2023 Indiana Code › Title 6. Taxation › Article 3. State Income Taxes › Chapter 3. Credits › 6-3-3-10. Enterprise Zone Employers; Credit; Employment Expenditures

Sec. 10. (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.
As added by P.L.23-1983, SEC.12. Amended by P.L.9-1986, SEC.6; P.L.347-1989(ss), SEC.9; P.L.120-1999, SEC.3; P.L.14-2000, SEC.17; P.L.1-2003, SEC.35; P.L.269-2003, SEC.8; P.L.4-2005, SEC.50; P.L.182-2009(ss), SEC.197; P.L.154-2020, SEC.9.