Sales and Use Taxes

Our firm helps several of our clients understand and file Sales and Use Tax Returns (usually called the ST-103 coupons for Indiana).

How much is Indiana’s sales tax? Indiana’s sales tax is 7 percent.

What is Use Tax? Use tax is due on property brought into Indiana for use, storage or consumption.

What is the difference between use tax and sales tax? Both taxes are complimentary and are meant to assure the state gross retail tax of 7 percent is paid upon a purchase. A purchaser pays a “sales” tax when purchasing from an Indiana seller. A purchaser pays a “use” tax when purchasing from an out-of-state seller, but the purchase is delivered into Indiana.

Who owes Indiana use tax? Generally, any type of business entity (individual, partnership, corporation, etc.) that makes purchases of tangible personal property is subject to use tax unless it previously paid at least a 7 percent sales tax on the purchase to the vendor. Use tax can be thought of as a mirror of the sales tax. Both our sales tax and use tax rates are 7 percent.

What type of purchases might cause me to become liable for use tax?

  • Catalog purchases by phone or mail from out-of-state vendors
  • Internet purchases from out-of-state vendors
  • Items withdrawn from your inventory for personal use or to give away

What about items I purchase at garage sales and auctions? Items sold at garage sales are generally exempted under Indiana’s casual sale statute. A casual sale exemption is applicable when the seller is not in the “business” of selling merchandise and the seller has already paid an original sales or use tax on the item.

Recent Indiana Department of Revenue rules state that all new businesses file their Sales and Use Tax Returns online using INTAX. This is a user friendly system that takes about 14 days to set up. Our firm has several clients in which we file and pay the Sales/Use tax using the INTAX system.

The above conversation dealt with the sales/use tax rules for Indiana. Be aware that each state has its own set of rules and following the rules for different states is difficult. We have the experience and knowledge to assist your business if you have nexus in multiple states.

Please call Brent today at 260-407-5000 to further discuss sales or use taxes!

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