DEPARTMENT OF STATE REVENUE
Information Bulletin #103
(Replaces Bulletin #103 Dated August 2009)
DISCLAIMER: Information bulletins are intended to provide nontechnical assistance to the general public. Every attempt is made to provide information that is consistent with the appropriate statutes, rules, and court decisions. Any information that is not consistent with the law, regulations, or court decisions is not binding on either the Department or the taxpayer. Therefore, the information provided in the bulletin should serve only as a foundation for further investigation and study of the current law and procedures related to the subject matter covered herein.
SUBJECT: Alternative Fuel Vehicle Manufacturer Tax Credit
DIGEST OF CHANGES: Extends expiration date of credit to Dec. 31, 2016
EFFECTIVE DATE: Upon Publication
Indiana provides an income tax credit for assemblers or manufacturers of alternative fuel vehicles. The credit was created in 2007 and applies to taxable years beginning after Dec. 31, 2006. The Indiana Economic Development Corporation (IEDC) certifies qualified investments. The credit is for up to 15% of the qualified investment made in a given tax year, as determined by the IEDC.
The IEDC may not award any credits for investments made after Dec. 31, 2016.
A. "Alternative fuel vehicle" means any passenger car or light truck with a gross weight of 8,500 pounds or less that is designed to operate using at least one of the following: methanol, denatured ethanol, other alcohols, E85 (mixtures containing 85% or more by volume of methanol, denatured ethanol, and other alcohols with gasoline or other fuel), natural gas, liquefied petroleum gas, hydrogen, coal-derived liquid fuels, nonalcohol fuels derived from biological material, P-Series fuels, electricity, biodiesel, or ultra-low sulfur diesel fuel.
B. "Qualified investment" means the amount of a taxpayer's expenditures in Indiana that are reasonable and necessary for the manufacture or assembly of alternative fuel vehicles, as certified by the IEDC.
Qualified investments include
(1) Construction of new (or the modernization of existing) telecommunications, production, manufacturing, fabrication, assembly, finishing, distribution, transportation, or logistical distribution facilities;
(2) Purchase of new equipment used for telecommunications, production, manufacturing, fabrication, assembly, finishing, distribution, transportation, or logistical distribution;
(3) Purchase of new computers and related equipment;
(4) Onsite infrastructure improvements;
(5) Costs associated with retooling existing machinery and equipment;
(6) Costs associated with the construction of special-purpose buildings, pits, and foundations; and
(7) Costs associated with the purchase of machinery, equipment, or special-purpose buildings used to manufacture or assemble alternative fuel vehicles.
A taxpayer cannot claim the credit for any jobs that the taxpayer relocates from one site in Indiana to another site in Indiana.
C. "Taxpayer" means an individual, a corporation, a partnership, or another entity that has state tax liability.
II. APPLYING FOR THE CREDIT
A taxpayer who wishes to qualify for the credit must first apply to the IEDC for certification of qualifying investments.
If the taxpayer is awarded the credit by the IEDC, the IEDC will then enter into an agreement with the taxpayer. The agreement must include all of the following:
(1) A detailed description of the project;
(2) The first taxable year for which the credit may be claimed;
(3) The taxpayer's state tax liability for each tax in the year immediately preceding the year in which the credit may be claimed;
(4) The maximum credit that will be allowed each year;
(5) A requirement that operations be maintained at the location for at least 10 years during the term the credit is offered;
(6) A specific method for determining the number of new employees per year performing tasks not performed by other employees;
(7) A requirement for the taxpayer to annually report to IEDC:
a. The number of new employees per year performing tasks not performed by other employees;
b. The average wage of all employees at project location; and
c. Any other information IEDC needs to perform its duties
(8) A requirement that the IEDC verify the taxpayer's information required in #7 with appropriate state agencies; once verified, the IEDC will issue a certificate to the taxpayer stating such;
(9) The average wage paid to employees at the project location will be at least 150% of the hourly minimum wage under IC 22-2-2-4
or its equivalent (the average excludes highly compensated employees);
(10) A requirement that the taxpayer keep the project property for at least 10 years or its "useful life for federal tax purposes," whichever is less;
(11) A requirement that payroll at the project location during the term of the credit should be at least at the same level as before the qualified investment was made;
(12) A requirement that the taxpayer notify the IEDC within 30 days of receiving or making a proposal that would transfer the taxpayer's state tax liabilities to a successor taxpayer; and
(13) Any other performance conditions the IEDC determines are appropriate.
A taxpayer that proposes a project to manufacture or assemble alternative fuel vehicles that would create new jobs, increase wage levels, or involve substantial capital investment in Indiana may apply to the IEDC for the tax credit before the qualified investment is made. After receipt of the application, the IEDC may enter into an agreement for a tax credit with the applicant if certain conditions are met. These conditions are
(1) The project will raise the total earnings of the taxpayer's Indiana employees;
(2) The project is economically sound, will increase Indiana employment opportunities, and will strengthen the Indiana economy;
(3) The project will reduce air pollution;
(4) The project will reduce dependence on foreign energy sources;
(5) Receiving credit is a major factor in the taxpayer going forward;
(6) The project will result in an overall positive fiscal impact to Indiana;
(7) The credit is not prohibited because of job relocations by the taxpayer; and
(8) The average wage paid to employees at the project location will be at least 150% of the hourly minimum wage.
A taxpayer may apply the credit against their state income tax liability (adjusted gross income, financial institutions, or insurance premiums tax) if the taxpayer is awarded the credit by the IEDC and if the taxpayer has complied with all the terms of the agreement.
A taxpayer claiming the credit is required to submit to the Department a copy of the certificate of verification from the IEDC.
A taxpayer may carry forward unused credit for up to nine consecutive years, as determined by the IEDC. The amount carried forward will be the amount of the unused credit.
The alternative fuel vehicle manufacturer tax credit cannot be claimed with any of the other tax credits listed in IC 6-3.1-1-3
. If a taxpayer has been granted more than one of the tax credits listed under IC 6-3.1-1-3
for the same project, the taxpayer must elect to apply only one of the tax credits in the manner prescribed by the Department.
If a taxpayer does not comply with the agreement, the Department, after notification from the IEDC, may make an assessment against the taxpayer to reclaim the amount of tax credits previously claimed.
Posted: 05/30/2012 by Legislative Services Agency
Composed: Oct 24,2014 12:09:58PM EDT
version of this document.