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State & Local Tax Update - 1/20/12

Posted 3:40 PM by

Indiana Updates Sales Tax Guidance for Colleges and Universities:  The IDOR has revised Information Bulletin 68 concerning nonprofit and state colleges and universities to include separate sales tax treatment for colleges and universities that operate as nonprofit organizations and those that operate as governmental agencies. Indiana state colleges and universities that are nonprofit organizations or governmental agencies are entitled to certain exemptions from sales and use tax for purchases and sales that support the exempt government function or educational mission of the institutions. Transactions that do not support the exempt educational mission of a nonprofit educational institution or that are associated with a proprietary activity on the part of a state government educational institution are subject to tax. The bulletin details: purchases and sales by nonprofit colleges and universities; purchases and sales by state colleges and universities; application of the key terms “educational materials,” “proprietary activity,” “accommodations,” and “student”; furnishing or selling intrastate telecommunication services; and student organizations at state colleges and universities.

Missouri Upholds Use Tax on Repair Parts: The MO Sup Ct. held that a company that provides maintenance and repair services for mainframe computers is liable for use tax on parts it purchased and used in fulfilling maintenance contracts because it engaged in taxable use in MO. The company did not just store the parts temporarily in MO, but unpacked, inspected, tested, and repackaged the parts then certified them for use and shipped them to its customers. Further, it was not entitled to resale exemption because it did not purchase the parts for subsequent taxable sale. For more information, see Custom Hardware Engineering & Consulting Inc. v. Director of Revenue.