LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6659 NOTE PREPARED: Dec 16, 2020
BILL NUMBER: HB 1317 BILL AMENDED:
SUBJECT: Sales Tax Remittances by Restaurants.
FIRST AUTHOR: Rep. Andrade BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: X GENERAL IMPACT: State & Local
X DEDICATED
FEDERAL
Summary of Legislation: This bill provides for a payment program for restaurants with unpaid Sales Tax
and Food and Beverage Taxes. Defines "state tax liability" as Sales Tax and Food and Beverage Taxes
incurred after February 28, 2021, and before August 1, 2021. The bill provides that a restaurant can enter into
a payment program agreement with the Department of State Revenue (DOR) that covers state tax liability
for the prescribed time period. It provides that, upon payment of all state tax liability, the DOR shall abate
and not seek to collect any interest, penalties, collection fees, or costs.
Effective Date: January 1, 2021 (retroactive).
Explanation of State Expenditures: Department of State Revenue (DOR): The bill requires the DOR to
establish a payment program for restaurants with unpaid Sales Tax and Food and Beverage Taxes incurred
during March 2021 through July 2021. The bill’s requirements represent an additional workload and
expenditure on the agency outside of the agency’s routine administrative functions, and existing staffing and
resource levels, if currently being used to capacity, may be insufficient for full implementation. The
additional funds and resources required could be supplied through existing staff and resources currently
being used in another program or with new appropriations. Ultimately, the source of funds and resources
required to satisfy the requirements of this bill will depend on legislative and administrative actions.
Criminal Penalties: The bill provides that the DOR may not seek civil or criminal prosecution against a
taxpayer who enters into a payment program and pays the full amount of taxes owed. Under current law, it
is a Level 6 felony to knowingly fail to collect or remit Sales Tax. A Level 6 felony is punishable by a prison
term ranging from 6 to 30 months, with an advisory sentence of one year. The sentence depends on mitigating
and aggravating circumstances. Assuming offenders can be housed in existing facilities with no additional
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staff, the marginal cost for medical care, food, and clothing is approximately $3,524 annually, or $9.66 daily,
per prisoner. However, any reduction in expenditures is likely to be small.
Explanation of State Revenues: Sales Tax: The payment plan provided by the bill could potentially result
in more Sales Tax revenue being collected than would have been collected without the provision of a
payment plan and abatement of penalties and interest. However, the amount that would be collected is
indeterminable. Sales Tax revenue is deposited in the General Fund (99.838%), Commuter Rail Service Fund
(0.131%), and Industrial Rail Service Fund (0.031%).
The bill would also result in a loss of revenue from penalties and interest. Taxpayers are subject to interest
if they fail to file a return or pay the full amount of tax liability by the due date. The interest rate is
established by the DOR. The DOR may also impose penalties equal to 10% of the amount owed. The amount
of penalties and interest that would not be collected is indeterminable.
Criminal Penalties: If fewer court cases occur and fewer fines are collected, revenue to both the Common
School Fund (from criminal fines) and the state General Fund (from court fees) would decrease. The
maximum fine for a Level 6 felony is $10,000. However, any reduction in revenue would likely be small.
Explanation of Local Expenditures: Criminal Penalties: If fewer defendants are detained in county jails
prior to their court hearings, local expenditures for jail operations may decrease. However, any reduction in
expenditures would likely be small.
Explanation of Local Revenues: Food and Beverage Taxes: The payment plan provided by the bill could
potentially result in more Food and Beverage Tax revenue being collected than would have otherwise been
collected. However, the amount of revenue that may be collected is indeterminable. [Currently 15 counties
and 16 municipalities impose a Food and Beverage Tax. Revenue from these taxes is used for various
purposes. A total of $104.18 M was collected in CY 2019.]
Criminal Penalties: If fewer court actions occur and fewer guilty verdicts are entered, local governments
would receive less revenue from court fees. However, the amounts would likely be small.
State Agencies Affected: Department of State Revenue; Department of Correction.
Local Agencies Affected: Cities, towns, and counties that impose a Food and Beverage Tax; trial courts;
local law enforcement agencies.
Information Sources: Legislative Services Agency. Indiana Handbook of Taxes, Revenues, and
Appropriations, FY 2020.
Fiscal Analyst: Lauren Tanselle, 317-232-9586.
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