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An Indiana company that purchased two aircraft, one from Canada and another from Connecticut, and used the aircraft to fly to several U.S. destinations before entering Indiana for the first time were assessed for use tax during an audit by the Indiana Department of Revenue. The planes were primarily stored in a hangar within Indiana but were used frequently for interstate travel. However, the company had a private letter ruling from the Department which stated that the lease payments were not subject to Indiana use tax because the aircraft were used primarily for interstate travel. The court upheld the original assessment stating that the tax assessment violated the three prong test set in place by the Supreme Court case Complete Auto Transit, Inc. v. Brady to deter discrimination against unconstitutional taxation of interstate commerce. (Simon Aviation, Inc. v. Indiana Department of State Revenue, Docket #49T10-0003-TA-31, Decided April 02, 2004)

(05/15/2004)

Indiana has made changes to the taxability of installation and the rules for delivery taxability. Effective March 18, 2004, installation charges are no longer subject to Indiana sales tax. However, for the exemption to apply the installation charges must be separately stated on the invoice, bill of sale or a similar document which is given to the purchaser. Effective January 1, 2004 delivery charges are defined as "charges by the seller for preparation and delivery of the property to a location designated by the purchaser of the property, including transportation, shipping, postage, handling, crating and packing. A transfer of property does not occur until after delivery of the property to the purchaser." Delivery charges, as defined, will continue to be taxable. (Commissioner's Directive #23, Indiana Department of Revenue, April 2004; Indiana IC 6-2.5-4-1(e)(2))

(05/15/2004)

A new Indiana provision clarifies that a retail merchant is not entitled to a refund of Indiana sales or use taxes unless the retail merchant refunds those taxes to the person from whom they were collected. (P.L. 97 (S.B. 106), Laws 2004, effective March 16, 2004.)

(05/15/2004)

Legislation was signed into law on March 17, 2004 that made the following sales and use tax law changes in Indiana : (1) certain out-of-state businesses will be required to register as retail merchants and collect the tax; (2) the provision of satellite television and radio services and cable radio services is made subject to tax; (3) a credit is enacted against Indiana use tax for sales taxes paid in another state on a vehicle, aircraft, or watercraft, and the sales tax credit that is currently available for sales of these items made in Indiana when the item is titled or registered in another state is repealed; (4) separately stated installation charges are specifically excluded from gross receipts subject to tax; and (5) the sales tax on complimentary hotel rooms is repealed. (H.B. 1365, Laws 2004, as signed into law by Governor Joe Kernan, March 17, 2004)

(04/15/2004)

Effective March 9, 2004, all income from the sale of bundled telecommunications services is subject to Indiana sales tax. Traditionally, long distance calls have not been subject to Indiana sales tax. Recently, phone companies have started offering bundled local and long distance service packages for a flat monthly fee. The entire fee is identified as taxable unless the service provider keeps adequate books and records in the regular course of business to allocate which portion of the bill would be subject to tax or considered nontaxable had the portions been separately stated on the bill. (PL 5 (HB 1114), Laws 2004; Digest of HB1114, updated February 19, 2004)

(04/15/2004)

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