Indiana verifies that contractor’s purchase and use of items outside the state are not subject to use tax.

In a Letter of Findings, issued by the Indiana Department of Revenue, a contractor was not required to pay an assessment of use tax on its purchase of seeds, a fan, bathroom rough-in kits, painting and wallpapering supplies, and fabric books. The contractor was assessed use tax on these items during an audit. The contractor was able to provide sufficient evidence proving that sales tax was paid on the purchase of the seeds and therefore no additional use tax would be due. Also, the contractor submitted evidence that the fan, rough-in kits, and painting and wallpapering supplies were purchased and utilized outside the State of Indiana. Finally, the contractor’s disagreement with the assessment of use tax on the purchase of fabric books was not that the items were not subject to use tax, but that these items were listed multiple times in the audit. The State of Indiana also stated, reaffirming IC 6-2.5-4-1(e)(2), that delivery charges that take place prior to the transfer of title among the enumerated taxable services in the State of Indiana. (Letter of Findings, No. 02-0398, Indiana Department of Revenue, January 1, 2005)

Posted on January 24, 2005