Ind. Code ch. 6-3-4.5

in effect

Ind. Code § 6-3-4.5-1 Definitions

Sec. 1. The following definitions apply throughout this chapter: (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(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(c), the corporation is a corporate partner only to the extent that its income is subject to tax under 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 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. (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 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. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.41; P.L.138-2022, SEC.6; P.L.178-2022(ts), SEC.7; P.L.1-2023, SEC.11; P.L.201-2023, SEC.97; P.L.9-2024, SEC.186; P.L.80-2025, SEC.3.

Ind. Code § 6-3-4.5-2 Amended return; pass through entity; adjustment for a review year; state adjustment; partnerships and tiered partners; numerical tier

Sec. 2. The following apply for purposes of this chapter: (1) If a taxpayer has not filed a return under IC 6-3 or IC 6-5.5 for a taxable year, review year, or adjustment year, any reference to an amended return shall be a reference to an original return that includes any adjustments under this chapter. (2) If a taxpayer is a partnership or pass through entity and has not issued a statement to its owners or beneficiaries, any reference to an amended statement shall be a reference to an original statement that includes any adjustment under this chapter. (3) Any reference to tax shall include interest under IC 6-8.1-10-1 and penalties under IC 6-8.1. (4) In the case of a final federal adjustment for a review year that is required, the adjustment shall be treated as: (A) occurring in the review year, if and to the extent the adjustment: (i) results in an imputed underpayment for federal purposes to the partnership; (ii) would result in an imputed underpayment for federal purposes to the partnership for the review year except that the adjustment is reported by the partners of the partnership in the manner provided under Section 6225(c)(2) of the Internal Revenue Code; or (iii) results in an adjustment that is passed through to the review year partners for federal tax purposes, in the case of a partnership that makes a valid election pursuant to Section 6226 of the Internal Revenue Code; or (B) occurring in the adjustment year, to the extent a tax attribute is taken into account by the partnership as provided under Section 6225(a)(2) of the Internal Revenue Code and regardless of whether the item is a separately stated item for partners for federal income tax purposes. (C) For purposes of clauses (A) and (B): (i) a federal adjustment netted against another federal adjustment for purposes of determining an imputed underpayment for federal purposes to the partnership, or for purposes of determining a partner's federal tax due with respect to a review year, is considered to occur in the review year; (ii) a federal adjustment permitted to reduce the imputed underpayment for federal purposes for a partnership, or permitted for purposes of determining a partner's federal tax due or federal tax attributes with respect to a review year, and not otherwise described in item (i), is considered to occur in the review year; and (iii) if an adjustment related to a review year affects a tax attribute of a partner such that the partner is required to change one (1) or more tax attributes for federal purposes for a year other than the review year, the partner shall treat the change in the tax attribute as occurring for Indiana purposes in the same year as the change is required for federal purposes. (5) In the case of a state adjustment, the change shall be treated as occurring in the taxable year to which the state adjustment relates, unless the adjustment is treated as occurring in a different year as a result of subdivision (4). (6) For taxable years beginning before January 1, 2017, any reference to IC 6-3.6 shall be construed to include IC 6-3.5-1.1, IC 6-3.5-6, and IC 6-3.5-7, prior to their repeal. (7) With respect to partnerships and tiered partners: (A) a partner that is a partnership that receives a report of partnership adjustments, receives a final federal adjustment, or files an amended return is considered a tier one (1) entity; (B) a tiered partner that is a direct partner of a tier one (1) entity is considered a tier two (2) entity; and (C) each tiered partner that is an owner, beneficiary, or partner of an entity that is a tier two (2) entity or higher shall be assigned a tier number that is one (1) tier higher and is considered an entity in that tier. If, after application of this subdivision, a tiered partner is assigned to more than one (1) tier, the tiered partner shall be treated as being assigned to the highest numerical tier to which the tiered partner could be assigned. (8) In the case of a partnership or tiered partner that is assigned a numerical tier, the applicable deadline for purposes of this chapter is: (A) in the case of a tier one (1) entity receiving a report of partnership adjustments, ninety (90) days from the date the report of partnership adjustments is final; (B) in the case of a tier one (1) entity that has received a final federal adjustment, one hundred eighty (180) days from the final determination date for a final determination date before January 1, 2026, and one (1) year from the final determination date for a final determination date after December 31, 2025; (C) in the case of a tier one (1) entity that has filed an amended return under this chapter other than an amended return resulting from a final federal adjustment, zero (0) days; and (D) in the case of a tiered partner that has received adjustments resulting from a tier one (1) partnership, a number of days equal to: (i) the number of days described in clauses (A) through (C), as applicable; plus (ii) thirty (30) multiplied by the tier number assigned to the tiered partner; minus (iii) thirty (30). However, if a tiered partner receives an adjustment reported on a partnership audit tracking report under Section 6226 of the Internal Revenue Code, the time period applicable for the tiered partner is the longer of the time period described in clause (D) or ninety (90) days from the date prescribed in Section 6226(b)(4)(B) of the Internal Revenue Code, and any other applicable deadlines under this subdivision or subdivision (9). (9) Any reference to an election under section 9(c) of this chapter includes an election under sections 6(d) and 8(c) of this chapter. (10) In the case of a direct partner or indirect partner that is not a tiered partner, the applicable deadline for purposes of this chapter is ninety (90) days after the applicable deadline that is determined for the partnership or tiered partner under subdivision (8). If a direct partner or indirect partner described in this subdivision is subject to more than one (1) applicable deadline, the applicable deadline is the latest date determined under this subdivision. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.42; P.L.128-2026, SEC.21.

Ind. Code § 6-3-4.5-3 Department audit or investigation; tax attribute; report of proposed partnership adjustments

Sec. 3. (a) If the department conducts an audit or investigation of a partnership, and the department determines that the partnership: (1) did not correctly report any tax attribute for a taxable year; or (2) did not correctly allocate any tax attribute for a taxable year; the department may adjust or reallocate the tax attribute. If the department makes an adjustment or reallocation to one (1) or more tax attributes, the department shall provide a report of proposed partnership adjustments for the taxable year to the partnership. (b) The report of proposed partnership adjustments shall list: (1) the department's adjustments to tax attributes; and (2) if the report of proposed partnership adjustments is not attributed to one (1) or more affected direct partners in proportion to their share of income from the partnership, the allocation of the department's adjustments to such affected direct partners. The portion of adjustments not specifically allocated to partners in the report of proposed partnership adjustments shall be considered to be allocated in proportion to their share of income from the partnership and adjusted to account for the partners whose adjustments are specifically allocated to them. (c) If the report of proposed partnership adjustments for a taxable year results in either: (1) a potential increase in tax to one (1) or more direct partners; or (2) if the partnership reported tax attributes that would result in a refund of tax to one (1) or more partners, a reduction in that refund; such report shall be treated as a proposed assessment under IC 6-8.1-5 to the partnership. (d) If the result for partnership adjustments for a taxable year results in: (1) no direct increase in tax to any direct partner; and (2) a change in tax attributes to one (1) or more direct partners that would result in a refund in excess of any refund claimed; the department shall issue a report of proposed partnership adjustments to the partnership reflecting such adjustments. Any refund arising from a report of proposed partnership adjustments shall be issued to the partners, subject to the partner claiming the refund and any statute of limitations on such refunds. In the case of partnership adjustments otherwise described in this subsection that result from a partnership adjustment described in subsection (c), all such partnership adjustments shall be treated as adjustments to which subsection (c) applies. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.43; P.L.1-2023, SEC.12.

Ind. Code § 6-3-4.5-3.5 Underreporting of tax due by partner in partnership

Sec. 3.5. If a partnership is assessed tax due pursuant to IC 6-3-2.1, IC 6-3-4-12, IC 6-5.5-2-8, or this chapter as a result of underreporting the tax due for one (1) or more partners, the provisions of this chapter for timeliness of assessments, reporting, and rights to appeal apply in the same manner as a report of proposed partnership adjustments, except as specifically provided in this chapter. As added by P.L.1-2023, SEC.13.

Ind. Code § 6-3-4.5-4 Partnership's right to protest and appeal

Sec. 4. If the department issues a report of proposed partnership adjustments to a partnership for a taxable year, the partnership shall be considered to be the taxpayer for purposes of IC 6-8.1-5, including all rights to protest and appeal the report of proposed partnership adjustments, except as specifically provided under this chapter. As added by P.L.159-2021, SEC.18.

Ind. Code § 6-3-4.5-5 Report of partnership adjustments; timing; protest; appeal; settlement agreement

Sec. 5. (a) For purposes of this chapter, a report of proposed partnership adjustments for a taxable year is considered a report of final partnership adjustments upon the latest of: (1) the last day a protest of the report of proposed partnership adjustments could have been filed by the partnership, if no protest is filed; (2) if a protest is filed, but no original tax appeal is filed pursuant to IC 6-8.1-5, the last day on which an original tax appeal could have been filed; (3) if an original tax appeal has been filed, the last day on which no further appeal may be taken from a decision requested; or (4) the date set in subsection (b). (b) If, upon protest or appeal, an adjustment in a report of proposed partnership adjustments is determined to be incorrect, the department shall issue a report of final partnership adjustments consistent with the determination not more than one hundred eighty (180) days after the determination is otherwise determined to be final under subsection (a)(1) through (a)(3). If the report of final partnership adjustments is not issued within one hundred eighty (180) days, one (1) day for each day that the report of final partnership adjustments is issued after the one hundred eighty (180) day deadline is added to the deadline for which a partnership or tiered partner may act without being subject to assessment under section 18 of this chapter. In the case of a partnership with multiple tiers, this extension applies to each tier. (c) Notwithstanding subsection (a), if the partnership and the department enter into a settlement agreement under IC 6-8.1-3-17 to resolve all matters related to the report of proposed partnership adjustments for a taxable year, the report of final partnership adjustments for that taxable year reflected in the agreement shall be issued final one hundred eighty (180) days after the date of the signature of the last party required to sign the agreement. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.44.

Ind. Code § 6-3-4.5-6 Partnership duties; partner level adjustments report; remittance; tiered partner duties; amended return; election

Sec. 6. (a) Once a report of partnership adjustments is considered final, the partnership shall, not later than the applicable deadline: (1) supply to its direct partners and the department a partner level adjustments report attributable to each partner in the form and manner prescribed by the department; (2) remit any composite tax or withholding tax due under IC 6-3-4-12 or IC 6-5.5-2-8; and (3) remit any pass through entity tax due under IC 6-3-2.1. (b) If the partner is a tiered partner, the tiered partner shall, not later than the applicable deadline for the tiered partner: (1) file an amended return for the taxable year and for any other affected year reporting its share of the adjustments; (2) supply its owners or beneficiaries and the department amended statements reflecting the adjustments attributable to the owner or beneficiary, or a report, in the form and manner prescribed by the department; and (3) remit any tax due under IC 6-3, IC 6-3.6, or IC 6-5.5, including any pass through entity tax, composite tax, or withholding tax due under IC 6-3-2.1, IC 6-3-4-12, IC 6-3-4-13, IC 6-3-4-15, and IC 6-5.5-2-8. (c) Upon receipt of a partner level adjustments report or any statement from tiered partners arising from a partner level adjustments report, the taxpayer receiving the report or statement shall file an amended return for the taxable year reporting the adjustments along with any other affected year and remit any tax due not later than the applicable deadline for the partner. (d) Notwithstanding any other provision of this chapter or IC 6-3-4-11: (1) A partnership that has been issued a report of proposed partnership adjustments, or a tiered partner that is a partnership that has received a partner level adjustment report or statement arising from a report of final partnership adjustments, may elect to pay any tax due arising from a report of final partnership adjustments. (2) Such election must be filed with the department not later than sixty (60) days after the department issues the report of proposed partnership adjustments or, in the case of an election by a tiered partner, not later than the date by which the tiered partner is required to file an amended return under this section. (3) The computation of tax and other provisions governing this election shall be in a manner consistent with an election under section 9(c) of this chapter. (4) If a partnership has made an election under this chapter to report and remit any tax due at the partnership level for a taxable year, the partnership shall be considered to have made a timely election under this subsection with regard to any adjustments in the report of partnership adjustments for that taxable year. (5) No election may be made under this subsection after April 30, 2023. As added by P.L.159-2021, SEC.18. Amended by P.L.1-2023, SEC.14; P.L.9-2024, SEC.187.

Ind. Code § 6-3-4.5-7 Partner level adjustments report; assessment; adjustments to tax attributes

Sec. 7. (a) If the department receives the partner level adjustments report or statement required to be provided under section 6 of this chapter and the department determines that a taxpayer has not reported the correct amount of tax to the department, the department shall issue an assessment to the taxpayer of any tax due. (b) For purposes of any assessment, protest, and litigation related to a partner level adjustments report or statement arising from a partner level adjustments report, any adjustments to tax attributes reported in the partner level adjustments report shall be final. As added by P.L.159-2021, SEC.18.

Ind. Code § 6-3-4.5-8 Filing of amended partnership return; remittance; tiered partners; direct or indirect partners; payment of tax; tax attributes

Sec. 8. (a) If a partnership: (1) determines that it did not correctly report any tax attribute for a taxable year; (2) determines that it did not correctly allocate any tax attribute for a taxable year; or (3) receives final federal adjustments as a result of a federal partnership audit or administrative adjustment request for a taxable year; the partnership shall file an amended partnership return with the department and provide its direct partners with amended statements or a report in the form and manner prescribed by the department reflecting the correctly reported and allocated tax attributes for any applicable year. (b) If the partnership files an amended partnership return under this section for a taxable year: (1) the partnership shall remit any composite tax or withholding tax due under IC 6-3-4-12 or IC 6-5.5-2-8 and any pass through entity tax due under IC 6-3-2.1 on its direct partners resulting from the amended return at the time of filing; (2) any tiered partners shall, not later than the applicable deadline for the tiered partner: (A) file an amended return and, if applicable, remit any tax due under IC 6-3, IC 6-3.6, or IC 6-5.5, including any amounts due under IC 6-3-2.1, IC 6-3-4-12, IC 6-3-4-13, IC 6-3-4-15, or IC 6-5.5-2-8; and (B) report any adjustments to the tiered partner's owners or beneficiaries by providing amended statements to the tiered partner's owners or beneficiaries, or a report in the form and manner prescribed by the department; and (3) any direct or indirect partners who are not tiered partners and who are required to file a return under IC 6-3 or IC 6-5.5 or who have filed a return under IC 6-3 or IC 6-5.5 shall file amended returns with the department for any taxable year affected by the amended partnership return and remit any tax due not later than the applicable deadline for the partner. (c) Notwithstanding any other provision of this chapter or IC 6-3-4-11: (1) A partnership that has filed an amended partnership return under this section, or a tiered partner that is a partnership and that is a partner of a partnership that has filed an amended partnership return under this section, may elect to pay any tax due arising from an amended partnership return. (2) Such election must be filed with the department not later than the date on which the amended partnership return is filed with the department or, in the case of an election by a tiered partner that is a partnership, not later than the date by which the tiered partner is required to file an amended return under this section. (3) The computation and payment of tax and other provisions governing this election shall be in a manner consistent with an election under section 9(c) of this chapter. (4) If a partnership has made an election under this chapter to report and remit all tax otherwise due at the partnership level for a taxable year, the partnership shall be considered to have made a timely election under this subsection with regard to any changes arising from an amended return under this section for that taxable year. (5) No election may be made under this subsection for an amended return filed after April 30, 2023. (d) If the department determines that a partnership: (1) did not correctly report any tax attributes for a taxable year; (2) did not correctly allocate any tax attributes for a taxable year; or (3) did not report the proper amount of tax under IC 6-3-2.1, IC 6-3-4-12, or IC 6-5.5-2-8; the department may proceed against the partnership in the manner provided under sections 3 through 6 of this chapter. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.45; P.L.1-2023, SEC.15.

Ind. Code § 6-3-4.5-9 Partnership level audit; final federal adjustments; election by an audited partnership; consent to Indiana law

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 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 this article, 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(c), IC 6-3-2-1.5 (before its expiration), or IC 6-5.5-2-1, as 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(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(b) and IC 6-3.6 for any county, the rate under 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(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 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(c), IC 6-3-2-1.5 (before its expiration), 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 this article 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. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.46; P.L.138-2022, SEC.7; P.L.178-2022(ts), SEC.8; P.L.1-2023, SEC.16; P.L.201-2023, SEC.98; P.L.9-2024, SEC.188; P.L.80-2025, SEC.4; P.L.23-2026, SEC.38.

Ind. Code § 6-3-4.5-10 Reporting and payment requirements; tiered partners; rules

Sec. 10. (a) The direct and indirect partners of an audited partnership that are tiered partners, and all of the partners, owners, and beneficiaries of those tiered partners that are subject to tax under IC 6-3 or IC 6-5.5, are subject to the reporting and payment requirements of section 8 of this chapter. (b) The tiered partners who are partnerships are entitled to make the elections provided by section 9(c) of this chapter, provided that such an election is made not later than the due date by which the tiered partner is otherwise required to furnish statements or other reports to its partners under section 8(b)(2) of this chapter. (c) The department may adopt rules under IC 4-22-2 to establish procedures and interim time periods for the reports and payments required by tiered partners and their partners, owners, and beneficiaries and for making the elections under section 9(c) of this chapter. As added by P.L.159-2021, SEC.18.

Ind. Code § 6-3-4.5-11 Procedures; alternative reporting and payment method; application; timing

Sec. 11. Under procedures adopted by and subject to the approval of the department, an audited partnership or tiered partner may enter into an agreement with the department to utilize an alternative reporting and payment method, including applicable time requirements or any other provision of section 9 of this chapter, if the audited partnership or tiered partner demonstrates that the requested method will reasonably provide for the reporting and payment of taxes due. Application for approval of an alternative reporting and payment method must be made by the audited partnership or tiered partner within the time for election as provided in section 9(c)(1) of this chapter. As added by P.L.159-2021, SEC.18.

Ind. Code § 6-3-4.5-12 Irrevocable election; no deduction or credit; other state or local tax jurisdictions

Sec. 12. (a) The election made pursuant to section 9(c) of this chapter is irrevocable unless the department, in its discretion, determines otherwise. (b) If properly reported and paid by the audited partnership or tiered partner, the amount determined under section 9(c)(2) of this chapter or similarly under an optional election under section 11 of this chapter, will be treated as paid in lieu of taxes owed by its direct and indirect partners, to the extent applicable, on the same final federal adjustments. The direct partners or indirect partners may not take any deduction or credit for this amount or claim a refund of the amount in this state. However, nothing in this subsection shall preclude a direct partner from claiming a credit for any amounts paid by the audited partnership or tiered partner on the direct partner's behalf to another state or local tax jurisdiction in accordance with provisions in IC 6-3-3-3 and IC 6-3.6-8-6. (c) If the department determines that a partnership made an election under section 9(c) of this chapter that was improper with regard to one (1) or more partners or adjustments, the department may treat the election as invalid with regard to the partners or adjustments and treat any tax applicable to such partners as tax withheld by the partnership on any affected partner's behalf. As added by P.L.159-2021, SEC.18.

Ind. Code § 6-3-4.5-13 Designation of a state partnership representative; qualifications

Sec. 13. If the department conducts an audit or investigation under this chapter, or the partnership receives federal adjustments covered under sections 9 through 12 of this chapter, the partnership shall be required to designate a state partnership representative for that taxable year or review year. The following apply: (1) With respect to an action required or permitted to be taken by a partnership under this chapter and a proceeding for administrative or judicial review with respect to that action, the state partnership representative for the taxable year shall have sole authority to act on behalf of the partnership, and the partnership's direct partners and indirect partners shall be bound by those actions. (2) The state partnership representative for a taxable year is the partnership's federal partnership representative for the taxable year, unless the partnership designates in writing another person as its state partnership representative or the partnership has not designated a federal partnership representative. (3) The department may establish reasonable qualifications for and procedures for designating a person, other than the federal partnership representative, to be the state partnership representative. As added by P.L.159-2021, SEC.18.

Ind. Code § 6-3-4.5-14 Changes to a report of final partnership adjustments; timing

Sec. 14. For purposes of this chapter and IC 6-8.1-5-2, an assessment may not be issued against a direct or indirect partner or partnership with regard to changes related to a report of final partnership adjustments if the report of proposed partnership adjustments is issued by the department to a partnership after the latest of: (1) three (3) years after the due date of the partnership's return, including any valid extension granted under IC 6-8.1-6-1; (2) three (3) years after the date the partnership's return is filed with the department; (3) in the case of the partnership's underreporting of its adjusted gross income by more than twenty-five percent (25%), the periods provided in subdivisions (1) and (2) shall be six (6) years; (4) if the partnership fails to file a return required under IC 6-3-4-10, files a fraudulent return, or files a substantially blank return, no time limit; (5) in the case of a report of proposed partnership adjustments arising from final federal adjustments: (A) one (1) year after the date on which the department receives the final federal adjustments from the partnership in the manner prescribed by the department; or (B) December 31, 2021; whichever is later; or (6) in the case of a report of proposed partnership adjustments issued to a tiered partner that is a partnership as a direct or indirect result of another partnership's report of final partnership adjustments, final federal adjustments, or an amended return, one (1) year after the applicable deadline for the tiered partner or the date otherwise determined under this section for the partnership, whichever is later. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.47; P.L.128-2026, SEC.22.

Ind. Code § 6-3-4.5-15 Reports; proposed assessment; timing; protest; appeal

Sec. 15. (a) If the department receives the partner level adjustments report, amended statement, or similar report required to be provided under section 6 of this chapter and the department determines that a taxpayer has not reported the correct amount of tax to the department for a taxable year of the taxpayer affected by the partner level adjustments report, the department shall issue a proposed assessment to the taxpayer not later than: (1) one hundred eighty (180) days after the department receives the partner level adjustments report or amended statement arising from the partner level adjustments report from the entity required to provide the report or statement to the department; (2) one hundred eighty (180) days after the applicable deadline for the taxpayer; or (3) the period during which the taxpayer could otherwise be issued a proposed assessment under IC 6-8.1-5-2; whichever is latest. (b) If a taxpayer receives multiple partner level adjustments reports or amended statements relating to the same report of final partnership adjustments, the last day for issuing a proposed assessment to the taxpayer is the latest time for which the department could issue an assessment for any partner level adjustments report or amended statement arising from the report of partnership adjustments as determined under this section. (c) The taxpayer may protest or appeal the proposed assessment or refund denial in the same manner as prescribed in IC 6-8.1-5 or IC 6-8.1-9-1, whichever is applicable. However, any adjustments made pursuant to a report of final partnership adjustments shall be considered final as to the taxpayer. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.48.

Ind. Code § 6-3-4.5-16 Incorrect reporting of tax attributes; proposed assessment; refund; reporting considered conclusive for protest or appeal

Sec. 16. (a) If the department determines that the partnership correctly reported and allocated tax attributes to its partners on a return or an amended return, but that the taxpayer reported the tax attributes from the partnership incorrectly, and that the taxpayer did not report the proper amount of tax as a result of such tax attributes for any year affected by the partnership return or amended return, the department may issue a proposed assessment against the taxpayer not later than one hundred eighty (180) days after the applicable deadline for the taxpayer or the date otherwise prescribed in IC 6-8.1-5-2 for issuing a proposed assessment against the taxpayer, whichever is later. (b) If the amended return filed by the partnership would result in a refund to one (1) or more direct or indirect partners, the partner must file an amended return not later than: (1) the date prescribed under IC 6-8.1-9-1 for the partner to claim a refund, if the amended return is not the result of a change by the Internal Revenue Service; or (2) if the adjustment is the result of a change by the Internal Revenue Service, the applicable deadline for the partner, or the date prescribed under IC 6-8.1-9-1, whichever is later. (c) For purposes of any protest or appeal from an amended return under this section, any reporting by the partnership shall be considered conclusive with regard to the direct and indirect partners of the partnership. As added by P.L.159-2021, SEC.18.

Ind. Code § 6-3-4.5-17 Inconsistent reporting of tax attribute; disclosure; proposed assessment; timing; reporting considered conclusive for protest or appeal

Sec. 17. (a) If the department determines that a taxpayer reported a tax attribute in an inconsistent manner with the partnership's reporting of the tax attribute and the taxpayer does not disclose the inconsistent reporting in a manner prescribed by the department, the department may issue a proposed assessment against the taxpayer as a result of the inconsistent reporting not later than: (1) three (3) years after the due date of the partnership's return, including any valid extensions granted under IC 6-8.1-6-1; (2) three (3) years after the partnership's return is filed with the department; (3) in the case of the partnership's underreporting of its adjusted gross income by more than twenty-five percent (25%), the periods provided in subdivisions (1) and (2) shall be six (6) years; (4) if the partnership fails to file a return required under IC 6-3-4-10, files a fraudulent return, or files a substantially blank return, no time limit; or (5) the latest date for which the taxpayer could be assessed under IC 6-8.1-5-2; whichever date is latest. (b) For purposes of this section: (1) if a partnership is required to file a return under IC 6-3-4-10 and fails to file such return or fails to provide the partner with a statement setting forth the tax attributes from the partnership, the taxpayer will be considered to have reported all tax attributes from the partnership in an inconsistent manner with the partnership's reporting of the tax attributes; (2) in the case of a partner who owns a direct or indirect interest in a partnership that has made a valid election under Section 6221(b) of the Internal Revenue Code and has received a final federal adjustment with regard to an item of the partnership: (A) the partner shall be considered to have reported items consistently with the partnership only if the partner properly reports the federal adjustment in a manner consistent with the federal treatment of such adjustment; and (B) for purposes of this chapter, IC 6-8.1-5-2, and IC 6-8.1-9-1, the federal adjustment shall be considered a final federal adjustment with regard to such partner; and (3) for purposes of any protest or appeal with regard to a proposed assessment under this section, any reporting by the partnership shall be considered conclusive with regard to the direct or indirect partners of the partnership, provided that the reporting by the partnership is determined to be neither fraudulent nor in bad faith. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.49.

Ind. Code § 6-3-4.5-18 Reporting requirements; liability for tax; proposed assessment timing; reduction of the tax attributable to direct or indirect partner; duty to issue report

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(b), plus the highest rate imposed in any county under IC 6-3.6; (2) 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 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 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. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.50; P.L.138-2022, SEC.8; P.L.178-2022(ts), SEC.9; P.L.201-2023, SEC.99; P.L.80-2025, SEC.5.

Ind. Code § 6-3-4.5-19 Remitting payment on behalf of a partner; claim for refund

Sec. 19. If a partnership or tiered partner remits a payment on behalf of a partner, shareholder, or beneficiary as a result of this chapter, the partner, shareholder, or beneficiary may file a claim for refund with regard to any overpayment remitted on its behalf not later than the date on which the partner, shareholder, or beneficiary is required to file an amended return under this chapter or the date otherwise prescribed under IC 6-8.1-9-1, whichever is later. As added by P.L.159-2021, SEC.18.

Ind. Code § 6-3-4.5-20 Partnership with more than 10,000 direct owners; extension of time; written agreement; automatic extension; rules

Sec. 20. (a) Notwithstanding any other provision of this chapter or IC 6-8.1, if, before the end of the time period within which the department may take an action under this chapter: (1) in the case of a partnership or tiered partner that has more than ten thousand (10,000) direct owners, the department shall extend the time period one (1) time by sixty (60) days upon written request of the partnership or tiered partner, regardless of whether the department signs the extension; (2) in the case of an action required to be taken with regard to a partnership under this chapter, the department and the partnership agree to extend that period, the period may be extended according to the terms of a written agreement signed by both the department and the partnership; and (3) in the case of an action required to be taken with regard to a tiered partner, direct partner, or indirect partner under this chapter, the department and the tiered partner, direct partner, or indirect partner, as applicable, agree to extend that period, the period may be extended according to the terms of a written agreement signed by both the department and the tiered partner, direct partner, or indirect partner, as appropriate. (b) If an extension is entered into under subsection (a), the request for automatic extension or agreement must contain: (1) the date to which the extension is made; and (2) a statement that the person or entity agrees to preserve the person's or entity's records until the extension terminates. (c) If an extension is entered into under subsection (a), the applicable deadlines and statute of limitations for any actions arising from an action required by a partnership, tiered partner, direct partner, or indirect partner shall be extended in a manner consistent with the extension under subsection (a). (d) The department and a partnership, tiered partner, direct partner, or indirect partner may enter into more than one (1) extension agreement under this section. (e) The department may, by rules adopted under IC 4-22-2 or by guidelines published in the Indiana Register, provide for automatic extensions or relief from liability and reporting for certain situations. The following apply: (1) In the case of an automatic extension, the extension shall be considered signed by both the department and the partnership, tiered partner, direct partner, or indirect partner before the time the department may take an action under this section. In addition, the partnership, tiered partner, direct partner, or indirect partner shall preserve the person's or entity's records until the automatic extension terminates. (2) In the case of relief from liability, such relief shall be granted only under the situations specifically granted by the rules or guidelines. (3) The department may adopt rules or guidelines to establish a de minimis amount upon which a taxpayer shall not be required to comply with specified provisions of this chapter. As added by P.L.159-2021, SEC.18. Amended by P.L.137-2022, SEC.51.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://iga.in.gov/laws/2026/ic/titles/6Fetched: 10/17/2026