Form Fit-20 - Financial Institution Tax Booklet - 2012 Page 4
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28A taxpayer is transacting business in Indiana for purposes of the
(b) An interest in a loan-backed security representing
franchise tax when it satisfies any of the following eight tests:
ownership or participation in a pool of promissory
(1) Maintains an office in Indiana;
notes or certificates of interest providing for payments
(2) Has an employee, a representative, or an independent
in relation to payments or reasonable projections of
contractor conducting business in Indiana;
payments on the notes or certificates.
(3) Regularly sells products or services of any kind or nature to
(c) An interest in a loan or other asset where the interest
customers in Indiana who receive the product or service
is attributed to a consumer loan, commercial loan,
in Indiana;
or secured commercial loan and where the payment
(4) Regularly solicits business from potential customers in
obligations were solicited and entered into by a person
Indiana;
who is independent and not acting on behalf of the
(5) Regularly performs services outside Indiana that are
owner.
consumed within Indiana;
(d) An interest in the right to service or collect income
(6) Regularly engages in transactions with customers in
from a loan or other asset where interest on the loan is
Indiana involving intangible property, including loans, but
attributed as a loan described above and the payment
not property described in IC 6-5.5-3-8(5), and resulting in
obligations were solicited and entered into by a person
receipts flowing to the taxpayer from within Indiana;
who is independent and not acting on behalf of the
(7) Owns or leases tangible personal or real property located
owner.
in Indiana; or
(e) An amount held in an escrow or trust account with
(8) Regularly solicits and receives deposits from customers in
respect to the property described previously.
Indiana.
(6) Acting
(a) As an executor of an estate;
“Regularly, ” for purposes of the previously listed tests, is defined as
(b) As a trustee of a benefit plan;
assets attributable in Indiana equal to at least $5 million or 20 or
(c) As a trustee of an employee’s pension, profit sharing, or
more Indiana customers.
other retirement plan;
(d) As a trustee of a testamentary or inter vivos trust or
corporate indenture; or
Exempt Entities
(e) In any other fiduciary capacity, including holding title
Four specific types of organizations are exempted from the
to real property in Indiana.
franchise tax: insurance companies, international banking
facilities, S corporations exempt from income tax under IRC
Method of Reporting
Section 1363, and nonprofit corporations (with the exception of
state chartered credit unions). Federal law prohibits state taxation
A taxpayer is allowed to file a separate return only in those
of federally chartered credit unions.
instances where the taxpayer is not a member of a unitary group.
Members of a unitary group must file collectively on one combined
return. No provision is made for filing consolidated returns.
Exempt Transactions
A taxpayer is not considered to be transacting business in Indiana
If the taxpayer is a member of a group, combined reporting is
if the ONLY activities of the taxpayer in Indiana are in connection
mandatory. However, if the taxpayer determines that its Indiana
with any of the following:
income is not accurately reflected by the filing of a combined
(1) Maintaining or defending an action or a suit;
return, the taxpayer can petition the Department by indicating
(2) Filing, modifying, renewing, extending, or transferring a
on its annual return that the return is a separate return made by a
mortgage, deed of trust, or security interest;
member of a unitary group. Such petition is subject to approval by
(3) Acquiring, foreclosing, or otherwise conveying property
the Department. The petition must include the name and federal
in Indiana as a result of a default under the terms of a
identification number of each member of the group petitioning for
mortgage, deed of trust, or security interest relating to the
an alternative method. Each member must include its justification
property;
for the alternative method.
(4) Selling tangible personal property, if taxation under this
law is precluded because of federal law relating to interstate
Petitions can also be sent to:
commerce;
Indiana Department of Revenue
(5) Owning an interest in the following types of property
Tax Policy Division
even though activities are conducted in Indiana that
100 N. Senate Ave.
are reasonably required to evaluate and complete the
Room N248
acquisition or disposition of the property, the servicing
Indianapolis, IN 46204
of the property, or the income from the property, or the
acquisition or liquidation of collateral relating to the
property:
(a) An interest in a real estate mortgage investment
conduit, a real estate investment trust, or a regulated
investment company.
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