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Disclaimer: Every attempt is made to provide information that is consistent with the appropriate statutes, rules, and court decisions. Any information that is not consistent with the law, regulations, or court decisions is not binding on either the department or the taxpayer. Therefore, the information provided herein should serve only as a foundation for further investigation and study of the current law and procedures related to the subject matter covered herein.
In conjunction with the hurricane relief efforts provided by the Internal Revenue Service, the Indiana Department of Revenue is extending the filing due dates by 60 days for any individual or business taxpayer whose filing address is either in Florida or Texas. The Department is also waiving any penalty or interest during this 60-day extension period for those affected taxpayers. If any questions, please contact: (317) 232-2240, Monday – Friday, 8 a.m. - 4:30 p.m. ET. Hurricane Relief
How to Find Code Cites and Enrolled Acts Online • Indiana General Assembly - https://iga.in.gov
Legal FinDOR • Legal FinDOR is a document retrieval tool designed for both legal and financial professionals and nonprofessionals. • This tool enables you to search for and retrieve previously issued documents that explain the department’s position on a variety of tax related matters. • You may search documents such as: • Letters of Findings • Memoranda of Decision • Final Orders Denying Refund • Revenue Rulings • Information Bulletins
Sales and Use, HEA 1129 • Effective Date: July 1, 2017 • Code: IC 6-2.5-2-1 • Enrolled Act: HEA 1129, SEC 2 • Sales Tax and Remote Sellers • Retail Merchants without a physical presence in Indiana will be required to collect and remit the sales tax to Indiana on retail transactions made in Indiana if: • Calendar year gross revenue from sales into Indiana exceeds $100,000, or • 200 or more separate sales transactions into Indiana
Individual AGI, SEA 515 • Effective Date: July 1, 2017 • Code: IC 6-3-1-3.5 • Enrolled Act: SEA 515, SEC 11 • New Deduction - Claim of Right Repayments • Provides for a deduction for amounts: • Included in adjusted gross income in a previous year under a claim of right that are repaid in a later year, and • For which the repayment is an allowable deduction for federal income tax purposes under IRC section 1341(a)(2)
Individual AGI, HEA 1001 • Effective Date: January 1, 2018 • Code: IC 6-3-2-4 • Enrolled Act: HEA 1001 • Retirement and Survivor Benefits • Provides for a deduction for first $5,000 received by individual or spouse and included in federal AGI, excluding AGI described below,for active service or service in reserves of the United States Armed Forces • Provides a deduction up to $6,250 for income from retirement or survivor’s benefits for active service or service in the reserves of the United States Armed Forces and included in federal AGI. Available for individual or surviving spouse with no age requirement. • Income Tax Information Bulletin 6
Debt Collection, SEA 515 • Effective Date: January 1, 2018 • Code: IC 6-8.1-9-14 • Enrolled Act: SEA 515 • Centralized Debt Collection • Priority of Claims (offsets) • Fees
Form Changes - Individual • Line 7, IT-40, previously “State Taxable Income” • Indiana Adjusted Gross Income definition now includes applicable deductions under IC 6-3-2;therefore Indiana worksheet to determine Indiana Adjusted Gross Income will no longer be necessary. • Lake County Residential Income Credit no longer requires extra step before calculating the credit.
Form Changes – Individual, (cont.) • County Tax Rates • Counties no longer have resident and nonresident rates. • Indiana Adjusted Gross Income Tax Rate • 3.23% for 2017 • Twenty-First Century Scholarship Credit Repealed • No carry-forward provision
Due Dates - Individual • April 17, 2018 • IT-40, IT-40PNR, IT-40RNR, IT-40ES, ES-40, IT-9 • July 2, 2018 • SC-40, IT-40 & IT-40PNR if claiming Unified Tax Credit for Elderly (without ext.) • November 14, 2018 • Due date for state returns filed under IT-9 and/or Federal Form 4868 extension
Form Changes - Corporate • Twenty-First Century Scholarship Credit Repealed • No carry-forward provision • IT-20S and IT-65 have new checkboxes • If entity claims Research Expense Credit, box on front of return to be checked. • Indiana Research Expense Credit Form (IT-20REC) • Lines 1 - 3 from previous forms have been removed and instructions have been updated. • Corporate Adjusted Gross Tax Rates • July 1, 2016 through June 30, 2017 rate is 6.25% • July 1, 2017 through June 30, 2018 rate is 6.0%
Form Changes - Composite • Schedule Composite - Used by S-corporations and Partnerships with non-resident shareholders or partners who are individuals or other non-corporate entities. • Schedule Composite-COR – A new schedule to be used by S-Corporations or Partnerships to report withholding on non-resident shareholders or partners who are corporations. There is no county tax on this schedule.
Form Changes – Corporate Due Dates • Commissioner’s Directive #58 was issued in response to P.L 114-41, which changed federal due dates of corporate returns. • Effective for tax years beginning after January 1, 2016: • Form IT-20 Indiana Corporate Income Tax Return • Due 15th day of fifth month following the end of the taxable year • Form IT-20S Indiana S Corporation Return • Due 15th day of fourth month following the end of the tax year • Form IT-65 Indiana Partnership Return • Due 15th day of fourth month following the end of the tax year
Due Dates – Corporate Extensions • Form IT-20 Indiana Corporate Income Tax Return • Extended due date is 30 days after 15th day of tenth month after the end of the taxpayer’s taxable year. • Form IT-20S (Indiana S-Corp) and Form IT-65 (Indiana Partnership) • Remains the 15th day of tenth month after the end of the taxpayer’s tax year. • Income Tax Information Bulletin 15
Software and E-Filing Extension Check Box Driver’s License Number Requirement for Identification
Identity Protection Program • The Indiana Department of Revenue continues to increase security measures to protect Hoosiers and the state from identity theft and identity fraud. • The department has identified and stopped more than $100 million in attempted tax refund fraud and helped more than 5,500 taxpayers discover their identities were stolen and used to file fraudulent Indiana tax returns.
Identity Protection Program, (cont.) • Selected taxpayers will receive a letter asking them to confirm the name and address on the letter match an Indiana tax return they recently submitted. • If a taxpayer receives this letter and the identity information is not correct or they did not submit an Indiana income tax return, they should not complete the Identity Confirmation Quiz, but rather follow the letter’s instructions to contact the department. • If the identity information matches and the taxpayer did recently submit a tax return, they should proceed with the Identity Confirmation Quiz.
Identity Protection Program, (cont.) Taxpayers asked to complete the Identity Confirmation Quiz will have 30 days to do so.Taxpayers are advised to complete the quiz quickly so that the processing of the return may continue and the refund be issued in a timely manner. After that quiz window expires, customers will need to contact the department to have information verified and reviewed. Those required to take the quiz ARE NOT suspected of identity theft. This effort is designed to further protect taxpayer’s identities and tax refunds.
Non-Filer Project Research indicates that about 10% of individual taxpayers do not file a tax return. Using third-party vendors who have expansive databases, the department has worked to identify those individuals to contact them to encourage their compliance. The department’s goal is to permanently convert non-compliant taxpayers into compliant ones going forward, thus reducing the burden on all Hoosiers, and ensuring individuals and businesses operate on a level playing field. Since the beginning of this program in 2014, the department has collected more than $21 million in previously unpaid taxes. Additionally, due to increased education and oversight, there has been a marked improvement in voluntary taxpayer compliance.
Returns Processing • Incomplete tax returns • Missing or incomplete forms/schedules • Lack of documentation for credits • Duplicate filings • Calculation errors • Unidentified checks • Non-departmentally approved returns or coupons
Reporting Nominee Withholding Individuals who are non-resident shareholders have been denied credit for taxes withheld due to incorrect completion of the K-1 form.
Comptroller of Maryland v. Wynne, (cont.) • A 2015 United States Supreme Court decision where the State of Maryland’s tax system was found to discriminate against interstate income, and therefore violated the dormant Commerce Clause. • Because Indiana has both state and county income taxes, the department has received many questions based on the Wynne decision. • Upon examination, as compared to Maryland, Indiana’s tax system was found to be non-discriminatory. • The Indiana Department of Revenue issued Commissioner’s Directive #57, July, 2016 to provide guidance regarding Comptroller of Maryland v. Wynne.
Comptroller of Maryland v. Wynne, (cont.) Pursuant to Indiana statutes, the department will continue to permit out-of-state income taxes to be applied against Indiana state income taxes, and out-of-state local taxes to be applied against Indiana local income taxes. Prior to January 1, 2015, out-of-state local income taxes paid could not be credited against the Indiana county’s County Economic Development Income Tax (CEDIT). If a credit for out-of-state local income taxes has not previously been allowed against a taxpayer’s CEDIT liability, taxpayers can file a claim for refund prior to the expiration of the statute of limitations
Other Reminders Update your software packages Section 179 Federal limitation changes verses State limitation Reprints
Notices Generated Failure to Pay or Partial Payments Late Payments Desk Examination Field Audit Returned Check Failure to File
Generation of Notices • For most tax types, the notice is generated on the seventh day after the due date of the return. • For registered taxes, if a return is not received within 25 days past the due date, a estimated billing will be generated. • Prior to the due date, if an individual files an income tax return without a payment, the individual will receive a PFC (Personal Filing Coupon). A PFC is not considered a bill, but more like a payment voucher. For Individual Income Tax, notices (bills) are not generated until all paper returns and checks are processed.
Notice Stages AR-80: Notice of Tax Due / Proposed Assessment AR-RC: 10 Day Returned Check Notice AR-40: Demand Notice for Payment WAR-C: Clerk Warrant WAR-S: Sheriff Warrant WAR-A: Agency Warrant Additional collection mechanisms are not limited to but could include Federal and Indiana State Refund Offsets.
Action Steps for the Taxpayer • If a taxpayer receives an AR-80 Proposed Assessment, the taxpayer should first review Page 1 of the notice to find out the type of tax, the tax period, and the due date. They should then review Page 2 to learn exactly why the notice was issued to them. • The taxpayer must… Reply by the due date on the bill. If they do not respond by the due date, the law requires the department to start the collection efforts and they will lose their protest rights. • If a taxpayer receives an AR-40 Demand Notice for Payment, they need to be aware of the due date on the bill. If they cannot pay, they still must call or write the department by the due date. Ignoring a bill will result in it advancing through the warrant stages.
Appeals Process • If you receive a proposed assessment or denial of a claim for refund, you have 60 days from the date issued to file a protest, and your protest must be in writing, • Complete information regarding the appeals process may be found in the Indiana Department of Revenue Administrative Protest Guide at: http://www.in.gov/dor/reference/files/DOR_Protest_Guide.pdf
Debt Collection, SEA 515 • Effective Date: January 1, 2018 • Code: IC 6-8.1-9-14 • Enrolled Act: SEA 515 • Centralized Debt Collection (refund offset) • “Except as provided in subsection (n), the department shall establish, administer, and make available a centralized debt collection program for use by state agencies to collect delinquent accounts, charges, fees, loans, taxes, or other indebtedness owed to or being collected by state agencies. The department's collection facilities shall be available for use by other state agencies only when resources are available to the department.”
Debt Collection, SEA 515, (cont.) • Effective Date: January 1, 2018 • Code: IC 6-8.1-9.5-12 • Enrolled Act: SEA 515, SEC 30 • Priority of Claims • Establishes the order in which multiple claims will be off set
Debt Collection Fees In accordance with IC 6-8.1-9.5-10, the Indiana Department of Revenue may charge a claimant agency a fee of 15% for any funds it offsets as a collection fee for its services. Historically, this fee has not been charged, except for the $20 fee that was charged for an offset to the IRS. Effective January 1, 2018, the department will begin assessing the 15% fee, except in the instance where the offset is to Child Support or Workforce Development. The fee for an offset to the IRS will remain at a flat rate of $20. The department is currently working to develop correspondence that will communicate to taxpayers where their tax refunds have been offset and what fees have been charged.
