2023 Indiana Code › Title 6. Taxation › Article 3. State Income Taxes › Chapter 2. Imposition of Tax and Deductions › 6-3-2-3.2. Indiana Income of Race Team Members

Sec. 3.2. (a) The following definitions apply to this section:
(1) "Bonus for services rendered as a race team member" includes:
(A) a bonus earned as a result of participation in a racing event, such as a performance bonus or any other bonus; and
(B) a bonus paid for signing a contract, unless all of the following conditions are met:
(i) The payment of the signing bonus is not conditional upon the signee participating in a racing event for the team or performing any subsequent services for the team.
(ii) The signing bonus is payable separately from the salary and any other compensation.
(iii) The signing bonus is nonrefundable.
(2) "Indiana duty days" means the number of total duty days spent by a race team member within Indiana rendering a service for the race team in any manner during the taxable year, except travel days spent in Indiana that do not involve either a race, practice, qualification, training, testing, team meeting, promotional caravan, or other similar race team event.
(3) "Race team" includes a professional motorsports racing team that has services rendered by a race team member in Indiana or participated in a racing event at a qualified motorsports facility (as defined in IC 5-1-17.5-14).
(4) "Race team member" includes employees or independent contractors who render services on behalf of the race team. The term includes but is not limited to drivers, pit crew members, mechanics, technicians, spotters, and crew chiefs.
(5) "Total duty days" means all days during the taxable year that a race team member renders a service for the race team. The term includes:
(A) race days, practice days, qualification days, training days, testing days, days spent at team meetings, days spent with a promotional caravan, and days served with the team in which the team competes or is scheduled to compete;
(B) days spent conducting training and rehabilitation activities, but only if the service is conducted at the facilities of the race team; and
(C) travel days that do not involve either a race, practice, qualification, training, testing, team meeting, promotional caravan, or other similar team event.
Total duty days for an individual who joins a race team during the season begin on the day the individual joins the team, and, for an individual who leaves a team, end on the day the individual leaves the team. When an individual changes teams during a taxable year, a separate duty day calculation must be made for the period the individual was with each team. Total duty days do not include those days for which a team member is not compensated and is not rendering a service for the team in any manner, including days when the team member has been suspended without pay and prohibited from performing any services for the team.
(6) "Total income" means the total compensation received during the taxable year for services rendered. The term includes salaries, wages, bonuses, and any other type of compensation paid during the taxable year to a race team member for services rendered in that year. The term does not include strike benefits, severance pay, termination pay, contract or option year buy-out payments, expansion or relocation payments, or any other payments not related to services rendered to the race team.
(b) For purposes of IC 6-3, Indiana income is the individual's total income during the taxable year multiplied by the following fraction:
(1) The numerator of the fraction is the individual's Indiana duty days for the taxable year.
(2) The denominator of the fraction is the individual's total duty days for the taxable year.
(c) It is presumed that this section results in a fair and equitable apportionment of the race team member's compensation. However, if the department demonstrates that the method provided under this section does not fairly and equitably apportion a team member's compensation, the department may require the team member to apportion the team member's compensation under another method that the department prescribes. The prescribed method must result in a fair and equitable apportionment. A team member may submit a proposal for an alternative method to apportion the team member's compensation if the team member demonstrates that the method provided under this section does not fairly and equitably apportion the team member's compensation. If approved by the department, the proposed method must be fully explained in the team member's nonresident personal income tax return.
(d) The department shall adopt rules, guidelines, or other instructions applicable for taxable years beginning after December 31, 2013, to establish alternative methods:
(1) of simplifying return filing for race team members, if the team is not based in Indiana; and
(2) for a race team not based in Indiana to file a composite return on behalf of and covering more than one (1) race team member if the same amount of tax is remitted as if individual filings had occurred. Filing a composite return under this subdivision exempts:
(A) a race team member covered by the return from having an individual income tax return filing requirement with respect to the income reported on the composite return; and
(B) a race team that is not based in Indiana from a filing requirement only with respect to team members included on the composite return.
(e) Notwithstanding any other provision under IC 6-3-4, the department may adopt rules, guidelines, or other instructions related to withholding requirements under this chapter.
(f) This section, as enacted in 2013, is intended to be a clarification of the law and not a substantive change in the law.
As added by P.L.233-2013, SEC.8. Amended by P.L.210-2016, SEC.1.