§ 6-3-4-13 — Corporations; withholding from dividends to nonresident shareholders

Indiana § 6-3-4-13

• Jurisdiction: Indiana
• Art. 3: STATE INCOME TAXES
• Ch. 4: Returns and Remittances

Text

(a) Every corporation which is exempt from tax
under IC 6-3 pursuant to IC 6-3-2-2.8(2) shall, at the time that it pays
or credits amounts to any of its nonresident shareholders as dividends
or as their share of the corporation's undistributed taxable income,
withhold the amount prescribed by the department. Such corporation
so paying or crediting any nonresident shareholder:
(1) shall be liable to the state of Indiana for the payment of the tax
required to be withheld under this section and shall not be liable
to such shareholder for the amount withheld and paid over in
compliance or intended compliance with this section; and
(2) when the aggregate amount due under IC 6-3 and IC 6-3.6
exceeds one hundred fifty dollars ($150) per quarter, then such
corporation shall make return and payment to the department
quarterly, on such dates and in such manner as the department
shall prescribe, of the amount of tax which, under IC 6-3 and IC 6-3.6, it is required to withhold.
If a corporation credits a shareholder with pass through entity tax
imposed under IC 6-3-2.1, the withholding required for that
shareholder under this section shall be reduced by the tax credited to
the shareholder under IC 6-3-2.1, but in no event shall the tax required
to be withheld be reduced to less than zero dollars ($0).
(b) Every corporation shall, at the time of each payment made by it
to the department pursuant to this section, deliver to the department a
return upon such form as shall be prescribed by the department
showing the total amounts paid or credited to its nonresident
shareholders, the amount withheld in accordance with the provisions
of this section, and such other information as the department may
require. Every corporation withholding as provided in this section shall
furnish to its nonresident shareholders annually, but not later than the
fifteenth day of the third month after the end of its taxable year, a
record of the amount of tax withheld on behalf of such shareholders on
forms to be prescribed by the department.
(c) All money withheld by a corporation, pursuant to this section,
shall immediately upon being withheld be the money of the state of
Indiana and every corporation which withholds any amount of money
under the provisions of this section shall hold the same in trust for the
state of Indiana and for payment thereof to the department in the
manner and at the times provided in IC 6-3. Any corporation may be
required to post a surety bond in such sum as the department shall
determine to be appropriate to protect the state of Indiana with respect
to money withheld pursuant to this section.
(d) The provisions of IC 6-8.1 relating to additions to tax in case of
delinquency and penalties shall apply to corporations subject to the
provisions of this section, and for these purposes any amount withheld,
or required to be withheld and remitted to the department under this
section, shall be considered to be the tax of the corporation, and with
respect to such amount it shall be considered the taxpayer.
(e) Amounts withheld from payments or credits to a nonresident
shareholder during any taxable year of the corporation in accordance
with the provisions of this section shall be considered to be a part
payment of the tax imposed on such nonresident shareholder for the
shareholder's taxable year within or with which the corporation's
taxable year ends. A return made by the corporation under subsection
(b) shall be accepted by the department as evidence in favor of the
nonresident shareholder of the amount so withheld from the
shareholder's distributive share.
(f) This section shall in no way relieve any nonresident shareholder
from the shareholder's obligation of filing a return or returns at the time
required under IC 6-3 or IC 6-3.6, and any unpaid tax shall be paid at
the time prescribed by section 5 of this chapter.
(g) Instead of the reporting periods required under subsection (a),
the department may permit a corporation to file one (1) return and
payment each year if the corporation pays or credits amounts to its
nonresident shareholders only one (1) time each year. The withholding
return and payment are due on or before the fifteenth day of the fourth
month after the end of the taxable year of the corporation. However, if
a corporation is permitted an extension to file its income tax return
under IC 6-8.1-6-1, the return and payment due under this subsection
shall be allowed the same treatment as the extended income tax return
with respect to the due dates, interest, and penalties under IC 6-8.1-6-1.
(h) If a distribution will be made with property other than money or
a gain is realized without the payment of money, the corporation shall
not release the property or credit the gain until it has funds sufficient
to enable it to pay the tax required to be withheld under this section. If
necessary, the corporation shall obtain such funds from the
shareholders.
(i) If a corporation fails to withhold and pay any amount of tax
required to be withheld under this section and thereafter the tax is paid
by the shareholders, such amount of tax as paid by the shareholders
shall not be collected from the corporation but it shall not be relieved
from liability for interest or penalty otherwise due in respect to such
failure to withhold under IC 6-8.1-10.
(j) A corporation described in subsection (a) shall file a composite
adjusted gross income tax return on behalf of all nonresident
shareholders. The composite return must include each nonresident
shareholder regardless of whether or not the nonresident shareholder
has other Indiana source income.
(k) If a corporation described in subsection (a) does not include all
nonresident shareholders in the composite return, the corporation is
subject to the penalty imposed under IC 6-8.1-10-2.1(j).
(l) For taxable years beginning after December 31, 2013, the
department may not impose a late payment penalty on a corporation for
the failure to file a return, pay the full amount of the tax shown on the
corporation's return, or pay the deficiency of the withholding taxes due
under this section if the corporation pays the department before the
fifteenth day of the fourth month after the end of the partnership's
taxable year at least:
(1) eighty percent (80%) of the withholding tax due for the
current year; or
(2) one hundred percent (100%) of the withholding tax due for the
preceding year.
(m) Notwithstanding subsection (l), a corporation is subject to a late
payment penalty for the failure to file a return, pay the full amount of
the tax shown on the corporation's return, or pay the deficiency of the
withholding taxes due under this section for any amounts of
withholding tax, including any interest under IC 6-8.1-10-1, reported
or paid after the due date of the return, as adjusted by any extension
under IC 6-8.1-6-1.
(n) For purposes of this section, a "nonresident shareholder" is:
(1) an individual who does not reside in Indiana;
(2) a trust that does not reside in Indiana; or
(3) an estate that does not reside in Indiana.
Formerly: Acts 1963(ss), c.32, s.413; Acts 1965, c.233, s.23;
Acts 1969, c.326, s.8; Acts 1971, P.L.65, SEC.3; Acts 1973, P.L.50,
SEC.5. As amended by Acts 1979, P.L.68, SEC.5; Acts 1982, P.L.49,
SEC.5; P.L.2-1982(ss), SEC.11; P.L.23-1986, SEC.4; P.L.18-1994,
SEC.11; P.L.2-1995, SEC.32; P.L.211-2007, SEC.27; P.L.137-2012,
SEC.58; P.L.293-2013(ts), SEC.14; P.L.242-2015, SEC.19;
P.L.197-2016, SEC.27; P.L.1-2023, SEC.9.