Effective Date: October 1, 2018
Threshold: Gross revenue exceeds $100,000 or 200 or more separate transactions
Measurement Date: the calendar year in which the retail transaction is made or for the calendar year preceding the calendar year in which the retail transaction is made
Includable Transactions: Gross sales; Marketplace sales excluded from the threshold for individual sellers
When You Need to Register Once You Exceed the Threshold: Immediately upon reaching the threshold
Effective July 1, 2017, Indiana has enacted economic nexus legislation affecting remote sellers. Sellers that do not have a physical presence in Indiana will be required to collect and remit Indiana sales tax and comply with the procedures and requirements of Indiana’s sales tax laws if the seller meets either of the following criteria for the calendar year in which the retail transaction is made or for the calendar year preceding the calendar year in which the retail transaction is made:
The Indiana Department of Revenue may bring a declaratory judgment action against a remote seller to establish that the person has an obligation to collect Indiana sales tax and that the person’s obligation to collect Indiana sales tax is valid under state and federal law. The department and other state agencies and state entities may not, during the pendency of the declaratory judgment action – including any appeals from a judgment in the declaratory judgment action – enforce the obligation to collect Indiana sales tax against any person that does not affirmatively consent or otherwise remit the sales tax on a voluntary basis. The latter does not apply to a person if there is a previous judgment from a court establishing the validity of the obligation to collect state gross retail tax with respect to that person.
Included in the statute is an explanation for the enactment of the remote seller collection provisions with a plea to the U.S. Supreme Court to reconsider its doctrine that prevents states from requiring remote sellers to collect the tax. It also claims that the non collection of the tax by remote sellers causes significant harm to the state of Indiana. (H.B. 1129, Laws 2017, effective July 1, 2017)
UPDATE: On June 30, 2017, the trade associations American Catalog Mailers Association and NetChoice filed a lawsuit challenging the constitutionality of Indiana’s economic nexus legislation. The American Catalog Mailers Association and NetChoice are challenging the legislation as being in violation of the Commerce Clause of the U.S. Constitution as interpreted by the Supreme Court in Quill v. North Dakota. The trade associations made attempts to convince Indiana to suspend enforcement of the provision pending the decision in the South Dakota case on economic nexus but the state has not responded. The statute included provisions that prohibit the state from enforcing the obligation to collect Indiana sales tax against any person that does not affirmatively consent or otherwise remit the sales tax on a voluntary basis during the pendency of the declaratory judgment action – including any appeals from a judgment in the declaratory judgment action. We recommend that no company voluntarily elect to collect if their only presence in the state is under these economic nexus provisions. We will continue to monitor for developments. (American Catalog Mailers Association and NetChoice v. Adam Krupp, in his official capacity as the Commissioner of the Indiana Department of Revenue, Eric Holcomb, in his official capacity as the Governor of the State of Indiana, and Indiana Department of Revenue)
UPDATE: Indiana is currently reviewing their provisions and will announce an effective date shortly. They do not expect this will be enforced retroactively.
UPDATE: Indiana announced that their provisions will not be enforceable retroactively. The Indiana Department of Revenue has provided a number of FAQs for remote sellers to better understand how current Indiana laws and filing requirements apply.
UPDATE: Indiana has issued a state notice stating, “Indiana’s Department of Revenue is currently prohibited from enforcing the obligation to collect sales tax from remote sellers until a declaratory judgment action currently pending in Indiana is resolved. Moreover, remote sellers are not obligated to register or collect Indiana sales tax until the declaratory judgment is resolved. Pending resolution of the declaratory judgment action, DOR will begin enforcing Indiana’s economic nexus law on October 1, 2018. That said, any merchant may voluntarily register and remit sales tax to Indiana.”
UPDATE: The legal challenge to Indiana’s law regarding remote sellers was resolved this week when an order granting voluntary dismissal was entered by the Marion Superior Court. The Indiana Department of Revenue (DOR) is set to begin enforcing the state’s economic nexus law on October 1, 2018. That said, any merchant may voluntarily register and remit sales tax to Indiana prior to October 1, 2018 through the Streamlined Sales Tax Registration System or with Indiana’s INBiz portal.
UPDATE – 3/25/2024: Effective January 1, 2024 retroactively, Indiana has removed the 200-transaction count from its economic nexus threshold. As of that date, a retail merchant that does not have a physical presence in Indiana is required to collect and remit Indiana sales tax on retail transactions made in Indiana if the merchant’s gross revenue from any combination of the following three items exceeds $100,000 for the current or preceding calendar year:
A marketplace facilitator must include both transactions made on its own behalf and transactions facilitated for sellers for purposes of determining if they exceed the economic nexus threshold. Except for instances where a marketplace facilitator has not met the economic nexus threshold, the transactions of the seller made through the marketplace are not counted toward the seller for purposes of determining if the seller exceeds the economic nexus threshold. (S.B. 228, Laws 2024)