The Indiana Department of Revenue (DOR) started the non-filer/skip-filer program to identify individuals who are not filing taxes with the State of Indiana but should be.
DOR works with various third parties including the Internal Revenue Service (IRS), Department of Workforce Development (DWD), Bureau of Motor Vehicles (BMV), and employers. This information is used to ensure taxpayers are within compliance in accordance with IC 6-3-4-1, focusing on both tax liability and on legal residency status. There is no statute of limitations if a tax return was never filed according to 45 IAC 15-5-7; however, in order to receive a refund, the return must be filed within three years after the due date of the return in accordance with IC 6-8.1-9-1.
Military service members may have unique situations. If you entered the armed forces as an Indiana resident, you keep Indiana as your taxation state regardless of duty station unless action is taken to change it. Form DD 2058, State of Legal Residence Certificate, is the only form that changes your legal residency or domicile in accordance with DoD 7000.14-R Volume 7A, Chapter 44-2.6.2. More information for military service members is available.
Tax liability
Any individual who earned income from an Indiana-sourced business or individual totaling more than their allowable exemptions must file an Indiana tax return. A general rule is to file if Indiana-based wages are greater than $1,000. This includes those who may live out of state any portion of the year. Military service members who are stationed in Indiana without permanent residency but had a side business or another W-2 employment outside of the military are subject to Indiana taxes for those additional wages.
Residency
All individuals who reside in Indiana for the full year or part of the year and have Indiana tax liability as addressed above are required to file an Indiana tax return. Military service members rely on Form DD 2058 to designate legal residency for tax purposes. This form is typically signed upon enlistment and is not automatically updated when moving to a new duty station.
I received a non-filer/skip-filer letter. Now what?
The letter you received will focus on either tax liability or on legal residency. The reason you received the letter is because DOR does not have a return on file for the year(s) in question and received third-party information that indicates one should have been filed.
The best course of action is to file the missing tax return, even if you believe it was already filed and any amount owed already paid. Common examples of missing returns include the return having been rejected by the IRS or Indiana upfront or the return not being processed due to failure to follow previously requested identity verification. You can view all your processed Indiana tax returns when signing in to your INTIME account.
If you disagree that you have tax liability in Indiana for the year(s) in question, you will need to prove your legal residency and that all tax liability was owed to another state. Your letter will list acceptable documents and ways to submit them for review.
