Sales Tax Changes

by: Tom Johnson
Date: 1/23/2004

Effective January 1, 2004, Indiana has enacted legislation to bring Indiana's Sales and Use Tax statutes into conformity with the Streamlined Sales and Use Tax Agreement. The legislation is meant to simplify and modernize tax collection and administration.

This legislation brings some changes in what is considered taxable sales and what is considered tax-exempt items. It also provides definitions of what is included in "Gross retail income" and has added other definitions that provide guidance to retailers. Some important changes to be aware of include the following:

  • Gross retail income provides that delivery and installation charges are included in gross retail income and are taxable.
  • Food sold in an unheated state by weight or volume as a single item, or bakery items including bread, rolls, buns, biscuits, bagels, croissants, pastries, donuts, danish, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas are considered exempt. Additionally, all bottled water and snack food items are exempt.
  • Some taxable items include candy (if flour is not one of the first three ingredients), alcohol beverages, soft drinks, food sold through a vending machine, food sold in a heated state or heated by the seller, two or more food ingredients mixed or combined by the seller, and food sold with eating utensils provided by the seller.


Complete information on these changes can be found in Commissioner's Directive #21 and Information Bulletin #29 from the Indiana Department of Revenue. For more information, contact Tom Johnson, RHAI Controller, at 317-673-4211, 800-678-1957 (toll-free), or e-mail tjohnson@livengood-associates.com.


 
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