SALT Report 1327 – The Indiana Department of Revenue has issued a sales tax bulletin for newspaper publishers and manufacturers. The information is meant to update taxpayers regarding changes to the manufacturer’s exemption, the 18-month limitation on refund claims related to utilities used in manufacturing, and the taxability of free-distribution newspapers.
Indiana law also provides an exemption from sales tax for transactions involving purchases of machinery, tools, and equipment that are directly used in the direct production of tangible personal property, and for purchases of materials directly consumed or directly incorporated in direct production.
This exemption applies to purchases of utilities consumed in direct production. Tangible personal property purchased to be used, consumed, or incorporated directly in the direct production of newspapers qualifies in the same manner for an exemption as purchases of any other tangible personal property used, consumed, or incorporated in manufacturing or production.
Production of the newspaper is considered to begin at the point at which news is gathered and ends with the packaging of the newspaper. Cameras, darkrooms, or supplies used to take photographs; computers or other equipment used to record stories; and equipment used to transmit or receive copy are considered to be used directly in the direct production of the newspapers.
Refund claims based provided for utilities used in the production process may not cover transactions that occur more than 18 months before the date of the refund claim.
Exemptions for Free Distribution Newspaper
The term “free-distribution newspaper” includes qualifying community newspapers, shopping papers, shoppers’ consumer papers, pennysavers, shopping guides, town criers, dollar stretchers, or other similar publications.
IC 6-2.5-5-31(d) provides an exemption from sales tax for transactions involving free distribution newspapers or for printing services performed in publishing free-distribution newspapers if the purchaser is the publisher of the free-distribution newspaper.
IC 6-2.5-5-31(c) provides an exemption from sales tax for transactions involving manufacturing machinery, tools, and equipment and other tangible personal property if the person acquiring that property acquires it for direct use or for direct consumption as a material to be consumed in the direct production or publication of free distribution newspapers or for incorporation as a material part of free-distribution newspapers published by that person.
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