The Indiana Department of Revenue has issued a directive from the commissioner regarding the state’s new heavy equipment rental excise tax, effective January 1, 2019. The tax was created by H.B. 1323, signed into law as Public Law 188 in 2018. Previously, heavy equipment rentals were subject to personal property tax. Now, such rentals are excluded from personal property tax and subject to the new excise tax.
The heavy equipment rental excise tax is imposed upon the rental of heavy rental equipment from retail merchant and an Indiana location for a period of 365 or fewer days for a rental contract with no specified due date. The excise tax is imposed at a rate of 2.25% of the gross retail income received by the retail merchant for the rental, which includes delivery charges and any miscellaneous charges the merchant applies to the rental bill.
The person renting the heavy equipment rental will pay the tax as a separate amount from the consideration for the rental. The retail merchant must be registered with the state and is responsible for collecting and remitting the tax. Businesses that already have sales tax accounts open should add the new excise tax to their existing sales tax locations online. Types of equipment subject to the tax include but are not limited to:
The heavy equipment rental excise tax follows sales tax filing frequency and reporting methods, but it must be filed separately. For more information, you can read the full directive or visit the DOR’s heavy equipment rental excise tax page. Also keep in mind that rental with an operator is a service, not the rental of tangible personal property, and thus would be a non-taxable service. (Commissioner’s Directive #60, Indiana Department of Revenue, effective January 1, 2019)