Income withholding; wages; reports; earned income tax advance
payments; penalties
Sec. 8. (a) Except as provided in subsection (d) or (l), every
employer making payments of wages subject to tax under this article,
regardless of the place where such payment is made, who is required
under the provisions of the Internal Revenue Code to withhold,
collect, and pay over income tax on wages paid by such employer to
such employee, shall, at the time of payment of such wages, deduct
and retain therefrom the amount prescribed in withholding
instructions issued by the department. The department shall base its
withholding instructions on the adjusted gross income tax rate for
persons, on the total rates of any income taxes that the taxpayer is
subject to under IC 6-3.5, and on the total amount of exclusions the
taxpayer is entitled to under IC 6-3-1-3.5(a)(3) and
IC 6-3-1-3.5(a)(4). Such employer making payments of any wages:
(1) shall be liable to the state of Indiana for the payment of the
tax required to be deducted and withheld under this section and
shall not be liable to any individual for the amount deducted
from the individual's wages and paid over in compliance or
intended compliance with this section; and
(2) shall make return of and payment to the department monthly
of the amount of tax which under this article and IC 6-3.5 the
employer is required to withhold.
(b) An employer shall pay taxes withheld under subsection (a)
during a particular month to the department no later than thirty (30)
days after the end of that month. However, in place of monthly
reporting periods, the department may permit an employer to report
and pay the tax for:
(1) a calendar year reporting period, if the average monthly
amount of all tax required to be withheld by the employer in the
previous calendar year does not exceed ten dollars ($10);
(2) a six (6) month reporting period, if the average monthly
amount of all tax required to be withheld by the employer in the
previous calendar year does not exceed twenty-five dollars
($25); or
(3) a three (3) month reporting period, if the average monthly
amount of all tax required to be withheld by the employer in the
previous calendar year does not exceed seventy-five dollars
($75).
An employer using a reporting period (other than a monthly reporting
period) must file the employer's return and pay the tax for a reporting
period no later than the last day of the month immediately following
the close of the reporting period. If an employer files a combined
sales and withholding tax report, the reporting period for the
combined report is the shortest period required under this section,
section 8.1 of this chapter, or IC 6-2.5-6-1.
(c) For purposes of determining whether an employee is subject
to taxation under IC 6-3.5, an employer is entitled to rely on the
statement of an employee as to the employee's county of residence as
represented by the statement of address in forms claiming
exemptions for purposes of withholding, regardless of when the
employee supplied the forms. Every employee shall notify the
employee's employer within five (5) days after any change in the
employee's county of residence.
(d) A county that makes payments of wages subject to tax under
this article:
(1) to a precinct election officer (as defined in IC 3-5-2-40.1);
and
(2) for the performance of the duties of the precinct election
officer imposed by IC 3 that are performed on election day;
is not required, at the time of payment of the wages, to deduct and
retain from the wages the amount prescribed in withholding
instructions issued by the department.
(e) Every employer shall, at the time of each payment made by the
employer to the department, deliver to the department a return upon
the form prescribed by the department showing:
(1) the total amount of wages paid to the employer's employees;
(2) the amount deducted therefrom in accordance with the
provisions of the Internal Revenue Code;
(3) the amount of adjusted gross income tax deducted therefrom
in accordance with the provisions of this section;
(4) the amount of income tax, if any, imposed under IC 6-3.5
and deducted therefrom in accordance with this section; and
(5) any other information the department may require.
Every employer making a declaration of withholding as provided in
this section shall furnish the employer's employees annually, but not
later than thirty (30) days after the end of the calendar year, a record
of the total amount of adjusted gross income tax and the amount of
each income tax, if any, imposed under IC 6-3.5, withheld from the
employees, on the forms prescribed by the department.
(f) All money deducted and withheld by an employer shall
immediately upon such deduction be the money of the state, and
every employer who deducts and retains any amount of money under
the provisions of this article 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 this article. Any employer may be
required to post a surety bond in the sum the department determines
to be appropriate to protect the state with respect to money withheld
pursuant to this section.
(g) The provisions of IC 6-8.1 relating to additions to tax in case
of delinquency and penalties shall apply to employers subject to the
provisions of this section, and for these purposes any amount
deducted or required to be deducted and remitted to the department
under this section shall be considered to be the tax of the employer,
and with respect to such amount the employer shall be considered the
taxpayer. In the case of a corporate or partnership employer, every
officer, employee, or member of such employer, who, as such officer,
employee, or member is under a duty to deduct and remit such taxes
shall be personally liable for such taxes, penalties, and interest.
(h) Amounts deducted from wages of an employee during any
calendar year in accordance with the provisions of this section shall
be considered to be in part payment of the tax imposed on such
employee for the employee's taxable year which begins in such
calendar year, and a return made by the employer under subsection
(b) shall be accepted by the department as evidence in favor of the
employee of the amount so deducted from the employee's wages.
Where the total amount so deducted exceeds the amount of tax on the
employee as computed under this article and IC 6-3.5, the department
shall, after examining the return or returns filed by the employee in
accordance with this article and IC 6-3.5, refund the amount of the
excess deduction. However, under rules promulgated by the
department, the excess or any part thereof may be applied to any
taxes or other claim due from the taxpayer to the state of Indiana or
any subdivision thereof. No refund shall be made to an employee
who fails to file the employee's return or returns as required under
this article and IC 6-3.5 within two (2) years from the due date of the
return or returns. In the event that the excess tax deducted is less than
one dollar ($1), no refund shall be made.
(i) This section shall in no way relieve any taxpayer from the
taxpayer's obligation of filing a return or returns at the time required
under this article and IC 6-3.5, and, should the amount withheld
under the provisions of this section be insufficient to pay the total tax
of such taxpayer, such unpaid tax shall be paid at the time prescribed
by section 5 of this chapter.
(j) Notwithstanding subsection (b), an employer of a domestic
service employee that enters into an agreement with the domestic
service employee to withhold federal income tax under Section 3402
of the Internal Revenue Code may withhold Indiana income tax on
the domestic service employee's wages on the employer's Indiana
individual income tax return in the same manner as allowed by
Section 3510 of the Internal Revenue Code.
(k) To the extent allowed by Section 1137 of the Social Security
Act, an employer of a domestic service employee may report and
remit state unemployment insurance contributions on the employee's
wages on the employer's Indiana individual income tax return in the
same manner as allowed by Section 3510 of the Internal Revenue
Code.
(l) The department shall adopt rules under IC 4-22-2 to exempt an
employer from the duty to deduct and remit from the wages of an
employee adjusted gross income tax withholding that would
otherwise be required under this section whenever:
(1) an employee has at least one (1) qualifying child, as
determined under Section 32 of the Internal Revenue Code;
(2) the employee is eligible for an earned income tax credit
under IC 6-3.1-21;
(3) the employee elects to receive advance payments of the
earned income tax credit under IC 6-3.1-21 from money that
would otherwise be withheld from the employee's wages for
adjusted gross income taxes; and
(4) the amount that is not deducted and remitted is distributed
to the employee, in accordance with the procedures prescribed
by the department, as an advance payment of the earned income
tax credit for which the employee is eligible under IC 6-3.1-21.
The rules must establish the procedures and reports required to carry
out this subsection.
(m) A person who knowingly fails to remit trust fund money as set
forth in this section commits a Class D felony.
(Formerly: Acts 1963(ss), c.32, s.408; Acts 1965, c.233, s.20; Acts
1969, c.326, s.6; Acts 1971, P.L.65, SEC.1; Acts 1973, P.L.50,
SEC.3.) As amended by Acts 1979, P.L.68, SEC.3; Acts 1980, P.L.61,
SEC.6; Acts 1982, P.L.49, SEC.2; P.L.2-1982(ss), SEC.9;
P.L.26-1985, SEC.10; P.L.70-1986, SEC.2; P.L.94-1995, SEC.1;
P.L.8-1996, SEC.6; P.L.192-2002(ss), SEC.81.
Last modified: May 28, 2006