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An Indiana car dealer had purchased web-based software for a yearly license fee. The taxpayer argued that the yearly payments were for "software support services" and not for the software itself. The state found that software license agreement fell under the definition of taxable, pre-written software and tax was due on the item. The state also found that consumable supplies used in the auto repair function of the customer's business were subject to tax. The taxpayer argued that the cost of the consumable supplies was included in the amount eventually billed to the end customer, but the state found that the auto dealer was the end user of the supplies and, therefore, responsible for the tax. (Letter of Findings No. 09-0418, Indiana Department of Revenue, January 27, 2010)


The Indiana Department of Revenue has issued an Information Bulletin explaining the taxability of telecommunications services. Telecommunication service means the electronic transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point or between or among points. The term also includes the transmission, conveyance, or routing in which computer processing applications are used to act on the form, code, or protocol of the content for purposes of transmission, conveyance, or routing regardless of whether the service is referred to as voice over Internet protocol services or is classified by the Federal Communications Commission as enhanced or value added. The bulletin also provides several examples of the taxability of telecommunications service transactions involving public utilities, retail transactions for telecommunication providers, and miscellaneous charges (Information Bulletin #1T, November 2009).


The SST Compliance Review and Interpretations Committee (CRIC) has issued a report on its annual recertification review of member states. All states except Indiana and Iowa were found to be in compliance. The SST Governing Board will review the CRIC’s report and recommendations at their December 17 teleconference meeting. (2009 Compliance Review Report, SST Compliance Review and Interpretations Committee, December 4, 2009)


The Indiana Department of Revenue found a taxpayer’s purchases of tangible personal property did not qualify for the manufacturing activity. The taxpayer disassembles articles for the scrap components to sell them to scrap buyers. The state found that the taxpayer does not add new parts to the articles being disassembled, but instead removes parts and separates them into groupings. As a result, the state determined that this recycling activity did not constitute manufacturing since no new article is produced. (Letter of Findings No. 09-0311, Indiana Department of Revenue, November 25, 2009)


Recently, the Indiana Department of Revenue determined that a taxpayer’s testing and recertification activities did not qualify for a manufacturing exemption. The taxpayer, who tests and recertifies used gas cylinders for its customers pursuant to federal regulatory requirements, contended that it was a remanufacturer of used gas cylinders and therefore was entitled to a manufacturing exemption. Upon arrival of the cylinders, the taxpayer performs a visual inspection and the cylinders that pass inspection are recertified. The Department concluded that although this recertification process is complex, it does not substantially change the existing cylinders. In addition to this, the work performed on the cylinders was contemplated as a normal part of the life cycle of the existing cylinders. As a result the taxpayer was found not to be a remanufacturer of used gas cylinders and therefore, not entitled to any manufacturing exemptions. (Letter of Findings, Indiana Department of Revenue, September 30, 2009)



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