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 under
IC 5-28-15.
"Pass through entity" means a:
(1) corporation that is exempt from the adjusted gross income
tax 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 loan
proceeds for:
(1) a purpose that is directly related to a business located in an
enterprise zone;
(2) an improvement that increases the assessed value of real
property 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 is
incurred 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, under
IC 6-3.1-1-2, are to be applied before the credit provided by this
chapter.
"Taxpayer" means any person, corporation, limited liability
company, 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's
state 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 under
IC 5-28-15-5;
(3) provides the assistance to urban enterprise associations
required from zone businesses under IC 5-28-15-5(b); and
(4) complies with any requirements adopted by the board of the
Indiana economic development corporation under IC 5-28-15
for 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 incentives
under this section within the enterprise zone, except as provided in
subdivisions (2) and (3).
(b) The amount of the credit to which a taxpayer is entitled under
this section is five percent (5%) multiplied by the amount of interest
received 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 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.
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 this
chapter for a particular taxpayer and a particular taxable year
exceeds the taxpayer's state tax liability for that taxable year, then the
taxpayer may carry the excess over to the immediately succeeding
taxable years. Except as provided in subsection (b), the credit
carryover may not be used for any taxable year that begins more than
ten (10) years after the date on which the qualified loan from which
the credit results is made. The amount of the credit carryover from
a taxable year shall be reduced to the extent that the carryover is used
by the taxpayer to obtain a credit under this chapter for any
subsequent taxable year.
(b) Notwithstanding subsection (a), if a loan is a qualified loan as
the result of the use of the loan proceeds in a particular enterprise
zone, and if the phase-out period of that enterprise zone terminates
in a taxable year that succeeds the last taxable year in which a
taxpayer is entitled to use credit carryover that results from that loan
under subsection (a), then the taxpayer may use the credit carryover
for any taxable year up to and including the taxable year in which the
phase-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 this
chapter shall be applied against taxes owed by the taxpayer in the
following order:
(1) First, against the taxpayer's adjusted gross income tax
liability (IC 6-3-1 through IC 6-3-7) for the taxable year.
(2) Second, against the taxpayer's insurance premiums tax
liability (IC 27-1-18-2) for the taxable year.
(3) Third, against the taxpayer's financial institutions tax
liability (IC 6-5.5) for the taxable year.
(b) If the tax paid by the taxpayer under a tax provision listed in
subsection (a) is a credit against the liability or a deduction in
determining the tax base under another Indiana tax provision, the
credit or deduction shall be computed without regard to the credit to
which 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 taxpayer
must claim the credit on his annual state tax return or returns in the
manner prescribed by the department. The taxpayer shall submit to
the department all information that the department determines is
necessary for the calculation of the credit provided by this chapter
and 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 a
loan are used for a purpose other than the purpose stated at the time
a credit was claimed under this chapter for interest on that loan, and
if that stated purpose caused the department to designate the loan as
a qualified loan, then the department shall disallow the credit
allowed under this chapter for interest on that loan.
(b) A taxpayer shall pay to the department the amount of any
credit 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 the
Indiana economic development corporation the following
information:
(1) The number of tax credits claimed under this chapter for
returns processed during the preceding state fiscal year.
(2) The total amount of the claims for tax credits described in
subdivision (1).
(3) For each enterprise zone, the number and amount of the
claims for tax credits described in subdivision (1) that are
attributable to loans made to businesses located in the enterprise
zone.
As added by P.L.214-2005, SEC.17.