Indiana Administrative Code › Title 45 - DEPARTMENT OF STATE REVENUE › Article 3.1 - ADJUSTED GROSS INCOME TAX › Rule 1 - State Adjusted Gross Income Tax › Section 1-98 - Withholding and returns by interstate transportation companies

Current through July 10, 2024
Authority: IC 6-8.1-3-3
Affected: IC 6-3-4
Sec. 98.
Withholding of Compensation Paid To Employees of Interstate
				  Transportation Companies. The following policy prescribed by the Department
				  applies to the withholding of state income tax on transportation companies
				  including railroads, motor carriers, airlines, and water carriers on
				  compensation paid to their employees who work in more than one state.
Transportation companies who employ Indiana residents in this
				  State will continue to withhold the Indiana Adjusted Gross Income Tax as
				  prescribed under Section 408 of the Indiana Adjusted Gross Income Tax Act of
				  1963, as amended. In the event that the Indiana resident earns more than 50% of
				  his compensation outside of Indiana the employer, under Public Law 91-569, is
				  required to withhold the tax for the state in which more than 50% of the
				  compensation is earned; however, if more than 50% of the compensation is not
				  earned in any state, the employer must withhold on the basis of residency. If
				  tax is withheld on an Indiana resident and remitted to a state other than
				  Indiana, the employer must file an annual information return reporting any
				  wages on those Indiana residents subject to the withholding provisions of
				  another state.
It is the opinion of this Department that the 50% test
				  prescribed under this Federal Act does not apply to Indiana residents employed
				  by a railroad, motor carrier, airline or water carrier in the States of
				  Georgia, Illinois, Kentucky, Michigan, Mississippi, North Carolina, Ohio and
				  Wisconsin. Since Indiana has reciprocal tax agreements with the above states
				  for transportation company employees, any tax assessed on an Indiana
				  transportation employee other than Indiana adjusted gross income tax would be
				  inoperative as a result of these agreements. Nonresident transportation
				  employees who are employed in Indiana and receive more than 50% of their
				  compensation for services performed in this state, are subject to the
				  withholding of the Indiana adjusted gross income tax; however, if the employees
				  subject to Public Law 91-569 are residents of Georgia, Illinois, Kentucky,
				  Michigan, Mississippi, North Carolina, Ohio or Wisconsin, these nonresident
				  employees are not subject to the withholding tax provisions in accordance with
				  the previously mentioned reciprocal agreements. Nonresident employees who are
				  residents of those states having a reciprocal agreement with Indiana should
				  file a certificate of residency with the employer, and the employer should
				  withhold on the basis of residency.
Information returns are required to be submitted by the
				  transportation company to the state of residency of those employees subject to
				  withholding tax as a nonresident employee.
In determining whether more than 50% is earned in the state
				  of employment, the measurement in determining compensation on the various
				  workers is as follows:
Railroad employees assigned to track borne vehicles = Mileage
				  traveled in a state
Maintenance and terminal employees = Time worked in a
				  state
Motor Carrier employees operating vehicle = Mileage traveled
				  in a state
Employees operating a water carrier = Time worked in a
				  state
Employees operating an aircraft = Scheduled flight
				  time