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On March 10, 2015, a bipartisan group of senators introduced the Marketplace Fairness Act of 2015. Similar legislation – the Marketplace Fairness Act of 2013 – was previously introduced in February 2013 and passed by the Senate on May 6, 2013. That legislation failed to be enacted. If passed, the Marketplace Fairness Act of 2015 would authorize states meeting certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes. For more information on the previous legislation, visit Federal Government Introduces New Remote Seller Bill. (Marketplace Fairness Act of 2015, March 10, 2015)

 

UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.

(03/16/2015)

A finance company that purchased installment sale contracts at a 30% discount was entitled to the full amounts of its Indiana sales tax refund claims. The finance company purchased installment sale contracts without recourse for 70% of the amount originally financed from a car dealership. Full sales tax was financed under the contracts. The car dealership remitted 100% of the sales tax amount to the Department. Some of the installment sale customers defaulted on their contracts, and the finance company sought a tax refund on 100% of the default amount. The bad debt deduction does not require that the discounted amount be excluded when calculating the deduction. Retailers or their assignees may deduct from their gross retail income amounts written off as bad debt for federal tax purposes. (SAC Finance, Inc. v. Indiana Department of State Revenue, Indiana Tax Court, No. 49T10-1007-TA-34; 49T10-1102-TA-11, December 24, 2014)

(02/17/2015)

On December 16, 2014, President Barack Obama signed the Consolidated and Further Continuing Appropriations Act, 2015, for sales and use tax purposes. The Act includes a provision that extends the Internet Tax Freedom Act (ITFA) until October 1, 2015 with all provisions unchanged.

 

On January 9, 2015, the House of Representative introduced a bill (un-numbered) that would permanently extend the ITFA, banning states and local jurisdictions from imposing any new tax on internet access. The proposed bill removes the current effective dates of November 1, 2003 through October 1, 2015 and changes the effective date to be effective for new taxes imposed after the date of the enactment.  It is not clear if states that have been grandfathered under the existing provision could retain their current tax on internet access but it appears that may be the case.  No formal legislation has been introduced that would incorporate the Marketplace Fairness Act into this bill. The bill is sponsored by House Judiciary Committee Chairman Bob Goodlatte, among others.

 

For our previous news item on this topic, see Internet Tax Freedom Act is Extended Through December 11, 2014.

 

For an update on this news item, see Internet Tax Freedom Act Extended Until December 11, 2015.

 

(Consolidated and Further Continuing Appropriations Act, 2015; H.R. 235)

(02/12/2015)

Conveyors and conveyor equipment used by a cardboard box manufacturer did not qualify for Indiana’s manufacturing exemption from sales and use tax because the items were used in post-production. Equipment that is directly used in the production process is exempt if it has an immediate effect on the articles produced. The conveyors and conveyor equipment do not have an immediate effect on the finished product and they do not change the form, composition, or character of the finished product. The conveyors may be a necessary component of the manufacturer’s overall process but that does not mean that they have an immediate effect on the item being produced. The taxpayer argued that the production process was not complete until the “packaging” process was complete and that these conveyers were part of the packaging process.  The Department did not agree even though packaging equipment is allowed as part of the manufacturing process.  (Letter of Findings No. 04-20140408, Indiana Department of Revenue, November 26, 2014)

(02/12/2015)

A business that repairs, installs, designs and sells vehicle graphics, signs, and banners was liable for Indiana sales tax on nontaxable design and installation services because the services were sold as part of a unitary or bundled transaction with tangible personal property. The questioned services are not taxable in Indianaif separately sold from the tangible personal property, but unitary or bundled transactions that include the sale of property and services for a single combined charge are taxable. The corporation charged one price on its invoices for services and property sold. Therefore the services were subject to sales tax. (Letter of Findings No. 04-20130631, Indiana Department of Revenue, August 27, 2014)

(10/22/2014)

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