Income/Franchise:
Indiana DOR Updates Guidance on Elective Entity-Level Tax for Pass-through Entities
Information Bulletin #72B, Ind. Dept. of Rev. (rev. 10/24). The Indiana Department of Revenue (Department) issued an updated bulletin addressing implementation of legislation enacted in 2023 that allows some pass-through entities to make an election to pay an entity-level state income tax (PTET) in Indiana based on each owner’s aggregate share of the electing entity’s adjusted gross income for taxable years beginning on or after January 1, 2022 [see S.B. 2 (2023), signed by gov. 2/22/23, and previously issued Multistate Tax Alert for more details on this PTET]. The guidance addresses topics such as eligibility to make the PTET election, how to make the election, applicable forms and/or schedules to file, how to calculate the PTET (including under tiered structures) and making estimated payments. According to the Department, the bulletin has been revised:
To reflect that the revised computation of income subject to withholding and PTET will be used for 2025 and later, rather than 2024 and later,
To reflect that grantor trusts should treat PTET as flowing through to the grantor,
To reflect that estimated tax penalties will not be imposed for 2023 and 2024, and
To clarify that a safe harbor for payments will be determined based on the combined PTET and composite withholding tax due, as opposed to just PTET.
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