Section 6-3-2-1.5 - "Qualified area"; tax rate in qualified area; application of tax rate after December 31, 2018; expiration(a) As used in this section, "qualified area" means:(1) a military base (as defined in IC 36-7-30-1(c));(2) a military base reuse area established under IC 36-7-30;(3) the part of an economic development area established under IC 36-7-14.5-12.5 that is or formerly was a military base (as defined in IC 36-7-30-1(c)); or(4) a qualified military base enhancement area established under IC 36-7-34.(b) Except as provided in subsections (e) and (h), a tax at the lesser of:(1) the rate of five percent (5%) of adjusted gross income; or(2) the rate imposed under section 1(b) of this chapter; is imposed on that part of the adjusted gross income of a corporation that is derived from sources within a qualified area if the corporation locates all or part of its operations in a qualified area during the taxable year, as determined under subsection (g). The tax rate under this section applies to the taxable year in which the corporation locates its operations in the qualified area and to the next succeeding four (4) taxable years, and the tax rate shall be determined as provided in this subsection in each of those taxable years.
(c) In the case of a corporation that locates all or part of its operations in a qualified military base enhancement area established under IC 36-7-34-4(1), the tax rate imposed under this section applies to the corporation only if the corporation meets at least one (1) of the following criteria: (1) The corporation is a participant in the technology transfer program conducted by the qualified military base (as defined in IC 36-7-34-3).(2) The corporation is a United States Department of Defense contractor.(3) The corporation and the qualified military base have a mutually beneficial relationship evidenced by a memorandum of understanding between the corporation and the United States Department of Defense.(d) In the case of a business that uses the services or commodities in a qualified military base enhancement area established under IC 36-7-34-4(2), the business must satisfy at least one (1) of the following criteria: (1) The business is a participant in the technology transfer program conducted by the qualified military base (as defined in IC 36-7-34-3).(2) The business and the qualified military base have a mutually beneficial relationship evidenced by a memorandum of understanding between the business and the qualified military base (as defined in IC 36-7-34-3).(e) A taxpayer is not entitled to the tax rate described in subsection (b) to the extent that the taxpayer substantially reduces or ceases its operations at another location in Indiana in order to relocate its operations within the qualified area, unless: (1) the taxpayer had existing operations in the qualified area; and(2) the operations relocated to the qualified area are an expansion of the taxpayer's operations in the qualified area.(f) A determination under subsection (e) that a taxpayer is not entitled to the tax rate provided by this section as a result of a substantial reduction or cessation of operations applies to the taxable year in which the substantial reduction or cessation occurs and in all subsequent years. Determinations under this section shall be made by the department of state revenue.(g) The department of state revenue:(1) shall adopt rules under IC 4-22-2 to establish a procedure for determining the part of a corporation's adjusted gross income that was derived from sources within a qualified area; and(2) may adopt other rules that the department considers necessary for the implementation of this chapter.(h) The tax rate under this section applies only to a corporation that locates all or part of its operations in a qualified area before January 1, 2019. However, this subsection may not be construed to prevent the tax rate from applying to succeeding taxable years of a corporation after December 31, 2018, if the corporation locates all or part of its operations in a qualified area before January 1, 2019.(i) This section expires January 1, 2025.Amended by P.L. 201-2023,SEC. 96, eff. 1/1/2024.Amended by P.L. 138-2022,SEC. 5, eff. 7/1/2022.Amended by P.L. 212-2018SP1,SEC. 21, eff. 7/1/2018.Amended by P.L. 288-2013, SEC. 32, eff. 1/1/2014.As added by P.L. 81-2004, SEC.21. Amended by P.L. 190-2005, SEC.2; P.L. 203-2005, SEC.4; P.L. 180-2006, SEC.4.