Indiana – Recently Enacted Sales and Use Tax Laws

SALT Report 2578 – On June 12, 2013 the Indiana General Assembly overrode Governor Mike Pence’s veto of House Bill 1546. During the technical corrections day meeting, both the House and Senate voted to override the Governor’s veto and force into law a Bill includes the retroactive approval of local income taxes that have been collected in Jackson and Pulaski counties since 2011, even though there was no law authorizing it. The Bill also includes the following sales and use tax provisions:

Indiana Government Exemption

Effective January 1, 2014, accommodations purchased by the state of Indiana, its agencies, instrumentalities, or other entities for use in “performing government functions” are exempt.

Nonprofit Exemption

Effective January 1, 2014, accommodations purchased by qualified nonprofit entities that are “primarily used to carry on or to raise money to carry on the entity’s not-for-profit purposes” are exempt.

Gasoline Prepayment Deduction or Credit

A retailer who sells gasoline or special fuels from a metered pump can deduct their sales tax prepayments from the amount of sales tax collected. If the gasoline prepayment deduction exceeds the amount of sales tax that is to be remitted, the retailer may take a credit instead. The credit will be first applied against the retailer’s sales and use tax liability. Any amount remaining will be applied against the retailer’s gas tax liability. The credit may not be applied to liabilities for gasoline delivered to a taxable marine facility.

Retailers may file a claim for refund instead of taking a credit if any excess tax payment is remaining after the credits are taken. The retailer may also file a claim for refund under the rules for retail distributors who prepay sales tax and sell gas to an exempt purchaser. These provisions are effective retroactively to July 1, 2012.

Retail Merchant Certificate Renewal

If the Department notifies a retail merchant that it will not renew the merchant’s registered retail merchant’s certificate due to delinquent sales and use taxes, and the merchant pays the taxes due before the certificate expires, the Department will renew the certificate for a one year period. This provision is effective January 1, 2014.

Additionally, a wholesaler, retailer, dealer, or permit of any other type will not be issued, renewed or transferred if the applicant is more than 30 days delinquent in remitting sales taxes. This provision is effective July 1, 2013.

Sales Made Without a Retail Merchant’s Certificate

Effective July 1, 2013, it is a Class A misdemeanor for a retail merchant to make retail transactions without a valid registered retail merchant’s certificate. Previously, it was a Class B misdemeanor.

Disaster Recovery Exemption

An exemption from sales and use tax is available for sales of equipment used or consumed during a disaster period by an out-of-state business that performs disaster related emergency work in the State. Additionally, the Bill provides that these out-of-state businesses are also exempt from any state or local business, occupational licensing, or registration requirements. This exemption is effective July 1, 2013.

However, sales and use tax is due on materials or services purchased by an out-of-state business or out-of-state employee for use or consumption during the disaster period. This also applies to fuel taxes, hotel taxes, and car rental taxes.

Electronic Document Delivery

Effective July 1, 2013, if a taxpayer provides written consent, the Department may use a secure electronic delivery service to provide the taxpayer with any documents that would otherwise be delivered through the mail.

Automated Sales Suppression Devices

Anyone who sells, purchases, installs, transfers, or possesses an automated sales suppression device or phantom-ware, is committing a Class C felony. Automated sales suppression devices are those devices that falsify the electronic records of electronic cash registers and other point-of-sale systems, including transaction data and transaction reports. Phantom-ware is used to create a virtual second till to eliminate or manipulate the transaction records in an electronic cash register.

For Further Information

Indiana General Assembly – Act 1546, Laws 2013