HB 1117 Amended to Add Wind and Anaerobic Digester Tax Credits

Earlier this week (01/28/08) a coal bill, HB 1117, was amended by a voice vote on second reading on the House floor to add a state income tax credit for equipment used to produce energy derived from the use of wind or from the use of anaerobic digesters. The amount of the credit is equal to ten percent (10%) of the purchase price. HB 1117 passed third reading 01/29/08 by a vote of 81 to 8. Again, the votes against this bill appear to be in opposition to the original subject of the bill and not the renewable tax credit language that was added on second reading. Rep. Dale Grubb (D-Covington) offered the amendment.

See how your state representative voted visit:
http://www.in.gov/legislative/bills/2008/PDF/Hrollcal/0082.PDF.pdf.

HB 1117 Amended Digest: Coal gasification and substitute natural gas. Provides that a taxpayer awarded a coal gasification technology investment tax credit may agree to use less than 100% Indiana coal in the qualifying coal gasification project and qualify for the credit if the taxpayer: (1) wishes to assign the tax credit; and (2) certifies to the Indiana economic development corporation that partial use of other coal is necessary to result in lower rates for Indiana retail utility customers. Changes the definition of "substitute natural gas" to include gas: (1) produced by a facility outside Indiana; and (2) converted from coal from a location other than the Illinois basin. Changes the definition of a "customer choice program" to include customers located in the service area of an electric utility. Provides that when substitute natural gas (SNG) purchase obligations are proportionally assigned due to a customer choice program, the assignee must meet the assignment requirements in the previously approved contract for purchase of the SNG. Provides that a taxpayer that purchases from an Indiana business certain equipment used to produce energy derived from the use of wind or from the use of anaerobic digestors is entitled to a credit against state income tax liability. Provides that the amount of the credit is 10% of the purchase price of the equipment.

The language of the amendment is as follows:
Chapter 32. Credit for Purchase of Qualified Equipment Sec. 1. As used in this chapter, "pass through entity" means: (1) a corporation that is exempt from the adjusted gross income tax under IC 6-3-2-2.8(2); (2) a partnership; (3) a limited liability company; or (4) a limited liability partnership. Sec. 2. As used in this chapter, "qualified equipment" means equipment used to produce energy that is: (1) for retail or commercial use; and (2) derived from the use of wind or from the use of anaerobic digestors. Sec. 3. As used in this chapter, "state income tax liability" means a taxpayer's total tax liability that is incurred under IC 6-3-1 through IC 6-3-7, 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. Sec. 4. (a) A taxpayer that purchases qualified equipment from an Indiana business (as certified by the Indiana economic development corporation) in a taxable year is entitled to a credit against state income tax liability for that taxable year. The amount of the credit is equal to ten percent (10%) of the purchase price of the qualified equipment. (b) A taxpayer may not claim a credit under this chapter for the purchase of qualified equipment if the taxpayer claims another state income tax credit or deduction for that same qualified equipment. Sec. 5. If a pass through entity is entitled to a credit under this chapter but does not have state income tax liability against which the tax credit may be applied, a shareholder, partner, 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, or member is entitled. Sec. 6. (a) If the amount of the credit determined under this chapter for a taxpayer in a taxable year exceeds the taxpayer's state income tax liability for that taxable year, the taxpayer may carry the excess credit over for a period not to exceed the taxpayer's following five (5) taxable years. 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 a refund of any unused credit amount. Sec. 7. To receive the credit provided by this chapter, a taxpayer must claim the credit on the taxpayer's state tax return or returns in the manner prescribed by the department. Sec. 8. The department, with the assistance of the Indiana utility regulatory commission, shall adopt rules necessary to carry out this chapter.

To read the full text of the bill see: http://www.in.gov/legislative/bills/2008/PDF/HB/HB1117.2.pdf.

This bill now moves to the Indiana State Senate for further consideration and deliberation. The Senate Sponsors are Sen. Hershman and Sen. R. Young. The bill has already been assigned to the Senate Committee on Utilities and Regulatory Affairs chaired by Sen. Hershman who also introduced SB 224.