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An Indiana corporation engaged in waste hauling was found liable for use tax on the purchase and repair of trucks used to haul waste. The taxpayer argued that these trucks qualified for the public transportation exemption because it contracts with a broker who acts as the taxpayer’s agent in securing waste from customers for transport to landfills, and therefore does not own the waste and is transporting the property of another. Although it is undisputed that the language of the agreement between the taxpayer and the broker limits the agency relationship to the transportation of the material and not the material itself, the agreement does not contain language that suggests that the broker or the customers own the waste. The precedent set in other cases dictates that absent this specific language, the waste hauler is presumed to be the owner of the waste at the moment it is picked up. Since the taxpayer was found to own the waste, it is not transporting the personal property of another and therefore does not qualify for the exemption. (Letter of Findings No. 09-0591, Indiana Department of Revenue, April 29, 2010)


An updated bulletin on telecommunications services, released by the Indiana Department of Revenue, highlights that ancillary services do not qualify as telecommunications services and are therefore not taxable. Pursuant to Indiana legislation, the definition of ancillary services means services that are associated with or incidental to the provision of telecommunication services, including detailed telecommunication billing, directory assistance, vertical services, and voice mail services. Furthermore, a vertical service is defined under the Streamlined Sales and Use Tax Agreement to mean an ancillary service that is offered in connection with one or more telecommunication services, which offers advanced calling features that allow customer to identify callers and to manage multiple calls and call connections, including conference bridging services. Call waiting, caller ID, call forwarding, distinct ringing, and voice mail services all qualify as vertical services and are therefore exempt. (Informational Bulletin #51T, April 8, 2010)


A taxpayer’s purchase of licenses of software that handled various office management duties commonly performed by a receptionist and accessed through the software vendor’s website was found under audit to be taxable as prewritten software because the software was not custom and is available to anyone who pays for access. Since the taxpayer must interface with the vendor’s servers to access the software, it claimed it had not purchased a tangible asset and had instead merely accessed a website for a fee. Although the taxpayer came to this conclusion by relying on an earlier Letter of Findings, the Department rejected this claim because the facts of the instant case were substantially different from the case discussed in the letter of finding. However, the Department did abate the ten percent negligence penalty because it agreed that the taxpayer had a reasonable cause to believe it was not required to pay sales or use tax when it purchased the licenses. (Letter of Findings No. 09-0656, Indiana Department of Revenue, March 24, 2010)


The Indiana Department of Revenue found that a dealership’s sale of optional warranty contracts were subject to tax because the contracts were billed as a single price for the service, labor, and parts provided under the contract. Since the dealership did not separate the cost of the service from the cost of the cost of the tires and wheels that would be provided in the event of a repair, the Department’s decision to impose sales tax on the warranties is reasonable and within its statutory authority.

Further, the taxpayer was found to owe use tax on purchases of “online database subscriptions” and “credit reports”. Although the reports were delivered electronically, the taxpayer purchased the reports on a per-unit cost qualifying the reports as taxable “goods”. However, a portion of invoices that appear to be for an electronic storage service cost are exempt because the service cost was separately-stated from the charge for monthly reports. (Letter of Findings No. 09-0797, Indiana Department of Revenue, March 24, 2010)


An Indiana taxpayer selling fuels, animal feed and fertilizer was found to owe tax on equipment used in their fertilizer and petroleum bulk plant. The taxpayer had not paid tax on the equipment as they contended that the equipment qualified for the manufacturing equipment exemption. The taxpayer's business was purchasing various types of dry fertilizer or fuels and blending them to order. The state found that this process did not meet the definition of "manufacturing" so the equipment was subject to use tax. (Letter of Findings No. 09-0563, Indiana Department of Revenue, January 27, 2010)



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