must claim the credit on the eligible taxpayer's
173	173	30 state tax return or returns in the manner prescribed by the
174	174	31 department. The eligible taxpayer shall submit to the department
175	175	32 the certification of credit, proof of payment of the certified
176	176	33 qualified railroad expenditures or qualified new rail infrastructure
177	177	34 expenditures, and all information that the department determines
178	178	35 is necessary for the calculation of the credit.
179	179	36 (b) The department shall record the time of filing of each
180	180	37 application for allowance of a tax credit and shall approve the
181	181	38 applications, if they otherwise qualify for a tax credit under this
182	182	39 chapter, in the chronological order in which the applications are
183	183	40 filed.
184	184	41 Sec. 13. If a pass through entity is entitled to a credit under
185	185	42 section 10 of this chapter but does not have state tax liability
186	186	2023 IN 1373—LS 7132/DI 129 5
187	187	1 against which the credit may be applied, a shareholder, partner, or
188	188	2 member of the pass through entity is entitled to a credit equal to:
189	189	3 (1) the credit determined for the pass through entity for the
190	190	4 taxable year; multiplied by
191	191	5 (2) the percentage of the pass through entity's distributive
192	192	6 income to which the shareholder, partner, or member is
193	193	7 entitled.
194	194	8 Sec. 14. (a) If the credit provided by this chapter exceeds the
195	195	9 eligible taxpayer's state tax liability for the taxable year for which
196	196	10 the credit is first claimed, the excess may be carried forward to
197	197	11 succeeding taxable years and used as a credit against the eligible
198	198	12 taxpayer's state tax liability during those taxable years. Each time
199	199	13 that the credit is carried forward to a succeeding taxable year, the
200	200	14 credit is to be reduced by the amount that was used as a credit
201	201	15 during the immediately preceding taxable year. The credit
202	202	16 provided by this chapter may be carried forward and applied to
203	203	17 succeeding taxable years for five (5) taxable years following the
204	204	18 unused credit year.
205	205	19 (b) A credit earned by an eligible taxpayer in a particular
206	206	20 taxable year shall be applied against the eligible taxpayer's tax
207	207	21 liability for that taxable year before any credit carryover is applied
208	208	22 against that liability under subsection (a).
209	209	23 (c) An eligible taxpayer is not entitled to any carryback or
210	210	24 refund of any unused credit.
211	211	25 Sec. 15. (a) An eligible taxpayer may assign any part of the
212	212	26 credit that the eligible taxpayer may claim under this chapter to an
213	213	27 eligible customer, eligible vendor, or any taxpayer subject to tax
214	214	28 under IC 6-3-1 through IC 6-3-7 and IC 6-5.5. An eligible taxpayer
215	215	29 may assign a credit for up to five (5) taxable years following the
216	216	30 first year for which the credit may be claimed. If the assignor of
217	217	31 the credit is a tax exempt entity, the assignment must be completed
218	218	32 on or before a date that is not more than one (1) year after the
219	219	33 close of the taxable year for which the credit was certified under
220	220	34 section 11 of this chapter. A credit that is assigned under this
221	221	35 section remains subject to this chapter.
222	222	36 (b) An assignment of a credit under this section must be in
223	223	37 writing. If the right to claim a credit is assigned under this section,
224	224	38 the eligible taxpayer and the assignee shall provide the department
225	225	39 with a copy of the written assignment not later than thirty (30)
226	226	40 days after the assignment is made. The written assignment must
227	227	41 include at least the following information:
228	228	42 (1) The name, address, and taxpayer identification number of
229	229	2023 IN 1373—LS 7132/DI 129 6
230	230	1 the eligible taxpayer and the assignee.
231	231	2 (2) The taxable year for which the department originally
232	232	3 certified the eligible taxpayer's expenditures as qualified
233	233	4 railroad expenditures or qualified new rail infrastructure
234	234	5 expenditures under section 11 of this chapter.
235	235	6 (3) The amount of the credit being assigned and the taxable
236	236	7 year or years in which the credit will be claimed by the
237	237	8 assignee.
238	238	9 (c) Both the eligible taxpayer and assignee shall report the
239	239	10 assignment on the eligible taxpayer's and assignee's state tax
240	240	11 returns for the year in which the assignment is made, in the
241	241	12 manner prescribed by the department.
242	242	13 (d) If the amount of credit properly available under this section
243	243	14 is less than the amount claimed by the eligible taxpayer that assigns
244	244	15 the credit or the credit is subject to recapture, the department shall
245	245	16 assess the amount of overstated or recaptured credit as taxes due
246	246	17 from the eligible taxpayer and not the assignee. The assessment
247	247	18 shall be made in the manner provided for a deficiency in taxes
248	248	19 under IC 6-8.1.
249	249	20 Sec. 16. Before January 1, 2024, and before January 1 of each
250	250	21 year thereafter, the department shall prepare and submit a report
251	251	22 to the legislative council in an electronic format under IC 5-14-6
252	252	23 that:
253	253	24 (1) outlines the credit assignments that take place during each
254	254	25 preceding calendar year; and
255	255	26 (2) lists and summarizes, for each eligible taxpayer that claims
256	256	27 the credit provided by this chapter, the eligible taxpayer's
257	257	28 investments in:
258	258	29 (A) qualified rail expenditures; or
259	259	30 (B) qualified new rail infrastructure expenditures.
260	260	31 Sec. 17. The department may adopt rules under IC 4-22-2 for
261	261	32 the verification and certification process under sections 10 and 11
262	262	33 of this chapter and to otherwise carry out this chapter.
263	263	34 SECTION 2. [EFFECTIVE JANUARY 1, 2023 (RETROACTIVE)]
264	264	35 (a) IC 6-3.1-36.5, as added by this act, applies only to taxable years
265	265	36 beginning after December 31, 2022.
266	266	37 (b) This SECTION expires January 1, 2027.
267	267	38 SECTION 3. An emergency is declared for this act.
268	268	2023 IN 1373—LS 7132/DI 129