§ 6-3-3-3 — Taxes paid to other states; liability for income tax to a foreign country

(a) Whenever a resident person has become liable
for tax to another state upon all or any part of the person's income for
a taxable year derived from sources without this state and subject to
taxation under IC 6-3-2, the amount of tax paid by the person to the
other state shall be credited against the amount of the tax payable by
the person. Such credit shall be allowed upon the production to the
department of satisfactory evidence of the fact of such payment, except
that such application for credit shall not operate to reduce the tax
payable under IC 6-3-2 to an amount less than would have been
payable were the income from the other state ignored. The credit
provided for by this subsection shall not be granted to a taxpayer when
the laws of the other state, under which the adjusted gross income in
question is subject to taxation, provides for a credit to the taxpayer
substantially similar to that granted by subsection (b).
(b) Whenever a nonresident person has become liable for tax to the
state where the person resides upon the person's income for the taxable
year derived from sources within this state and subject to taxation
under IC 6-3-2, the proportion of tax paid by the person to the state
where the person resides that the person's income subject to taxation
under IC 6-3-2 bears to the person's income upon which the tax so
payable to the other state was imposed shall be credited against the tax
payable by the person under IC 6-3-2, but only if the laws of the other
state grant a substantially similar credit to residents of this state subject
to income tax under the laws of such other state, or impose a tax upon
the income of its residents derived from sources in this state and
exempt from taxation the income of residents of this state. No credit
shall be allowed against the amount of the tax on any adjusted gross
income taxable under IC 6-3-2 that is exempt from taxation under the
laws of the other state.
(c) Notwithstanding subsection (a), if a resident person will be liable
for income tax to a foreign country upon the person's income included
under the Internal Revenue Code, the income is considered from
sources outside the United States under the Internal Revenue Code, and
the income is included in the person's Indiana adjusted gross income
due solely to an acceleration of the income inclusion for federal income
tax purposes, the person may claim the credit allowable under this
section by providing evidence to the department of the following:
(1) The foreign country in which the income is subject to tax.
(2) The amount of income included in Indiana adjusted gross
income that is derived from the foreign country.
(3) The amount of tax that will be imposed in the foreign country
upon the individual's realization of the income under the laws of
the foreign country, including any withholding tax or composite
tax.
(4) Any other information required by the department.
The department may impose limitations and conditions on the claim
under this subsection, including reporting requirements on the part of
the person and extensions of statutes of limitations under IC 6-8.1-5-2.
(d) As used in this subsection, "pass through entity tax" means a
state net income tax imposed by another state on a pass through entity
enacted by the state after 2017 that is substantially similar to that
imposed under IC 6-3-2.1. Solely for purposes of this section, an owner
of a pass through entity shall be considered liable for tax paid to
another state by the pass through entity pursuant to a pass through
entity tax imposed by the state (whether elected or otherwise) in an
amount equal to that portion of the pass through entity tax representing
the pass through entity tax credited to or otherwise attributed to the
owner by the pass through entity, and the owner shall be considered to
have paid that portion of the tax paid by the pass through entity. The
owner of a pass through entity shall also be considered liable for and
to have paid state income taxes to another state paid by the pass
through entity on behalf of an owner through withholding, a composite
return, or otherwise.
Formerly: Acts 1963(ss), c.32, s.303. As amended by
P.L.2-1988, SEC.10; P.L.159-2021, SEC.11; P.L.1-2023,
SEC.6.