Indiana General Assembly Recesses for 2021
Successful Session in Face of Outside Challenges
The Indiana General Assembly concluded a historic and unusual session on April 22, one week earlier than the originally set date of April 29. As of late last year, leadership in both the House and Senate were working through the details of how a legislative session would functionally operate during the pandemic. Ultimately, lawmakers were able to conduct business with certain measures in place to reduce the risk of exposure for both lawmakers and the general public. Most notably, the House Chamber was relocated to a larger space in the Indiana Government Center South. The Senate Chamber closed its public gallery and moved the senators’ voting desks to that location to provide for adequate distancing. Committee hearings took place remotely, based on space accommodations, or in larger rooms when available. As a result, legislators navigated the external challenges of the pandemic to achieve a successful session.
Technically, lawmakers recessed the 2021 session with the intent to come back into session later in the year to address redistricting. The redistricting process is completed legislatively and utilizes U.S. census data when establishing new legislative districts. Once lawmakers are in possession of all necessary census data, it is anticipated they will return to session later this year to complete the work of redrawing the legislative districts for all House, Senate and congressional districts, a process repeated every 10 years.
For the session period that recently concluded, 1,025 bills were introduced between both the Senate and House. Of these, 316 bills, or roughly 31% of the bills introduced, survived the first half of session. At the halfway point, the Indiana Mortgage Bankers Association was tracking 74 of the 316 bills that had survived the first half of session. Of those 316 bills that survived to the halfway point of session, only 220 bills were ultimately passed to be sent to the governor’s desk for signature into law.
Of the bills the IMBA was tracking throughout session are several that will have a direct impact on the industry if and when enacted. The first two bills sent to the governor this session to be signed into law were important to the industry. First, HEA 1056 clarified the issue arising from last session’s SEA 340, through which the change of “or” to “and” imposed a new requirement of a second witness when recording documents. The second bill, SEA 1, provided immunity from civil tort liability to any individual, corporation, organization or entity for damages “arising from COVID-19” which occurred on or after March 1, 2020. Both of these bills were effective immediately upon the governor’s signature, becoming law on Feb. 18.
In addition to HEA 1056 and SEA 1, the IMBA supported legislation that restated existing law that a deposit account is a contract for the payment of money, which has a six-year statute of limitations (SEA 370). In addition, the state will move to an electronic lien and title system for vehicles under SEA 400. This bill ushers in a long-awaited process that will allow vehicle transactions to occur in a more efficient manner using new technology.
On a broader COVID-19 relief front, the General Assembly enacted a $60 million Small Business Restart Grant Program eligible for small businesses with a demonstrated loss of more than 30% in revenue in 2020 compared to 2019 and fewer than 100 employees, among other criteria. Businesses are eligible to receive up to $50,000 in support. In terms of economic development, the state created a new economic development fund in the state budget, modeled after the Regional Cities Initiative. The fund, titled Regional Economic Acceleration and Development Initiative (READI), is designed to funnel capital ($500 million appropriation) to communities in a similar manner to the Regional Cities program.
Finally, each session comes with challenges in the form of bills or legislative ideas that would create significant disruptions to the industry, and this year was no different. The IMBA was successful in advocating to prevent a troubling bill from passing. SB 49 would have created significant liability, both legally and financially, for a lender that chooses not to do business with a gun dealer or manufacturer. The issue is expected to reemerge in upcoming years, and the IMBA will remain involved in the ongoing debate.
While much has changed as a result of the pandemic, the positive impact the Indiana General Assembly has had on the Indiana mortgage banking industry has remained strong. The IMBA extends special thanks to the many legislators and mortgage bankers who worked toward satisfactory outcomes on issues of concern to the industry. The effort and engagement put forward by so many ensures Indiana continues to be a state in which we can serve customers well and positively impact Indiana communities and the broader economy.
Legislation That Passed the 2021 Indiana General Assembly
SEA 1 – Civil Immunity Related to COVID-19
Author: Sen. Mark Messmer, R-Jasper
House Sponsor: Rep. Jerry Torr, R-Carmel
Bill summary
Provides civil tort immunity for damages arising from COVID-19 on the premises owned or operated by a person, on any premises on which the person or an employee or agent of the person provided property or services to the individual, or during an activity managed, organized or sponsored by the person, except for an act or omission that constitutes gross negligence or willful or wanton misconduct (including fraud and intentionally tortious acts). Defines “COVID-19 protective product” and provides civil tort immunity for harm that results from the design, manufacture, labeling, sale, distribution or donation of a COVID-19 protective product, except for an act or omission that constitutes gross negligence or willful or wanton misconduct (including fraud and intentionally tortious acts). Prohibits class action suits.
Why it matters
SEA 1 is a broadly applied immunity bill from COVID-19 liability supported by a coalition of business trades and other individual entities. The IMBA supported the general approach to provide immunity to businesses from COVID-19-related lawsuits.
What happened
The bill passed the General Assembly and was signed by the governor.
SEA 332 – Publication of Notice by Political Subdivisions
Author: Sen. Jim Buck, R-Kokomo
House Sponsor: Rep. Doug Miller, R-Elkhart
Bill summary
Allows a political subdivision, when required by statute to publish a notice two or more times, to make the first publication of notice in a newspaper and any subsequent publications of the notice on the official website of the political subdivision. Requires the political subdivision or contractor that maintains the political subdivision’s official website to provide proof of publication of the notice on the official website. Provides that if, with regard to a sheriff’s sale of real property to execute a judgment, the sheriff is not able to procure publication of the notice in a newspaper of general circulation within the county, the sheriff may publish the notice on the website of each county where the real estate is located (instead of dispensing with the publication of notice entirely).
Why it matters
Among other publication changes, the bill originally provided that if, with regard to a sheriff’s sale of real property to execute a judgment, the sheriff is not able to procure publication of the notice in a newspaper of general circulation within the county, the sheriff may publish the notice on the website of each county where the real estate is located (instead of dispensing with the publication of notice entirely). The bill also sets up an optional procedure for the sheriff to post the publication once in a local newspaper and twice on a county-run website, instead of three times in the newspaper as under current law. The IMBA supports legislation that identifies more cost-effective options for the borrower and the lender regarding publication costs.
What happened
The bill passed the General Assembly and awaits the governor’s signature.
SEA 346 – Financial Institutions and Consumer Credit
Author: Sen. Eric Bassler, R-Washington
House Sponsor: Rep. Martin Carbaugh, R-Fort Wayne
Bill summary
For purposes of the statutes governing: (1) first-lien mortgage transactions; (2) the Uniform Consumer Credit Code; and (3) financial institutions; changes references to federal laws within those statutes from federal laws as in effect on Dec. 31, 2019, to federal laws as in effect on Dec. 31, 2020. Amends the statute concerning loans made by a credit union to the credit union’s members to eliminate certain requirements with respect to loans secured by real estate. Amends the definition of “check” for purposes of the statute governing licensed cashers of checks to remove a reference to a “personal money order.”
Why it matters
SEA 346 is the annual bill of the Indiana Department of Financial Institutions, which every year suggests changes to law that it deems necessary, based primarily on findings from examiners. The IMBA supported the general intent of the legislation, but did not support the alignment of the credit union loan provision with federal regulations.
What happened
The bill passed the General Assembly and was signed by the governor.
SEA 383 – Various Tax Matters
Author: Sen. Travis Holdman, R-Markle
House Sponsor: Rep. Tim Brown, R-Crawfordsville
Bill summary
Requires a corporation with gross income of more than $1 million to file its corporate income tax return in an electronic manner specified by the Indiana Department of Revenue. Provides a sales tax exemption for a utility scale battery energy storage system. Provides a sales tax exemption for public safety equipment and materials. Provides certain procedures for reporting federal partnership audit adjustments for purposes of the state adjusted gross income tax and financial institutions tax in order to conform with changes in federal law. Provides that the DOR may prescribe procedures: (1) by which a pass-through entity remits tax; (2) for persons or entities that are otherwise subject to withholding but that may have circumstances such that standard tax computation may result in excess withholding; (3) for individuals and trusts that are residents for part of the taxable year and nonresidents for part of the taxable year; and (4) by which an entity may request alternative withholding arrangements.
Requires the daily parimutuel breakage on wagers to be paid to the DOR, instead of the auditor of state, for deposit in the appropriate breed development fund. Requires a utility provider to maintain records sufficient to document each one-to-one meter change. Allows a person to request that the DOR reissue an exemption certificate with a new meter number in the event of a one-to-one meter change. Removes duplicate provisions regarding electronic filing requirements for sales tax and withholding tax remittance. Removes certain unnecessary information currently required for employer withholding tax reporting forms. Specifies that the penalty provisions in current law for failure to make a payment by electronic funds transfer also apply to a failure to make a payment by any other electronic means. Clarifies that an individual’s estimated income tax filing and payment requirements include local income taxes. Clarifies the penalty calculation for failure to make estimated tax payments, including estimated utility receipts tax and financial institutions tax payments. Provides that a taxpayer may elect to claim a tax credit against the taxpayer’s Indiana adjusted gross income tax liability for the amount of tax that is imposed in a foreign country, but not due from the taxpayer under the laws of that foreign country until a tax year after the tax year in which the income subject to the foreign country’s tax is included in the taxpayer’s Indiana adjusted gross income (provides for retroactive application to tax years beginning after Dec. 31, 2016).
Sets a floor on the periodic change in the gasoline tax and the special fuel tax rates each year of not less than the rates in the preceding year. Provides that the fee to register a trailer that is registered under the International Registration Plan shall be prorated based on the Indiana mileage percentage of the registrant’s trucks and tractors registered under the IRP. Allows the DOR to release the name and business address of a person who is issued a retail merchant’s certificate for the purpose of reporting the status of the person’s certificate. Provides that the provision in current law requiring an out-of-state merchant to collect sales tax on retail transactions made in Indiana if certain threshold conditions are met extends to the following: (1) the waste tire management fee; (2) the fireworks public safety fee; (3) the prepaid wireless service charge.
Provides that a township trustee casts the deciding vote to break a tie vote in the new township board, except for a tie vote on increasing the township trustee’s compensation. Makes a clarifying change to redevelopment tax credit provisions. Delays the expiration of provisions providing that a local income tax council for a county with a single voting bloc must vote as a whole in order to exercise its authority to increase (but not decrease) a local income tax rate in the county.
Why it matters
This bill is the annual Department of Revenue tax bill. It contains a number of changes to Indiana’s tax code related to both the corporate and Financial Institutions Tax. This includes certain procedures for reporting federal partnership audit adjustments for purposes of the state Adjusted Gross Income Tax and Financial Institutions Tax in order to conform with changes in federal law. The bill also provides that the DOR may prescribe procedures: (1) by which a pass-through entity remits tax; (2) for persons or entities that are otherwise subject to withholding but that may have circumstances such that standard tax computation may result in excess withholding; (3) for individuals and trusts that are residents for part of the taxable year and nonresidents for part of the taxable year; and (4) by which an entity may request alternative withholding arrangements. The IMBA monitored the legislation for adverse impacts on financial institutions and did not have concerns with the language as passed.
What happened
The bill passed the General Assembly and awaits the governor’s signature.
See: Indiana State Legislative Update May 3, 2021 - Part 2
