2016 Indiana Legislative Update

indiana legislative update

2018 Edition  |  Table of Contents
 

Sales and Use Tax
By Donna L. Niesen, CPA, April Meade, JD, and Stephen Royster, CPA

Affected Code Section: Ind. Code § 6-2.5-1-5 (amendment)
Effective Date: January 1, 2019
Enacted By: House Bill 1323 § 2
Explanation: Amends the definition of “gross retail income” to provide that the term does not include that part of the gross receipts attributable to, among other things, any taxes legally imposed directly on the consumer that are separately stated on the invoice, bill of sale, or similar document given to the purchaser, including an excise tax imposed under Ind. Code Chapter 6-6-15.

Affected Code Section: Ind. Code § 6-2.5-4-16.7 (addition)
Effective Date: July 1, 2018
Enacted By: Senate Bill 257 § 1
Explanation: Provides that a person is a retail merchant making a retail transaction when the person sells, rents, leases, or licenses for consideration the right to use prewritten computer software delivered electronically. Provides that a transaction in which an end user purchases, rents, leases, or licenses the right to remotely access prewritten computer software over the Internet, over private or public networks, or through wireless media: (1) is not considered to be a transaction in which prewritten computer software is delivered electronically; and (2) does not constitute a retail transaction.
Application Note: For years the business community has grappled with Indiana’s taxation of SaaS. With the passage of Senate Bill 257, sellers and purchasers of SaaS products have clearer statutory guidance on how to handle sales and use tax. However, electronic delivery of software remains taxable in Indiana.

Affected Code Section: Ind. Code § 6-2.5-5-1 (amendment)
Effective Date: Upon Passage
Enacted By: Senate Bill 6 § 67
Explanation: Makes technical corrections by removing the term “insecticides” and including “pesticides” as transactions that are exempt from the state gross retail tax. Provides that a transaction involving the sale of a race horse in a claiming race is exempt from the state gross retail tax.

Affected Code Section: Ind. Code § 6-2.5-5-20 (amendment)
Effective Date: July 1, 2019
Enacted By: Senate Bill 124 § 1
Explanation: Eliminates the provision in current law that specifies that food sold through a vending machine is not eligible for the sales tax exemption for food and food ingredients for human consumption.

Affected Code Section: Ind. Code § 6-2.5-5-40 (amendment)
Effective Date: Upon Passage
Enacted By: Senate Bill 6 § 68
Explanation: Makes technical corrections.

Affected Code Section: Ind. Code § 6-2.5-5-51 (amendment)
Effective Date: Upon Passage
Enacted By: House Bill 1290 § 1
Explanation: Defines “heating oil” to have the meaning set forth in Ind. Code § 6-6-2.5-12. Specifies that heating oil is not included in the sales tax exemption for special fuel.

Affected Code Section: Ind. Code § 6-2.5-8-7 (amendment)
Effective Date: Upon Passage
Enacted By: Senate Bill 52 § 1
Explanation: Provides that the Indiana department of state revenue shall suspend a registered retail merchant’s certificate for good cause if the department finds in a public hearing by a preponderance of the evidence that a person has been convicted of dealing in marijuana based on the sale of fraudulently labeled low THC hemp extract. Provides that the suspension of the registered retail merchant certificate for the place of business shall last for one (1) year and another retail merchant certificate may not be issued for one (1) year to any person that: (1) applied for or made a retail transaction under the retail merchant certificate suspended; or (2) owned or co-owned, directly or indirectly or was an officer, a director, a manager, or a partner of the retail merchant that was issued the retail merchant certificate that was suspended.

Affected Code Section: Ind. Code Chapter 6-6-15 (addition)
Effective Date: January 1, 2019
Enacted By: House Bill 1323 § 3
Explanation: Imposes an excise tax on the rental of heavy rental equipment from a retail merchant from a location in Indiana. Provides that the term “heavy rental equipment” means personal property (including attachments used in conjunction with the personal property): (A) that is owned by a person or business that: (i) is classified under 532412 of the North American Industry Classification System Manual in effect on January 1, 2018; and (ii) is a retail merchant in the business of renting heavy equipment, including any attachments; (B) is not intended to be permanently affixed to any real property; and (C) is not subject to registration under Ind. Code Article 9-18.1 for use on a public highway. Specifies that the term does not include heavy rental equipment that is rented for mining purposes or heavy rental equipment that is eligible for a property tax abatement deduction under Ind. Code Chapter 6-1.1-12.1 during the calendar year. Defines “rental” as any transfer of possession or control of heavy rental equipment for consideration: (A) for a period not to exceed three hundred sixty-five (365) days; or (B) for a period that is open ended under the terms of the rental contract with no specified end date. Provides that the heavy equipment rental excise tax is two and twenty-five hundredths percent (2.25%) of the gross retail income received by the retail merchant for the rental. Provides that a transaction is exempt from the excise tax if: (1) the rentee is: (A) the United States government; (B) the state; (C) a political subdivision; (D) an agency or instrumentality of an entity described in clauses (A) through (C). (2) The transaction is a subrent of the heavy rental equipment from a rentee to another person, and the rentee was liable for the excise tax. Provides that a person that rents heavy rental equipment is liable for the heavy equipment rental excise tax on the transaction. Specifies that the person shall pay the tax to the retail merchant as a separate amount added to the consideration for the transaction. Provides that the retail merchant shall collect the tax as an agent for the state. Provides that the retail merchant shall remit the excise tax in the same manner as the state gross retail tax. Provides that the excise tax shall be sourced to the business location of the retail merchant from which the heavy rental equipment is rented. Provides that return to be filed for the payment of the excise tax may be either a separate return or may be combined with the return filed for the payment of the state gross retail tax, as prescribed by the department of state revenue. Provides that all revenues collected from the excise tax must be deposited in a special account of the state general fund called the heavy equipment rental excise tax account. Provides that on or before April 30 and October 30 of each year, all amounts held in the account must be distributed to counties in which the excise tax was initially imposed and collected.

Affected Code Section: Ind. Code § 6-8.1-1-1 (amendment)
Effective Date: January 1, 2019
Enacted By: House Bill 1323 § 4
Explanation: Adds the heavy equipment rental excise tax to the definition of “listed taxes” or “taxes.”

Affected Code Section: Non-Code Section
Effective Date: July 1, 2019
Enacted By: Senate Bill 124 § 2
Explanation: Provides that Ind. Code § 6-2.5-5-20, as amended by this act, applies only to retail transactions involving food sold through a vending machine that occur after June 30, 2019.

Affected Code Section: Non-Code Section
Effective Date: July 1, 2018
Enacted By: Senate Bill 257 § 2
Explanation: Provides that Ind. Code § 6-2.5-4-16.7, applies only to transactions occurring after June 30, 2018.

Affected Code Section: Non-Code Section
Effective Date: Upon Passage
Enacted By: Senate Bill 349 § 1
Explanation: Urges the legislative council to assign to an appropriate interim study committee the task of studying the following: (1) The issue of which entities are required to collect sales tax on short term rentals. (2) The issue of whether local units can impose a local innkeeper's tax on short term rentals.

Affected Code Section: Non-Code Section
Effective Date: July 1, 2018
Enacted By: Senate Bill 349 § 2
Explanation: Urges the legislative council to assign to an appropriate interim study committee the task of studying the topic of collecting and remitting state taxes regarding activity related to the peer-to-peer sharing economy.

 

Connect with Donna 
Donna L. Niesen is a partner in Katz, Sapper & Miller’s State and Local Tax Group. Donna helps keep clients up-to-date on the multitude of tax rules and requirements in all 50 states. She guides them in the right direction as they address complex issues that emerge on the state and local levels.

Connect with April 
April Meade is a state and local tax senior in Katz, Sapper & Miller’s State and Local Tax Group. April assists clients with business incentives and provides consulting services on a variety of technical sales tax matters.  

Connect with Stephen 
Stephen Royster is a director in Katz, Sapper & Miller’s State and Local Tax Group. Stephen provides services in tax consulting and preparation in the areas of multistate income and sales taxes, business incentives, controversy services and other state taxes.