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Indiana e-Fairness Bill

Indiana House Enrolled Act No. 1365, Sections 2 - 8

The full text of the bill is available from the Indiana Legislature.

SECTION 2. IC 6-2.5-1-5, AS AMENDED BY P.L.257-2003, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 5. (a) Except as provided in subsection (b), "gross retail income" means the total gross receipts, of any kind or character, received in a retail transaction, including cash, credit, property, and services, for which tangible personal property is sold, leased, or rented, valued in money, whether received in money or otherwise, without any deduction for:
        (1) the seller's cost of the property sold;
        (2) the cost of materials used, labor or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller;
        (3) charges by the seller for any services necessary to complete the sale, other than delivery and installation charges;
        (4) delivery charges; or
         (5) installation charges; or
         (6) (5) the value of exempt personal property given to the purchaser where taxable and exempt personal property have been bundled together and sold by the seller as a single product or piece of merchandise.
For purposes of subdivision (4), delivery charges are charges by the seller for preparation and delivery of the property to a location designated by the purchaser of property, including but not limited to transportation, shipping, postage, handling, crating, and packing.
    (b) "Gross retail income" does not include that part of the gross receipts attributable to:
        (1) the value of any tangible personal property received in a like kind exchange in the retail transaction, if the value of the property given in exchange is separately stated on the invoice, bill of sale, or similar document given to the purchaser;
        (2) the receipts received in a retail transaction which constitute interest, finance charges, or insurance premiums on either a promissory note or an installment sales contract;
        (3) discounts, including cash, terms, or coupons that are not reimbursed by a third party that are allowed by a seller and taken by a purchaser on a sale;
        (4) interest, financing, and carrying charges from credit extended on the sale of personal property if the amount is separately stated on the invoice, bill of sale, or similar document given to the purchaser; or
        (5) 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; or
        (6) installation charges that are separately stated on the invoice, bill of sale, or similar document given to the purchaser.
    (c) A public utility's or a power subsidiary's gross retail income includes all gross retail income received by the public utility or power subsidiary, including any minimum charge, flat charge, membership fee, or any other form of charge or billing.
    SECTION 3. IC 6-2.5-3-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 1. For purposes of this chapter:
    (a) "Use" means the exercise of any right or power of ownership over tangible personal property.
    (b) "Storage" means the keeping or retention of tangible personal property in Indiana for any purpose except the subsequent use of that property solely outside Indiana.
    (c) "A retail merchant engaged in business in Indiana" includes any retail merchant who makes retail transactions in which a person acquires personal property or services for use, storage, or consumption in Indiana and who: maintains:
        (1) maintains an office, place of distribution, sales location, sample location, warehouse, storage place, or other place of business which is located in Indiana and which the retail merchant maintains, occupies, or uses, either permanently or temporarily, either directly or indirectly, and either by himself the retail merchant or through an a representative, agent, or subsidiary; or
        (2) maintains a representative, agent, salesman, canvasser, or solicitor who, while operating in Indiana under the authority of and on behalf of the retail merchant or a subsidiary of the retail merchant, sells, delivers, installs, repairs, assembles, sets up, accepts returns of, bills, invoices, or takes orders for sales of tangible personal property or services to be used, stored, or consumed in Indiana;
         (3) is otherwise required to register as a retail merchant under IC 6-2.5-8-1; or
        (4) may be required by the state to collect tax under this article to the extent allowed under the Constitution of the United States and federal law.
    (d) Notwithstanding any other provision of this section, tangible or intangible property that is:
        (1) owned or leased by a person that has contracted with a commercial printer for printing; and
        (2) located at the premises of the commercial printer;
shall not be considered to be, or to create, an office, a place of distribution, a sales location, a sample location, a warehouse, a storage place, or other place of business maintained, occupied, or used in any way by the person. A commercial printer with which a person has contracted for printing shall not be considered to be in any way a representative, an agent, a salesman, a canvasser, or a solicitor for the person.
    SECTION 4. IC 6-2.5-3-5 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 5. (a) A person is entitled to a credit against the use tax imposed on the use, storage, or consumption of a particular item of tangible personal property equal to the amount, if any, of sales tax, purchase tax, or use tax paid to another state, territory, or possession of the United States for the acquisition of that property.
     (b) The credit provided under subsection (a) does not apply to the use tax imposed on the use, storage, or consumption of vehicles, watercraft, or aircraft that are required to be titled, registered, or licensed by Indiana.
    SECTION 5. IC 6-2.5-4-1, AS AMENDED BY P.L.257-2003, SECTION 19, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE UPON PASSAGE]: Sec. 1. (a) A person is a retail merchant making a retail transaction when he engages in selling at retail.
    (b) A person is engaged in selling at retail when, in the ordinary course of his regularly conducted trade or business, he:
        (1) acquires tangible personal property for the purpose of resale; and
        (2) transfers that property to another person for consideration.
    (c) For purposes of determining what constitutes selling at retail, it does not matter whether:
        (1) the property is transferred in the same form as when it was acquired;
        (2) the property is transferred alone or in conjunction with other property or services; or
        (3) the property is transferred conditionally or otherwise.
    (d) Notwithstanding subsection (b), a person is not selling at retail if he is making a wholesale sale as described in section 2 of this chapter.
    (e) The gross retail income received from selling at retail is only taxable under this article to the extent that the income represents:
        (1) the price of the property transferred, without the rendition of any service; and
        (2) except as provided in subsection (g), any bona fide charges which are made for preparation, fabrication, alteration, modification, finishing, completion, delivery, or other service performed in respect to the property transferred before its transfer and which are separately stated on the transferor's records.
For purposes of subdivision (2), charges for delivery are charges by the seller for preparation and delivery of the property to alocation designated by the purchaser of property, including but not limited to transportation, shipping, postage, handling, crating, and packing. For purposes of this subsection, a transfer is considered to have occurred after delivery of the property to the purchaser.
    (f) Notwithstanding subsection (e):
        (1) in the case of retail sales of gasoline (as defined in IC 6-6-1.1-103) and special fuel (as defined in IC 6-6-2.5-22), the gross retail income received from selling at retail is the total sales price of the gasoline or special fuel minus the part of that price attributable to tax imposed under IC 6-6-1.1, IC 6-6-2.5, or Section 4041(a) or Section 4081 of the Internal Revenue Code; and
        (2) in the case of retail sales of cigarettes (as defined in IC 6-7-1-2), the gross retail income received from selling at retail is the total sales price of the cigarettes including the tax imposed under IC 6-7-1.
    (g) Gross retail income does not include income that represents charges for serving or delivering food and food ingredients furnished, prepared, or served for consumption at a location, or on equipment, provided by the retail merchant. However, the exclusion under this subsection only applies if the charges for the serving or delivery are stated separately from the price of the food and food ingredients when the purchaser pays the charges.
    SECTION 6. IC 6-2.5-4-11 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE MARCH 1, 2004 (RETROACTIVE)]: Sec. 11. (a) A person is a retail merchant making a retail transaction when he the person furnishes local cable television or radio service or intrastate cable satellite television or radio service that terminates in Indiana.
    (b) Notwithstanding subsection (a), a person is not a retail merchant making a retail transaction when the person provides, installs, constructs, services, or removes tangible personal property which is used in connection with the furnishing of local cable television or radio service or intrastate cable satellite or radio television service.
    SECTION 7. IC 6-2.5-6-9, AS AMENDED BY P.L.257-2003, SECTION 30, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 9. (a) In determining the amount of state gross retail and use taxes which he a retail merchant must remit under section 7 of this chapter, athe retail merchant shall, subject to subsection subsections (c) and (d), deduct from his the retail merchant's gross retail income from retail transactions made during a particular reporting period, an amount equal to his the retail merchant's receivables which:
        (1) resulted from retail transactions in which the retail merchant did not collect the state gross retail or use tax from the purchaser;
        (2) resulted from retail transactions on which the retail merchant has previously paid the state gross retail or use tax liability to the department; and
        (3) were written off as an uncollectible debt for federal tax purposes under Section 166 of the Internal Revenue Code during the particular reporting period.
    (b) If a retail merchant deducts a receivable under subsection (a) and subsequently collects all or part of that receivable, then the retail merchant shall, subject to subsection (c)(6), (d)(6), include the amount collected as part of his the retail merchant's gross retail income from retail transactions for the particular reporting period in which he the retail merchant makes the collection.
    (c) This subsection applies only to retail transactions occurring after June 30, 2004. The right to a deduction under this section is assignable only if the retail merchant that paid the state gross retail or use tax liability assigned the right to the deduction in writing.
    (d) The following provisions apply to a deduction for a receivable treated as uncollectible debt under subsection (a):
        (1) The deduction does not include interest.
        (2) The amount of the deduction shall be determined in the manner provided by Section 166 of the Internal Revenue Code for bad debts but shall be adjusted to exclude:
            (A) financing charges or interest;
            (B) sales or use taxes charged on the purchase price;
            (C) uncollectible amounts on property that remain in the possession of the seller until the full purchase price is paid;
            (D) expenses incurred in attempting to collect any debt; and
            (E) repossessed property.
        (3) The deduction shall be claimed on the return for the period during which the receivable is written off as uncollectible in the claimant's books and records and is eligible to be deducted for federal income tax purposes. For purposes of this subdivision, a claimant who is not required to file federal income tax returns may deduct an uncollectible receivable on a return filed for the period in which the receivable is written off as uncollectible in the claimant's books and records and would be eligible for a bad debt deduction for federal income tax purposes if the claimant were required to file a federal income tax return.
        (4) If the amount of uncollectible receivables claimed as a deduction by a retail merchant for a particular reporting period exceeds the amount of the retail merchant's taxable sales for that reporting period, the retail merchant may file a refund claim under IC 6-8.1-9. However, the deadline for the refund claim shall be measured from the due date of the return for the reporting period on which the deduction for the uncollectible receivables could first be claimed.
        (5) If a retail merchant's filing responsibilities have been

assumed by a certified service provider (as defined in IC 6-2.5-11-2), the certified service provider may claim, on behalf of the retail merchant, any deduction or refund for uncollectible receivables provided by this section. The certified service provider must credit or refund the full amount of any deduction or refund received to the retail merchant.
        (6) For purposes of reporting a payment received on a previously claimed uncollectible receivable, any payments made on a debt or account shall be applied first proportionally to the taxable price of the property and the state gross retail tax or use tax thereon, and secondly to interest, service charges, and any other charges.
        (7) A retail merchant claiming a deduction for an uncollectible receivable may allocate that receivable among the states that are members of the streamlined sales and use tax agreement if the books and records of the retail merchant support that allocation.
    SECTION 8. IC 6-2.5-8-10, AS AMENDED BY P.L.254-2003, SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2004]: Sec. 10. (a) A person that:
        (1) makes retail transactions from outside Indiana to a destination in Indiana;
        (2) does not maintain a place of business in Indiana; and
        (3) either:
            (A) engages in the regular or systematic soliciting of retail transactions from potential customers in Indiana;
            (B) enters into a contract to provide property or services to an agency (as defined in IC 4-13-2-1) or an a state educational institution of higher education (as defined in IC 20-12-0.5-1); or
            (C) agrees to sell property or services to an agency (as defined in IC 4-13-2-1) or an a state educational institution of higher education (as defined in IC 20-12-0.5-1); or
            (D) is closely related to another person that maintains a place of business in Indiana or is described in clause (A), (B), or (C);
shall file an application for a retail merchant's certificate under this chapter and collect and remit tax as provided in this article. Conduct described in subdivision (3)(B) and (3)(C) occurring after June 30, 2003, constitutes consent to be treated under this article as if the person has a place of business in Indiana or is engaging in conduct described in subdivision (3)(A), including the provisions of this article that require a person to collect and remit tax under this article.
    (b) A person is rebuttably presumed to be engaging in the regular or systematic soliciting of retail transactions from potential customers in Indiana if the person does any of the following:
        (1) Distributes catalogs, periodicals, advertising flyers, or other written solicitations of business to potential customers in Indiana, regardless of whether the distribution is by mail or otherwise and without regard to the place from which the distribution originated or in which the materials were prepared.
        (2) Displays advertisements on billboards or displays other outdoor advertisements in Indiana.
        (3) Advertises in newspapers published in Indiana.
        (4) Advertises in trade journals or other periodicals that circulate primarily in Indiana.
        (5) Advertises in Indiana editions of a national or regional publication or a limited regional edition in which Indiana is included as part of a broader regional or national publication if the advertisements are not placed in other geographically defined editions of the same issue of the same publication.
        (6) Advertises in editions of regional or national publications that are not by the contents of the editions geographically targeted to Indiana but that are sold over the counter in Indiana or by subscription to Indiana residents.
        (7) Broadcasts on a radio or television station located in Indiana.
        (8) Makes any other solicitation by telegraphy, telephone, computer data base, cable, optic, microwave, or other communication system.
    (c) A person not maintaining a place of business in Indiana is considered to be engaged in the regular or systematic soliciting of retail transactions from potential customers in Indiana if the person engages in any of the activities described in subsection (b) and:
        (1) makes at least one hundred (100) retail transactions from outside Indiana to destinations in Indiana during a period of twelve (12) consecutive months; or
        (2) makes at least ten (10) retail transactions totaling more than one hundred thousand dollars ($100,000) from outside Indiana to destinations in Indiana during a period of twelve (12) consecutive months.
    (d) Subject to subsection (e), the location in or outside Indiana of vendors that:
        (1) are independent of a person that is soliciting customers in Indiana; and
        (2) provide products or services to the person in connection with the person's solicitation of customers in Indiana:
             (A) including products and services such as creation of copy, printing, distribution, and recording; but
            (B) excluding:
                (i) delivery of goods;
                (ii) billing or invoicing for the sale of goods;
                (iii) providing repairs of goods;
                (iv) assembling or setting up goods for use by the purchaser; or
                (v) accepting returns of unwanted or damaged goods;
is not to be taken into account in the determination of whether the person is required to collect use tax under this section.
    (e) Subsection (d) does not apply if the person soliciting orders is closely related to the vendor.
    (f) For purposes of subsections (a) and (e), a person is closely related to another person if:
        (1) the two (2) persons:
            (A) use an identical or a substantially similar name, trademark, or good will to develop, promote, or maintain sales;
            (B) pay for each other's services in whole or in part contingent on the volume or value of sales; or
            (C) share a common business plan or substantially coordinate their business plans; and
        (2) either:
            (A) one (1) or both of the persons are corporations and:
                (i) one (1) person; and
                (ii) any other person related to the person in a manner that would require an attribution of stock from the corporation to the person or from the person to the corporation under the attribution rules of Section 318 of the Internal Revenue Code;
            own directly, indirectly, beneficially, or constructively at least fifty percent (50%) of the value of the corporation's outstanding stock;
            (B) both entities are corporations and an individual stockholder and the members of the stockholder's family (as defined in Section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively a total of at least fifty percent (50%) of the value of both entities' outstanding stock; or
            (C) one (1) or both persons are limited liability companies, partnerships, limited liability partnerships, estates, or trusts, and their members, partners, or beneficiaries own directly, indirectly, beneficially, or constructively a total of at least fifty percent (50%) of the profits, capital, stock, or value of one (1) or both persons.