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Indiana Department of Revenue was authorized to establish a tax amnesty program that provides a limited-time opportunity for individuals and businesses to pay past-due listed taxes free of penalty, interest and collection fees without fear of criminal or civil prosecution. Examples of taxes to which amnesty will apply include gross income tax, state gross retail and use taxes and all other taxes and fees that the Department collects. The program runs from September 15, 2005, through November 15, 2005. The penalty will be double the originally assessed penalty for those that are eligible to participate in the program, but fail to do so. This program applies to a listed tax that was due and payable for a period ending before July 1, 2004. (Indiana Department of State Revenue, Sec. 6-8.1-3-17)


The State of Indiana recently issued a Letter Ruling indicating that optional warranties and maintenance agreements that only contain the intangible right to have property supplied and there is no certainty that property will be supplied are not subject to sales or use tax. The taxpayer involved in the Letter Ruling is a manufacturer who purchased several maintenance agreements including equipment repair, software support, and telephone support. Since there was no true definite possibility that property would be supplied in accordance with the agreements, the State agreed with the taxpayer that the agreements were not subject to sales or use tax. In regards to the taxpayer’s purchase of cutting software, the Letter Ruling discussed the fact that since the taxpayer was utilizing the software to instruct its manufacturing machinery on cutting techniques, the software was not directly involved in the production of a product for sale. Therefore, the cutting software was subject to sales and use tax. (Indiana Department of Revenue, Letter Ruling No. 03-0108, February 1, 2005)


An Indiana taxpayer protested the assessment of sales tax on their sale of calling cards at a grocery store. The taxpayer claimed that many of the calling cards were for Voice Over Internet Protocol communications and were not subject to tax. The taxpayer also petitioned that the tax was computed incorrectly on the calling cards. The Indiana Department of Revenue found that the cards that were purchased by customers were sold at a lower price than standard calling cards, but the cards allowed customers to use a telephone for a predetermined number of minutes and this constituted a calling card purchase under Indiana law and was, therefore, subject to normal calling card taxes. Also, it was found that the auditor’s calculation was proper as the taxpayer did not provide enough information to calculate otherwise. (Letter of Findings No. 03-0313, Indiana Department of Revenue, December 1, 2004


The Indiana Department of Revenue issued a Letter of Findings denying a taxpayer’s request for abatement of sales tax assessed on the sale of prepaid voice over internet calling cards. The taxpayer, a grocery business, sold prepaid voice over internet calling cards. The Department of Revenue stated that the sale of such cards is subject to tax because the customers purchased the cards so that they could use telephones to call persons in other locations for an already predetermined number of minutes. The taxpayer also argued that the method in which the auditor calculated the sales tax due on the calling cards was incorrect. Due to lack of evidence in certain cases, the auditor calculated tax based on the average markup of the calling cards. Where evidence was provided, the auditor calculated tax based on the taxpayer’s accumulated cost of the phone cards. (Letter of Findings, No. 03-0313, Indiana Department of Revenue, December 1, 2004)


In a Letter of Findings, issued by the Indiana Department of Revenue, a contractor was not required to pay an assessment of use tax on its purchase of seeds, a fan, bathroom rough-in kits, painting and wallpapering supplies, and fabric books. The contractor was assessed use tax on these items during an audit. The contractor was able to provide sufficient evidence proving that sales tax was paid on the purchase of the seeds and therefore no additional use tax would be due. Also, the contractor submitted evidence that the fan, rough-in kits, and painting and wallpapering supplies were purchased and utilized outside the State of Indiana. Finally, the contractor’s disagreement with the assessment of use tax on the purchase of fabric books was not that the items were not subject to use tax, but that these items were listed multiple times in the audit. The State of Indiana also stated, reaffirming IC 6-2.5-4-1(e)(2), that delivery charges that take place prior to the transfer of title among the enumerated taxable services in the State of Indiana. (Letter of Findings, No. 02-0398, Indiana Department of Revenue, January 1, 2005)



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