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Indiana has issued a bulletin updating its sales tax guidance on drop shipments. For sales for resale, purchasers may now provide either the Indiana Resale Certificate Form ST-105 or Form SSTGB Form F0003 (Streamlined Sales Tax Governing Board exemption certificate). The transaction between the seller and the purchaser will normally be exempt as a sale for resale if the procedures are properly followed. (Information Bulletin #57, Indiana Department of Revenue, September 2011)


An Indiana company’s contracts for real property improvements were deemed to be time and materials contracts subject to sales tax, not nontaxable lump-sum contracts, despite the fact that customers paid the entire contract price when the contract was executed. A contract is lump-sum when all materials and labor are provided for one specified price. In a time and materials contract, materials and labor are sold for separately quoted prices. In this case, the company listed labor and materials as separate components on the invoice, but charged a single negotiated price for all items required to complete the contracted work. A number of factors show the company’s contracts to be inconsistent with a true lump-sum contract. A contract clause permits discounts on the combined price of materials and labor when products are sold with installation. Additionally, another clause provides for procedures to allow customers to purchase a water heater for installation without separate charges for installation. Finally, the company lists offers for discounted or free installation on its website. (Letter of Findings No. 04-20110020, Indiana Department of Revenue, January 25, 2012)


An Indiana retailer was deemed not liable for sales and use tax on the sale of the right to use web-based computer programs because the retailer provided service contracts, brochures and other information about the services to the court showing that the transactions did not involve prewritten computer software, which is taxable tangible personal property. As such, the retailer was not liable for collecting and remitting sales and use tax on the sale of the right to use web-based computer programs. (Letter of Findings No. 04-20110291, Indiana Department of Revenue, March 28, 2012)


A car manufacturer that sells access to an online employee training system to a car dealership is not subject to sales tax on sales of the training system. The sale qualifies as a nontaxable training service and not as a sale of tangible personal property, computer software, or a subscription subject to Indiana sales tax. However, sales of customer “leads” by the car manufacturer to a car dealership qualify as sales of tangible personal property and are subject to Indiana sales tax. The sale of statistical reports, graphs, diagrams or any other information produced or complied by a computer and sold or reproduced for sale in substantially the same form as it is so produced is considered to be the sale of tangible personal property unless the information from which such reports was compiled was furnished by the same person to whom the finished report is sold. However, the charge for reports compiled by a computer exclusively from data furnished by the same person for whom the data is prepared is considered to be for a service and is not subject to sales or use tax unless it is part of a unitary transaction which is subject to sales or use tax. In this case, the data was provided by independent parties and not the car dealers. The customer information was obtained by the car manufacturer and sold on a per-unit basis to the dealership. The dealership paid a monthly fee for the customer information reports. (Letter of Findings No. 04-20100705, Indiana Department of Revenue, January 25, 2012)


The Indiana Department of Revenue has issued a ruling stating that repair service companies must collect and remit sales tax on the monthly or annual fees it charges customers under their real estate improvement repair services contracts for a number of items. The included items are furnaces, boilers, water heaters, heat pumps, central air conditioning units, inside water lines, inside electric lines, and inside gas lines. Repair service companies are not required to remit sales or use tax on the tangible personal property that is used to repair any of the listed items under such contracts. Optional extended warranty or maintenance agreements that contain the right to have property supplied in the event that it’s needed are subject to sales tax if there is a reasonable expectation that tangible personal property will be provided. The supplier of the parts or property is not liable for use tax on the items because the supplier is using them to fulfill the service called for by the repair service contract. (Revenue Ruling No. 2010-09 ST, Indiana Department of Revenue, January 14, 2011)



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