Legislature Passes Bill Addressing Budget and Tax Matters

On June 22, 2002, the Indiana General Assembly passed House Bill 1001 (SS) in order to address Indiana's budget deficit. The Bill was signed by the Governor on June 28, 2002.

HB 1001 (SS) eliminates the Corporate Gross Income Tax (Gross Receipts Tax) for all entities effective January 1, 2003. However, at that time utilities will be subject to a new "Utility Receipts Tax" on gross receipts received in consideration "for the retail sale of utility services for consumption." Such gross receipts are subject to a tax rate of 1.4%. In comparison, under the prior Gross Receipts Tax, the receipt of gross income in exchange for furnishing utility service was subject to a tax rate of 1.2%.

HB 1001 (SS) also amends the Indiana sales tax, most significantly by raising the tax rate from 5% to 6%. This will increase the amount of money that municipal utilities annually collect on behalf of the State. However, the new law does not impact purchases of tangible personal property by municipal utilities. Such transaction remain exempt from the sales tax.

If you have any questions regarding the new tax laws or would like a copy of the relevant sections of HB 1001 (SS), please call Mike Cracraft or Steve Krohne of Hackman Hulett & Cracraft at (317) 636-5401.

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