Schedule IN-COMPA

This article explains the purpose of Schedule IN-COMPA, an Indiana form for reducing or waiving withholding on nonresident income from pass-through entities, along with detailed instructions for completing it.

Schedule IN-COMPA, officially titled the “Indiana Withholding and Composite Filing Opt-Out Affidavit,” is a form used by nonresidents who are shareholders, partners, or beneficiaries of a pass-through entity (such as a partnership, S corporation, trust, or estate) to request a reduction or elimination of Indiana withholding taxes. This form is particularly useful in cases where withholding would result in duplicate tax payments or when the nonresident taxpayer’s Indiana income tax liability is significantly lower than the amount of withholding.

The form also serves as an agreement that the nonresident will take responsibility for filing their Indiana tax returns and paying any tax due. While not mandatory for pass-through entities to accept, the Schedule IN-COMPA must be properly completed and attached to the pass-through entity’s return if accepted. Note that this affidavit cannot be used to reduce or waive pass-through entity tax (PTET) and may be voided by the Indiana Department of Revenue under certain circumstances, such as when there are adjustments or amendments to the pass-through entity’s tax filings.

How to File Schedule IN-COMPA

To file Schedule IN-COMPA, the nonresident taxpayer must complete and submit the form to the pass-through entity before the 15th day of the fourth month following the end of the entity’s tax year. The completed affidavit must then be attached to the pass-through entity’s tax return for the applicable year(s). If the affidavit covers multiple years, it generally needs to be completed only once for the specified period unless there is a material change in law or facts.

In the event of an amended return or adjustment by the pass-through entity, the affidavit will not exempt the entity from withholding, and it does not relieve partnerships of tax liabilities arising from adjustments if the partnership elects to be taxed at the partnership level.

How to Complete Schedule IN-COMPA Line-by-Line Instructions

How to Complete Schedule IN-COMPA: Line-by-Line Instructions

Pass-Through Entity Information

  • Name of Entity: Enter the legal name of the pass-through entity (e.g., partnership, S corporation, etc.).
  • FEIN: Provide the Federal Employer Identification Number of the entity.
  • Address: Include the full mailing address of the entity, including city, state, and ZIP code.
  • Type of Pass-Through Entity: Check the box that identifies the type of entity—Partnership, S Corporation, Estate, or Trust.

Nonresident Information

  • Name: Enter the full name of the nonresident individual, corporation, or other entity.
  • FEIN/SSN: Provide the Federal Employer Identification Number or Social Security Number of the nonresident.
  • Address: Include the complete mailing address of the nonresident, including city, state, and ZIP code.
  • Type of Entity: Specify the type of entity (e.g., individual, C corporation, S corporation, etc.).
  • Year(s): For the first five reasons listed on the form or for corporations registered in Indiana and remitting estimated payments, enter the range of years covered by the affidavit (e.g., 2022-2026). For all other reasons, enter the current taxable year only.

Reasons for Claiming Exemption or Reduction in Withholding

  • Check one or more boxes to indicate the reason(s) for reduced or eliminated withholding. Each reason corresponds to a code that must be listed in Column A of the Schedule Composite or Schedule Composite-COR for the pass-through entity.
    • (03): The entity is an employee stock ownership plan.
    • (05): The entity is an insurance company not subject to Indiana adjusted gross income tax or financial institutions tax.
    • (06): The entity is a nonprofit organization (including IRAs and other retirement plans) with income that is not unrelated business income.
    • (07): The entity is a real estate investment trust (excluding captive real estate investment trusts).
    • (08): The entity is a real estate mortgage investment conduit.
    • (09): The entity qualifies for a treaty-based exemption. List the country and the relevant treaty provision.
    • (04): Suspended losses—Specify the allowable amount and claim amount.
    • (10): Passive activity losses—Specify the allowable amount and claim amount.
    • (11): Indiana net operating losses—Specify the allowable amount and claim amount.
    • (12): Indiana tax credits from other sources or carryforwards—List each credit, the credit code, the amount, the year earned, and the FEIN or SSN of the source.
    • (13): The entity is a corporation or financial institution registered to do business in Indiana and remitting estimated payments on income from the pass-through entity. Provide the FEIN if the corporation subject to withholding differs from the corporation reporting tax for Indiana purposes.

Declaration and Signature

  • The nonresident must sign and date the affidavit under penalty of perjury.
  • Include the name and title (if applicable) of the individual signing the affidavit.

Additional Considerations

  1. Material Changes: If there is a material change in law or facts, the affidavit becomes void, and a new affidavit must be completed.
  2. Pass-Through Entity Obligations: Pass-through entities are required to attach completed affidavits to their tax returns each year. Failure to do so will result in the affidavit being treated as invalid.
  3. Amended Returns: The affidavit does not relieve the pass-through entity of withholding obligations if an amended return or department adjustment is filed.
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