Indiana – Delivery of Automobiles Created Nexus


SALT Report 2223 – The Indiana Department of Revenue issued a ruling regarding whether an out-of-state business who delivered automobiles to customers in Indiana had substantial nexus that would require it collect and remit sales tax. Pursuant to an audit, the Department determined that the Taxpayer had not collected or reported sales tax on nine deliveries it made in Indiana from 2008 – 2011. The Department issued an assessment for sales tax and interest which the Taxpayer timely appealed.

In its appeal, the Taxpayer claimed that it only delivered items to customers in Indiana when the customer’s location was en route to an event in which the Taxpayer was attending anyway. As a result, the Taxpayer believed that its activities did not establish nexus with Indiana and did not constitute taxable events.

In their decision, the Department stated that Indiana recognizes federal law which states that “a vendor whose only contact with a taxing state is by mail or common carrier does not have substantial nexus as required by the U.S. Commerce Clause.” However, the Department determined that the Taxpayer delivers merchandise in Indiana using its own vehicle, not a common carrier. Therefore, the Department ruled that the Taxpayer has substantial nexus with Indiana and is liable for sales tax on deliveries of merchandise made to customers in Indiana.

For Further Information

Indiana Department of Revenue – Letter of Finding 04-20120449