*SB0451.1*
January 22, 2025
SENATE BILL No. 451
_____
DIGEST OF SB 451 (Updated January 21, 2025 11:36 am - DI 120)
Citations Affected: IC 6-3.
Synopsis: Income tax rate. Provides for a decrease in the individual
adjusted gross income tax rate beginning in 2030 depending on certain
conditions being met.
Effective: July 1, 2025.
Holdman
January 13, 2025, read first time and referred to Committee on Tax and Fiscal Policy.
January 21, 2025, amended, reported favorably — Do Pass.
SB 451—LS 6727/DI 120 January 22, 2025
First Regular Session of the 124th General Assembly (2025)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2024 Regular Session of the General Assembly.
SENATE BILL No. 451
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 6-3-2-1, AS AMENDED BY P.L.201-2023,
2 SECTION 95, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2025]: Sec. 1. (a) As used in this section, "state fiscal year"
4 means the annual period commencing July 1 of a given year and
5 ending June 30 of the following year.
6 (b) Each taxable year, a tax at the following rate of adjusted gross
7 income is imposed upon the adjusted gross income of every resident
8 person, and on that part of the adjusted gross income derived from
9 sources within Indiana of every nonresident person:
10 (1) For taxable years beginning before January 1, 2015, three and
11 four-tenths percent (3.4%).
12 (2) For taxable years beginning after December 31, 2014, and
13 before January 1, 2017, three and three-tenths percent (3.3%).
14 (3) For taxable years beginning after December 31, 2016, and
15 before January 1, 2023, three and twenty-three hundredths percent
16 (3.23%).
17 (4) For taxable years beginning after December 31, 2022, and
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1 before January 1, 2024, three and fifteen hundredths percent
2 (3.15%).
3 (5) For taxable years beginning after December 31, 2023, and
4 before January 1, 2025, three and five-hundredths percent
5 (3.05%).
6 (6) For taxable years beginning after December 31, 2024, and
7 before January 1, 2026, three percent (3%).
8 (7) For taxable years beginning after December 31, 2025, and
9 before January 1, 2027, two and ninety-five hundredths percent
10 (2.95%).
11 (8) For taxable years beginning after December 31, 2026, and
12 before January 1, 2030, two and nine-tenths percent (2.9%).
13 (9) For taxable years beginning after December 31, 2029, if
14 the actual amount of forecasted state general fund revenue
15 collections for the state fiscal year ending June 30, 2028, and
16 for state fiscal years ending June 30 of each even-numbered
17 year thereafter, exceed by at least three percent (3%) the
18 amount of forecasted state general fund revenue collections
19 for the state fiscal year ending June 30 of the immediately
20 preceding state fiscal year, as determined by the budget
21 agency under subsection (e), the tax rate shall be decreased by
22 the percentage point of five one-hundredths of one percent
23 (0.05%) beginning January 1 of the even-numbered year
24 immediately succeeding the year of the budget agency
25 determination under subsection (e).
26 (b) (c) Except as provided in section 1.5 of this chapter (before its
27 expiration), each taxable year, a tax at the following rate of adjusted
28 gross income is imposed on that part of the adjusted gross income
29 derived from sources within Indiana of every corporation:
30 (1) Before July 1, 2012, eight and five-tenths percent (8.5%).
31 (2) After June 30, 2012, and before July 1, 2013, eight percent
32 (8.0%).
33 (3) After June 30, 2013, and before July 1, 2014, seven and
34 five-tenths percent (7.5%).
35 (4) After June 30, 2014, and before July 1, 2015, seven percent
36 (7.0%).
37 (5) After June 30, 2015, and before July 1, 2016, six and
38 five-tenths percent (6.5%).
39 (6) After June 30, 2016, and before July 1, 2017, six and
40 twenty-five hundredths percent (6.25%).
41 (7) After June 30, 2017, and before July 1, 2018, six percent
42 (6.0%).
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1 (8) After June 30, 2018, and before July 1, 2019, five and
2 seventy-five hundredths percent (5.75%).
3 (9) After June 30, 2019, and before July 1, 2020, five and
4 five-tenths percent (5.5%).
5 (10) After June 30, 2020, and before July 1, 2021, five and
6 twenty-five hundredths percent (5.25%).
7 (11) After June 30, 2021, four and nine-tenths percent (4.9%).
8 (c) (d) If for any taxable year a taxpayer is subject to different tax
9 rates under subsection (b), (c), the taxpayer's tax rate for that taxable
10 year is the rate determined in the last STEP of the following STEPS:
11 STEP ONE: Multiply the number of days in the taxpayer's taxable
12 year that precede the day the rate changed by the rate in effect
13 before the rate change.
14 STEP TWO: Multiply the number of days in the taxpayer's
15 taxable year that follow the day before the rate changed by the
16 rate in effect after the rate change.
17 STEP THREE: Divide the sum of the amounts determined under
18 STEPS ONE and TWO by the number of days in the taxpayer's
19 tax period.
20 However, the rate determined under this subsection shall be rounded
21 to the nearest one-hundredth of one percent (0.01%).
22 (e) This subsection applies beginning in 2028, and applies in
23 each even-numbered year thereafter. After the end of each
24 even-numbered state fiscal year, the budget agency shall calculate
25 and determine the percentage of revenue growth in the actual
26 amount of forecasted state general fund revenue collections
27 compared to the immediately preceding odd-numbered state fiscal
28 year for purposes of determining whether the tax rate will decrease
29 for a taxable year under subsection (b)(9). The budget agency shall
30 make the calculation not later than thirty (30) days after the end of
31 each even-numbered state fiscal year. Not later than September 1
32 of each even-numbered year, the budget agency shall certify the
33 results to the department and to the legislative council, and report
34 to the state budget committee for review the following:
35 (1) The percentage of revenue growth determined under this
36 subsection.
37 (2) The adjusted gross income tax rate determination made
38 for the following even-numbered year under this subsection.
39 Not later than November 1 of each odd-numbered year, the
40 department shall provide notice of the determination and the
41 applicable tax rates for each even-numbered year under subsection
42 (b)(9)(A) and (b)(9)(B) on the department's website in a
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1 departmental notice.
2 SECTION 2. IC 6-3-2-1.7, AS ADDED BY P.L.137-2022,
3 SECTION 34, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
4 JULY 1, 2025]: Sec. 1.7. (a) For purposes of this section:
5 (1) "Distributor" means a person or entity located in this state that
6 purchases tangible personal property from an eligible corporation
7 for purposes of resale. For purposes of this section, a distributor
8 is not a person or entity that has a relationship described in
9 Section 267(b) of the Internal Revenue Code with the eligible
10 corporation.
11 (2) "Eligible corporation" means a corporation otherwise subject
12 to tax under section 1(b) 1(c) of this chapter. An eligible
13 corporation shall not include a corporation described in section
14 2.8(2) of this chapter or a corporation subject to tax under
15 IC 6-5.5.
16 (3) "Qualifying distribution sale" means a sale of tangible
17 personal property by an eligible corporation to a distributor that:
18 (A) is a purchase for resale by the distributor as defined in
19 IC 6-2.5-5-8; and
20 (B) for which the sourcing of the sale of the property to an
21 ultimate customer outside Indiana is agreed to by the
22 department and the eligible corporation, or, in the absence of
23 an agreement, sourced by the ratio of the population of Indiana
24 compared to the population of all states in which the qualified
25 distribution sales are sold to an ultimate customer.
26 For purposes of this section, a qualifying distribution sale shall
27 not include any sale for which the distributor does not issue an
28 exemption certificate in the manner provided by the department
29 under IC 6-2.5-8-8 or a purchase by the distributor for the
30 distributor's own use other than for resale. A qualifying
31 distribution sale shall not include any sale made by a pass through
32 entity that would otherwise be attributable under this article to the
33 eligible corporation.
34 (4) "Ultimate customer" means a purchaser of tangible personal
35 property who purchases the tangible personal property without an
36 intent of future resale of property.
37 (b) If an eligible corporation has greater than one billion dollars
38 ($1,000,000,000) of tangible personal property sales that otherwise
39 would be sourced to this state under section 2(e) of this chapter, and
40 would have an apportionment percentage under section 2 of this
41 chapter of greater than ten percent (10%) prior to application of this
42 section the eligible corporation may elect to determine its tax as
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1 follows:
2 STEP ONE: Determine the apportionment percentage under
3 sections 2 and 2.2 of this chapter, treating qualifying distribution
4 sales as if they were not receipts for purposes of the
5 apportionment numerator, but treating the portion where the
6 ultimate customer would be located in Indiana as part of the
7 receipts numerator.
8 STEP TWO: Determine Indiana adjusted gross income in the
9 manner otherwise provided in this article, applying the
10 apportionment percentage in STEP ONE. For purposes of this
11 STEP, any adjusted gross income arising from qualified
12 distribution sales shall be treated as business income of the
13 eligible corporation.
14 STEP THREE: Determine the tax due under this chapter on the
15 amount computed in STEP TWO, reduced by any nonrefundable
16 credits under IC 6-3-3 or IC 6-3.1, but not less than zero (0). For
17 purposes of this article, any application of a credit under this
18 STEP shall reduce the amount available for carryforward in the
19 same manner as otherwise provided under IC 6-3-3 or IC 6-3.1.
20 STEP FOUR:
21 (A) If the eligible corporation's qualified distribution sales are
22 not in excess of two billion dollars ($2,000,000,000),
23 determine one-half of one percent (0.5%) of the qualified
24 distribution sales.
25 (B) If the eligible corporation's qualified distribution sales are
26 in excess of two billion dollars ($2,000,000,000) but not in
27 excess of three billion dollars ($3,000,000,000), determine
28 three-eighths of one percent (0.375%) of the qualified
29 distribution sales in excess of two billion dollars
30 ($2,000,000,000) plus ten million dollars ($10,000,000).
31 (C) If the eligible corporation's qualified distribution sales are
32 in excess of three billion dollars ($3,000,000,000) but not in
33 excess of four billion dollars ($4,000,000,000), determine
34 one-fourth of one percent (0.25%) of the qualified distribution
35 sales in excess of three billion dollars ($3,000,000,000) plus
36 thirteen million seven hundred fifty thousand dollars
37 ($13,750,000).
38 (D) If the eligible corporation's qualified distribution sales are
39 in excess of four billion dollars ($4,000,000,000), determine
40 one-eighth of one percent (0.125%) of the qualified
41 distribution sales in excess of four billion dollars
42 ($4,000,000,000) plus sixteen million two hundred fifty
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1 thousand dollars ($16,250,000).
2 STEP FIVE: Add the amounts determined under STEP THREE
3 and STEP FOUR.
4 (c) Notwithstanding any other provision of this section, for an
5 eligible corporation that makes an election:
6 (1) if the tax for a taxable year covered by the election as
7 computed under subsection (b) is less than twenty-six million
8 dollars ($26,000,000), the tax shall be twenty-six million dollars
9 ($26,000,000); and
10 (2) if the tax for the taxable year covered by an election as
11 computed under subsection (b) is greater than the amount
12 specified in clauses (A) through (C), the amount of tax shall be
13 the following amounts:
14 (A) For a taxable year ending after December 31, 2018, and
15 before January 1, 2025, forty million dollars ($40,000,000).
16 (B) For a taxable year ending after December 31, 2024, and
17 before January 1, 2026, forty-two million dollars
18 ($42,000,000).
19 (C) For each taxable year ending after December 31, 2025,
20 forty-two million dollars ($42,000,000) plus one million
21 dollars ($1,000,000) for each taxable year ending after
22 December 31, 2025.
23 For purposes of this subsection, the tax for a taxable year under this
24 section shall be determined after application of any credit allowable
25 under IC 6-3-3 and IC 6-3.1.
26 (d) If an eligible corporation makes an election under this section,
27 the following apply:
28 (1) The eligible corporation shall be subject to the election for the
29 taxable year of the election and each taxable year thereafter until
30 the first taxable year ending ten (10) years after the first year in
31 which an election is made under this section, even if the
32 corporation would not be an eligible corporation for a taxable year
33 after the taxable year in which the election is made, and shall be
34 binding on any successor corporation or group of corporations to
35 the eligible corporation.
36 (2) After the period of the initial election under subdivision (1),
37 the department may permit a taxpayer to make an election under
38 this section for each subsequent taxable year after the election
39 expires under subdivision (1). However:
40 (A) an election under this subdivision is only permitted for one
41 (1) taxable year; and
42 (B) if an eligible corporation does make an election for a
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1 taxable year, the eligible corporation may only make a new
2 election if the new election is subject to the terms of
3 subdivision (1).
4 (e) If two (2) or more eligible corporations are part of a consolidated
5 return or combined return, the computation under STEP FOUR of
6 subsection (b) shall be determined separately for each corporation.
7 (f) For purposes of computing net operating losses for the taxable
8 year under section 2.6 of this chapter and the deduction allowable
9 against adjusted gross income under section 2.6 of this chapter, the loss
10 for the taxable year or deduction allowable shall be computed pursuant
11 to STEP TWO of subsection (b).
12 (g) An election under this section shall be in the form and manner
13 prescribed by the department. The election must be completed and filed
14 with the department on or before the date of filing of the original return
15 for a taxable year to be effective beginning with that taxable year. In
16 addition, if an eligible corporation files a consolidated return or
17 combined return for the first taxable year of the election, or for any year
18 subsequent to the first taxable year of the election, the eligible
19 corporation and the department shall enter into an agreement regarding
20 issues specific to consolidated or combined returns. In the absence of
21 such an agreement, any such issues shall be treated in a manner
22 prescribed by the department and published in the Indiana Register. If
23 the original return for a taxable year is filed after the due date for the
24 original return, including any extensions, an election will not be
25 allowed for that taxable year or any subsequent year to which the
26 election otherwise would apply. However, the eligible corporation may
27 file an election for subsequent taxable years, provided the eligible
28 corporation otherwise meets the requirements of this section.
29 SECTION 3. IC 6-3-4.5-1, AS AMENDED BY P.L.9-2024,
30 SECTION 186, IS AMENDED TO READ AS FOLLOWS
31 [EFFECTIVE JULY 1, 2025]: Sec. 1. The following definitions apply
32 throughout this chapter:
33 (1) "Adjustment year" means the partnership taxable year
34 described in Section 6225(d)(2) of the Internal Revenue Code.
35 (2) "Administrative adjustment request" means an administrative
36 adjustment request filed by a partnership under Section 6227 of
37 the Internal Revenue Code.
38 (3) "Affected year" means any taxable year for a taxpayer that is
39 affected by an adjustment under this chapter, regardless of
40 whether the partnership has received an adjustment for that
41 taxable year.
42 (4) "Audited partnership" means a partnership subject to a
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1 partnership level audit resulting in a federal adjustment.
2 (5) "Corporate partner" means a partner that is subject to the state
3 adjusted gross income tax under IC 6-3-2-1(b) IC 6-3-2-1(c) or
4 the financial institutions tax under IC 6-5.5-2-1. In the case of a
5 partner that is a corporation described in IC 6-3-2-2.8(2) that also
6 is subject to tax under IC 6-3-2-1(b), IC 6-3-2-1(c), the
7 corporation is a corporate partner only to the extent that its
8 income is subject to tax under IC 6-3-2-1(b). IC 6-3-2-1(c).
9 (6) "Direct partner" means a partner that holds an interest directly
10 in a partnership or pass through entity.
11 (7) "Exempt partner" means a partner that is exempt from the
12 adjusted gross income tax under IC 6-3-2-2.8(1) or the financial
13 institutions tax under IC 6-5.5-2-7(4), except to the extent of
14 unrelated business taxable income.
15 (8) "Federal adjustment" means a change to an item or amount
16 determined under the Internal Revenue Code or a change to any
17 other tax attribute that is used by a taxpayer to compute state
18 adjusted gross income taxes or financial institutions tax owed,
19 whether that change results from action by the Internal Revenue
20 Service, including a partnership level audit, or the filing of an
21 amended federal return, a federal refund claim, or an
22 administrative adjustment request by the taxpayer. A federal
23 adjustment is positive to the extent that it increases state adjusted
24 gross income as determined under IC 6-3 or IC 6-5.5 and is
25 negative to the extent that it decreases state adjusted gross income
26 as determined under IC 6-3 or IC 6-5.5.
27 (9) "Federal adjustment reports" includes methods or forms
28 required by the department for use by a taxpayer to report final
29 federal adjustments for purposes of this chapter, including an
30 amended Indiana tax return, information return, or uniform
31 multistate report.
32 (10) "Federal partnership representative" means a person the
33 partnership designates for the taxable year as the partnership's
34 representative, or the person the Internal Revenue Service has
35 appointed to act as the federal partnership representative,
36 pursuant to Section 6223(a) of the Internal Revenue Code.
37 (11) "Final determination date" means the following:
38 (A) Except as provided in clause (B) or (C), if the federal
39 adjustment arises from an Internal Revenue Service audit or
40 other action by the Internal Revenue Service, the final
41 determination date is the date on which the federal adjustment
42 is a final determination under IC 6-3-4-6(d).
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1 (B) For federal adjustments arising from an Internal Revenue
2 Service audit or other action by the Internal Revenue Service,
3 if the taxpayer filed as a member of a consolidated tax return
4 filed under IC 6-3-4-14, a combined return filed under
5 IC 6-3-2-2 or IC 6-5.5-5-1, or a return combined by the
6 department under IC 6-3-2-2(p), the final determination date
7 means the first date on which no related federal adjustments
8 arising from that audit remain to be finally determined, as
9 described in clause (A), for the entire group.
10 (C) If the federal adjustment results from filing an amended
11 federal return, a federal refund claim, or an administrative
12 adjustment request, the final determination date means the day
13 on which the amended return, refund claim, administrative
14 adjustment request, or other similar report was filed.
15 (12) "Final federal adjustment" means a federal adjustment after
16 the final determination date for that federal adjustment has
17 passed.
18 (13) "Indirect partner" means a partner in a partnership or pass
19 through entity that itself holds an interest directly, or through
20 another indirect partner, in a partnership or pass through entity.
21 (14) "Internal Revenue Code" has the meaning set forth in
22 IC 6-3-1-11.
23 (15) "Nonresident partner" has the meaning provided in
24 IC 6-3-4-12(n).
25 (16) "Partner" means a person or entity that holds an interest
26 directly or indirectly in a partnership or other pass through entity.
27 (17) "Partner level adjustments report" means a report provided
28 by a partnership to its partners as a result of a department action
29 with regard to the partnership. A partner level adjustments report
30 does not include an amended statement provided by a partnership
31 or other entity as a result of an adjustment reported by the
32 partnership.
33 (18) "Partnership" has the meaning set forth in IC 6-3-1-19.
34 (19) "Partnership level audit" means an examination by the
35 Internal Revenue Service at the partnership level under Sections
36 6221 through 6241 of the Internal Revenue Code, as enacted by
37 the Bipartisan Budget Act of 2015, Public Law 114-74, which
38 results in federal adjustments.
39 (20) "Partnership return" means a return required to be filed by a
40 partnership pursuant to IC 6-3-4-10. In the case of a partnership
41 that is required to withhold tax or file a composite return pursuant
42 to IC 6-3-4-12 or IC 6-5.5-2-8, the term also includes the returns
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1 or schedules required for tax withholding or composite filing. In
2 the case of a partnership that is an electing entity under
3 IC 6-3-2.1, the term also includes the returns or schedules
4 required for the pass through entity tax under IC 6-3-2.1.
5 (21) "Pass through entity" means an entity defined in IC 6-3-1-35,
6 other than a partnership, that:
7 (A) is not subject to tax except as provided in IC 6-3-2-2.8(2),
8 in the case of a corporation described in IC 6-3-2-2.8(2); or
9 (B) is not subject to tax except on its undistributed taxable
10 income, in the case of an estate or a trust.
11 (22) "Reallocation adjustment" means a federal adjustment
12 resulting from a partnership level audit or an administrative
13 adjustment request that changes the shares of one (1) or more
14 items of partnership income, gain, loss, expense, or credit
15 allocated to direct partners. A positive reallocation adjustment
16 means the portion of a reallocation adjustment that would
17 increase federal adjusted gross income or federal taxable income
18 for one (1) or more direct partners, and a negative reallocation
19 adjustment means the portion of a reallocation adjustment that
20 would decrease federal adjusted gross income or federal taxable
21 income for one (1) or more direct partners, according to Section
22 6225 of the Internal Revenue Code and the regulations under that
23 section.
24 (23) "Resident partner" means a partner that is not a nonresident
25 partner.
26 (24) "Review year" means the taxable year of a partnership that
27 is subject to a partnership level audit, an administrative
28 adjustment request, or an amended federal return that results in
29 federal adjustments, regardless of whether any federal tax
30 determined to be due is the responsibility of the partnership or
31 partners.
32 (25) "Statement" means a form or schedule prescribed by the
33 department through which a partnership or pass through entity
34 reports tax attributes to its owners or beneficiaries.
35 (26) "Tax attribute" means any item of income, deduction, credit,
36 receipts for apportionment, or other amount or status that
37 determines a partner's liability under IC 6-3, IC 6-3.6, or IC 6-5.5.
38 (27) "Taxable year" means, in the case of a partnership, the year
39 or partial year for which a partnership files a return for state and
40 federal purposes and, in the case of a partner, the taxable year in
41 which the partner reports tax attributes from the partnership.
42 (28) "Taxpayer" has the meaning set forth in IC 6-3-1-15 (in the
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1 case of the adjusted gross income tax) and IC 6-5.5-1-17 (in the
2 case of the financial institutions tax) and, unless the context
3 clearly indicates otherwise, includes a partnership subject to a
4 partnership level audit or a partnership that has made an
5 administrative adjustment request, as well as a tiered partner of
6 that partnership.
7 (29) "Tiered partner" means any partner that is a partnership or
8 pass through entity.
9 (30) "Unrelated business taxable income" has the meaning set
10 forth in Section 512 of the Internal Revenue Code.
11 SECTION 4. IC 6-3-4.5-9, AS AMENDED BY P.L.9-2024,
12 SECTION 188, IS AMENDED TO READ AS FOLLOWS
13 [EFFECTIVE JULY 1, 2025]: Sec. 9. (a) Partnerships and partners
14 shall report final federal adjustments arising from a partnership level
15 audit or an administrative adjustment request and make payments as
16 required under this section.
17 (b) Final federal adjustments subject to the requirements of this
18 section, except those subject to a properly made election under
19 subsection (c), shall be reported as follows:
20 (1) Not later than the applicable deadline, the partnership shall:
21 (A) file an amended partnership return for the review year and
22 any other taxable year affected by the final federal adjustments
23 with the department as provided in section 8 of this chapter
24 and provide any other information required by the department;
25 (B) notify each of its direct partners of their distributive share
26 of the final federal adjustments as provided in section 8 of this
27 chapter for all affected taxable years for which the partnership
28 filed an amended partnership return by an amended statement
29 or a report in the form and manner prescribed by the
30 department;
31 (C) file an amended composite return for direct partners and
32 an amended withholding return for direct partners for the
33 review year and any affected taxable years as otherwise
34 required by IC 6-3-4-12 or IC 6-5.5-2-8 and pay any tax due
35 for the taxable years; and
36 (D) if the partnership is an electing entity, file an amended
37 return under IC 6-3-2.1 for the review year and any affected
38 taxable year and pay any tax due for the taxable year.
39 (2) Each direct partner that is subject to tax under IC 6-3,
40 IC 6-3.6, or IC 6-5.5 shall, on or before the applicable deadline:
41 (A) file an amended return as provided in section 8 of this
42 chapter reporting their distributive share of the adjustments
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1 reported to them under subdivision (1)(B) for the taxable year
2 in which affected taxable year attributes would be reported by
3 the direct partner as provided in section 8 of this chapter; and
4 (B) pay any additional amount of tax due as if final federal
5 partnership adjustments had been properly reported, less any
6 credit for related amounts paid or withheld and remitted on
7 behalf of the direct partner.
8 (3) Each tiered partner shall treat any final federal partnership
9 adjustments under this section in a manner consistent with the
10 treatment of tiered partners under section 8 of this chapter.
11 (c) Except as provided in subsection (d), an audited partnership
12 making an election under this subsection shall:
13 (1) not later than the applicable deadline, file an amended
14 partnership return for the review year and for any other affected
15 taxable year elected by the audited partnership, including
16 information as required by the department, and notify the
17 department that it is making the election under this subsection;
18 and
19 (2) not later than ninety (90) days after the applicable deadline,
20 pay an amount, determined as follows, in lieu of taxes owed by its
21 direct or indirect partners:
22 (A) Exclude from final federal adjustments the distributive
23 share of these adjustments reported to a direct exempt partner
24 that is not unrelated business income.
25 (B) For the total distributive shares of the remaining final
26 federal adjustments reported to direct corporate partners and
27 to direct exempt partners, apportion and allocate such
28 adjustments as provided under IC 6-3-2-2 or IC 6-3-2-2.2 (in
29 the case of the adjusted gross income tax) or IC 6-5.5-4 (in the
30 case of the financial institutions tax), and multiply the
31 resulting amount by the tax rate for the taxable year under
32 IC 6-3-2-1(b), IC 6-3-2-1(c), IC 6-3-2-1.5, or IC 6-5.5-2-1, as
33 applicable.
34 (C) For the total distributive shares of the remaining final
35 federal adjustments reported to nonresident direct partners
36 other than tiered partners or corporate partners, determine the
37 amount of such adjustments which is Indiana source income
38 under IC 6-3-2-2 or IC 6-3-2-2.2, and multiply the resulting
39 amount by the tax rate under IC 6-3-2-1(a), IC 6-3-2-1(b), and
40 if applicable IC 6-3.6. If a partnership is unable to determine
41 whether a nonresident is subject to tax under IC 6-3.6, or to
42 determine in what county the nonresident is subject to tax
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1 under IC 6-3.6, tax shall also be imposed at the highest rate for
2 which a county imposes a tax under IC 6-3.6 for the taxable
3 year.
4 (D) For the total distributive shares of the remaining final
5 federal adjustments reported to tiered partners:
6 (i) determine the amount of any adjustment that is of a type
7 that it would be subject to sourcing in Indiana under
8 IC 6-3-2-2, IC 6-3-2-2.2, or IC 6-5.5-4, as applicable, and
9 determine the portion of this amount that would be sourced
10 to Indiana;
11 (ii) determine the amount of any adjustment that is of a type
12 that it would not be subject to sourcing to Indiana by a
13 nonresident partner under IC 6-3-2-2, IC 6-3-2-2.2, or
14 IC 6-5.5-4, as applicable;
15 (iii) determine the portion of the amount determined under
16 item (ii) that can be established, as prescribed by the
17 department by rule under IC 4-22-2, to be properly allocable
18 to nonresident indirect partners or other partners not subject
19 to tax on the adjustments; and
20 (iv) multiply the sum of the amounts determined in items (i)
21 and (ii) reduced by the amount determined in item (iii) by
22 the highest combined rate for the taxable year under
23 IC 6-3-2-1(a) IC 6-3-2-1(b) and IC 6-3.6 for any county, the
24 rate under IC 6-3-2-1(b), IC 6-3-2-1(c), or the rate under
25 6-5.5-2-1 for the taxable year, whichever is highest.
26 (E) For the total distributive shares of the remaining final
27 federal adjustments reported to resident individual, estate, or
28 trust direct partners, multiply that amount by the tax rate under
29 IC 6-3-2-1(a) IC 6-3-2-1(b) and IC 6-3.6. If a partnership does
30 not reasonably ascertain the county of residence for an
31 individual direct partner, the rate under IC 6-3.6 for that
32 partner shall be treated as the highest rate imposed in any
33 county under IC 6-3.6 for the taxable year.
34 (F) Add an amount equal to any credit reduction under
35 IC 6-3-3, IC 6-3.1, and IC 6-5.5 attributable as a result of final
36 federal adjustments.
37 (G) Add the amounts determined in clauses (B), (C), (D)(iv),
38 (E), and (F). For purposes of determining interest and
39 penalties, the due date of payment shall be the due date of the
40 partnership's return under IC 6-3-4-10 for the taxable year,
41 determined without regard to any extensions.
42 (d) Final federal adjustments subject to an election under subsection
SB 451—LS 6727/DI 120 14
1 (c) shall not include:
2 (1) the distributive share of final federal adjustments that would
3 constitute income derived from a partnership to any direct or
4 indirect partner that is a corporation taxable under IC 6-3-2-1(b),
5 IC 6-3-2-1(c), IC 6-3-2-1.5, or IC 6-5.5-2-1 and is considered
6 unitary to the partnership; or
7 (2) any other circumstances that the department determines would
8 result in avoidance or evasion of any tax otherwise due from one
9 (1) or more partners under IC 6-3 or IC 6-5.5.
10 (e) No election under subsection (c) may be made for federal audit
11 adjustments received by the department after April 30, 2023.
12 (f) Notwithstanding IC 6-3-4-11, an audited partnership not
13 otherwise subject to any reporting or payment obligations to Indiana
14 that makes an election under subsection (c) consents to be subject to
15 Indiana law related to reporting, assessment, payment, and collection
16 of Indiana tax calculated under the election.
17 SECTION 5. IC 6-3-4.5-18, AS AMENDED BY P.L.201-2023,
18 SECTION 99, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
19 JULY 1, 2025]: Sec. 18. (a) If a partnership or tiered partner is required
20 to issue a report, issue an amended statement, or issue other
21 information to a partner, owner, or beneficiary under this chapter, and
22 does not issue such report, statement, or information within the period
23 such issuance is required under this chapter, the partnership or tiered
24 partner shall be liable for any tax that otherwise may be due from the
25 partner, owner, or beneficiary, notwithstanding any other provision in
26 IC 6-3 or IC 6-5.5. The tax rate under this section shall be computed at
27 the highest rate for the taxable year under:
28 (1) IC 6-3-2-1(a), IC 6-3-2-1(b), plus the highest rate imposed in
29 any county under IC 6-3.6;
30 (2) IC 6-3-2-1(b); IC 6-3-2-1(c); or
31 (3) IC 6-5.5-2-1;
32 unless the partnership or tiered partner can establish that a lower rate
33 should apply, the partnership or tiered partner has made an election to
34 be subject to tax under sections 6, 8, or 9 of this chapter, or to the
35 extent the partnership, tiered partner, or the department can determine
36 that the tax was otherwise properly reported and remitted. Such tax
37 shall be considered to be due on the due date of the partnership's or
38 tiered partner's return for the taxable year, determined without regard
39 to extensions.
40 (b) If a partnership or tiered partner issues the report, amended
41 statement, or other information:
42 (1) to an address that the partnership or tiered partner knows or
SB 451—LS 6727/DI 120 15
1 reasonably should know is incorrect; or
2 (2) if the report, amended statement, or other information not
3 described in subdivision (1) is returned and the partnership or
4 tiered partner:
5 (A) fails to take reasonable steps to determine a proper address
6 for reissuance within thirty (30) days after the report, amended
7 statement, or other information is returned; or
8 (B) takes such steps and fails to reissue the report, amended
9 statement, or other information to a proper address within
10 thirty (30) days after the report, amended statement, or other
11 information is returned;
12 such report, amended statement, or other information shall be
13 considered to have not been issued for purposes of this section.
14 (c) The department may issue a proposed assessment under this
15 section not later than three (3) years after the department receives a
16 return or amended return from the partnership or tiered partner for
17 which the partnership or tiered partner fails to issue reports, amended
18 statements, or other information, or from the date a partnership is
19 required to issue partner level adjustments reports to its partners.
20 (d) If:
21 (1) a direct or indirect partner files and remits the tax otherwise
22 due under this section, the assessment to the partnership or tiered
23 partner under this section shall be reduced by the portion of the
24 tax attributable to the direct or indirect partner; and
25 (2) a partnership or tiered partner files and remits the tax under
26 this section, such tax shall be treated as payment of tax to the
27 direct or indirect partners. However, in no event shall the direct
28 or indirect partners be permitted a refund of tax paid by a
29 partnership or tiered partner under this section unless otherwise
30 permitted under this chapter or IC 6-8.1-9-1.
31 (e) Nothing in this section shall be construed to relieve a partnership
32 or tiered partner from any duty to issue a report, amended statement, or
33 other information otherwise required under this chapter or under any
34 other provision of IC 6-3 or IC 6-5.5. If a partnership or tiered partner
35 issues a report, amended statement, or other information provided
36 under this chapter after the date otherwise required for issuance, the
37 department may grant relief to any tiered partner, direct partner, or
38 indirect partner affected by the late issuance, including extension of
39 applicable deadlines.
SB 451—LS 6727/DI 120 16
COMMITTEE REPORT
Mr. President: The Senate Committee on Tax and Fiscal Policy, to
which was referred Senate Bill No. 451, has had the same under
consideration and begs leave to report the same back to the Senate with
the recommendation that said bill be AMENDED as follows:
Page 2, line 12, delete "2029," and insert "2030,".
Page 2, line 13, delete "2028," and insert "2029,".
Page 2, line 22, delete "following".
Page 2, line 22, delete ":" and insert "of".
Page 2, line 23, delete "(A) Five" and insert "five".
Page 2, run in lines 22 through 23.
Page 2, line 24, after "of the" insert "even-numbered".
Page 2, delete lines 26 through 28.
Page 3, line 36, delete "report to the" and insert "to the legislative
council, and report to the state".
Page 3, line 41, delete "each applicable year" and insert "the
following even-numbered year".
Page 3, line 42, delete "even-numbered" and insert
"odd-numbered".
Page 4, line 2, after "each" insert "even-numbered".
and when so amended that said bill do pass.
(Reference is to SB 451 as introduced.)
HOLDMAN, Chairperson
Committee Vote: Yeas 13, Nays 0.
SB 451—LS 6727/DI 120