Indiana Tax Changes - October 2024
Week Of 10.07.2024
The Indiana Department of Revenue has updated its income tax information bulletin concerning the S corporation, trust, and partnership mandate to file a composite return on behalf of nonresident shareholders and partners.
Here are the key updates:
- Effective Date: The changes apply to tax years 2025 and later.
- Computation of Income: The previously announced computation of income subject to withholding and pass-through entity tax (PTET) will be used for tax years 2025 and later, not 2024 as originally stated.
- Safe Harbor Provision: The 90% safe harbor for tax reasonably expected to be due applies only if the entity elects to be subject to PTET.
- Penalties: The $500 penalty for failure to include nonresident owners with zero or negative income on a composite return is effective beginning with the 2024 tax year, not for taxable years beginning in 2023 as previously published.
Indiana Interest Rates on Underpayments and Overpayments:
- Effective Date: The new interest rate will be effective for the calendar year beginning January 1, 2025.
- Rate: The interest rate for both underpayments and overpayments of tax will be 6% for calendar year 2025. This is an increase from the 4% rate for calendar year 2024.
- Calculation: The interest rate is determined by rounding to the nearest whole number two percentage points above the average investment yield on state general fund money for the state's fiscal year ending June 30, 2024, excluding pension fund investments.
Indiana Pass-Through Entity Tax (PTET) Updates:
- Effective Date: The changes apply to tax years 2025 and later.
- Computation of Income: The previously announced computation of income subject to withholding and PTET will be used for tax years 2025 and later, not 2024 as originally stated.
- Safe Harbor Provision: The safe harbor provision extending time to file is determined based on the combination of both PTET and composite withholding tax due.
- Penalties: Penalties for failure to make estimated tax payments will not be imposed for taxable years 2023 and 2024.
- Grantor Trusts: Grantor trusts should treat PTET as flowing through directly to the grantor, not to the beneficiary of the trust.
Indiana Pass-Through Entity Tax (PTET) Updates:
- Effective Date: The changes apply to tax years 2025 and later.
- Computation of Income: The previously announced computation of income subject to withholding and PTET will be used for tax years 2025 and later, not 2024 as originally stated.
- Safe Harbor Provision: The 90% safe harbor for tax reasonably expected to be due applies only if the entity elects to be subject to PTET.
- Penalties: Penalties for failure to make estimated tax payments will not be imposed for taxable years 2023 and 2024.
- Composite Return: The $500 penalty for failure to include nonresident owners with zero or negative income on a composite return is effective beginning with the 2024 tax year, not for taxable years beginning in 2023 as previously published.
- Grantor Trusts: Grantor trusts should treat PTET as flowing through directly to the grantor, not to the beneficiary of the trust.
Week Of 09.30.2024
Indiana Corporate Income Tax
Key Takeaway: Indiana S corporations are not required to withhold county income tax on distributions to nonresident shareholders unless the shareholder has a principal place of employment or business in an Indiana county on January 1st of the taxable year.
Details:
- An Indiana S corporation successfully argued against withholding county income tax on distributions to its sole nonresident shareholder.
- The shareholder, due to disability, had become a passive investor with no active role in the business.
- The shareholder did not have a principal place of employment or business in Indiana on January 1st of the taxable years 2020 and 2021.
- The Indiana Department of Revenue accepted the documentation provided and sustained the taxpayer's protest.
- Reference: Indiana Dept of State Rev. Letter of Finding No. 02-20241224, 09/01/2024.
Indiana Sales & Use Taxes: Gasoline Use Tax Rate
October 2024:
- The gasoline use tax rate for October 1, 2024, through October 31, 2024, is 18.3¢ per gallon.
- This rate is determined by multiplying the statewide average retail price of gasoline by the state retail tax rate (7%) and rounding to the nearest $0.001.
- The average retail price of gasoline for August 16, 2024, to September 15, 2024, was $2.6115 per gallon.
- Reference: Indiana Departmental Notice No. 2, 10/01/2024.
September 2024:
- The gasoline use tax rate for September 1, 2024, through September 30, 2024, was 20.4¢ per gallon.
Note: This information is current as of October 1, 2024.
Week Of 10.07.2024
Indiana Corporate Income Tax—Indiana updates guidance on PTET provisions.
The Indiana Department of Revenue has updated its income tax information bulletin concerning the state's pass-through entity tax (PTET) to clarify that the previously announced computation of income subject to withholding and PTET will be used for 2025 and later as opposed to 2024. The bulletin has also been updated to clarify that the safe harbor provision extending time to file is determined based on the combination of both PTET and composite withholding tax due, and that penalties for failure to make estimated tax payments will not be imposed for taxable years 2023 and 2024. The revised bulletin notes that grantor trusts should treat PTET as flowing through directly to the grantor, not to the beneficiary of the trust as was previously published. (Indiana Information Bulletin No. IT72B, 10/01/2024.)
Indiana Corporate Income Tax—Indiana issues guidance regarding computation of income subject to withholding and PTET.
The Indiana Department of Revenue has updated its income tax information bulletin concerning the S corporation, trust, and partnership mandate to file a composite return on behalf of nonresident shareholders and partners. The revised bulletin clarifies that the previously announced computation of income subject to withholding and pass through entity tax (PTET) will be used for 2025 and later as opposed to 2024. The safe harbor provision has been clarified to reflect the 90% safe harbor for tax reasonably expected to be due applies only if the entity elects to be subject to PTET. The bulletin also clarifies that the $500 penalty for failure to include nonresident owners with zero or negative income on a composite return is effective beginning with the 2024 tax year and will not be imposed for taxable years that begin during 2023 as was previously published. (Indiana Information Bulletin No. IT72, 10/01/2024.)
Indiana General Administrative Provisions—Indiana interest rate on underpayments and overpayments increased for 2025.
The Indiana Department of Revenue has announced that the interest rate on underpayments and overpayments of tax that will be effective for the calendar year beginning January 1, 2025 is increased from the 2024 rate. The rate of interest for both underpayments of tax and for excess payments of tax for calendar year 2025 will be 6%. The interest rate for both underpayments and overpayments for calendar year 2024 is 4%. The rate of interest for an underpayment of tax and an excess tax payment is the percentage rounded to the nearest whole number that equals two percentage points above the average investment yield on state general fund money for the state's fiscal year ending June 30, 2024, excluding pension fund investments, as provided by the State Treasurer's Office. (Indiana Departmental Notice No. 3, 10/01/2024.)
Indiana Partnerships—Indiana updates guidance on PTET provisions.
The Indiana Department of Revenue has updated its income tax information bulletin concerning the state's pass-through entity tax (PTET) to clarify that the previously announced computation of income subject to withholding and PTET will be used for 2025 and later as opposed to 2024. The bulletin has also been updated to clarify that the safe harbor provision extending time to file is determined based on the combination of both PTET and composite withholding tax due, and that penalties for failure to make estimated tax payments will not be imposed for taxable years 2023 and 2024. The revised bulletin notes that grantor trusts should treat PTET as flowing through directly to the grantor, not to the beneficiary of the trust as was previously published. (Indiana Information Bulletin No. IT72B, 10/01/2024.)
Indiana Partnerships—Indiana issues guidance regarding computation of income subject to withholding and PTET.
The Indiana Department of Revenue has updated its income tax information bulletin concerning the S corporation, trust, and partnership mandate to file a composite return on behalf of nonresident shareholders and partners. The revised bulletin clarifies that the previously announced computation of income subject to withholding and pass through entity tax (PTET) will be used for 2025 and later as opposed to 2024. The safe harbor provision has been clarified to reflect the 90% safe harbor for tax reasonably expected to be due applies only if the entity elects to be subject to PTET. The bulletin also clarifies that the $500 penalty for failure to include nonresident owners with zero or negative income on a composite return is effective beginning with the 2024 tax year and will not be imposed for taxable years that begin during 2023 as was previously published. (Indiana Information Bulletin No. IT72, 10/01/2024.)
Indiana Property Tax—U.S. Supreme Court action—petition for certiorari denied in Indiana case.
The U.S. Supreme Court has denied a request to review an Indiana Supreme Court decision which held that when return mail receipts for notices of a tax sale are returned with only the signatures of mail carriers, and where the tax sale purchaser states under oath that its first class mail notices were returned, the tax sale purchaser is not obligated to attempt further to notify the owners by other means. The petition involved the effect of the U. S. Postal Service's altered signature policy during COVID-19, which resulted in an increase of certified mail return receipts that were either returned unsigned or contained an illegible signature with a "C19" notation. (Crowe v. Savvy IN, LLC, Ind. S. Ct., Case No. 23S-TP00090, 10/11/2023, cert. denied, U.S. S. Ct., Dkt. No. 23-1117, 10/07/2024.)
Week Of 09.30.2024
Indiana Corporate Income Tax—Indiana S corporation not required to withhold county income tax on distributions to nonresident shareholder.
An Indiana S corporation was not required to withhold county income tax on distributions made to its sole shareholder who resided out of state and did not have a principal place of employment or business in Indiana. As a general rule, withholding of local income tax for nonresident owners is not required unless the nonresident owner has a principal place of employment or business in an Indiana county on January 1 of the taxable year. The taxpayer provided supporting documents disputing the tax, interest, and penalties assessed during an audit of the S corporation's returns for calendar years 2020 and 2021, demonstrating that the sole nonresident shareholder had become "a passive investor" due to disability, continued to own 100% interest of the S corporation without participating in day-to-day business operations, and did not have a principal place of employment or business in an Indiana county on January 1 of either taxable year. The Department accepted the documentation and sustained the taxpayer's protest. (Indiana Dept of State Rev. Letter of Finding No. 02-20241224, 09/01/2024.)
Indiana Sales and Use Tax Rates—Indiana sets gasoline use tax rate for October 2024.
The gasoline use tax rate for the period October 1, 2024, through October 31, 2024, is 18.3¢ per gallon. Using the retail price of gasoline for the period from August 16, 2024, to September 15, 2024, the Indiana Department of Revenue determined that the statewide average retail price per gallon of gasoline is $2.6115. The statewide retail price per gallon of gasoline is multiplied by the state retail tax rate, 7%, and rounded to the nearest $0.001. The gasoline use tax rate for the period September 1, 2024, through September 30, 2024, is 20.4¢ per gallon. (Indiana Departmental Notice No. 2, 10/01/2024.)
Indiana Sales & Use Taxes—Indiana sets gasoline use tax rate for October 2024.
The gasoline use tax rate for the period October 1, 2024, through October 31, 2024, is 18.3¢ per gallon. Using the retail price of gasoline for the period from August 16, 2024, to September 15, 2024, the Indiana Department of Revenue determined that the statewide average retail price per gallon of gasoline is $2.6115. The statewide retail price per gallon of gasoline is multiplied by the state retail tax rate, 7%, and rounded to the nearest $0.001. The gasoline use tax rate for the period September 1, 2024, through September 30, 2024, is 20.4¢ per gallon. (Indiana Departmental Notice No. 2, 10/01/2024.)
Week Of 10.07.2024
Indiana Corporate Income Tax—Indiana updates guidance on PTET provisions.
The Indiana Department of Revenue has updated its income tax information bulletin concerning the state's pass-through entity tax (PTET) to clarify that the previously announced computation of income subject to withholding and PTET will be used for 2025 and later as opposed to 2024. The bulletin has also been updated to clarify that the safe harbor provision extending time to file is determined based on the combination of both PTET and composite withholding tax due, and that penalties for failure to make estimated tax payments will not be imposed for taxable years 2023 and 2024. The revised bulletin notes that grantor trusts should treat PTET as flowing through directly to the grantor, not to the beneficiary of the trust as was previously published. (Indiana Information Bulletin No. IT72B, 10/01/2024.)
Indiana Corporate Income Tax—Indiana issues guidance regarding computation of income subject to withholding and PTET.
The Indiana Department of Revenue has updated its income tax information bulletin concerning the S corporation, trust, and partnership mandate to file a composite return on behalf of nonresident shareholders and partners. The revised bulletin clarifies that the previously announced computation of income subject to withholding and pass through entity tax (PTET) will be used for 2025 and later as opposed to 2024. The safe harbor provision has been clarified to reflect the 90% safe harbor for tax reasonably expected to be due applies only if the entity elects to be subject to PTET. The bulletin also clarifies that the $500 penalty for failure to include nonresident owners with zero or negative income on a composite return is effective beginning with the 2024 tax year and will not be imposed for taxable years that begin during 2023 as was previously published. (Indiana Information Bulletin No. IT72, 10/01/2024.)
Indiana General Administrative Provisions—Indiana interest rate on underpayments and overpayments increased for 2025.
The Indiana Department of Revenue has announced that the interest rate on underpayments and overpayments of tax that will be effective for the calendar year beginning January 1, 2025 is increased from the 2024 rate. The rate of interest for both underpayments of tax and for excess payments of tax for calendar year 2025 will be 6%. The interest rate for both underpayments and overpayments for calendar year 2024 is 4%. The rate of interest for an underpayment of tax and an excess tax payment is the percentage rounded to the nearest whole number that equals two percentage points above the average investment yield on state general fund money for the state's fiscal year ending June 30, 2024, excluding pension fund investments, as provided by the State Treasurer's Office. (Indiana Departmental Notice No. 3, 10/01/2024.)
Indiana Partnerships—Indiana updates guidance on PTET provisions.
The Indiana Department of Revenue has updated its income tax information bulletin concerning the state's pass-through entity tax (PTET) to clarify that the previously announced computation of income subject to withholding and PTET will be used for 2025 and later as opposed to 2024. The bulletin has also been updated to clarify that the safe harbor provision extending time to file is determined based on the combination of both PTET and composite withholding tax due, and that penalties for failure to make estimated tax payments will not be imposed for taxable years 2023 and 2024. The revised bulletin notes that grantor trusts should treat PTET as flowing through directly to the grantor, not to the beneficiary of the trust as was previously published. (Indiana Information Bulletin No. IT72B, 10/01/2024.)
Indiana Partnerships—Indiana issues guidance regarding computation of income subject to withholding and PTET.
The Indiana Department of Revenue has updated its income tax information bulletin concerning the S corporation, trust, and partnership mandate to file a composite return on behalf of nonresident shareholders and partners. The revised bulletin clarifies that the previously announced computation of income subject to withholding and pass through entity tax (PTET) will be used for 2025 and later as opposed to 2024. The safe harbor provision has been clarified to reflect the 90% safe harbor for tax reasonably expected to be due applies only if the entity elects to be subject to PTET. The bulletin also clarifies that the $500 penalty for failure to include nonresident owners with zero or negative income on a composite return is effective beginning with the 2024 tax year and will not be imposed for taxable years that begin during 2023 as was previously published. (Indiana Information Bulletin No. IT72, 10/01/2024.)
Indiana Property Tax—U.S. Supreme Court action—petition for certiorari denied in Indiana case.
The U.S. Supreme Court has denied a request to review an Indiana Supreme Court decision which held that when return mail receipts for notices of a tax sale are returned with only the signatures of mail carriers, and where the tax sale purchaser states under oath that its first class mail notices were returned, the tax sale purchaser is not obligated to attempt further to notify the owners by other means. The petition involved the effect of the U. S. Postal Service's altered signature policy during COVID-19, which resulted in an increase of certified mail return receipts that were either returned unsigned or contained an illegible signature with a "C19" notation. (Crowe v. Savvy IN, LLC, Ind. S. Ct., Case No. 23S-TP00090, 10/11/2023, cert. denied, U.S. S. Ct., Dkt. No. 23-1117, 10/07/2024.)
Week Of 09.30.2024
Indiana Corporate Income Tax—Indiana S corporation not required to withhold county income tax on distributions to nonresident shareholder.
An Indiana S corporation was not required to withhold county income tax on distributions made to its sole shareholder who resided out of state and did not have a principal place of employment or business in Indiana. As a general rule, withholding of local income tax for nonresident owners is not required unless the nonresident owner has a principal place of employment or business in an Indiana county on January 1 of the taxable year. The taxpayer provided supporting documents disputing the tax, interest, and penalties assessed during an audit of the S corporation's returns for calendar years 2020 and 2021, demonstrating that the sole nonresident shareholder had become "a passive investor" due to disability, continued to own 100% interest of the S corporation without participating in day-to-day business operations, and did not have a principal place of employment or business in an Indiana county on January 1 of either taxable year. The Department accepted the documentation and sustained the taxpayer's protest. (Indiana Dept of State Rev. Letter of Finding No. 02-20241224, 09/01/2024.)
Indiana Sales and Use Tax Rates—Indiana sets gasoline use tax rate for October 2024.
The gasoline use tax rate for the period October 1, 2024, through October 31, 2024, is 18.3¢ per gallon. Using the retail price of gasoline for the period from August 16, 2024, to September 15, 2024, the Indiana Department of Revenue determined that the statewide average retail price per gallon of gasoline is $2.6115. The statewide retail price per gallon of gasoline is multiplied by the state retail tax rate, 7%, and rounded to the nearest $0.001. The gasoline use tax rate for the period September 1, 2024, through September 30, 2024, is 20.4¢ per gallon. (Indiana Departmental Notice No. 2, 10/01/2024.)
Indiana Sales & Use Taxes—Indiana sets gasoline use tax rate for October 2024.
The gasoline use tax rate for the period October 1, 2024, through October 31, 2024, is 18.3¢ per gallon. Using the retail price of gasoline for the period from August 16, 2024, to September 15, 2024, the Indiana Department of Revenue determined that the statewide average retail price per gallon of gasoline is $2.6115. The statewide retail price per gallon of gasoline is multiplied by the state retail tax rate, 7%, and rounded to the nearest $0.001. The gasoline use tax rate for the period September 1, 2024, through September 30, 2024, is 20.4¢ per gallon. (Indiana Departmental Notice No. 2, 10/01/2024.)