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DOR's Back on Track Plan
As a result of the COVID-19 pandemic, DOR suspended and altered several programs and procedures to provide relief for Hoosiers.
Impact of Rescinding Executive Orders 20-03 through 21-13
The Executive Orders issued by Governor Holcomb after Executive Order 20-02 and prior to the issuance of Executive Order 21-15 directed the Department to take certain actions and also gave the Department the authority and discretion to take other actions to help Hoosiers during the public health emergency. The directives contained in these Executive Orders will be rescinded and cease on June 30, 2021. Many of the actions contained within those Executive Orders have expired by their own terms. However, certain of these actions are still in effect.
Income Tax
The Department announced that it would not use an employee’s relocation to working from home in Indiana as a basis for establishing Indiana nexus or for exceeding the protections provided by P.L. 86-272 when the relocation was the result of a federal, state or local governmental work from home declaration or pursuant to the order of a physician. This accommodation will end upon the end of the applicable work from home declaration. If the person remains in Indiana after that date, such presence can be used in determining whether the employer has Indiana nexus. The accommodation for workers subject to a physician’s order will expire the later of June 30, 2021 or the expiration of an existing physician’s order in place prior to June 30, 2021.
Use Tax
Executive Order 20-05 allowed the Department to waive use tax obligations on groups or organizations, including manufacturers, making donations of medicine, medical supplies or other eligible items to fight the COVID-19 pandemic in Indiana. The Department will not accept requests for use tax waiver for donations made after June 30, 2021.
Motor Carriers
Executive Order 20-03 temporarily lifted restrictions on the hours of service for motor carriers/drivers who deliver food, goods and items to Indiana businesses and entities for purchase or use by Hoosiers, as well as delivery of items for emergency preparedness and relief/supplies. Executive Order 20-03 was continued in subsequent Executive Orders. However, this accommodation will be rescinded and expire on June 30, 2021 pursuant to Executive Order 21-15.
Power of Attorney
A federal power of attorney form will no longer be accepted after June 30, 2021. If you do not have a federal power of attorney on file with the state of Indiana as of June 30, 2021, you must provide or have provided a state of Indiana power of attorney form (POA-1).
See an outline of changes that were made for the 2020 tax season.
DOR's Offices Are Open; Appointments Required for Some Services, Times
DOR is now accepting walk-in customers at all locations. Due to staffing constraints, appointments may be required on certain days. Check for information on your local district office before you visit.
Appointments are required to open new IRP or IFTA accounts through Motor Carrier Services (MCS). Walk-in service for other motor carrier transactions is available during normal business hours at MCS. Appointments are highly recommended for reduced wait times at DOR district offices.
Frequently Asked Questions
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed on March 27, 2020 and was one of the largest economic bills in history. It authorized more than $2 trillion to battle COVID-19 and its economic effects, including providing corporation relief, loan programs for small businesses, individual relief, support for medical providers, and various types of economic relief across businesses and industries.
In December 2020, Congress passed a federal budget, which included significant second stimulus package provisions. The second stimulus package authorized $900 billion for the same purposes as the CARES Act. This package is tied to a $1.4 trillion resolution to fund the federal government through September 2021.
In March 2021, Congress enacted the “American Rescue Plan Act of 2021” that became P.L. 117-2, which provided a third round of stimulus authorizing expenditures of $1.9 trillion.
Income Tax Information Bulletin #119 contains detailed information regarding Internal Revenue Code provisions not followed by Indiana and clarifies of related issues. Specific information regarding Indiana’s tax treatment of federal COVID-19 provisions is available through DOR’s Tax Library. Customers with questions regarding unemployment income, should refer to DOR’s “Unemployment Benefits and Taxes” page.
- Who is eligible for the deferral and waiver of penalty and interest?
Individuals and corporations were both eligible for the deferral of penalty and interest from March to July. That deferral and waiver period expired on July 15, 2020. Individual estimated payments originally due on June 15, 2020 are now due on or before July 15, 2020.
All other tax return filings and payment due dates remain unchanged.
- What taxes are included in the deferral and waiver of penalty and interest?
The deferral and waiver of penalty and interest extended to only certain individual and corporate filing and payments. Unpaid income and franchise taxes due on or after April 1, 2020, and before July 15, 2020, did not accrue interest or penalties until July 16, 2020 and unpaid passthrough withholding taxes due on or after April 1, 2020, and before July 15, 2020, did not accrue interest or penalties until August 18, 2020. This applies to all persons whose original or extended federal income tax return filing deadline is extended as a result of the IRS notices.
- Does this apply to returns or just payments due?
Yes, this applies to returns and payments due.
- I opted out of paying the withholding tax on my employees' salaries. Do I still have an obligation to pay Indiana withholding taxes?
The presidential memorandum regarding employers’ withholding obligation does not apply to any taxes due to Indiana. Employers and other withholding agents should continue withholding and remitting for all taxes required under Indiana law such as wages, gambling winnings, and non-resident shareholders/partners. Employees should contact their individual employer or the IRS regarding these federal-only withholding payroll tax changes.
- What do I do if I don't have power of attorney (POA) on file with my client in the state of Indiana, but do have a Federal power of attorney?
Due to the COVID-19 outbreak, DOR will accept a Federal power of attorney (POA) to serve temporarily as the Indiana POA until further notice in certain circumstances:
- The tax/form type on the Federal POA matches or is similar to the Indiana tax/form for which the person seeks to represent the client;
- The requested representation is only for non-legal matters. (Any temporary acceptance of the Federal POA would not extend to protests of assessments or refund denial matters.); and
- The Federal POA was executed on or before March 6, 2020 (when Governor Holcomb issued Executive Order 20-02, decreeing a public health emergency).
A federal power of attorney form will no longer be accepted after June 30, 2021. If you do not have a federal power of attorney on file with the state of Indiana as of June 30, 2021, you must provide or have provided a state of Indiana power of attorney form (POA-1).
Property Taxes
- Are property tax payment deadlines extended?
Property taxes are not usually handled by DOR. Taxpayers are encouraged to reach out to their county, city, or the Indiana Department of Local Government Finance on the status of their property taxes.
Income Tax
- Does the filing and payment extension affect the deadline for filing amended returns and requesting refunds for previous income tax years?
The deadline for filing a claim for refund of income tax that was set to expire between April 1, 2020 and July 14, 2020 was extended to July 15, 2020, including refunds of withholding or estimated tax paid in 2016. All other refund deadlines before April 1, 2020 and after July 14, 2020, remain unchanged.
As of December 2020, all tax types are back to their normally scheduled due dates. The dates that had been extended are now due as normal.
- Does the due date extension apply to previously extended returns?
Yes, the due date extension applied to previously extended returns.
- If my business receives a federal Paycheck Protection Program (PPP) loan that is later forgiven and excluded from gross income for federal income tax purposes under section 1106 of the federal CARES Act, will that income tax exclusion also apply for Indiana income tax purposes?
As a result of the 2021 legislative session, Indiana conforms to the Internal Revenue Code as of March 31, 2021 and therefore conforms to the federal exclusion of forgiven PPP loan amounts from gross income and the allowance of deductions for expenses paid with forgiven loan amounts.
The second stimulus package also made several non-code changes with regards to loans given to partnerships and S-corporations for COVID-19 reasons. The loan amount shall be treated as tax exempt income and any expenses paid for by the loan will be fully-deductible. This treatment will change the adjusted basis of partners. Any increase to the adjusted basis of a partner’s interest in a partnership due to the excluded loan will equal the partner’s distributive share of deductions for the expenses paid for with the loan. Similar rules apply to S corporations and their shareholders.
- How will Indiana treat COVID-19 Economic Injury Disaster Loans (EIDL)?
EIDL will be treated in a manner similar to PPP loan forgiveness and PPP associated expenses.
- Will the federal COVID-19 economic impact payments be taxable in Indiana?
The economic impact payments, otherwise known as stimulus payments, are not considered income at the federal level and also would not be treated as income by Indiana.
IRS and Small Business Administration guidance state that economic impact payments are to be treated as an advanced refundable tax credit and will not count as taxable income at the federal level.
- Will the presence of employees temporarily telecommuting from within Indiana solely as a result of states of emergency declared in response to COVID-19 establish Indiana income tax nexus for a business that does not otherwise have nexus in this state?
In response to the new remote work requirements associated with the COVID-19 pandemic, DOR will not use someone’s relocation, that is the direct result of temporary remote work requirements arising from and during the COVID-19 pandemic health crisis, as the basis for establishing Indiana nexus or for exceeding the protections provided by P.L. 86-272 for the employer of the temporary relocated employee.
The temporary protections provided under this guidance will extend for periods of time where:
- There is an official work from home order issued by an applicable federal, state or local governmental unit, or
- Pursuant to the order of a physician in relation to the COVID-19 outbreak or due to an actual diagnosis of COVID-19,
plus 14 days to allow for return to normal work locations.
If the person remains in Indiana after the temporary remote work requirement has ended, nexus may be established for that employer. Likewise, an employer may not assert that solely having a temporarily relocated employee in Indiana under the circumstances described above creates nexus for the business or exceeds the protections of P.L. 86-272 for the employer.
This accommodation will end upon the end of the applicable work from home declaration. If the person remains in Indiana after that date, such presence can be used in determining whether the employer has Indiana nexus. The accommodation for workers subject to a physician’s order will expire the later of June 30, 2021 or the expiration of an existing physician’s order in place prior to June 30, 2021.
- How will Indiana address the individual charitable above-the-line- deduction in the CARES package?
The Indiana General Assembly de-coupled from this provision. Any such deduction should be added-back using Code 120 on the IT-40 or IT-40PNR
- How will the net operating losses provisions in the CARES Act impact my 2020 state tax return?
Indiana’s net operating loss deduction operates separately from the federal net operating loss deduction. Unlike federal law, Indiana does not permit the carryback of net operating losses. If you are filing a return or an amended return for a year affected by the CARES Act, add back any federal net operating loss deduction claimed for that year. Any Indiana net operating loss deduction for a taxable year will be computed and carried forward in the manner provided under IC 6-3-2-2.5 or IC 6-3-2-2.6, whichever is applicable.
Estimated Income Payments
- Does the filing and payment extension apply to required estimated income tax payments?
The deadline for corporate estimated payments due on April 20, May 20, or June 22, 2020 were due on or before July 15, 2020. As a result of the extensions for estimated payments, for Individual and Corporate filers who file on a calendar year basis this means that the first estimated payment, normally due in April, will now be due after the second estimated payment remained due in June.
- Are income tax estimated payments still required to be made by their regular due date?
As a result of the extensions for estimated payments, Individual and Corporate filers who file on a calendar year basis will have the usual first estimated payment—normally due in April 2020—due after the second estimated payment which remained due in June 2020.
Specific to Corporations
- What relief is available if I believe my income for tax year 2020 will vary substantially between different quarters because of economic disruptions caused by COVID-19?
There is an allowance for estimated payments to be made on annualized basis. This may provide relief at this time for businesses who believe their income for tax year 2020 will vary substantially between different quarters because of economic disruptions caused by COVID-19 and wish to avoid the penalties for insufficient estimated payments.
- What if I cannot pay my quarterly estimates because of economic hardship caused by COVID-19?
If your business has closed, a return must be filed even when no tax is due unless the Indiana tax account has been closed using Form BC-100. If your business is closed temporarily and has no tax revenue for a filing period, you must file a return indicating $0 for that period ($0 return). If a business is permanently closed, an Indiana tax account is no longer needed.
If your business simply cannot pay your quarterly estimates because of economic hardship, please call 317-232-0129. Payment plans are available.
- How will excess business losses be handled because of the CARES Act legislation?
The Indiana General Assembly decoupled from this provision for 2018 through 2020. Thus, the excess loss would be disallowed for Indiana purposes but would also be available as a net operating loss (NOL) carryforward starting in the year after loss. If you had an excess business loss that is required to be added back, use Code 120 to add back the disallowed portion of the excess business loss. In addition, you may be permitted a one-year deferral of bonus depreciation or expensing if you are required to add back an excess business loss.
Sales Tax
- Have the sales tax return due dates and payment dates been extended?
No. DOR has not extended sales tax return due dates or payment dates. Taxpayers should be paying all sales tax in a timely manner in order to avoid interest and penalties.