chapter.
    Sec. 11. The pilot life long learning tax credit program is established to encourage life long learning practices by eligible employees. The department shall administer the program.
    Sec. 12. (a) An eligible employee that makes an employee contribution to an account is eligible for a credit in a taxable year against the employee's state tax liability in the taxable year.
    (b) The amount of the credit is equal to the least of the following:
        (1) The employee contribution made by an eligible employee to the account in the taxable year.
        (2) Five hundred dollars ($500).
        (3) The amount of the credits allocated by the department to the eligible employee for the taxable year.
    Sec. 13. (a) A participating employer that makes an employer matching contribution to an account is eligible for a credit in a taxable year against the participating employer's state tax liability in the taxable year.
    (b) The amount of the credit is equal to the amount determined under STEP THREE of the following formula:
        STEP ONE: Determine the lesser of the following for each account:
            (A) The participating employer contribution made to the account of an eligible employee in the taxable year.
            (B) Five hundred dollars ($500).
        STEP TWO: Determine the sum of the STEP ONE amounts.
        STEP THREE: Determine the lesser of the following:
            (A) The STEP TWO amount.
            (B) The amount of the credit allocated by the department to the participating employer for the taxable year.
    Sec. 14. (a) If:
        (1) a pass through entity does not have state income tax liability against which the credit provided by this chapter may be applied; and
        (2) the pass through entity would be eligible for a credit under this chapter if the pass through entity were a taxpayer;
a shareholder, partner, or member of the pass through entity is entitled to a credit under this chapter.
    (b) Subject to this chapter, the amount of the credit to which a shareholder, partner, or member is entitled is equal to:
        (1) the credit determined for the pass through entity for the taxable year as if the pass through entity were a taxpayer with

state tax liability in the amount of the credit; multiplied by
        (2) the percentage of the pass through entity's distributive income to which the shareholder or partner is entitled.
    Sec. 15. (a) If the amount of the credit provided under this chapter for a taxpayer in a taxable year exceeds the taxpayer's state tax liability for that taxable year, the taxpayer may carry the excess over to subsequent taxable years until the entire credit is used. 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) A taxpayer is not entitled to a carryback or refund of any unused credit.
    Sec. 16. To receive the credit, a taxpayer must claim the credit on the taxpayer's annual state tax return or returns in the manner prescribed by the department of state revenue. The taxpayer shall submit to the department of state revenue the information that the department of state revenue determines is necessary for the department of state revenue to determine whether the taxpayer is eligible for the credit.
    Sec. 17. To qualify as a life long learning plan under this chapter, the plan must meet all of the following criteria:
        (1) Be in writing.
        (2) Cover at least all full-time employees of the participating employer and, if the participating employer elects to cover part-time employees under the plan, all part-time employees.
        (3) Provide for the establishment of an account for each eligible employee to which:
            (A) an eligible employee makes contributions for the payment of eligible education expenses; and
            (B) the participating employer makes matching contributions on a dollar for dollar basis for the purpose of paying eligible education expenses.
        However, the plan may limit the maximum amount that the participating employer must match. The limitation must uniformly apply to all full-time employees of the employer. If the participating employer elects to have part-time employees participate in the plan, the participating employer may impose a different uniform limitation for part-time employees.
        (4) Subject to section 18 of this chapter, provide that the account may be used only to pay eligible education expenses

incurred by or on behalf of an eligible employee for education selected at the sole discretion of the eligible employee.
        (5) Provide that the availability of the plan does not reduce or substitute for any other education program provided by the participating employer, including the provision, by a participating employer, of courses of instruction for the participating employer's eligible employees (including books, supplies, and equipment).
        (6) Provide procedures for dissemination of information about the plan, including the federal and state income tax consequences of the plan.
        (7) Provide for reporting to the department of state revenue of the information prescribed by the department of state revenue.
        (8) Provide procedures for the allocation of credits certified by the department for the participating employer's eligible employees among the participating employer's eligible employees.
        (9) Be certified by the department as a plan.
    Sec. 18. (a) To qualify as a life long learning account under this chapter, the account must meet all the following criteria:
        (1) Be established and administered in accordance with a plan.
        (2) Subject to this section, be used only to pay eligible education expenses incurred by or on behalf of an eligible employee for education selected at the sole discretion of the eligible employee.
        (3) Be held by a trustee or fiduciary, including the treasurer of state, approved by the department.
    (b) Money in an account that is contributed by an eligible employee is held in trust for the eligible employee. An eligible employee may withdraw the eligible employee's contribution to the account at any time for any purpose. However, if the amount is not withdrawn to:
        (1) pay eligible education expenses; or
        (2) transfer the money in the manner prescribed by the department of state revenue to the account of another participating employer;
the individual forfeits any tax benefit that the individual received under this chapter for the amount withdrawn. The department of state revenue shall prescribe a method for recovery of the tax benefit in the taxable year in which the event causing the forfeiture

of the tax benefit occurs.
    (c) An account may consist of gifts to an account in addition to contributions by an eligible employee or a participating employer. However, a gift to an account may be used only to pay eligible education expenses.
    (d) Transfer of an unused employer contribution as an employer contribution to another account does not result in forfeiture of a tax benefit received under this chapter. However, the employer is not eligible for an additional credit for the amount transferred.
    Sec. 19. A taxpayer that receives a credit for a contribution to an account is not entitled to a separate deduction for an eligible education expense in the taxable year that the eligible education expense is paid from the account. If the taxpayer deducted the eligible education expense in computing for federal income tax purposes:
        (1) federal adjusted gross income in the case of an individual; or
        (2) in the case of taxpayers other than an individual:
            (A) federal taxable income (as defined in Section 63 of the Internal Revenue Code) in the case of corporations;
            (B) federal life insurance company taxable income (as defined in Section 801 of the Internal Revenue Code) in the case of life insurance companies (as defined in Section 816(a) of the Internal Revenue Code) that are organized under Indiana law;
            (C) federal taxable income (as defined in Section 832 of the Internal Revenue Code) in the case of insurance companies subject to tax under Section 831 of the Internal Revenue Code and organized under Indiana law; or
            (D) federal taxable income (as defined for trusts and estates in Section 641(b) of the Internal Revenue Code) in the case of trusts and estates;
the taxpayer shall add the amount of the deduction back in determining state adjusted gross income under IC 6-3-1-3.5 and IC 6-5.5-1-2.
    Sec. 20. The department shall establish a program to provide information to participating employers and eligible employees about the life long learning tax credit program established by this chapter.
    Sec. 21. (a) The department shall establish a program to certify participating employer and eligible employee contributions to an account as eligible for a credit. The program must provide that the