Corporations; withholding from dividends to nonresident
shareholders
Sec. 13. (a) Every corporation which is exempt from tax under
IC 6-3 pursuant to IC 6-3-2-2.8(2) shall, at the time that it pays or
credits amounts to any of its nonresident shareholders as dividends
or as their share of the corporation's undistributed taxable income,
withhold the amount prescribed by the department. Such corporation
so paying or crediting any nonresident shareholder:
(1) shall be liable to the state of Indiana for the payment of the
tax required to be withheld under this section and shall not be
liable to such shareholder for the amount withheld and paid
over in compliance or intended compliance with this section;
and
(2) when the aggregate amount due under IC 6-3 and IC 6-3.5
exceeds one hundred fifty dollars ($150) per quarter, then such
corporation shall make return and payment to the department
quarterly, on such dates and in such manner as the department
shall prescribe, of the amount of tax which, under IC 6-3 and
IC 6-3.5, it is required to withhold.
(b) Every corporation shall, at the time of each payment made by
it to the department pursuant to this section, deliver to the department
a return upon such form as shall be prescribed by the department
showing the total amounts paid or credited to its nonresident
shareholders, the amount withheld in accordance with the provisions
of this section, and such other information as the department may
require. Every corporation withholding as provided in this section
shall furnish to its nonresident shareholders annually, but not later
than the fifteenth day of the third month after the end of its taxable
year, a record of the amount of tax withheld on behalf of such
shareholders on forms to be prescribed by the department.
(c) All money withheld by a corporation, pursuant to this section,
shall immediately upon being withheld be the money of the state of
Indiana and every corporation which withholds any amount of money
under the provisions of this section shall hold the same in trust for
the state of Indiana and for payment thereof to the department in the
manner and at the times provided in IC 6-3. Any corporation may be
required to post a surety bond in such sum as the department shall
determine to be appropriate to protect the state of Indiana with
respect to money withheld pursuant to this section.
(d) The provisions of IC 6-8.1 relating to additions to tax in case
of delinquency and penalties shall apply to corporations subject to
the provisions of this section, and for these purposes any amount
withheld, or required to be withheld and remitted to the department
under this section, shall be considered to be the tax of the
corporation, and with respect to such amount it shall be considered
the taxpayer.
(e) Amounts withheld from payments or credits to a nonresident
shareholder during any taxable year of the corporation in accordance
with the provisions of this section shall be considered to be a part
payment of the tax imposed on such nonresident shareholder for his
taxable year within or with which the corporation's taxable year ends.
A return made by the corporation under subsection (b) shall be
accepted by the department as evidence in favor of the nonresident
shareholder of the amount so withheld from the shareholder's
distributive share.
(f) This section shall in no way relieve any nonresident
shareholder from the shareholder's obligation of filing a return or
returns at the time required under IC 6-3 or IC 6-3.5, and any unpaid
tax shall be paid at the time prescribed by section 5 of this chapter.
(g) Instead of the reporting periods required under subsection (a),
the department may permit a corporation to file one (1) return and
payment each year if the corporation pays or credits amounts to its
nonresident shareholders only one (1) time each year. The
withholding return and payment are due on or before the fifteenth
day of the third month after the end of the taxable year of the
corporation.
(h) If a distribution will be made with property other than money
or a gain is realized without the payment of money, the corporation
shall not release the property or credit the gain until it has funds
sufficient to enable it to pay the tax required to be withheld under
this section. If necessary, the corporation shall obtain such funds
from the shareholders.
(i) If a corporation fails to withhold and pay any amount of tax
required to be withheld under this section and thereafter the tax is
paid by the shareholders, such amount of tax as paid by the
shareholders shall not be collected from the corporation but it shall
not be relieved from liability for interest or penalty otherwise due in
respect to such failure to withhold under IC 6-8.1-10.
(j) A corporation described in subsection (a) may file a composite
adjusted gross income tax return on behalf of some or all nonresident
shareholders if it complies with the requirements prescribed by the
department for filing a composite return.
(Formerly: Acts 1963(ss), c.32, s.413; Acts 1965, c.233, s.23; Acts
1969, c.326, s.8; Acts 1971, P.L.65, SEC.3; Acts 1973, P.L.50,
SEC.5.) As amended by Acts 1979, P.L.68, SEC.5; Acts 1982, P.L.49,
SEC.5; P.L.2-1982(ss), SEC.11; P.L.23-1986, SEC.4; P.L.18-1994,
SEC.11; P.L.2-1995, SEC.32.
Last modified: May 28, 2006