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 not
include possession by a shipping company on behalf of the
purchaser.
(b) This section:
(1) applies regardless of the characterization of a product as
tangible personal property, a digital good, or a service;
(2) applies only to the determination of a seller's obligation to
pay or collect and remit a sales or use tax with respect to the
seller's retail sale of a product; and
(3) does not affect the obligation of a purchaser or lessee to
remit tax on the use of the product to the taxing jurisdictions of
that use.
(c) This section does not apply to sales or use taxes levied on the
following:
(1) The retail sale or transfer of watercraft, modular homes,
manufactured homes, or mobile homes. These items must be
sourced 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 as
transportation equipment, as defined in subsection (g). The
retail sale of these items shall be sourced according to the
requirements of this article, and the lease or rental of these
items must be sourced according to subsection (f).
(3) Telecommunications services, as set forth in IC 6-2.5-12,
shall be sourced in accordance with IC 6-2.5-12.
(d) The retail sale, excluding lease or rental, of a product shall be
sourced as follows:
(1) When the product is received by the purchaser at a business
location of the seller, the sale is sourced to that business
location.
(2) When the product is not received by the purchaser at a
business location of the seller, the sale is sourced to the location
where receipt by the purchaser (or the purchaser's donee,
designated as such by the purchaser) occurs, including the
location 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 is
sourced to the location indicated by an address for the purchaser
that is available from the business records of the seller that are
maintained in the ordinary course of the seller's business when
use of this address does not constitute bad faith.
(4) When subdivisions (1), (2), and (3) do not apply, the sale is
sourced to the location indicated by an address for the purchaser
obtained during the consummation of the sale, including the
address of a purchaser's payment instrument, if no other address
is available, when use of this address does not constitute bad
faith.
(5) When none of the previous rules of subdivision (1), (2), (3),
or (4) apply, including the circumstance in which the seller is
without sufficient information to apply the previous rules, then
the location will be determined by the address from which
tangible personal property was shipped, from which the digital
good or the computer software delivered electronically was first
available for transmission by the seller, or from which the
service was provided (disregarding for these purposes any
location that merely provided the digital transfer of the product
sold).
(e) The lease or rental of tangible personal property, other than
property identified in subsection (f) or (g), shall be sourced as
follows:
(1) For a lease or rental that requires recurring periodic
payments, the first periodic payment is sourced the same as a
retail sale in accordance with the provisions of subsection (d).
Periodic payments made subsequent to the first payment are
sourced to the primary property location for each period
covered by the payment. The primary property location shall be
as indicated by an address for the property provided by the
lessee that is available to the lessor from its records maintained
in the ordinary course of business, when use of this address
does not constitute bad faith. The property location shall not be
altered by intermittent use at different locations, such as use of
business property that accompanies employees on business trips
and service calls.
(2) For a lease or rental that does not require recurring periodic
payments, the payment is sourced the same as a retail sale in
accordance with the provisions of subsection (d).
This subsection does not affect the imposition or computation of
sales or use tax on leases or rentals based on a lump sum or an
accelerated basis, or on the acquisition of property for lease.
(f) The lease or rental of motor vehicles, trailers, semitrailers, or
aircraft that do not qualify as transportation equipment, as defined in
subsection (g), shall be sourced as follows:
(1) For a lease or rental that requires recurring periodic
payments, each periodic payment is sourced to the primary
property location. The primary property location shall be as
indicated by an address for the property provided by the lessee
that is available to the lessor from its records maintained in the
ordinary course of business, when use of this address does not
constitute 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 periodic
payments, the payment is sourced the same as a retail sale in
accordance with the provisions of subsection (d).
This subsection does not affect the imposition or computation of
sales or use tax on leases or rentals based on a lump sum or
accelerated basis, or on the acquisition of property for lease.
(g) The retail sale, including lease or rental, of transportation
equipment shall be sourced the same as a retail sale in accordance
with the provisions of subsection (d), notwithstanding the exclusion
of 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 of
persons 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 and
certificated by the U.S. Department of Transportation or
another federal authority to engage in the carriage of persons
or property in interstate commerce.
(3) Aircraft that are operated by air carriers authorized and
certificated by the U.S. Department of Transportation or
another federal or a foreign authority to engage in the carriage
of persons or property in interstate or foreign commerce.
(4) Containers designed for use on and component parts
attached or secured on the items set forth in subdivisions (1)
through (3).
As added by P.L.257-2003, SEC.32.
Last modified: May 28, 2006