Stay up to date with sales tax: Join our mailing list!

The Indiana Department of Revenue has found that a farmer's use of a forklift did not qualify it for the agricultural exemption. The farmer contested an audit finding with the argument that the forklift was used for agricultural purposes and was, therefore, exempt from tax. The Department of Revenue denied this argument due to the fact that the forklift did not have "direct use in the production process" as required by the agricultural exemption. The forklift was used for moving containers of seeds and harvested watermelons, which the department ruled to be pre-production and post production activities. (Letter of Findings No. 09-0090, Indiana Department of Revenue, July 29, 2009)


An out-of-state taxpayer that operates an internet website that allows customers to reserve hotel rooms was assessed sales tax on the fees it charged to customer. For the transactions in question, the taxpayer’s customers would reserve a room through the website and pay the taxpayer two amounts. One amount was for the cost of the room and the other amount was for estimated taxes and fees. The taxpayer contended several things, one of which was that it did not actually provide the accommodations and was not a retail merchant. These contentions were denied because a retailer is someone who rents or furnishes cubicles or space in exchange for consideration. So although the taxpayer did not own the hotels, its customers were paying them for the use or occupation of the property. The taxpayers’ claim of a Commerce Clause violation was also denied because the burden placed on the taxpayer is the same as the one placed on an Indian based travel agent. Also, the fact that the taxpayer counted the revenue at the time the customer stayed at the hotel in Indiana further proved that the transaction takes place in Indiana. Therefore, the taxpayers’ fees, which were not separately stated, were deemed to be subject to sales tax. (Letter of Finding 08-0434, Indiana Department of Revenue, January 28, 2009; Letter of Finding 08-0435, Indiana Department of Revenue, January 28, 2009)


A company manufactures surgical cutting guides, designed on a custom basis, to correct the injuries and deformities in the knee. The guides are designed using 3-D software to ensure the exact size and placement of the replacement knee. These cutting guides fall into the category of an orthopedic device according to the definition, and are prescribed to surgeons on an as-needed, patient specific basis. Therefore, the cutting guides are exempt from Indiana sales and use taxes. (Revenue Ruling No. 2008-17, Indiana Department of Revenue, January 28, 2009)


A taxpayer was found liable for sales tax for its purchase of individualized credit cards because it did not meet the requirements of a service transaction with transfers of tangible personal property for a consideration. The taxpayer, an Indiana corporation, could not establish that the value of what tangible personal property was transferred did not exceed ten percent of the entire purchase, nor that the processor paid sales tax on the tangible personal property when originally purchased. However, the taxpayer was not liable for sales tax on its purchase and payment of postage to the billing statement processing company because it was a separate transaction from the tangible personal property. (Letter of Findings No. 08-0097, Indiana Department of Revenue, November 26, 2008)


Effective January 1, 2009, unless noted otherwise, Indiana has added and amended several sales and use tax statutory definitions in order to comply with the Streamlined Sales and Use Tax Agreement, including “specified digital products”, “end user”, and “durable equipment”. For example, the definition of “durable medical equipment” has been amended to include repair and replacement parts for the equipment, that 1) can withstand repeated use; 2) is primarily and customarily used to serve a medical purpose; 3) generally is not useful to a person in the absence of illness or injury; and 4) in not worn in or on the body. The term does not include mobility enhancing equipment. This particular change is effective March 3, 2008. In addition, changes to destination-based sourcing for certain retail floral sales have been delayed from January 1, 2008 to January 1, 2010. (S.B. 233, Laws 2008)



Scroll to Top