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Volume 13 No. 2 (2010)

Tax Booklet and Forms Mailing Program Cancelled

Following the example of the Internal Revenue Service, and several other states where electronic filing has become the mainstay of income-tax filing, Indiana is cancelling its annual program of mailing tax booklets and forms directly to taxpayers’ homes this year.

“There are so many options now for taxpayers to access forms and instructions that it just isn’t cost effective to print and mail tax booklets anymore,” said Revenue Commissioner John Eckart.

Those options include the state’s I-File program, which is completely free for all Hoosier taxpayers, regardless of income level. Additionally, taxpayers also can use the federal government’s e-File program, which is free for taxpayers with an income of $58,000 annually or less.

“Taxpayers can also download forms and instructions directly from our website,” said Eckart. “That option has been available for several years now.”

The Department of Revenue said it will slightly increase the number of tax booklets and forms provided to its 12 district offices throughout the state, as well as libraries in each county.

It cost the state upwards of $300,000 to mail tax booklets and forms directly to taxpayers’ homes in 2010. This year the state will mail a postcard about the change to those taxpayers who were scheduled to receive a tax booklet and forms. Those postcards are scheduled to be mailed the week of Dec. 20, 2010.

In the fall, the IRS announced it would no longer mail booklets and forms to taxpayers either.

Energy Star Heating and Cooling Equipment Tax Credit

Claims for the Energy Star Heating and Cooling Equipment Tax Credit have reached the legislature’s designated $1 million cap for the year. Some taxpayers have received notification indicating that their credit claims have been denied because the cap was reached before their returns were processed.

Claimed credits are processed and granted on a first-come-first-served basis as the Department receives and processes the returns.

Tax professionals may wish to encourage any clients who plan to claim specific credits in the future to file their returns earlier in the year. Electronically filed returns are processed instantaneously, whereas paper returns can take several weeks to process.

Below is a listing of tax credits that have cap limits mandated by the state legislature:

Energy Star Credit $1,000,000
School Scholarship Tax Credit $2,500,000
Maternity Home Tax Credit $500,000
Indiana Riverboat Building Credit $1,000,000
Teacher Summer Employment Creidt $500,000
Neighborhood Assistance Credit $2,500,000

New Electronic Filing Mandate for W-2s and WH-3s

Effective July 1, 2010, Indiana law (IC 6-3-4-16.5) will now require all businesses that file more than 25 W-2 statements per calendar year to file their WH-3 returns and
W-2s electronically. To comply with this new law, your business will need to be registered to file electronically. Also, if your business files more than 2,000 W-2 statements per calendar year, it must be certified to bulk upload those statements.

To better assist your business in completing this process, the Indiana Department of Revenue has established a website to help you quickly and easily register and certify to file your WH-3s and W-2s in 2011. You can find the website at www.in.gov/dor/4455.htm The site contains easy-to-follow, step-by-step instructions, FAQs and all the information you will need to comply with this new law.

The deadline for your business to register to file electronically and to be certified for bulk upload of your WH-3s and W-2 statements (if applicable) is Dec. 31, 2010. WH-3s are due the end of February 2011.

If you have any questions about this new law, or the process you need to complete to comply with it, please call (317) 233-4016.

Corporate Tax Forms Changes

This year, the corporate tax forms have seen only a few changes. When you look at this year’s forms, you’ll notice that they look very much like last year’s, with no line changes occurring. The main changes this year have centered on two new credits and a handful of “cosmetic” changes.

New Credits
This year, two new credits are available. They both have a 3-digit code and are entered on the lines for the nonrefundable credits.

Effective for tax years beginning after Dec. 31, 2009, a credit is available for contributions to school scholarship programs. A taxpayer that makes a qualifying contribution to a scholarship granting organization (SGO) is entitled to a credit against their state tax liability in the taxable year in which the contribution is made. The amount of a taxpayer's credit is equal to 50 percent of the amount of the contribution made to the SGO for a school scholarship program.

Although there are no limits on the size of a qualifying contribution to an SGO, the entire tax credit program has a limit of $2.5 million in credits per state fiscal year
(July 1 – June 30).

The other credit is one that is allowed for a corporation or pass-through entity if the business employs at least 10 new qualified employees and, after Dec. 31, 2009, the business:

  • Relocates or locates its operations in Indiana;
  • Incorporates in Indiana; or
  • Expands it operations in Indiana.

This credit is equal to 10 percent of the wages paid to qualified employees. To qualify for the credit, the taxpayer must submit an application to the IEDC.

Cosmetic Changes
On this year’s forms, you’ll also notice a few changes that affect that way the forms look and the way in which taxpayers should enter information on them. Last year some of the main corporate forms had zeroes filled in in the cents boxes and taxpayers were told to round all their dollar amounts when entering them on the forms. This change has now been made on all the corporate forms.

In addition, taxpayers should no longer place a negative amount in brackets: < >. Instead, on all forms, taxpayers should use a minus sign to denote a negative amount. They also should no longer use a comma in dollar amounts of four or more digits. For example, taxpayers should enter “1456” instead of “1,456”.

The 2010 corporate tax forms and instructions went live on the Department’s Web site Dec.1. To view the corporate forms and instructions, visit www.in.gov/dor/3914.htm

Individual Income Tax Form Changes

There are two new add-backs affecting individuals for 2010:

  • Line 1 of Form IT-40/IT-40EZ/IT-40PNR assumes conformity with the Internal Revenue Code for federal changes adopted after Jan. 1, 2010. If the 2011 Indiana state legislature does not conform to some or all of these federal code changes, you may have to modify the returns you prepare accordingly. The other (current year conformity) add-back is intended for those who do not wish to incorporate some or all of the 2010 changes to federal AGI on the Indiana returns they prepare. Note – In the event you use this add-back and the item(s) listed as an add-back is later adopted, you will need to file an amended return.
  • Discharge of debt of a principal residence add-back – The amount of discharge of indebtedness of a principal residence (not included in a bankruptcy) must be added back.

Unemployment compensation. At the time our publications were finalized, it was not known whether the unemployment compensation exemption was to be extended to tax year 2010. The unemployment compensation add-back area on the add-back Schedule 1/or Schedule B needs to be completed even if the exemption is not continued for federal tax purposes (the add-back may be $0). This is important because the unemployment compensation deduction worksheet references entries on the corresponding add-back schedule.

Offset credit order of application. Details have been included in the IT-40 and IT-40PNR instruction booklets detailing how to claim and limit offset credits when multiple credits are available.

Foreign country designation. A two-character code must be used when listing a foreign country as part of an address. A listing of these codes (Foreign Country Code Listing) can be found at www.in.gov/dor/4432.htm

Cosmetic changes.

  • A specific location (to the right of the last name(s)) has been designated for the inclusion of a suffix (e.g. JR, SR).
  • The cosmetic changes listed above for corporate tax filers also apply to individual income tax returns.

The new employer credit and the school scholarship credit listed in the Corporate Tax Form Changes area are also available to individual income tax filers.

Direct deposit. A box on the tax return must be checked if any of the requested refund will go to an overseas account. The Department will mail a paper check if the box is checked.

2010 Forms Available Now!

The Department knows that at this time of year tax practitioners are eager to see the forms and instructions. The 2010 Indiana individual and corporate tax forms became available online on Dec. 1.

To view the new forms and instructions, visit www.in.gov/dor/3489.htm

Important Update – Permanent Change for Counties to Adopt/Change Tax Rates

The 2010 Indiana General Assembly instituted a permanent change this year regarding the timing for counties to adopt/change county income tax types and rates. Changes made each year before Oct. 1 are effective Nov. 1; changes made after Sept. 30 but before Oct. 16 are effective Nov. 1; and changes made after Oct. 15 but before Nov. 1 are effective Dec. 1.

County withholding rates. Departmental Notice #1 will be updated each Oct. 1. In the event county tax rates change during Oct. 1 – Oct. 31, updated DN(s) #1 will be issued (effective Nov. 1 and/or Dec. 1). Withholding agents should check the Department’s website during this time period for any updates to DN #1.

County tax rates for income tax filing purposes. Regardless of when or the frequency of county tax rate changes, the combined effective rates will be published on the back of the county tax schedules (CT-40, CT-40EZ, CT-40PNR). Software developers will also use the updated information. Note – It is possible for county tax rates to change after the tax instruction booklets are finalized. If you are not using software to prepare 2010 Indiana income tax returns, you are encouraged to log on to the Department’s website at www.in.gov/dor/4388.htm to check for the most current information about rate changes.

New Tax Bulletins, Directives and Notices Available Online

New Commissioner’s Directives:

Income and Sales Tax Information Bulletins:

Departmental Notices:

Tax Policy Directive:

Be sure to check the Department’s Web site regularly for additional updates to tax bulletins, directives, and notices at http://www.in.gov/dor/3330.htm

Departmental Outreach Continues

Each year the Department reaches out to inform the public and professional communities as much as possible. This year is no different. Just fewer than 20 employees volunteer their knowledge, time and resources to educate the tax-paying community at large by going out among the public. Most of the time, they present the "General Update." This update is a 50-minute presentation given during Tax Schools and other events. It details and explains all of the recent legislative and procedural changes that will occur over the next year. Other times, they present on specific topics such as sales tax, military issues, NOLs or new and small business issues.

A number of organizations, including chambers of commerce, volunteer organizations and other associations, request that the Department come and speak to them at their luncheons, get-togethers and conventions. Audience size can range from 10 to 110 attendees per session. These sessions also allow attendees to query the Department on any number of topics that range from the general to the arcane.

The Department charges Debbie Grammer, Mindy Bates, Meme Anderson, Darlene Bowen, Jim Evans, Nick Fetchina, Lisa Wilson, Cathy McGuckin, Tamera Osborn, Michael Pang, Bob Muller and Diane Blankenship with being our public face during these events. Throughout the year, nearly 55 presentations will be given across the entire state.

The Tax Schools are a popular venue for the tax professional community to learn about what's new at the Department. These are joint collaborations among the Indiana Department of Revenue, Indiana University, the Internal Revenue Service and Purdue University. They are designed to educate and meet continuing education requirements for attorneys, certified public accountants, certified financial planners and enrolled agents. Topics include the Department's "General Update," small business issues, net operating losses, entity issues and ethics, among many others.

With only a few sessions remaining, the feedback we have received from these sessions has been very positive. Many of the changes that you will see in the coming year are designed to improve the efficiency and effectiveness of the Department and to mitigate any challenges we foresee. Hundreds of people who have attended these sessions seem to agree.

For further information, visit http://scs.indiana.edu/nc/taxpracinst.html and https://www.cec.purdue.edu/eC2K/Heading.asp?heading_id=91

FY2010 Annual Report Now Available

If you love numbers, then you will love this report!

The annual report for the Indiana Department of Revenue is now available. With an interactive online version for a quick look at some of the key points from the year and a full PDF version, the annual report touches on accomplishments as well as areas of improvement. It is a great resource for not just practitioners, but taxpayers as well.

To view the interactive version today, visit www.in.gov/dor/4454.htm

Get Connected and Get Critical Updates from the Department

With tax season just around the corner, it is important for tax practitioners to know the various ways in which they can contact the Department if they are in need of help or want to receive critical updates from the Department.

When you have a specific question that the website does not answer, you are encouraged to use the online inquiry center to send your questions and concerns directly to our tax professional area. If you have an immediate concern, however, you can contact the Department at (800) 462-6320 (enter 4367) to connect. This number is for the use of tax practitioners only. If a taxpayer would like to contact the Department, he or she can contact the Department at (317) 232-2240.

In addition, the Department now offers several ways for you to learn about important tax updates at your convenience:

For previous editions of the Tax Dispatch, click here.


To better serve Indiana taxpayers, the Indiana Department of Revenue may occasionally inform taxpayers of new services and results of a survey or invite a randomly selected group of taxpayers to participate in a short electronic survey or focus group. Electronic communication and surveys enable the Department to inform you about our services and helps the Department learn how to better serve Hoosier taxpayers.

Electronic surveys and e-mail messages from the Indiana Department of Revenue will never ask for any financial or personal information, and survey responses are always confidential.

If you are asked for personal or financial information (Social Security number, bank account information, etc.), do not reply or click on any links in the e-mail message. Legitimate organizations should never ask for personal information by e-mail.

If you would like to further verify an e-mail you have received by the Indiana Department of Revenue, please call (317) 232-2379.

Remember, the Indiana Department of Revenue will never request personal information by e-mail.

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