First Regular Session of the 124th General Assembly (2025)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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a new provision to the Indiana Code or the Indiana Constitution.
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between statutes enacted by the 2024 Regular Session of the General Assembly.
SENATE ENROLLED ACT No. 451
AN ACT to amend the Indiana Code concerning taxation.
Be it enacted by the General Assembly of the State of Indiana:
SECTION 1. IC 6-3-2-1, AS AMENDED BY P.L.201-2023,
SECTION 95, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: Sec. 1. (a) As used in this section, "state fiscal year"
means the annual period commencing July 1 of a given year and
ending June 30 of the following year.
(b) Each taxable year, a tax at the following rate of adjusted gross
income is imposed upon the adjusted gross income of every resident
person, and on that part of the adjusted gross income derived from
sources within Indiana of every nonresident person:
(1) For taxable years beginning before January 1, 2015, three and
four-tenths percent (3.4%).
(2) For taxable years beginning after December 31, 2014, and
before January 1, 2017, three and three-tenths percent (3.3%).
(3) For taxable years beginning after December 31, 2016, and
before January 1, 2023, three and twenty-three hundredths percent
(3.23%).
(4) For taxable years beginning after December 31, 2022, and
before January 1, 2024, three and fifteen hundredths percent
(3.15%).
(5) For taxable years beginning after December 31, 2023, and
before January 1, 2025, three and five-hundredths percent
(3.05%).
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(6) For taxable years beginning after December 31, 2024, and
before January 1, 2026, three percent (3%).
(7) For taxable years beginning after December 31, 2025, and
before January 1, 2027, two and ninety-five hundredths percent
(2.95%).
(8) For taxable years beginning after December 31, 2026, and
before January 1, 2030, two and nine-tenths percent (2.9%).
(9) For taxable years beginning after December 31, 2029, and
before January 1, 2032, if, as determined by the budget
agency under subsection (e), the:
(A) state general fund revenue collections in each of the
state fiscal years ending:
(i) June 30, 2025;
(ii) June 30, 2026;
(iii) June 30, 2027; and
(iv) June 30, 2028;
exceed by at least three and one-half percent (3.5%) the
state general fund revenue collections for the respective
immediately preceding state fiscal year; and
(B) amount of forecasted state general fund revenue
collections for the state fiscal year ending June 30, 2029,
are estimated to exceed by at least three and one-half
percent (3.5%) the state general fund revenue collections
in the state fiscal year ending June 30, 2028;
the tax rate shall be decreased by the percentage point of five
one-hundredths of one percent (0.05%) beginning January 1
of the even-numbered year immediately succeeding the year
of the budget agency determination under subsection (e).
(10) For taxable years beginning after December 31, 2031, and
before January 1, 2034, if, as determined by the budget
agency under subsection (e), the:
(A) state general fund revenue collections in each of the
state fiscal years ending:
(i) June 30, 2027;
(ii) June 30, 2028;
(iii) June 30, 2029; and
(iv) June 30, 2030;
exceed by at least three and one-half percent (3.5%) the
state general fund revenue collections for the respective
immediately preceding state fiscal year; and
(B) amount of forecasted state general fund revenue
collections for the state fiscal year ending June 30, 2031,
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are estimated to exceed by at least three and one-half
percent (3.5%) the state general fund revenue collections
in the state fiscal year ending June 30, 2030;
the tax rate shall be decreased by the percentage point of five
one-hundredths of one percent (0.05%) beginning January 1
of the even-numbered year immediately succeeding the year
of the budget agency determination under subsection (e).
(11) For taxable years beginning after December 31, 2033, and
before January 1, 2036, if, as determined by the budget
agency under subsection (e), the:
(A) state general fund revenue collections in each of the
state fiscal years ending:
(i) June 30, 2029;
(ii) June 30, 2030;
(iii) June 30, 2031; and
(iv) June 30, 2032;
exceed by at least three and one-half percent (3.5%) the
state general fund revenue collections for the respective
immediately preceding state fiscal year; and
(B) amount of forecasted state general fund revenue
collections for the state fiscal year ending June 30, 2033,
are estimated to exceed by at least three and one-half
percent (3.5%) the state general fund revenue collections
in the state fiscal year ending June 30, 2032;
the tax rate shall be decreased by the percentage point of five
one-hundredths of one percent (0.05%) beginning January 1
of the even-numbered year immediately succeeding the year
of the budget agency determination under subsection (e).
(12) For taxable years beginning after December 31, 2035, and
before January 1, 2038, if, as determined by the budget
agency under subsection (e), the:
(A) state general fund revenue collections in each of the
state fiscal years ending:
(i) June 30, 2031;
(ii) June 30, 2032;
(iii) June 30, 2033; and
(iv) June 30, 2034;
exceed by at least three and one-half percent (3.5%) the
state general fund revenue collections for the respective
immediately preceding state fiscal year; and
(B) amount of forecasted state general fund revenue
collections for the state fiscal year ending June 30, 2035,
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are estimated to exceed by at least three and one-half
percent (3.5%) the state general fund revenue collections
in the state fiscal year ending June 30, 2034;
the tax rate shall be decreased by the percentage point of five
one-hundredths of one percent (0.05%) beginning January 1
of the even-numbered year immediately succeeding the year
of the budget agency determination under subsection (e).
(13) For taxable years beginning after December 31, 2037, and
before January 1, 2040, if, as determined by the budget
agency under subsection (e), the:
(A) state general fund revenue collections in each of the
state fiscal years ending:
(i) June 30, 2033;
(ii) June 30, 2034;
(iii) June 30, 2035; and
(iv) June 30, 2036;
exceed by at least three and one-half percent (3.5%) the
state general fund revenue collections for the respective
immediately preceding state fiscal year; and
(B) amount of forecasted state general fund revenue
collections for the state fiscal year ending June 30, 2037,
are estimated to exceed by at least three and one-half
percent (3.5%) the state general fund revenue collections
in the state fiscal year ending June 30, 2036;
the tax rate shall be decreased by the percentage point of five
one-hundredths of one percent (0.05%) beginning January 1
of the even-numbered year immediately succeeding the year
of the budget agency determination under subsection (e).
(14) For taxable years beginning after December 31, 2039, and
before January 1, 2042, if, as determined by the budget
agency under subsection (e), the:
(A) state general fund revenue collections in each of the
state fiscal years ending:
(i) June 30, 2035;
(ii) June 30, 2036;
(iii) June 30, 2037; and
(iv) June 30, 2038;
exceeds by at least three and one-half percent (3.5%) the
state general fund revenue collections for the respective
immediately preceding state fiscal year; and
(B) amount of forecasted state general fund revenue
collections for the state fiscal year ending June 30, 2039,
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are estimated to exceed by at least three and one-half
percent (3.5%) the state general fund revenue collections
in the state fiscal year ending June 30, 2038;
the tax rate shall be decreased by the percentage point of five
one-hundredths of one percent (0.05%) beginning January 1
of the even-numbered year immediately succeeding the year
of the budget agency determination under subsection (e).
(15) For taxable years beginning after December 31, 2041, and
before January 1, 2044, if, as determined by the budget
agency under subsection (e), the:
(A) state general fund revenue collections in each of the
state fiscal years ending:
(i) June 30, 2037;
(ii) June 30, 2038;
(iii) June 30, 2039; and
(iv) June 30, 2040;
exceeds by at least three and one-half percent (3.5%) the
state general fund revenue collections for the respective
immediately preceding state fiscal year; and
(B) amount of forecasted state general fund revenue
collections for the state fiscal year ending June 30, 2041,
are estimated to exceed by at least three and one-half
percent (3.5%) the state general fund revenue collections
in the state fiscal year ending June 30, 2040;
the tax rate shall be decreased by the percentage point of five
one-hundredths of one percent (0.05%) beginning January 1
of the even-numbered year immediately succeeding the year
of the budget agency determination under subsection (e).
(16) For taxable years beginning after December 31, 2043, the
tax rate in effect in taxable years beginning after December
31, 2042, remains in effect.
(b) (c) Except as provided in section 1.5 of this chapter (before its
expiration), each taxable year, a tax at the following rate of adjusted
gross income is imposed on that part of the adjusted gross income
derived from sources within Indiana of every corporation:
(1) Before July 1, 2012, eight and five-tenths percent (8.5%).
(2) After June 30, 2012, and before July 1, 2013, eight percent
(8.0%).
(3) After June 30, 2013, and before July 1, 2014, seven and
five-tenths percent (7.5%).
(4) After June 30, 2014, and before July 1, 2015, seven percent
(7.0%).
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(5) After June 30, 2015, and before July 1, 2016, six and
five-tenths percent (6.5%).
(6) After June 30, 2016, and before July 1, 2017, six and
twenty-five hundredths percent (6.25%).
(7) After June 30, 2017, and before July 1, 2018, six percent
(6.0%).
(8) After June 30, 2018, and before July 1, 2019, five and
seventy-five hundredths percent (5.75%).
(9) After June 30, 2019, and before July 1, 2020, five and
five-tenths percent (5.5%).
(10) After June 30, 2020, and before July 1, 2021, five and
twenty-five hundredths percent (5.25%).
(11) After June 30, 2021, four and nine-tenths percent (4.9%).
(c) (d) If for any taxable year a taxpayer is subject to different tax
rates under subsection (b), (c), the taxpayer's tax rate for that taxable
year is the rate determined in the last STEP of the following STEPS:
STEP ONE: Multiply the number of days in the taxpayer's taxable
year that precede the day the rate changed by the rate in effect
before the rate change.
STEP TWO: Multiply the number of days in the taxpayer's
taxable year that follow the day before the rate changed by the
rate in effect after the rate change.
STEP THREE: Divide the sum of the amounts determined under
STEPS ONE and TWO by the number of days in the taxpayer's
tax period.
However, the rate determined under this subsection shall be rounded
to the nearest one-hundredth of one percent (0.01%).
(e) This subsection applies beginning in 2028, and applies in
each even-numbered year thereafter until 2043. After the end of
each even-numbered state fiscal year, the budget agency shall
calculate and compare the percentage of revenue growth in state
general fund revenue collections between state fiscal years as
described in subsection (b)(9) through (b)(15), including the
comparison of the percentage of revenue growth between the
amount of forecasted state general fund revenue collections for
particular state fiscal years and the actual state general fund
revenue collections for particular state fiscal years, to determine
whether the conditions described in subsection (b)(9) through
(b)(15) are satisfied. The budget agency shall make the calculation
not later than thirty (30) days after the end of each even-numbered
state fiscal year. Not later than September 1 of each
even-numbered calendar year, the budget agency shall certify the
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results to the department and to the legislative council, and report
to the state budget committee for review the following:
(1) The percentage of revenue growth determined under this
subsection.
(2) The adjusted gross income tax rate determination made
for the following even-numbered year under this subsection.
Not later than November 1 of each odd-numbered calendar year,
the department shall provide notice of the determination and the
applicable tax rates for each even-numbered calendar year under
subsection (b) on the department's website in a departmental
notice.
SECTION 2. IC 6-3-2-1.7, AS ADDED BY P.L.137-2022,
SECTION 34, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: Sec. 1.7. (a) For purposes of this section:
(1) "Distributor" means a person or entity located in this state that
purchases tangible personal property from an eligible corporation
for purposes of resale. For purposes of this section, a distributor
is not a person or entity that has a relationship described in
Section 267(b) of the Internal Revenue Code with the eligible
corporation.
(2) "Eligible corporation" means a corporation otherwise subject
to tax under section 1(b) 1(c) of this chapter. An eligible
corporation shall not include a corporation described in section
2.8(2) of this chapter or a corporation subject to tax under
IC 6-5.5.
(3) "Qualifying distribution sale" means a sale of tangible
personal property by an eligible corporation to a distributor that:
(A) is a purchase for resale by the distributor as defined in
IC 6-2.5-5-8; and
(B) for which the sourcing of the sale of the property to an
ultimate customer outside Indiana is agreed to by the
department and the eligible corporation, or, in the absence of
an agreement, sourced by the ratio of the population of Indiana
compared to the population of all states in which the qualified
distribution sales are sold to an ultimate customer.
For purposes of this section, a qualifying distribution sale shall
not include any sale for which the distributor does not issue an
exemption certificate in the manner provided by the department
under IC 6-2.5-8-8 or a purchase by the distributor for the
distributor's own use other than for resale. A qualifying
distribution sale shall not include any sale made by a pass through
entity that would otherwise be attributable under this article to the
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eligible corporation.
(4) "Ultimate customer" means a purchaser of tangible personal
property who purchases the tangible personal property without an
intent of future resale of property.
(b) If an eligible corporation has greater than one billion dollars
($1,000,000,000) of tangible personal property sales that otherwise
would be sourced to this state under section 2(e) of this chapter, and
would have an apportionment percentage under section 2 of this
chapter of greater than ten percent (10%) prior to application of this
section the eligible corporation may elect to determine its tax as
follows:
STEP ONE: Determine the apportionment percentage under
sections 2 and 2.2 of this chapter, treating qualifying distribution
sales as if they were not receipts for purposes of the
apportionment numerator, but treating the portion where the
ultimate customer would be located in Indiana as part of the
receipts numerator.
STEP TWO: Determine Indiana adjusted gross income in the
manner otherwise provided in this article, applying the
apportionment percentage in STEP ONE. For purposes of this
STEP, any adjusted gross income arising from qualified
distribution sales shall be treated as business income of the
eligible corporation.
STEP THREE: Determine the tax due under this chapter on the
amount computed in STEP TWO, reduced by any nonrefundable
credits under IC 6-3-3 or IC 6-3.1, but not less than zero (0). For
purposes of this article, any application of a credit under this
STEP shall reduce the amount available for carryforward in the
same manner as otherwise provided under IC 6-3-3 or IC 6-3.1.
STEP FOUR:
(A) If the eligible corporation's qualified distribution sales are
not in excess of two billion dollars ($2,000,000,000),
determine one-half of one percent (0.5%) of the qualified
distribution sales.
(B) If the eligible corporation's qualified distribution sales are
in excess of two billion dollars ($2,000,000,000) but not in
excess of three billion dollars ($3,000,000,000), determine
three-eighths of one percent (0.375%) of the qualified
distribution sales in excess of two billion dollars
($2,000,000,000) plus ten million dollars ($10,000,000).
(C) If the eligible corporation's qualified distribution sales are
in excess of three billion dollars ($3,000,000,000) but not in
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excess of four billion dollars ($4,000,000,000), determine
one-fourth of one percent (0.25%) of the qualified distribution
sales in excess of three billion dollars ($3,000,000,000) plus
thirteen million seven hundred fifty thousand dollars
($13,750,000).
(D) If the eligible corporation's qualified distribution sales are
in excess of four billion dollars ($4,000,000,000), determine
one-eighth of one percent (0.125%) of the qualified
distribution sales in excess of four billion dollars
($4,000,000,000) plus sixteen million two hundred fifty
thousand dollars ($16,250,000).
STEP FIVE: Add the amounts determined under STEP THREE
and STEP FOUR.
(c) Notwithstanding any other provision of this section, for an
eligible corporation that makes an election:
(1) if the tax for a taxable year covered by the election as
computed under subsection (b) is less than twenty-six million
dollars ($26,000,000), the tax shall be twenty-six million dollars
($26,000,000); and
(2) if the tax for the taxable year covered by an election as
computed under subsection (b) is greater than the amount
specified in clauses (A) through (C), the amount of tax shall be
the following amounts:
(A) For a taxable year ending after December 31, 2018, and
before January 1, 2025, forty million dollars ($40,000,000).
(B) For a taxable year ending after December 31, 2024, and
before January 1, 2026, forty-two million dollars
($42,000,000).
(C) For each taxable year ending after December 31, 2025,
forty-two million dollars ($42,000,000) plus one million
dollars ($1,000,000) for each taxable year ending after
December 31, 2025.
For purposes of this subsection, the tax for a taxable year under this
section shall be determined after application of any credit allowable
under IC 6-3-3 and IC 6-3.1.
(d) If an eligible corporation makes an election under this section,
the following apply:
(1) The eligible corporation shall be subject to the election for the
taxable year of the election and each taxable year thereafter until
the first taxable year ending ten (10) years after the first year in
which an election is made under this section, even if the
corporation would not be an eligible corporation for a taxable year
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after the taxable year in which the election is made, and shall be
binding on any successor corporation or group of corporations to
the eligible corporation.
(2) After the period of the initial election under subdivision (1),
the department may permit a taxpayer to make an election under
this section for each subsequent taxable year after the election
expires under subdivision (1). However:
(A) an election under this subdivision is only permitted for one
(1) taxable year; and
(B) if an eligible corporation does make an election for a
taxable year, the eligible corporation may only make a new
election if the new election is subject to the terms of
subdivision (1).
(e) If two (2) or more eligible corporations are part of a consolidated
return or combined return, the computation under STEP FOUR of
subsection (b) shall be determined separately for each corporation.
(f) For purposes of computing net operating losses for the taxable
year under section 2.6 of this chapter and the deduction allowable
against adjusted gross income under section 2.6 of this chapter, the loss
for the taxable year or deduction allowable shall be computed pursuant
to STEP TWO of subsection (b).
(g) An election under this section shall be in the form and manner
prescribed by the department. The election must be completed and filed
with the department on or before the date of filing of the original return
for a taxable year to be effective beginning with that taxable year. In
addition, if an eligible corporation files a consolidated return or
combined return for the first taxable year of the election, or for any year
subsequent to the first taxable year of the election, the eligible
corporation and the department shall enter into an agreement regarding
issues specific to consolidated or combined returns. In the absence of
such an agreement, any such issues shall be treated in a manner
prescribed by the department and published in the Indiana Register. If
the original return for a taxable year is filed after the due date for the
original return, including any extensions, an election will not be
allowed for that taxable year or any subsequent year to which the
election otherwise would apply. However, the eligible corporation may
file an election for subsequent taxable years, provided the eligible
corporation otherwise meets the requirements of this section.
SECTION 3. IC 6-3-4.5-1, AS AMENDED BY P.L.9-2024,
SECTION 186, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 1. The following definitions apply
throughout this chapter:
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(1) "Adjustment year" means the partnership taxable year
described in Section 6225(d)(2) of the Internal Revenue Code.
(2) "Administrative adjustment request" means an administrative
adjustment request filed by a partnership under Section 6227 of
the Internal Revenue Code.
(3) "Affected year" means any taxable year for a taxpayer that is
affected by an adjustment under this chapter, regardless of
whether the partnership has received an adjustment for that
taxable year.
(4) "Audited partnership" means a partnership subject to a
partnership level audit resulting in a federal adjustment.
(5) "Corporate partner" means a partner that is subject to the state
adjusted gross income tax under IC 6-3-2-1(b) IC 6-3-2-1(c) or
the financial institutions tax under IC 6-5.5-2-1. In the case of a
partner that is a corporation described in IC 6-3-2-2.8(2) that also
is subject to tax under IC 6-3-2-1(b), IC 6-3-2-1(c), the
corporation is a corporate partner only to the extent that its
income is subject to tax under IC 6-3-2-1(b). IC 6-3-2-1(c).
(6) "Direct partner" means a partner that holds an interest directly
in a partnership or pass through entity.
(7) "Exempt partner" means a partner that is exempt from the
adjusted gross income tax under IC 6-3-2-2.8(1) or the financial
institutions tax under IC 6-5.5-2-7(4), except to the extent of
unrelated business taxable income.
(8) "Federal adjustment" means a change to an item or amount
determined under the Internal Revenue Code or a change to any
other tax attribute that is used by a taxpayer to compute state
adjusted gross income taxes or financial institutions tax owed,
whether that change results from action by the Internal Revenue
Service, including a partnership level audit, or the filing of an
amended federal return, a federal refund claim, or an
administrative adjustment request by the taxpayer. A federal
adjustment is positive to the extent that it increases state adjusted
gross income as determined under IC 6-3 or IC 6-5.5 and is
negative to the extent that it decreases state adjusted gross income
as determined under IC 6-3 or IC 6-5.5.
(9) "Federal adjustment reports" includes methods or forms
required by the department for use by a taxpayer to report final
federal adjustments for purposes of this chapter, including an
amended Indiana tax return, information return, or uniform
multistate report.
(10) "Federal partnership representative" means a person the
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partnership designates for the taxable year as the partnership's
representative, or the person the Internal Revenue Service has
appointed to act as the federal partnership representative,
pursuant to Section 6223(a) of the Internal Revenue Code.
(11) "Final determination date" means the following:
(A) Except as provided in clause (B) or (C), if the federal
adjustment arises from an Internal Revenue Service audit or
other action by the Internal Revenue Service, the final
determination date is the date on which the federal adjustment
is a final determination under IC 6-3-4-6(d).
(B) For federal adjustments arising from an Internal Revenue
Service audit or other action by the Internal Revenue Service,
if the taxpayer filed as a member of a consolidated tax return
filed under IC 6-3-4-14, a combined return filed under
IC 6-3-2-2 or IC 6-5.5-5-1, or a return combined by the
department under IC 6-3-2-2(p), the final determination date
means the first date on which no related federal adjustments
arising from that audit remain to be finally determined, as
described in clause (A), for the entire group.
(C) If the federal adjustment results from filing an amended
federal return, a federal refund claim, or an administrative
adjustment request, the final determination date means the day
on which the amended return, refund claim, administrative
adjustment request, or other similar report was filed.
(12) "Final federal adjustment" means a federal adjustment after
the final determination date for that federal adjustment has
passed.
(13) "Indirect partner" means a partner in a partnership or pass
through entity that itself holds an interest directly, or through
another indirect partner, in a partnership or pass through entity.
(14) "Internal Revenue Code" has the meaning set forth in
IC 6-3-1-11.
(15) "Nonresident partner" has the meaning provided in
IC 6-3-4-12(n).
(16) "Partner" means a person or entity that holds an interest
directly or indirectly in a partnership or other pass through entity.
(17) "Partner level adjustments report" means a report provided
by a partnership to its partners as a result of a department action
with regard to the partnership. A partner level adjustments report
does not include an amended statement provided by a partnership
or other entity as a result of an adjustment reported by the
partnership.
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(18) "Partnership" has the meaning set forth in IC 6-3-1-19.
(19) "Partnership level audit" means an examination by the
Internal Revenue Service at the partnership level under Sections
6221 through 6241 of the Internal Revenue Code, as enacted by
the Bipartisan Budget Act of 2015, Public Law 114-74, which
results in federal adjustments.
(20) "Partnership return" means a return required to be filed by a
partnership pursuant to IC 6-3-4-10. In the case of a partnership
that is required to withhold tax or file a composite return pursuant
to IC 6-3-4-12 or IC 6-5.5-2-8, the term also includes the returns
or schedules required for tax withholding or composite filing. In
the case of a partnership that is an electing entity under
IC 6-3-2.1, the term also includes the returns or schedules
required for the pass through entity tax under IC 6-3-2.1.
(21) "Pass through entity" means an entity defined in IC 6-3-1-35,
other than a partnership, that:
(A) is not subject to tax except as provided in IC 6-3-2-2.8(2),
in the case of a corporation described in IC 6-3-2-2.8(2); or
(B) is not subject to tax except on its undistributed taxable
income, in the case of an estate or a trust.
(22) "Reallocation adjustment" means a federal adjustment
resulting from a partnership level audit or an administrative
adjustment request that changes the shares of one (1) or more
items of partnership income, gain, loss, expense, or credit
allocated to direct partners. A positive reallocation adjustment
means the portion of a reallocation adjustment that would
increase federal adjusted gross income or federal taxable income
for one (1) or more direct partners, and a negative reallocation
adjustment means the portion of a reallocation adjustment that
would decrease federal adjusted gross income or federal taxable
income for one (1) or more direct partners, according to Section
6225 of the Internal Revenue Code and the regulations under that
section.
(23) "Resident partner" means a partner that is not a nonresident
partner.
(24) "Review year" means the taxable year of a partnership that
is subject to a partnership level audit, an administrative
adjustment request, or an amended federal return that results in
federal adjustments, regardless of whether any federal tax
determined to be due is the responsibility of the partnership or
partners.
(25) "Statement" means a form or schedule prescribed by the
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department through which a partnership or pass through entity
reports tax attributes to its owners or beneficiaries.
(26) "Tax attribute" means any item of income, deduction, credit,
receipts for apportionment, or other amount or status that
determines a partner's liability under IC 6-3, IC 6-3.6, or IC 6-5.5.
(27) "Taxable year" means, in the case of a partnership, the year
or partial year for which a partnership files a return for state and
federal purposes and, in the case of a partner, the taxable year in
which the partner reports tax attributes from the partnership.
(28) "Taxpayer" has the meaning set forth in IC 6-3-1-15 (in the
case of the adjusted gross income tax) and IC 6-5.5-1-17 (in the
case of the financial institutions tax) and, unless the context
clearly indicates otherwise, includes a partnership subject to a
partnership level audit or a partnership that has made an
administrative adjustment request, as well as a tiered partner of
that partnership.
(29) "Tiered partner" means any partner that is a partnership or
pass through entity.
(30) "Unrelated business taxable income" has the meaning set
forth in Section 512 of the Internal Revenue Code.
SECTION 4. IC 6-3-4.5-9, AS AMENDED BY P.L.9-2024,
SECTION 188, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2025]: Sec. 9. (a) Partnerships and partners
shall report final federal adjustments arising from a partnership level
audit or an administrative adjustment request and make payments as
required under this section.
(b) Final federal adjustments subject to the requirements of this
section, except those subject to a properly made election under
subsection (c), shall be reported as follows:
(1) Not later than the applicable deadline, the partnership shall:
(A) file an amended partnership return for the review year and
any other taxable year affected by the final federal adjustments
with the department as provided in section 8 of this chapter
and provide any other information required by the department;
(B) notify each of its direct partners of their distributive share
of the final federal adjustments as provided in section 8 of this
chapter for all affected taxable years for which the partnership
filed an amended partnership return by an amended statement
or a report in the form and manner prescribed by the
department;
(C) file an amended composite return for direct partners and
an amended withholding return for direct partners for the
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review year and any affected taxable years as otherwise
required by IC 6-3-4-12 or IC 6-5.5-2-8 and pay any tax due
for the taxable years; and
(D) if the partnership is an electing entity, file an amended
return under IC 6-3-2.1 for the review year and any affected
taxable year and pay any tax due for the taxable year.
(2) Each direct partner that is subject to tax under IC 6-3,
IC 6-3.6, or IC 6-5.5 shall, on or before the applicable deadline:
(A) file an amended return as provided in section 8 of this
chapter reporting their distributive share of the adjustments
reported to them under subdivision (1)(B) for the taxable year
in which affected taxable year attributes would be reported by
the direct partner as provided in section 8 of this chapter; and
(B) pay any additional amount of tax due as if final federal
partnership adjustments had been properly reported, less any
credit for related amounts paid or withheld and remitted on
behalf of the direct partner.
(3) Each tiered partner shall treat any final federal partnership
adjustments under this section in a manner consistent with the
treatment of tiered partners under section 8 of this chapter.
(c) Except as provided in subsection (d), an audited partnership
making an election under this subsection shall:
(1) not later than the applicable deadline, file an amended
partnership return for the review year and for any other affected
taxable year elected by the audited partnership, including
information as required by the department, and notify the
department that it is making the election under this subsection;
and
(2) not later than ninety (90) days after the applicable deadline,
pay an amount, determined as follows, in lieu of taxes owed by its
direct or indirect partners:
(A) Exclude from final federal adjustments the distributive
share of these adjustments reported to a direct exempt partner
that is not unrelated business income.
(B) For the total distributive shares of the remaining final
federal adjustments reported to direct corporate partners and
to direct exempt partners, apportion and allocate such
adjustments as provided under IC 6-3-2-2 or IC 6-3-2-2.2 (in
the case of the adjusted gross income tax) or IC 6-5.5-4 (in the
case of the financial institutions tax), and multiply the
resulting amount by the tax rate for the taxable year under
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
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applicable.
(C) For the total distributive shares of the remaining final
federal adjustments reported to nonresident direct partners
other than tiered partners or corporate partners, determine the
amount of such adjustments which is Indiana source income
under IC 6-3-2-2 or IC 6-3-2-2.2, and multiply the resulting
amount by the tax rate under IC 6-3-2-1(a), IC 6-3-2-1(b), and
if applicable IC 6-3.6. If a partnership is unable to determine
whether a nonresident is subject to tax under IC 6-3.6, or to
determine in what county the nonresident is subject to tax
under IC 6-3.6, tax shall also be imposed at the highest rate for
which a county imposes a tax under IC 6-3.6 for the taxable
year.
(D) For the total distributive shares of the remaining final
federal adjustments reported to tiered partners:
(i) determine the amount of any adjustment that is of a type
that it would be subject to sourcing in Indiana under
IC 6-3-2-2, IC 6-3-2-2.2, or IC 6-5.5-4, as applicable, and
determine the portion of this amount that would be sourced
to Indiana;
(ii) determine the amount of any adjustment that is of a type
that it would not be subject to sourcing to Indiana by a
nonresident partner under IC 6-3-2-2, IC 6-3-2-2.2, or
IC 6-5.5-4, as applicable;
(iii) determine the portion of the amount determined under
item (ii) that can be established, as prescribed by the
department by rule under IC 4-22-2, to be properly allocable
to nonresident indirect partners or other partners not subject
to tax on the adjustments; and
(iv) multiply the sum of the amounts determined in items (i)
and (ii) reduced by the amount determined in item (iii) by
the highest combined rate for the taxable year under
IC 6-3-2-1(a) IC 6-3-2-1(b) and IC 6-3.6 for any county, the
rate under IC 6-3-2-1(b), IC 6-3-2-1(c), or the rate under
6-5.5-2-1 for the taxable year, whichever is highest.
(E) For the total distributive shares of the remaining final
federal adjustments reported to resident individual, estate, or
trust direct partners, multiply that amount by the tax rate under
IC 6-3-2-1(a) IC 6-3-2-1(b) and IC 6-3.6. If a partnership does
not reasonably ascertain the county of residence for an
individual direct partner, the rate under IC 6-3.6 for that
partner shall be treated as the highest rate imposed in any
SEA 451 — Concur 17
county under IC 6-3.6 for the taxable year.
(F) Add an amount equal to any credit reduction under
IC 6-3-3, IC 6-3.1, and IC 6-5.5 attributable as a result of final
federal adjustments.
(G) Add the amounts determined in clauses (B), (C), (D)(iv),
(E), and (F). For purposes of determining interest and
penalties, the due date of payment shall be the due date of the
partnership's return under IC 6-3-4-10 for the taxable year,
determined without regard to any extensions.
(d) Final federal adjustments subject to an election under subsection
(c) shall not include:
(1) the distributive share of final federal adjustments that would
constitute income derived from a partnership to any direct or
indirect partner that is a corporation taxable under 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 and is considered
unitary to the partnership; or
(2) any other circumstances that the department determines would
result in avoidance or evasion of any tax otherwise due from one
(1) or more partners under IC 6-3 or IC 6-5.5.
(e) No election under subsection (c) may be made for federal audit
adjustments received by the department after April 30, 2023.
(f) Notwithstanding IC 6-3-4-11, an audited partnership not
otherwise subject to any reporting or payment obligations to Indiana
that makes an election under subsection (c) consents to be subject to
Indiana law related to reporting, assessment, payment, and collection
of Indiana tax calculated under the election.
SECTION 5. IC 6-3-4.5-18, AS AMENDED BY P.L.201-2023,
SECTION 99, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2025]: Sec. 18. (a) If a partnership or tiered partner is required
to issue a report, issue an amended statement, or issue other
information to a partner, owner, or beneficiary under this chapter, and
does not issue such report, statement, or information within the period
such issuance is required under this chapter, the partnership or tiered
partner shall be liable for any tax that otherwise may be due from the
partner, owner, or beneficiary, notwithstanding any other provision in
IC 6-3 or IC 6-5.5. The tax rate under this section shall be computed at
the highest rate for the taxable year under:
(1) IC 6-3-2-1(a), IC 6-3-2-1(b), plus the highest rate imposed in
any county under IC 6-3.6;
(2) IC 6-3-2-1(b); IC 6-3-2-1(c); or
(3) IC 6-5.5-2-1;
unless the partnership or tiered partner can establish that a lower rate
SEA 451 — Concur 18
should apply, the partnership or tiered partner has made an election to
be subject to tax under sections 6, 8, or 9 of this chapter, or to the
extent the partnership, tiered partner, or the department can determine
that the tax was otherwise properly reported and remitted. Such tax
shall be considered to be due on the due date of the partnership's or
tiered partner's return for the taxable year, determined without regard
to extensions.
(b) If a partnership or tiered partner issues the report, amended
statement, or other information:
(1) to an address that the partnership or tiered partner knows or
reasonably should know is incorrect; or
(2) if the report, amended statement, or other information not
described in subdivision (1) is returned and the partnership or
tiered partner:
(A) fails to take reasonable steps to determine a proper address
for reissuance within thirty (30) days after the report, amended
statement, or other information is returned; or
(B) takes such steps and fails to reissue the report, amended
statement, or other information to a proper address within
thirty (30) days after the report, amended statement, or other
information is returned;
such report, amended statement, or other information shall be
considered to have not been issued for purposes of this section.
(c) The department may issue a proposed assessment under this
section not later than three (3) years after the department receives a
return or amended return from the partnership or tiered partner for
which the partnership or tiered partner fails to issue reports, amended
statements, or other information, or from the date a partnership is
required to issue partner level adjustments reports to its partners.
(d) If:
(1) a direct or indirect partner files and remits the tax otherwise
due under this section, the assessment to the partnership or tiered
partner under this section shall be reduced by the portion of the
tax attributable to the direct or indirect partner; and
(2) a partnership or tiered partner files and remits the tax under
this section, such tax shall be treated as payment of tax to the
direct or indirect partners. However, in no event shall the direct
or indirect partners be permitted a refund of tax paid by a
partnership or tiered partner under this section unless otherwise
permitted under this chapter or IC 6-8.1-9-1.
(e) Nothing in this section shall be construed to relieve a partnership
or tiered partner from any duty to issue a report, amended statement, or
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other information otherwise required under this chapter or under any
other provision of IC 6-3 or IC 6-5.5. If a partnership or tiered partner
issues a report, amended statement, or other information provided
under this chapter after the date otherwise required for issuance, the
department may grant relief to any tiered partner, direct partner, or
indirect partner affected by the late issuance, including extension of
applicable deadlines.
SEA 451 — Concur President of the Senate
President Pro Tempore
Speaker of the House of Representatives
Governor of the State of Indiana
Date: Time:
SEA 451 — Concur