SB 259

           Second Regular Session of the 124th General Assembly (2026)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
  Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
 Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2025 Regular Session of the General Assembly.
    SENATE ENROLLED ACT No. 259
    AN ACT to amend the Indiana Code concerning taxation.
    Be it enacted by the General Assembly of the State of Indiana:
   SECTION 1. IC 6-3-2.1-2, AS AMENDED BY P.L.194-2023,
SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 2. The following definitions apply throughout
this chapter:
      (1) "Electing entity" means a pass through entity described in
      IC 6-3-1-35 that is subject to Subchapter K or Subchapter S of the
      Internal Revenue Code and makes the election under this chapter.
      (2) "Entity owner" means the direct or indirect owners of an
      electing entity that are ultimately taxable on the entity's income
      under Subchapter K or Subchapter S of the Internal Revenue
      Code, except an owner described in subdivision (4)(A) through
      (4)(C).
      (3) "Nonresident" means:
         (A) a nonresident partner as defined by IC 6-3-4-12(n);
         (B) a nonresident shareholder as defined by IC 6-3-4-13(n);
         (C) a nonresident beneficiary as defined by IC 6-3-4-15(i);
         IC 6-3-4-15(j); or
         (D) in the case of a shareholder of a corporation described in
         IC 6-3-2-2.8(2), a corporation described in Section 501(c)(3)
         of the Internal Revenue Code that is exempt from taxation
         under Section 501(a) of the Internal Revenue Code and that is
         not domiciled in Indiana;
SEA 259
                                     2
      whichever is applicable.
      (4) "Owner" means a direct or indirect owner of an electing entity
      and includes a beneficiary of an estate or trust. However an owner
      shall not include:
         (A) an entity described in IC 6-3-2-2.8(3) that is not a
         partnership, a trust, or a corporation described in
         IC 6-3-2-2.8(2);
         (B) an entity described in IC 6-3-2-2.8(5); or
         (C) any other entity as determined by the department and listed
         in instructions or guidance issued by the department.
      (5) "Resident" means a partner, shareholder, or beneficiary:
         (A) that, in the case of an individual, estate, or trust, is a
         resident of Indiana as defined in IC 6-3-1-12; or
         (B) that is a partnership or corporation, including a corporation
         described in IC 6-3-2-2.8(1) or IC 6-3-2-2.8(2), that is
         domiciled in Indiana.
   SECTION 2. IC 6-3-4-12, AS AMENDED BY P.L.1-2023,
SECTION 8, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 12. (a) Every partnership shall, at the time
that the partnership pays or credits amounts to any of its nonresident
partners on account of their distributive shares of partnership income,
for a taxable year of the partnership, deduct and retain therefrom the
amount prescribed in the withholding instructions referred to in section
8 of this chapter. Such partnership so paying or crediting any
nonresident partner:
      (1) shall be liable to the state of Indiana for the payment of the tax
      required to be deducted and retained under this section and shall
      not be liable to such partner for the amount deducted from such
      payment or credit and paid over in compliance or intended
      compliance with this section; and
      (2) shall make return of and payment to the department monthly
      whenever the amount of tax due under IC 6-3 and IC 6-3.6
      exceeds an aggregate amount of fifty dollars ($50) per month with
      such payment due on the thirtieth day of the following month,
      unless an earlier date is specified by section 8.1 of this chapter.
Where the aggregate amount due under IC 6-3 and IC 6-3.6 does not
exceed fifty dollars ($50) per month, then such partnership shall make
return and payment to the department quarterly, on such dates and in
such manner as the department shall prescribe, of the amount of tax
which, under IC 6-3 and IC 6-3.6, it is required to withhold. If a
partnership credits a partner with pass through entity tax imposed
under IC 6-3-2.1, the withholding required for that partner under this
SEA 259
                                    3
section shall be reduced by the tax credited to the partner under
IC 6-3-2.1, but in no event shall the tax required to be withheld be
reduced to less than zero dollars ($0).
    (b) Every partnership shall, at the time of each payment made by it
to the department pursuant to this section, deliver to the department a
return upon such form as shall be prescribed by the department
showing the total amounts paid or credited to its nonresident partners,
the amount deducted therefrom in accordance with the provisions of
this section, and such other information as the department may require.
Every partnership making the deduction and retention provided in this
section shall furnish to its nonresident partners annually, but not later
than the fifteenth day of the third month after the end of its taxable
year, a record of the amount of tax deducted and retained from such
partners on forms to be prescribed by the department.
    (c) All money deducted and retained by the partnership, as provided
in this section, shall immediately upon such deduction be the money of
the state of Indiana and every partnership which deducts and retains
any amount of money under the provisions of IC 6-3 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 IC 6-3. Any
partnership may be required to post a surety bond in such sum as the
department shall determine to be appropriate to protect the state of
Indiana with respect to money deducted and retained pursuant to this
section.
    (d) The provisions of IC 6-8.1 relating to additions to tax in case of
delinquency and penalties shall apply to partnerships 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 partnership, and with
respect to such amount it shall be considered the taxpayer.
    (e) Amounts deducted from payments or credits to a nonresident
partner during any taxable year of the partnership in accordance with
the provisions of this section shall be considered to be in part payment
of the tax imposed on such nonresident partner for the nonresident
partner's taxable year within or with which the partnership's taxable
year ends. A return made by the partnership under subsection (b) shall
be accepted by the department as evidence in favor of the nonresident
partner of the amount so deducted for the nonresident partner's
distributive share.
    (f) This section shall in no way relieve any nonresident partner from
the nonresident partner's obligations of filing a return or returns at the
time required under IC 6-3 or IC 6-3.6, and any unpaid tax shall be paid
SEA 259
                                   4
at the time prescribed by section 5 of this chapter.
    (g) Instead of the reporting periods required under subsection (a),
the department may permit a partnership to file one (1) return and
payment each year if the partnership pays or credits amounts to its
nonresident partners only one (1) time each year. The return and
payment are due on or before the fifteenth day of the fourth month after
the end of the year. However, if a partnership is permitted an extension
to file its income tax return under IC 6-8.1-6-1, the return and payment
due under this subsection shall be allowed the same treatment as an
extended income tax return with respect to due dates, interest, and
penalties under IC 6-8.1-6-1.
    (h) If a partnership fails to withhold and pay any amount of tax
required to be withheld under this section and thereafter the tax is paid
by the partners, the amounts of tax as paid by the partners shall not be
collected from the partnership but it may not be relieved from liability
for interest or penalty otherwise due in respect to the failure to
withhold under IC 6-8.1-10.
    (i) A partnership shall file a composite adjusted gross income tax
return on behalf of all nonresident partners. The composite return must
include each nonresident partner regardless of whether or not the
nonresident partner has other Indiana source income.
    (j) If a partnership does not include all nonresident partners that
have distributive share income from the partnership:
       (1) as determined under this article; and
       (2) derived from Indiana sources;
of greater than zero dollars ($0) in the composite return, the
partnership is subject to the penalty imposed under IC 6-8.1-10-2.1(j).
    (k) For taxable years beginning after December 31, 2013, the
department may not impose a late payment penalty on a partnership for
the failure to file a return, pay the full amount of the tax shown on the
partnership's return, or pay the deficiency of the withholding taxes due
under this section if the partnership pays the department before the
fifteenth day of the fourth month after the end of the partnership's
taxable year at least:
       (1) eighty percent (80%) of the withholding tax due for the
       current year; or
       (2) one hundred percent (100%) of the withholding tax due for the
       preceding year.
    (l) Notwithstanding subsection (a) or (i), a partnership is not
required to withhold tax or file a composite adjusted gross income tax
return for a nonresident partner if the partnership:
       (1) is a publicly traded partnership as defined by Section 7704(b)
SEA 259
                                     5
      of the Internal Revenue Code;
      (2) meets the exception for partnerships under Section 7704(c) of
      the Internal Revenue Code; and
      (3) has agreed to file an annual information return reporting the
      name, address, taxpayer identification number, and other
      information requested by the department of each unit holder.
The department may issue written guidance explaining circumstances
under which limited partnerships or limited liability companies owned
by a publicly traded partnership may be excluded from the withholding
requirements of this section.
    (m) Notwithstanding subsection (k), a partnership is subject to a late
payment penalty for the failure to file a return, pay the full amount of
the tax shown on the partnership's return, or pay the deficiency of the
withholding taxes due under this section for any amounts of
withholding tax, including any interest under IC 6-8.1-10-1, reported
or paid after the due date of the return, as adjusted by any extension
under IC 6-8.1-6-1.
    (n) For purposes of this section, a "nonresident partner" is:
      (1) an individual who does not reside in Indiana;
      (2) a trust that does not reside in Indiana;
      (3) an estate that does not reside in Indiana;
      (4) a partnership not domiciled in Indiana;
      (5) a C corporation not domiciled in Indiana; or
      (6) an S corporation not domiciled in Indiana.
    SECTION 3. IC 6-3-4-13, AS AMENDED BY P.L.1-2023,
SECTION 9, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 13. (a) Every corporation which is exempt
from tax under IC 6-3 pursuant to IC 6-3-2-2.8(2) shall, at the time that
it pays or credits amounts to any of its nonresident shareholders as
dividends or as their share of the corporation's undistributed taxable
income, withhold the amount prescribed by the department. Such
corporation so paying or crediting any nonresident shareholder:
      (1) shall be liable to the state of Indiana for the payment of the tax
      required to be withheld under this section and shall not be liable
      to such shareholder for the amount withheld and paid over in
      compliance or intended compliance with this section; and
      (2) when the aggregate amount due under IC 6-3 and IC 6-3.6
      exceeds one hundred fifty dollars ($150) per quarter, then such
      corporation shall make return and payment to the department
      quarterly, on such dates and in such manner as the department
      shall prescribe, of the amount of tax which, under IC 6-3 and
      IC 6-3.6, it is required to withhold.
SEA 259
                                    6
If a corporation credits a shareholder with pass through entity tax
imposed under IC 6-3-2.1, the withholding required for that
shareholder under this section shall be reduced by the tax credited to
the shareholder under IC 6-3-2.1, but in no event shall the tax required
to be withheld be reduced to less than zero dollars ($0).
    (b) Every corporation shall, at the time of each payment made by it
to the department pursuant to this section, deliver to the department a
return upon such form as shall be prescribed by the department
showing the total amounts paid or credited to its nonresident
shareholders, the amount withheld in accordance with the provisions
of this section, and such other information as the department may
require. Every corporation withholding as provided in this section shall
furnish to its nonresident shareholders annually, but not later than the
fifteenth day of the third month after the end of its taxable year, a
record of the amount of tax withheld on behalf of such shareholders on
forms to be prescribed by the department.
    (c) All money withheld by a corporation, pursuant to this section,
shall immediately upon being withheld be the money of the state of
Indiana and every corporation which withholds any amount of money
under the provisions of this section 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 IC 6-3. Any corporation may be
required to post a surety bond in such sum as the department shall
determine to be appropriate to protect the state of Indiana with respect
to money withheld pursuant to this section.
    (d) The provisions of IC 6-8.1 relating to additions to tax in case of
delinquency and penalties shall apply to corporations subject to the
provisions of this section, and for these purposes any amount withheld,
or required to be withheld and remitted to the department under this
section, shall be considered to be the tax of the corporation, and with
respect to such amount it shall be considered the taxpayer.
    (e) Amounts withheld from payments or credits to a nonresident
shareholder during any taxable year of the corporation in accordance
with the provisions of this section shall be considered to be a part
payment of the tax imposed on such nonresident shareholder for the
shareholder's taxable year within or with which the corporation's
taxable year ends. A return made by the corporation under subsection
(b) shall be accepted by the department as evidence in favor of the
nonresident shareholder of the amount so withheld from the
shareholder's distributive share.
    (f) This section shall in no way relieve any nonresident shareholder
from the shareholder's obligation of filing a return or returns at the time
SEA 259
                                    7
required under IC 6-3 or IC 6-3.6, and any unpaid tax shall be paid at
the time prescribed by section 5 of this chapter.
    (g) Instead of the reporting periods required under subsection (a),
the department may permit a corporation to file one (1) return and
payment each year if the corporation pays or credits amounts to its
nonresident shareholders only one (1) time each year. The withholding
return and payment are due on or before the fifteenth day of the fourth
month after the end of the taxable year of the corporation. However, if
a corporation is permitted an extension to file its income tax return
under IC 6-8.1-6-1, the return and payment due under this subsection
shall be allowed the same treatment as the extended income tax return
with respect to the due dates, interest, and penalties under IC 6-8.1-6-1.
    (h) If a distribution will be made with property other than money or
a gain is realized without the payment of money, the corporation shall
not release the property or credit the gain until it has funds sufficient
to enable it to pay the tax required to be withheld under this section. If
necessary, the corporation shall obtain such funds from the
shareholders.
    (i) If a corporation fails to withhold and pay any amount of tax
required to be withheld under this section and thereafter the tax is paid
by the shareholders, such amount of tax as paid by the shareholders
shall not be collected from the corporation but it shall not be relieved
from liability for interest or penalty otherwise due in respect to such
failure to withhold under IC 6-8.1-10.
    (j) A corporation described in subsection (a) shall file a composite
adjusted gross income tax return on behalf of all nonresident
shareholders. The composite return must include each nonresident
shareholder regardless of whether or not the nonresident shareholder
has other Indiana source income.
    (k) If a corporation described in subsection (a) does not include all
nonresident shareholders who have distributive share income from
the corporation:
       (1) as determined under this article; and
       (2) derived from Indiana sources;
of greater than zero dollars ($0) in the composite return, the
corporation is subject to the penalty imposed under IC 6-8.1-10-2.1(j).
    (l) For taxable years beginning after December 31, 2013, the
department may not impose a late payment penalty on a corporation for
the failure to file a return, pay the full amount of the tax shown on the
corporation's return, or pay the deficiency of the withholding taxes due
under this section if the corporation pays the department before the
fifteenth day of the fourth month after the end of the partnership's
SEA 259
                                     8
taxable year at least:
      (1) eighty percent (80%) of the withholding tax due for the
      current year; or
      (2) one hundred percent (100%) of the withholding tax due for the
      preceding year.
    (m) Notwithstanding subsection (l), a corporation is subject to a late
payment penalty for the failure to file a return, pay the full amount of
the tax shown on the corporation's return, or pay the deficiency of the
withholding taxes due under this section for any amounts of
withholding tax, including any interest under IC 6-8.1-10-1, reported
or paid after the due date of the return, as adjusted by any extension
under IC 6-8.1-6-1.
    (n) For purposes of this section, a "nonresident shareholder" is:
      (1) an individual who does not reside in Indiana;
      (2) a trust that does not reside in Indiana; or
      (3) an estate that does not reside in Indiana.
    SECTION 4. IC 6-3-4-15, AS AMENDED BY P.L.1-2023,
SECTION 10, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 15. (a) A trust or estate shall, at the time that
it distributes income (except income attributable to interest or
dividends) to a nonresident beneficiary, deduct and retain therefrom the
amount prescribed in the withholding instructions referred to in section
8 of this chapter. The trust or estate so distributing income to a
nonresident beneficiary:
      (1) is liable to this state for the tax which it is required to deduct
      and retain under this section and is not liable to the beneficiary for
      the amount deducted from the distribution and paid to the
      department in compliance, or intended compliance, with this
      section; and
      (2) shall pay the amount deducted to the department before the
      thirtieth day of the month following the distribution, unless an
      earlier date is specified by section 8.1 of this chapter.
If a trust or estate credits a beneficiary with pass through entity tax
imposed under IC 6-3-2.1, the withholding required for that beneficiary
under this section shall be reduced by the tax credited to the
beneficiary under IC 6-3-2.1, but in no event shall the tax required to
be withheld be reduced to less than zero dollars ($0).
    (b) A trust or estate shall, at the time that it makes a payment to the
department under this section, deliver to the department a return which
shows the total amounts distributed to the trust's or estate's nonresident
beneficiaries, the amount deducted from the distributions under this
section, and any other information required by the department. The
SEA 259
                                     9
trust or estate shall file the return on the form prescribed by the
department. A trust or estate which makes the deduction and retention
required by this section shall furnish to its nonresident beneficiaries
annually, but not later than thirty (30) days after the end of the trust's
or estate's taxable year, a record of the amount of tax deducted and
retained from the beneficiaries. The trust or estate shall furnish the
information on the form prescribed by the department.
    (c) The money deducted and retained by a trust or estate under this
section is money of this state. Every trust or estate which deducts and
retains any money under this section shall hold the money in trust for
this state until it pays the money to the department in the manner and
at the time provided in this section. The department may require a trust
or estate to post a surety bond to protect this state with respect to
money deducted and retained by the trust or estate under this section.
The department shall determine the amount of the surety bond.
    (d) The provisions of IC 6-8.1 relating to penalties or to additions to
tax in case of a delinquency apply to trusts and estates which are
subject to this section. For purposes of this subsection, any amount
deducted, or required to be deducted and remitted to the department,
under this section is considered the tax of the trust or estate, and with
respect to that amount, it is considered the taxpayer.
    (e) Amounts deducted from distributions to nonresident
beneficiaries under this section during a taxable year of the trust or
estate are considered a partial payment of the tax imposed on the
nonresident beneficiary for his taxable year within or with which the
trust's or estate's taxable year ends. The department shall accept a
return made by the trust or estate under subsection (b) as evidence of
the amount of tax deducted from the income distributed to a
nonresident beneficiary.
    (f) This section does not relieve a nonresident beneficiary of his
duty to file a return at the time required under IC 6-3. The nonresident
beneficiary shall pay any unpaid tax at the time prescribed by section
5 of this chapter.
    (g) If a trust or estate fails to withhold and pay any amount of tax
required to be withheld under this section and thereafter the tax is paid
by the beneficiaries, the amount of tax paid by the beneficiaries may
not be collected from the trust or estate but it may not be relieved from
liability for interest or penalty otherwise due in respect to the failure to
withhold under IC 6-8.1-10.
    (h) A trust or estate shall file a composite adjusted gross income tax
return on behalf of all nonresident beneficiaries. The composite return
must include each nonresident beneficiary regardless of whether the
SEA 259
                                     10
nonresident beneficiary has other Indiana source income.
    (i) If a trust or estate does not include all nonresident
beneficiaries that have distributable net income from the trust or
estate:
       (1) as determined under this article; and
       (2) derived from Indiana sources;
of greater than zero dollars ($0) in the composite return, the trust
or estate is subject to the penalty imposed under IC 6-8.1-10-2.1(j).
    (i) (j) For purposes of this section, a "nonresident beneficiary" is:
       (1) an individual who does not reside in Indiana;
       (2) a trust that does not reside in Indiana;
       (3) an estate that does not reside in Indiana;
       (4) a partnership that is not domiciled in Indiana;
       (5) a C corporation that is not domiciled in Indiana; or
       (6) an S corporation that is not domiciled in Indiana.
    (j) (k) If a trust or estate is permitted an extension to file its income
tax return under IC 6-8.1-6-1, then the return and payment due under
this subsection shall be allowed the same treatment as the extended
income tax return with respect to due dates, interest, and penalties
under IC 6-8.1-6-1.
    SECTION 5. IC 6-8.1-10-2.1, AS AMENDED BY P.L.230-2025,
SECTION 91, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
UPON PASSAGE]: Sec. 2.1. (a) Except as provided in IC 6-3-4-12(k)
and IC 6-3-4-13(l), a person that:
       (1) fails to file a return for any of the listed taxes;
       (2) fails to pay the full amount of tax shown on the person's return
       on or before the due date for the return or payment;
       (3) incurs, upon examination by the department, a deficiency that
       is due to negligence;
       (4) fails to timely remit any tax held in trust for the state;
       (5) fails to file a return in the electronic manner required by the
       department if such return is required to be filed electronically; or
       (6) is required to make a payment by electronic funds transfer (as
       defined in IC 4-8.1-2-7), overnight courier, personal delivery, or
       any other electronic means and the payment is not received by the
       department by the due date in such manner and in funds
       acceptable to the department;
is subject to a penalty.
    (b) Except as provided in subsection (g), the penalty described in
subsection (a) is ten percent (10%) of:
       (1) the full amount of the tax due if the person failed to file the
       return or, in the case of a return required to be filed electronically,
SEA 259
                                    11
      the return is not filed in the electronic manner required by the
      department;
      (2) the amount of the tax not paid, if the person filed the return
      but failed to pay the full amount of the tax shown on the return;
      (3) the amount of the tax held in trust that is not timely remitted;
      (4) the amount of deficiency as finally determined by the
      department; or
      (5) the amount of tax due if a person failed to make payment
      required to be made by electronic funds transfer, overnight
      courier, personal delivery, or any other electronic means by the
      due date in such manner.
   (c) For purposes of this section, the filing of a substantially blank or
unsigned return does not constitute a return.
   (d) If a person subject to the penalty imposed under this section can
show that the failure to file a return, pay the full amount of tax shown
on the person's return, timely remit tax held in trust, or pay the
deficiency determined by the department was due to reasonable cause
and not due to willful neglect, the department shall waive the penalty.
   (e) A person who wishes to avoid the penalty imposed under this
section must make an affirmative showing of all facts alleged as a
reasonable cause for the person's failure to file the return, pay the
amount of tax shown on the person's return, pay the deficiency, or
timely remit tax held in trust, in a written statement containing a
declaration that the statement is made under penalty of perjury. The
statement must be filed with the return or payment within the time
prescribed for protesting departmental assessments. A taxpayer may
also avoid the penalty imposed under this section by obtaining a ruling
from the department before the end of a particular tax period on the
amount of tax due for that tax period.
   (f) The department shall adopt rules under IC 4-22-2 to prescribe the
circumstances that constitute reasonable cause and negligence for
purposes of this section.
   (g) A person who fails to file a return for a listed tax that shows no
tax liability for a taxable year, other than an information return (as
defined in section 6 of this chapter), on or before the due date of the
return shall pay a penalty of ten dollars ($10) for each day that the
return is past due, up to a maximum of two hundred fifty dollars
($250).
   (h) A:
      (1) corporation which otherwise qualifies under IC 6-3-2-2.8(2);
      (2) partnership; or
      (3) trust;
SEA 259
                                   12
that fails to withhold and pay any amount of tax required to be withheld
under IC 6-3-4-12, IC 6-3-4-13, or IC 6-3-4-15 shall pay a penalty
equal to twenty percent (20%) of the amount of tax required to be
withheld under IC 6-3-4-12, IC 6-3-4-13, or IC 6-3-4-15. This penalty
shall be in addition to any penalty imposed by section 6 of this chapter.
    (i) Subsections (a) through (c) do not apply to a motor carrier fuel
tax return.
    (j) If a pass through entity (as defined in IC 6-3-1-35) fails to
include all nonresident partners, nonresident shareholders, or
nonresident beneficiaries in a composite return as required by
IC 6-3-4-12(i), IC 6-3-4-12(j), IC 6-3-4-13(j), IC 6-3-4-13(k), or
IC 6-3-4-15(h), IC 6-3-4-15(i), a penalty of five hundred dollars ($500)
per pass through entity is imposed on the pass through entity. For
purposes of this subsection:
       (1) no penalty shall be imposed on the failure to list
       nonresident partners, nonresident shareholders, or
       nonresident beneficiaries not described in IC 6-3-4-12(j),
       IC 6-3-4-13(k), or IC 6-3-4-15(i), on a composite return; and
       (2) the determination of whether a partner, shareholder, or
       beneficiary is required to be included on a composite return
       shall be determined at the time the pass through entity files its
       return required under IC 6-3 unless the determination by the
       pass through entity was the result of:
          (A) fraud; or
          (B) intentional or reckless disregard of IC 6-3 or the
          Internal Revenue Code.
    (k) If a person subject to the penalty imposed under this section
provides the department with documentation showing that the person
is or has been subject to incarceration for a period of a least one
hundred eighty (180) days, the department shall waive any penalty
under this section and interest that accrues during the time the person
was incarcerated, but not to an extent greater than the penalty or
interest relief to which a person would otherwise have been entitled
under the federal Servicemembers Civil Relief Act (50 U.S.C.
3901-4043), if the person was in military service. Nothing in this
subsection shall preclude the department from issuing a proposed
assessment, demand notice, jeopardy proposed assessment, jeopardy
demand notice, or warrant otherwise permitted by law.
    (l) Beginning after December 31, 2024, reasonable cause under this
section for failure to file a timely and complete form IT-65 partnership
return will be presumed if the partnership (or any of its partners) is able
to show that all of the following conditions have been met:
SEA 259
                                  13
      (1) The partnership had no more than ten (10) partners for the
      taxable year. (A husband and wife filing a joint return count as
      one (1) partner.)
      (2) Each partner during the tax year was a natural person (other
      than a nonresident alien), or the estate of a natural person.
      (3) Each partner's proportionate share of any partnership item is
      the same as the partner's proportionate share of any other
      partnership item.
      (4) The partnership did not elect to be subject to the rules for
      federal consolidated audit proceedings under Sections 6221
      through 6234 of the Internal Revenue Code.
      (5) All partners reported their distributive share of partnership
      items on their timely filed income tax returns.
   SECTION 6. [EFFECTIVE UPON PASSAGE] IC 6-3-4-12,
IC 6-3-4-13, IC 6-3-4-15, and IC 6-8.1-10-21, all as amended by this
act, are effective for pass through entity returns due after passage
of this act, including any extensions allowable for the return.
   SECTION 7. An emergency is declared for this act.
SEA 259
President of the Senate
President Pro Tempore
Speaker of the House of Representatives
Governor of the State of Indiana
Date:  Time:
SEA 259