Note: This message is displayed if (1) your browser is not standards-compliant or (2) you have you disabled CSS. Read our Policies for more information.
The department is providing an option for nonresident shareholders and partners to opt out of the mandatory composite filing. To opt out, the non-Indiana resident individual must fill out form IN-COMPA and submit it to the S corporation or partnership.
The pass-through entity will still need to enter on the composite return the names of those members who are opting out. Now, though, the composite return will have a check box to indicate the individual has opted out of the composite filing. The partnership or S corporation must keep a copy of the IN-COMPA for its records and make it available to the department upon request.
Effective Jan. 1, 2013, partnerships and S corporations that are filing on a composite basis will remit the withholding on Indiana distributions directly into the corporate account by using form IT-6 WTH. Payment is due the 15th day of the 4th month following the close of the corporate account period. More than one composite withholding payment may be remitted. An additional line has been added to each corporate return to allow the total payment(s) to be claimed as a credit. If the withholding payment(s) is greater than the tax due, a refund will be issue to the partnership or S corporation. If the withholding payment(s) is less than the tax due, the difference is due when the partnership or S corporation return is filed. Payments made after the due date are subject to late penalty and interest.
For partners and shareholders who opt out of the composite filing, the partnership or S corporation must remit the withholding on Indiana distributions into a nonresident withholding account. S corporations and partnerships can complete the BT-1 application online (www.in.gov/dor/4337.htm) to create a nonresident withholding account if they do not currently have one.
The S corporation or partnership must file Form WH-1 electronically to remit the withholding due and to remit payment. The S corporation or partnership must provide Form WH-18 to each non-Indiana individual resident who opts out of the composite filing. The WH-18 will show the amount of tax the S corporation or partnership withheld on the individual’s behalf. In addition, the S corporation or partnership must file a copy of the WH-18 with its WH-3, which is used to recap the WH-1.
The procedure for filing and remitting withholding for shareholders and partners that are other entities (not individuals) is the same as the procedure for nonresident individuals: the S corporation or partnership must remit the withholding on the Indiana distribution into a nonresident withholding account, file Form WH-1 electronically, provide Form WH-18 to each entity, and file a copy of the WH-18 with the WH-3.
Form IT-41 is not included in the mandatory composite filing; however, the return may take advantage of remitting withholding payment(s) into the trust account when a composite return is filed. The trust will use Form IT-41ES to remit the withholding payment(s) that will be claimed on the return as fiduciary estimated tax paid. Trusts do not need to use Form IN-COMPA to opt out of the composite filing. However, the Indiana K-1 provided to each beneficiary must be enclosed with the IT-41 when filed. The composite worksheet must be completed to include the beneficiaries who qualify and request to be included in the composite filing.
For more information about composite filing, contact the department at (317) 232-0129.