CHAPTER 11. SIMPLIFIED SALES AND USE TAX ADMINISTRATION ACT
IC 6-2.5-11
Chapter 11. Simplified Sales and Use Tax Administration Act
IC 6-2.5-11-1
Short title
Sec. 1. This chapter shall be known as and referred to as the"simplified sales and use tax administration act".
As added by P.L.107-2001, SEC.1.
IC 6-2.5-11-2
Definitions
Sec. 2. As used in this chapter:
(1) "Agreement" means the Streamlined Sales and Use TaxAgreement.
(2) "Certified automated system" means software certifiedjointly by the states that are signatories to the agreement tocalculate the tax imposed by each jurisdiction on a transaction,to determine the amount of tax to remit to the appropriate state,and to maintain a record of the transaction.
(3) "Certified service provider" means an agent certified jointlyby the states that are signatories to the agreement to perform allof the seller's sales tax functions.
(4) "Person" means an individual, a trust, an estate, a fiduciary,a partnership, a limited liability company, a limited liabilitypartnership, a corporation, or any other legal entity.
(5) "Sales tax" means the state gross retail tax levied underIC 6-2.5.
(6) "Seller" means any person making sales, leases, or rentals ofpersonal property or services.
(7) "State" means any state of the United States and the Districtof Columbia.
(8) "Use tax" means the use tax levied under IC 6-2.5.
As added by P.L.107-2001, SEC.1.
IC 6-2.5-11-3
Findings of general assembly
Sec. 3. The general assembly finds that a simplified sales and usetax system will reduce and over time eliminate the burden and costfor all vendors to collect this state's sales and use tax. The generalassembly further finds that this state should participate in multistatediscussions to review, amend, or review and amend the terms of theagreement to simplify and modernize sales and use taxadministration in order to substantially reduce the burden of taxcompliance for all sellers and all types of commerce.
As added by P.L.107-2001, SEC.1.
IC 6-2.5-11-4
Delegates to review or amend agreement
Sec. 4. (a) For the purposes of reviewing, amending, or reviewingand amending the agreement embodying the simplification
requirements set forth in section 7 of this chapter, the state shallenter into multistate discussions. For purposes of those discussions,the state shall be represented by four (4) delegates, appointed asfollows:
(1) One (1) member of the house of representatives, appointedby the speaker of the house of representatives.
(2) One (1) member of the senate, appointed by the presidentpro tempore of the senate.
(3) One (1) individual appointed by the governor.
(4) The commissioner of the department of state revenue, whois an ex officio member.
A delegate appointed under subdivisions (1) through (3) serves at thepleasure of the officer who appointed that delegate.
(b) Each delegate who is not a state employee is entitled to theminimum salary per diem provided by IC 4-10-11-2.1(b). Thedelegate is also entitled to reimbursement for traveling expenses asprovided under IC 4-13-1-4 and other expenses actually incurred inconnection with the delegate's duties as provided in the state policiesand procedures established by the Indiana department ofadministration and approved by the budget agency. Expensesincurred under this subsection shall be paid out of the fundsappropriated to the department of state revenue.
(c) Each delegate who is a state employee but who is not amember of the general assembly is entitled to reimbursement fortraveling expenses as provided under IC 4-13-1-4 and other expensesactually incurred in connection with the delegate's duties as providedin the state policies and procedures established by the Indianadepartment of administration and approved by the budget agency.
(d) Each delegate who is a member of the general assembly isentitled to receive the per diem, mileage, and travel allowances paidto members of the general assembly under travel policies establishedby the legislative council. Per diem, mileage, and travel allowancespaid under this subsection shall be paid from appropriations made tothe legislative council or the legislative services agency.
As added by P.L.107-2001, SEC.1.
IC 6-2.5-11-5
Powers of department
Sec. 5. The department may enter into the agreement with one (1)or more states to simplify and modernize sales and use taxadministration in order to substantially reduce the burden of taxcompliance for all sellers and for all types of commerce. Infurtherance of the agreement, the department may act jointly withother states that are members of the agreement to establish standardsfor certification of certified service providers and certified automatedsystems and to establish performance standards for multistate sellers.The department may take other actions reasonably required toimplement this chapter. Other actions authorized by this sectioninclude, but are not limited to, the adoption of rules and the jointprocurement, with other member states, of goods and services in
furtherance of the cooperative agreement. The department or thedepartment's designee shall represent the state of Indiana before theother states that are signatories to the agreement.
As added by P.L.107-2001, SEC.1.
IC 6-2.5-11-6
Effect on Indiana law
Sec. 6. No provision of the agreement authorized by this chapterin whole or in part invalidates or amends any provision of the law ofIndiana. Adoption of the agreement by the state of Indiana does notamend or modify any Indiana law. Implementation of any conditionof the agreement in Indiana, whether adopted before, at, or aftermembership of this state in the agreement, must be by the action ofthis state.
As added by P.L.107-2001, SEC.1.
IC 6-2.5-11-7
Requirements in agreement
Sec. 7. The department shall not enter into the agreement unlessthe agreement requires each state to abide by the followingrequirements:
(1) Simplified State Rate. The agreement must set restrictionsto limit over time the number of state rates.
(2) Uniform Standards. The agreement must establish uniformstandards for the following:
(A) The sourcing of transactions to taxing jurisdictions.
(B) The administration of exempt sales.
(C) Sales and use tax returns and remittances.
(3) Central Registration. The agreement must provide a centralelectronic registration system that allows a seller to register tocollect and remit sales and use taxes for all signatory states.
(4) No Nexus Attribution. The agreement must provide thatregistration with the central registration system and thecollection of sales and use taxes in the signatory states will notbe used as a factor in determining whether the seller has nexuswith a state for any tax.
(5) Local Sales and Use Taxes. The agreement must provide forreduction of the burdens of complying with local sales and usetaxes through the following:
(A) Restricting variances between the state and local taxbases.
(B) Requiring states to administer any sales and use taxeslevied by local jurisdictions within the state so that sellerscollecting and remitting these taxes will not have to registeror file returns with, remit funds to, or be subject toindependent audits from local taxing jurisdictions.
(C) Restricting the frequency of changes in the local salesand use tax rates and setting effective dates for theapplication of local jurisdictional boundary changes to localsales and use taxes. (D) Providing notice of changes in local sales and use taxrates and of changes in the boundaries of local taxingjurisdictions.
(6) Monetary Allowances. The agreement must outline anymonetary allowances that are to be provided by the states tosellers or certified service providers. The agreement must allowfor a joint public and private sector study of the compliancecost on sellers and certified service providers to collect salesand use taxes for state and local governments under variouslevels of complexity to be completed on or before July 1, 2002.
(7) State Compliance. The agreement must require each state tocertify compliance with the terms of the agreement beforejoining and to maintain compliance, under the laws of themember state, with all provisions of the agreement while thestate is a member.
(8) Consumer Privacy. The agreement must require each stateto adopt a uniform policy for certified service providers thatprotects the privacy of consumers and maintains theconfidentiality of tax information.
(9) Advisory Councils. The agreement must provide for theappointment of an advisory council of private sectorrepresentatives and an advisory council of nonmember staterepresentatives to consult in the administration of theagreement.
As added by P.L.107-2001, SEC.1.
IC 6-2.5-11-8
Provisions in agreement
Sec. 8. The agreement authorized by this chapter is an accordamong individual cooperating sovereign states in furtherance of theirgovernmental functions. The agreement provides a mechanismamong the member states to establish and maintain a cooperative,simplified system for the application and administration of sales anduse taxes under the duly adopted law of each member state.
As added by P.L.107-2001, SEC.1.
IC 6-2.5-11-9
State is only intended beneficiary of agreement; no individualcauses of action
Sec. 9. (a) The agreement authorized by this chapter binds andinures only to the benefit of the state of Indiana and the othermember states. No person, other than a member state, is an intendedbeneficiary of the agreement. Any benefit to a person other than astate is established by the law of the state of Indiana and the othermember states and not by the terms of the agreement.
(b) Consistent with subsection (a), no person shall have any causeof action or defense under the agreement or by virtue of the state ofIndiana's approval of the agreement. No person may challenge, in anyaction brought under any provision of law, any action or inaction byany department, agency, or other instrumentality of the state of
Indiana, or any political subdivision of the state of Indiana on thegrounds that the action or inaction is inconsistent with the agreement.
(c) No law of Indiana, or the application thereof, may be declaredinvalid as to any person or circumstance on the grounds that theprovision or application is inconsistent with the agreement.
As added by P.L.107-2001, SEC.1.
IC 6-2.5-11-10
Certified services providers; allowances for sellers and certifiedservice providers under the agreement; relief for failure to collecttax
Sec. 10. (a) A certified service provider is the agent of a seller,with whom the certified service provider has contracted, for thecollection and remittance of sales and use taxes. As the seller's agent,the certified service provider is liable for sales and use tax due eachmember state on all sales transactions it processes for the sellerexcept as set out in this section. A seller that contracts with acertified service provider is not liable to the state for sales or use taxdue on transactions processed by the certified service provider unlessthe seller misrepresented the type of items it sells or committedfraud. In the absence of probable cause to believe that the seller hascommitted fraud or made a material misrepresentation, the seller isnot subject to audit on the transactions processed by the certifiedservice provider. A seller is subject to audit for transactions notprocessed by the certified service provider. The member states actingjointly may perform a system check of the seller and review theseller's procedures to determine if the certified service provider'ssystem is functioning properly and the extent to which the seller'stransactions are being processed by the certified service provider.
(b) A person that provides a certified automated system isresponsible for the proper functioning of that system and is liable tothe state for underpayments of tax attributable to errors in thefunctioning of the certified automated system. A seller that uses acertified automated system remains responsible and is liable to thestate for reporting and remitting tax.
(c) A seller that has a proprietary system for determining theamount of tax due on transactions and has signed an agreementestablishing a performance standard for that system is liable for thefailure of the system to meet the performance standard.
(d) A certified service provider or a seller using a certifiedautomated system that obtains a certification or taxability matrixfrom the department is not liable for sales or use tax collection errorsthat result from reliance on the department's certification or taxabilitymatrix. If the department determines that an item or transaction isincorrectly classified as to the taxability of the item or transaction,the department shall notify the certified service provider or the sellerusing a certified automated system of the incorrect classification. Thecertified service provider or the seller using a certified automatedsystem must revise the incorrect classification within ten (10) daysafter receiving notice of the determination from the department. If
the classification error is not corrected within ten (10) days afterreceiving the department's notice, the certified service provider or theseller using a certified automated system is liable for failure tocollect the correct amount of sales or use tax due and owing.
(e) If at least thirty (30) days are not provided between theenactment of a statute changing the rate set forth in IC 6-2.5-2-2 andthe effective date of the rate change, the department shall relieve theseller of liability for failing to collect tax at the new rate if:
(1) the seller collected the tax at the immediately precedingeffective rate; and
(2) the seller's failure to collect at the current rate does notextend beyond thirty (30) days after the effective date of therate change.
A seller is not eligible for the relief provided for in this subsection ifthe seller fraudulently fails to collect at the current rate or solicitspurchases based on the immediately preceding effective rate.
(f) The department shall allow any monetary allowances that areprovided by the member states to sellers or certified serviceproviders in exchange for collecting the sales and use taxes asprovided in article VI of the agreement.
As added by P.L.107-2001, SEC.1. Amended by P.L.195-2005,SEC.4; P.L.145-2007, SEC.9; P.L.182-2009(ss), SEC.183;P.L.113-2010, SEC.53.
IC 6-2.5-11-11
Relief from penalties, tax, and interest in certain transactionsinvolving reliance on data provided by the department
Sec. 11. (a) This section applies only to transactions occurringafter December 31, 2008.
(b) A purchaser is relieved from liability for penalties imposedunder IC 6-8.1-10-2.1 for failure to pay the amount of tax due if anyof the following occurs:
(1) A purchaser's seller or certified service provider relied onerroneous data provided by the department regarding any of thefollowing:
(A) Tax rates.
(B) Boundaries.
(C) Taxing jurisdiction assignments.
(D) The taxability matrix.
(2) A purchaser with a direct pay permit relied on erroneousdata provided by the department regarding any of the following:
(A) Tax rates.
(B) Boundaries.
(C) Taxing jurisdiction assignments.
(D) The taxability matrix.
(3) A purchaser relied on erroneous data in the taxability matrixprovided by the department.
(c) The department shall relieve a purchaser from liability for taxand interest for having failed to pay the correct amount of sales oruse tax in the circumstances described in subsection (b); however,
the relief is limited to tax and interest attributable to the department'serroneous classification in the taxability matrix of terms:
(1) included as taxable or exempt;
(2) included in the sales price;
(3) excluded from the sales price;
(4) included in a definition; or
(5) excluded from a definition.
As added by P.L.145-2007, SEC.10.
IC 6-2.5-11-12
Review of software; limited relief from liability
Sec. 12. (a) The department shall review software submitted to thegoverning board for certification as a certified automated system.The review is to determine that the program adequately classifiesproduct based exemptions granted under IC 6-2.5-5. Uponsatisfactory completion of the review, the department shall certify tothe governing board the department's acceptance of theclassifications made by the system.
(b) The governing board and the member states are notresponsible for classification of an item or a transaction within theproduct based exemptions certified by the department. The relieffrom liability provided in this section is not available to a certifiedservice provider or Model 2 seller that has incorrectly classified anitem or a transaction into a product based exemption certified by thedepartment. This subsection does not apply to the individual listingof items or transactions within a product definition approved by thegoverning board or the member states.
(c) If the department determines that an item or a transaction isincorrectly classified as to the taxability of the item or transaction,the department shall notify the certified service provider or Model 2seller of the incorrect classification. The certified service provider orModel 2 seller must revise the classification within ten (10) daysafter receiving notice of the determination from the department. Ifthe classification error is not corrected within ten (10) days afterreceiving the department's notice, the certified service provider orModel 2 seller is liable for failure to collect the correct amount ofsales or use tax due and owing.
As added by P.L.145-2007, SEC.11.