CHAPTER 13. GENERAL SOURCING RULES
IC 6-2.5-13
Chapter 13. General Sourcing Rules
IC 6-2.5-13-1
Sourcing of retail sales, leases, and rentals
Sec. 1. (a) As used in this section, the terms "receive" and"receipt" mean:
(1) taking possession of tangible personal property;
(2) making first use of services; or
(3) taking possession or making first use of digital goods;
whichever comes first. The terms "receive" and "receipt" do notinclude possession by a shipping company on behalf of thepurchaser.
(b) This section:
(1) applies regardless of the characterization of a product astangible personal property, a digital good, or a service;
(2) applies only to the determination of a seller's obligation topay or collect and remit a sales or use tax with respect to theseller's retail sale of a product; and
(3) does not affect the obligation of a purchaser or lessee toremit tax on the use of the product to the taxing jurisdictions ofthat use.
(c) This section does not apply to sales or use taxes levied on thefollowing:
(1) The retail sale or transfer of watercraft, modular homes,manufactured homes, or mobile homes. These items must besourced according to the requirements of this article.
(2) The retail sale, excluding lease or rental, of motor vehicles,trailers, semitrailers, or aircraft that do not qualify astransportation equipment, as defined in subsection (g). Theretail sale of these items shall be sourced according to therequirements of this article, and the lease or rental of theseitems must be sourced according to subsection (f).
(3) Telecommunications services, ancillary services, andInternet access service shall be sourced in accordance withIC 6-2.5-12.
(d) The retail sale, excluding lease or rental, of a product shall besourced as follows:
(1) When the product is received by the purchaser at a businesslocation of the seller, the sale is sourced to that businesslocation.
(2) When the product is not received by the purchaser at abusiness location of the seller, the sale is sourced to the locationwhere receipt by the purchaser (or the purchaser's donee,designated as such by the purchaser) occurs, including thelocation indicated by instructions for delivery to the purchaser(or donee), known to the seller.
(3) When subdivisions (1) and (2) do not apply, the sale issourced to the location indicated by an address for the purchaserthat is available from the business records of the seller that are
maintained in the ordinary course of the seller's business whenuse of this address does not constitute bad faith.
(4) When subdivisions (1), (2), and (3) do not apply, the sale issourced to the location indicated by an address for the purchaserobtained during the consummation of the sale, including theaddress of a purchaser's payment instrument, if no other addressis available, when use of this address does not constitute badfaith.
(5) When none of the previous rules of subdivision (1), (2), (3),or (4) apply, including the circumstance in which the seller iswithout sufficient information to apply the previous rules, thenthe location will be determined by the address from whichtangible personal property was shipped, from which the digitalgood or the computer software delivered electronically was firstavailable for transmission by the seller, or from which theservice was provided (disregarding for these purposes anylocation that merely provided the digital transfer of the productsold).
(e) The lease or rental of tangible personal property, other thanproperty identified in subsection (f) or (g), shall be sourced asfollows:
(1) For a lease or rental that requires recurring periodicpayments, the first periodic payment is sourced the same as aretail sale in accordance with the provisions of subsection (d).Periodic payments made subsequent to the first payment aresourced to the primary property location for each periodcovered by the payment. The primary property location shall beas indicated by an address for the property provided by thelessee that is available to the lessor from its records maintainedin the ordinary course of business, when use of this addressdoes not constitute bad faith. The property location shall not bealtered by intermittent use at different locations, such as use ofbusiness property that accompanies employees on business tripsand service calls.
(2) For a lease or rental that does not require recurring periodicpayments, the payment is sourced the same as a retail sale inaccordance with the provisions of subsection (d).
This subsection does not affect the imposition or computation ofsales or use tax on leases or rentals based on a lump sum or anaccelerated basis, or on the acquisition of property for lease.
(f) The lease or rental of motor vehicles, trailers, semitrailers, oraircraft that do not qualify as transportation equipment, as defined insubsection (g), shall be sourced as follows:
(1) For a lease or rental that requires recurring periodicpayments, each periodic payment is sourced to the primaryproperty location. The primary property location shall be asindicated by an address for the property provided by the lesseethat is available to the lessor from its records maintained in theordinary course of business, when use of this address does notconstitute bad faith. This location shall not be altered by
intermittent use at different locations.
(2) For a lease or rental that does not require recurring periodicpayments, the payment is sourced the same as a retail sale inaccordance with the provisions of subsection (d).
This subsection does not affect the imposition or computation ofsales or use tax on leases or rentals based on a lump sum oraccelerated basis, or on the acquisition of property for lease.
(g) The retail sale, including lease or rental, of transportationequipment shall be sourced the same as a retail sale in accordancewith the provisions of subsection (d), notwithstanding the exclusionof lease or rental in subsection (d). As used in this subsection,"transportation equipment" means any of the following:
(1) Locomotives and railcars that are used for the carriage ofpersons or property in interstate commerce.
(2) Trucks and truck-tractors with a gross vehicle weight rating(GVWR) of ten thousand one (10,001) pounds or greater,trailers, semitrailers, or passenger buses that are:
(A) registered through the International Registration Plan;and
(B) operated under authority of a carrier authorized andcertificated by the U.S. Department of Transportation oranother federal authority to engage in the carriage of personsor property in interstate commerce.
(3) Aircraft that are operated by air carriers authorized andcertificated by the U.S. Department of Transportation oranother federal or a foreign authority to engage in the carriageof persons or property in interstate or foreign commerce.
(4) Containers designed for use on and component partsattached or secured on the items set forth in subdivisions (1)through (3).
(h) Notwithstanding subsection (d), a retail sale of floral productsin which a florist or floral business:
(1) takes a floral order from a purchaser; and
(2) transmits the floral order by telegraph, telephone, or othermeans of communication to another florist or floral business fordelivery;
is sourced to the location of the florist or floral business thatoriginally takes the floral order from the purchaser.
As added by P.L.257-2003, SEC.32. Amended by P.L.153-2006,SEC.6; P.L.145-2007, SEC.15; P.L.19-2008, SEC.7;P.L.182-2009(ss), SEC.185.
IC 6-2.5-13-2
Repealed
(Repealed by P.L.145-2007, SEC.16.)
IC 6-2.5-13-3
Sourcing of purchases of direct mail
Sec. 3. (a) Notwithstanding section 1 of this chapter, a purchaserof direct mail that is not a holder of a direct pay permit shall provide
to the seller in conjunction with the purchase either a direct mailform or information to show the jurisdictions to which the direct mailis delivered to recipients.
(b) Upon receipt of the direct mail form, the seller is relieved ofall obligations to collect, pay, or remit the applicable tax and thepurchaser is obligated to pay or remit the applicable tax on a directpay basis. A direct mail form remains in effect for all future sales ofdirect mail by the seller to the purchaser until it is revoked in writing.
(c) Upon receipt of information from the purchaser showing thejurisdictions to which the direct mail is delivered to recipients, theseller shall collect the tax according to the delivery informationprovided by the purchaser. In the absence of bad faith, the seller isrelieved of any further obligation to collect tax on any transactionwhere the seller has collected tax under the delivery informationprovided by the purchaser.
(d) If the purchaser of direct mail does not have a direct paypermit and does not provide the seller with either a direct mail formor delivery information, as required by subsection (a), the seller shallcollect the tax according to section 1(d)(5) of this chapter. Nothingin this subsection limits a purchaser's obligation for sales or use taxto any state to which the direct mail is delivered.
(e) If a purchaser of direct mail provides the seller withdocumentation of direct pay authority, the purchaser shall not berequired to provide a direct mail form or delivery information to theseller.
As added by P.L.257-2003, SEC.32.