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depreciation property, until the property is sold. See

corporation quarterly income tax return, preprinted Form IT-

6, or by electronic funds transfer if the average quarterly

line 2(c) on Form IT-20S.

liability exceeds $10,000.

•

Deduction for Domestic Production Activities (new

If an estimated account needs to be established to pay

Schedule B corporate income tax liabilities, contact the

modification disallows IRC Section 199) - Add back an

Department to request preprinted quarterly estimated IT-6

amount equal to the deduction for qualified domestic

production activities for the taxable year if claimed for

returns.

federal income tax purposes under IRC Section 199. (See

The due dates for estimated tax payments for calendar

year corporate taxpayers are April 20, June 20, September

line 2(d) on Form IT-20S.) Citations affected: IC 6-3-1-

3.5(b)(8). Effective January 1, 2005 (HEA 1001-2005

20 and December 20 of the tax year. Fiscal year and short

SECTION 69).

tax year corporate filers must remit by the twentieth (20) day

of the fourth (4), sixth (6), ninth (9) and twelfth (12) month of

Also see revised instructions beginning on page 7.

their tax period. For further instructions, refer to Income Tax

Information Bulletin #11.

Utility Receipts Tax

To avoid costly penalty and interest charges for delinquent

Effective January 1, 2003, a Utility Receipts Tax (Form

filing of returns, an S Corporation should verify its tax status

URT) is imposed at the rate of one and four-tenths (1.4) percent

and withholding responsibilities before commencing business

of the taxable receipts from the retail sale of utility services.

in Indiana.

The utility services subject to tax include: electric energy,

natural gas, water, steam, sewage, and telecommunications.

Withholding Tax Liabilities of S Corporations

If you have more than $1,000 in gross receipts from the

The following instances obligate the S corporation to

sale of utility services, you might be required to file Form URT-

1 (Utility Receipts Tax Return), in addition to Form IT-20S.

withholding agent on behalf of each of the following:

See Commissioner's Directive #18.

Withholding on Residents

General Filing Instructions

S corporations making payments of salaries, wages,

tips, fees, bonuses, and commissions subject to Indiana

Liability of the S Corporation

state and/or county income taxes and required by the Internal

S corporations as entities generally are not subject to

Revenue Code to withhold federal taxes on those types of

income or financial institution tax.

payments are also required to withhold for Indiana tax

•

S corporations are considered to be the taxpayer with

purposes. Payment of amounts withheld must be remitted

respect to the payment of amounts withheld at source.

to the Department on the proper WH-1 withholding return by

See Withholding Tax Liabilities of S Corporations.

its due date. If a return and/or payment of the proper amount

•

S corporations are subject to the use tax. Use tax is

of tax withheld is not paid by the due date, penalty and

due on the storage, use or consumption of tangible

interest will be added. A shareholder may be personally

personal property purchased in a transaction in Indiana or

subject to criminal prosecution if the failure to pay and/or file

elsewhere, unless such transaction is exempted from the

a withholding return is due to fraud or tax evasion.

sales and use tax by law or the sales tax due and paid on

the transaction equals the use tax due. See instructions

Withholding on Nonresidents

for the Sales/Use Tax Worksheet on page 9.

Employees - An S corporation must withhold Indiana

•

An apportionment schedule must be included with the

state and/or county income taxes from employees who work

return if the S corporation is doing business both within

in Indiana but are not residents of Indiana. However,

and outside Indiana and has any shareholders not domiciled

withholding on compensation of nonresident team members

in Indiana. See Instructions for IT-20S Schedule E

of certain professional sports organizations is based on duty

Apportionment of Income on page 17 and 18.

days performed in Indiana. Refer to Income Tax Information

•

An S corporation may file a composite adjusted gross

Bulletin #88. There is an exception from withholding if an

income tax return on behalf of non-Indiana resident

employee resides in one of the states that has entered into

individual shareholders electing to participate in the

a reciprocal agreement with Indiana, but this does not affect

composite return. See Filing Procedures for IT-20COMP

county taxation. For purposes of withholding county income

Composite Return on page 14.

taxes, the term “nonresident” refers to a nonresident of the

•

Any passive income and built-in gains of an S corporation

county where the S corporation is located.

that is subject to tax under provisions of the Internal

Individual Shareholders - An S corporation must

Revenue Code will be subject to Indiana adjusted gross

withhold state income tax at the rate of three and four-tenths

income tax. See instructions for Schedule B beginning

(3.4) percent on the amount it pays or credits any of its

on page 8.

nonresident and part-year nonresident individual shareholders

as dividends or as their share of the corporation’s

S Corporations whose estimated adjusted gross income

undistributed taxable income (on current-year earnings)

tax liability from Schedule B is more than $1,000 for the tax

derived from Indiana sources. This does not apply to residents

year are required to file quarterly estimated tax payments.

of reverse credit states (Arizona, California - see note, Oregon,

Estimated tax payments are submitted with the Indiana

District of Columbia) who are subject to and pay income

Form It-20s - S Corporation Income Tax Booklet - Indiana Department Of Revenue - 2005 Page 3

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