Indiana’s Significant Tax Law Changes

Indiana recently enacted several pieces of legislation that will have major effects on the state’s tax laws. Signed by Governor Mike Pence in early May, these bills affect areas such as the tax amnesty program, income tax, sales tax, and property tax.

Tax Amnesty 2015
  • Eligible for taxpayers having an unpaid tax liability for a tax period ending before January 1, 2013.
  • Taxpayers will be granted a waiver of all penalties, interest, collection fees and other costs.
  • The DOR will be sending out letters to taxpayers that have unpaid liabilities.
  • The amnesty program will run from September 15, 2015 through November 16, 2015.
Income Tax
  • The throwback rule for income tax apportionment has been repealed. This change could significantly benefit those taxpayers shipping goods out of Indiana, although resident owners of passthrough entities will not be affected.
  • The definition of business income has been broadened to include all income apportionable to the state under the Constitution of the United States. In essence, this change makes it more difficult to treat gains from a sale of a business as non-business income and to allocate those gains to one state.
  • Sales of computer software by business taxpayers will now be treated as the sales of tangible personal property.
Sales and Use Tax
  • The current agricultural and manufacturing exemptions have been expanded to include certain material handling equipment used to transport materials directly used in the exempt processes of each activity.
  • The exemption for medical equipment, supplies, and devices has been expanded to include durable medical equipment, mobility enhancing equipment, and prosthetic devices, as well as any applicable repair and replacement parts.
  • The definitions of research and development activities that qualify for sales tax exemption has been expanded and clarified.
 Property Taxes
  • Taxpayers with less than $20,000 of total business property in a particular county are exempt from filing a personal property tax return. However, an annual certification exemption must be filed before May 15 of each year.
For more information contact Aaron Wilzbacher, CPA at 800.880.7800 ext. 1322 or awilzbacher@hsccpa.com.
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