Section 6-3-4-8 - Income withholding; wages; reports; penalties(a) Except as provided in IC 6-3-2-27.5 and subsection (d), every employer making payments of wages subject to tax under this article, regardless of the place where such payment is made, who is required under the provisions of the Internal Revenue Code to withhold, collect, and pay over income tax on wages paid by such employer to such employee, shall, at the time of payment of such wages, deduct and retain therefrom the amount prescribed in withholding instructions issued by the department. The department shall base its withholding instructions on the adjusted gross income tax rate for persons, on the total local income tax rate that the taxpayer is subject to under IC 6-3.6, and on the total amount of exclusions the taxpayer is entitled to under IC 6-3-1-3.5(a)(3) and IC 6-3-1-3.5(a)(4). However, the withholding instructions on the adjusted gross income of a nonresident alien (as defined in Section 7701 of the Internal Revenue Code) are to be based on applying not more than one (1) withholding exclusion, regardless of the total number of exclusions that IC 6-3-1-3.5(a)(3) and IC 6-3-1-3.5(a)(4) permit the taxpayer to apply on the taxpayer's final return for the taxable year. Such employer making payments of any wages: (1) shall be liable to the state of Indiana for the payment of the tax required to be deducted and withheld under this section and shall not be liable to any individual for the amount deducted from the individual's wages and paid over in compliance or intended compliance with this section; and(2) shall make return of and payment to the department monthly of the amount of tax which under this article and IC 6-3.6 the employer is required to withhold.(b) An employer shall pay taxes withheld under subsection (a) during a particular month to the department no later than thirty (30) days after the end of that month. However, in place of monthly reporting periods, the department may permit an employer to report and pay the tax for a calendar year reporting period, if the average monthly amount of all tax required to be withheld by the employer in the previous calendar year does not exceed one thousand dollars ($1,000). An employer using a reporting period (other than a monthly reporting period) must file the employer's return and pay the tax for a reporting period no later than the last day of the month immediately following the close of the reporting period.(c) For purposes of determining whether an employee is subject to taxation under IC 6-3.6, an employer is entitled to rely on the statement of an employee as to the employee's county of residence as represented by the statement of address in forms claiming exemptions for purposes of withholding, regardless of when the employee supplied the forms. Every employee shall notify the employee's employer within five (5) days after any change in the employee's county of residence.(d) A county that makes payments of wages subject to tax under this article: (1) to a precinct election officer (as defined in IC 3-5-2-40.1); and(2) for the performance of the duties of the precinct election officer imposed by IC 3 that are performed on election day; is not required, at the time of payment of the wages, to deduct and retain from the wages the amount prescribed in withholding instructions issued by the department.
(e) Every employer shall, at the time of each payment made by the employer to the department, deliver to the department a return upon the form prescribed by the department showing, with regard to wages paid to the employer's employees:(1) the amount of adjusted gross income tax deducted therefrom in accordance with the provisions of this section;(2) the amount of income tax, if any, imposed under IC 6-3.6 and deducted therefrom in accordance with this section; and(3) any other information the department may require. Every employer making a declaration of withholding as provided in this section shall furnish the employer's employees annually, but not later than thirty (30) days after the end of the calendar year, a record of the total amount of adjusted gross income tax and the amount of each income tax, if any, imposed under IC 6-3.6, withheld from the employees, on the forms prescribed by the department. In addition, the employer shall file Form WH-3 annual withholding tax reports with the department not later than thirty-one (31) days after the end of the calendar year.
(f) All money deducted and withheld by an employer shall immediately upon such deduction be the money of the state, and every employer who deducts and retains any amount of money under the provisions of this article shall hold the same in trust for the state of Indiana and for payment thereof to the department in the manner and at the times provided in this article. Any employer may be required to post a surety bond in the sum the department determines to be appropriate to protect the state with respect to money withheld pursuant to this section.(g) The provisions of IC 6-8.1 relating to additions to tax in case of delinquency and penalties shall apply to employers subject to the provisions of this section, and for these purposes any amount deducted or required to be deducted and remitted to the department under this section shall be considered to be the tax of the employer, and with respect to such amount the employer shall be considered the taxpayer. In the case of a corporate or partnership employer, every officer, employee, or member of such employer, who, as such officer, employee, or member is under a duty to deduct and remit such taxes, shall be personally liable for such taxes, penalties, and interest.(h) Amounts deducted from wages of an employee during any calendar year in accordance with the provisions of this section shall be considered to be in part payment of the tax imposed on such employee for the employee's taxable year which begins in such calendar year, and a return made by the employer under subsection (b) shall be accepted by the department as evidence in favor of the employee of the amount so deducted from the employee's wages. Where the total amount so deducted exceeds the amount of tax on the employee as computed under this article and IC 6-3.6, the department shall, after examining the return or returns filed by the employee in accordance with this article and IC 6-3.6, refund the amount of the excess deduction. However, under rules promulgated by the department, the excess or any part thereof may be applied to any taxes or other claim due from the taxpayer to the state of Indiana or any subdivision thereof. In the event that the excess tax deducted is less than one dollar ($1), no refund shall be made.(i) This section shall in no way relieve any taxpayer from the taxpayer's obligation of filing a return or returns at the time required under this article and IC 6-3.6, and, should the amount withheld under the provisions of this section be insufficient to pay the total tax of such taxpayer, such unpaid tax shall be paid at the time prescribed by section 5 of this chapter.(j) Notwithstanding subsection (b), an employer of a domestic service employee that enters into an agreement with the domestic service employee to withhold federal income tax under Section 3402 of the Internal Revenue Code may withhold Indiana income tax on the domestic service employee's wages on the employer's Indiana individual income tax return in the same manner as allowed by Section 3510 of the Internal Revenue Code.(k) To the extent allowed by Section 1137 of the Social Security Act, an employer of a domestic service employee may report and remit state unemployment insurance contributions on the employee's wages on the employer's Indiana individual income tax return in the same manner as allowed by Section 3510 of the Internal Revenue Code.(l) A person who knowingly fails to remit trust fund money as set forth in this section commits a Level 6 felony.Amended by P.L. 194-2023,SEC. 20, eff. 1/1/2024.Amended by P.L. 159-2021,SEC. 14, eff. 7/1/2021.Amended by P.L. 197-2016, SEC. 25, eff. 1/1/2017.Amended by P.L. 242-2015, SEC. 17, eff. 7/1/2015.Amended by P.L. 293-2013, SEC. 12, eff. 5/10/2013, retroactive.Amended by P.L. 158-2013, SEC. 86, eff. 7/1/2014.Amended by P.L. 137-2012, SEC. 55, eff. 1/1/2013.Amended by P.L. 172-2011, SEC. 60, eff. 1/1/2011 (retroactive).(Formerly: Acts 1963(ss), c.32, s.408; Acts 1965, c.233, s.20; Acts 1969, c.326, s.6; Acts1971 , P.L. 65, SEC.1; Acts1973 , P.L. 50, SEC.3.) As amended by Acts1979 , P.L. 68, SEC.3; Acts1980 , P.L. 61, SEC.6; Acts1982 , P.L. 49, SEC.2; P.L. 2-1982 (ss), SEC.9; P.L. 26-1985, SEC.10; P.L. 70-1986, SEC.2; P.L. 94-1995, SEC.1; P.L. 8-1996, SEC.6; P.L. 192-2002 (ss), SEC.81; P.L. 131-2008, SEC.16.