@hilliardcouple,

I saw your posting about the Schedule Composite for the Indiana partnership filing.  I agree with your assertion that the software does not include non-residents on the composite form when the partner has a distributive loss on Part 4, line 9 of their respective K-1.  The software is following the IT-65 instructions provided by the Indiana at this time. Below is an excerpt from the instructions for the IT-65, on page 18:

 "A partnership will be assessed a penalty of $500 if it fails to file a composite return that includes all nonresident partners. If a partnership has a nonresident partner with a negative distributive share of income after modifications, that partner is not required to be listed. Failure to list such partners will not be subject to the $500 penalty."

The verbal communication with the agency seems to be not aligned with the instructions.  Did they indicate what they expected to see in the filing?  A blank Schedule Composite?  Did they want a the composite checkbox completed on page 1, line E of the IT-65?  

Any more details would be helpful to help us investigate the issue.  Thanks.