§ 6-3-4-15 — Trusts or estates; distribution of income to nonresident beneficiaries; deduction, retention, and pay over of tax due; returns required

Indiana § 6-3-4-15

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

Text

(a) A trust or estate shall, at the time that it
distributes income (except income attributable to interest or dividends)
to a nonresident beneficiary, deduct and retain therefrom the amount
prescribed in the withholding instructions referred to in section 8 of
this chapter. The trust or estate so distributing income to a nonresident
beneficiary:
(1) is liable to this state for the tax which it is required to deduct
and retain under this section and is not liable to the beneficiary for
the amount deducted from the distribution and paid to the
department in compliance, or intended compliance, with this
section; and
(2) shall pay the amount deducted to the department before the
thirtieth day of the month following the distribution, unless an
earlier date is specified by section 8.1 of this chapter.
If a trust or estate credits a beneficiary with pass through entity tax
imposed under IC 6-3-2.1, the withholding required for that beneficiary
under this section shall be reduced by the tax credited to the
beneficiary 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) A trust or estate shall, at the time that it makes a payment to the
department under this section, deliver to the department a return which
shows the total amounts distributed to the trust's or estate's nonresident
beneficiaries, the amount deducted from the distributions under this
section, and any other information required by the department. The
trust or estate shall file the return on the form prescribed by the
department. A trust or estate which makes the deduction and retention
required by this section shall furnish to its nonresident beneficiaries
annually, but not later than thirty (30) days after the end of the trust's
or estate's taxable year, a record of the amount of tax deducted and
retained from the beneficiaries. The trust or estate shall furnish the
information on the form prescribed by the department.
(c) The money deducted and retained by a trust or estate under this
section is money of this state. Every trust or estate which deducts and
retains any money under this section shall hold the money in trust for
this state until it pays the money to the department in the manner and
at the time provided in this section. The department may require a trust
or estate to post a surety bond to protect this state with respect to
money deducted and retained by the trust or estate under this section.
The department shall determine the amount of the surety bond.
(d) The provisions of IC 6-8.1 relating to penalties or to additions to
tax in case of a delinquency apply to trusts and estates which are
subject to this section. For purposes of this subsection, any amount
deducted, or required to be deducted and remitted to the department,
under this section is considered the tax of the trust or estate, and with
respect to that amount, it is considered the taxpayer.
(e) Amounts deducted from distributions to nonresident
beneficiaries under this section during a taxable year of the trust or
estate are considered a partial payment of the tax imposed on the
nonresident beneficiary for his taxable year within or with which the
trust's or estate's taxable year ends. The department shall accept a
return made by the trust or estate under subsection (b) as evidence of
the amount of tax deducted from the income distributed to a
nonresident beneficiary.
(f) This section does not relieve a nonresident beneficiary of his
duty to file a return at the time required under IC 6-3. The nonresident
beneficiary shall pay any unpaid tax at the time prescribed by section
5 of this chapter.
(g) If a trust or estate fails to withhold and pay any amount of tax
required to be withheld under this section and thereafter the tax is paid
by the beneficiaries, the amount of tax paid by the beneficiaries may
not be collected from the trust or estate but it may not be relieved from
liability for interest or penalty otherwise due in respect to the failure to
withhold under IC 6-8.1-10.
(h) A trust or estate shall file a composite adjusted gross income tax
return on behalf of all nonresident beneficiaries. The composite return
must include each nonresident beneficiary regardless of whether the
nonresident beneficiary has other Indiana source income.
(i) For purposes of this section, a "nonresident beneficiary" is:
(1) an individual who does not reside in Indiana;
(2) a trust that does not reside in Indiana;
(3) an estate that does not reside in Indiana;
(4) a partnership that is not domiciled in Indiana;
(5) a C corporation that is not domiciled in Indiana; or
(6) an S corporation that is not domiciled in Indiana.
(j) If a trust or estate is permitted an extension to file its income tax
return under IC 6-8.1-6-1, then the return and payment due under this
subsection shall be allowed the same treatment as the extended income
tax return with respect to due dates, interest, and penalties under IC 6-8.1-6-1.
As added by Acts 1977(ss), P.L.4, SEC.13. Amended by Acts
1979, P.L.68, SEC.6; Acts 1982, P.L.49, SEC.6; P.L.2-1982(ss),
SEC.12; P.L.242-2015, SEC.20; P.L.181-2016, SEC.28; P.L.1-2023,
SEC.10.