SB 258-1_ Filed 03/13/2006, 15:24
Adopted 3/13/2006
CONFERENCE COMMITTEE REPORT
DIGEST FOR ESB 258
Citations Affected: IC 6-2.5.
Synopsis: Streamlined sales tax provisions. Makes the following changes in the gross retail and
use tax law: (1) Defines "bundled transaction" and "direct mail". (2) Excludes tobacco products
from the definition of "food and food ingredients". (3) Provides that a person is a retail merchant
making a retail transaction when the person sells tangible personal property as part of a bundled
transaction. (4) Exempts a person from filing a monthly state gross retail and use tax return
whenever the person: (A) voluntarily registers as a seller under the streamlined sales and use tax
agreement; (B) is not a model 1, model 2, or model 3 seller; and (C) has a tax collection liability
for the preceding calendar year that did not exceed $1,000. (5) Provides that whenever a florist
takes a floral order and transmits the order to another florist for delivery the transaction is sourced
to the location where the florist originally took the order. (This conference committee report
deletes the following provisions added by the House Ways and Means Committee: (1)
Requires the governor to issue a management statement concerning the effectiveness of the
accounting system and the internal controls used in the accounting system and makes
related changes. (2) Validates the procedures used in issuing certain bonds, leases, and
other obligations. (3) Updates internal references in Indiana law to the Internal Revenue
Code and expands the class of individuals for whom a dependent deduction may be taken
on a state adjusted gross income tax return.)
Effective: Upon passage; July 1, 2006.
Text Box
Adopted Rejected
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CONFERENCE COMMITTEE REPORT
MR. SPEAKER:
Your Conference Committee appointed to confer with a like committee from the Senate
upon Engrossed House Amendments to Engrossed Senate Bill No. 258 respectfully reports
that said two committees have conferred and agreed as follows to wit:
that the Senate recede from its dissent from all House amendments and that
the Senate now concur in all House amendments to the bill and that the bill
be further amended as follows:
Delete the title and insert the following:
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Delete everything after the enacting clause and insert the following:
SOURCE: IC 6-2.5-1-11.5; (06)CC025802.1. -->
SECTION 1. IC 6-2.5-1-11.5 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2006]: Sec. 11.5. (a) This section applies to retail
transactions occurring after December 31, 2007.
(b) "Bundled transaction" means a retail sale of two (2) or more
products, except real property and services to real property, that
are:
(1) distinct;
(2) identifiable; and
(3) sold for one (1) nonitemized price.
(c) The term does not include a retail sale in which the sales price
of a product varies, or is negotiable, based on other products that
the purchaser selects for inclusion in the transaction.
(d) The term does not include a retail sale that:
(1) is comprised of:
(A) a service that is the true object of the transaction; and
(B) tangible personal property that:
(i) is essential to the use of the service; and
(ii) is provided exclusively in connection with the service;
(2) includes both taxable and nontaxable products in which:
(A) the seller's purchase price; or
(B) the sales price;
of the taxable products does not exceed ten percent (10%) of
the total purchase price or the total sales price of the bundled
products; or
(3) includes both exempt tangible personal property and
taxable tangible personal property:
(A) any of which is classified as:
(i) food and food ingredients;
(ii) drugs;
(iii) durable medical equipment;
(iv) mobility enhancing equipment;
(v) over-the-counter drugs;
(vi) prosthetic devices; or
(vii) medical supplies; and
(B) for which:
(i) the seller's purchase price; or
(ii) the sales price;
of the taxable tangible personal property is fifty percent
(50%) or less of the total purchase price or the total sales
price of the bundled tangible personal property.
The determination under clause (B) must be made on the basis
of either individual item purchase prices or individual item sale
prices.
SOURCE: IC 6-2.5-1-16.5; (06)CC025802.2. -->
SECTION 2. IC 6-2.5-1-16.5 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2006]: Sec. 16.5. (a) "Direct mail" means printed material
delivered by United States mail or another delivery service to:
(1) a mass audience; or
(2) addresses on a mailing list:
(A) provided by a purchaser; or
(B) specified at the direction of a purchaser;
if the cost of the item is not billed directly to the recipient.
(b) The term includes tangible personal property that the
purchaser supplies directly or indirectly to the direct mail seller for
inclusion in the package containing the printed material.
(c) The term does not include multiple items of printed material
delivered to a single address.
SOURCE: IC 6-2.5-1-20; (06)CC025802.3. -->
SECTION 3. IC 6-2.5-1-20 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 20. "Food and food
ingredients" means substances, whether in liquid, concentrated, solid,
frozen, dried, or dehydrated form, that are sold for ingestion or chewing
by humans and that are consumed for their taste or nutritional value.
The term does not include alcoholic beverages, candy, dietary
supplements, tobacco products, or soft drinks.
SOURCE: IC 6-2.5-4-15; (06)CC025802.4. -->
SECTION 4. IC 6-2.5-4-15 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2006]: Sec. 15. (a) This section applies to retail transactions
occurring after December 31, 2007.
(b) A person is a retail merchant making a retail transaction
when the person sells tangible personal property as part of a
bundled transaction.
SOURCE: IC 6-2.5-6-1; (06)CC025802.5. -->
SECTION 5. IC 6-2.5-6-1 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2006]: Sec. 1. (a)
Except as otherwise
provided in this section, each person liable for collecting the state
gross retail or use tax shall file a return for each calendar month and
pay the state gross retail and use taxes that the person collects during
that month. A person shall file the person's return for a particular month
with the department and make the person's tax payment for that month
to the department not more than thirty (30) days after the end of that
month, if that person's average monthly liability for collections of state
gross retail and use taxes under this section as determined by the
department for the preceding calendar year did not exceed one thousand
dollars ($1,000). If a person's average monthly liability for collections
of state gross retail and use taxes under this section as determined by
the department for the preceding calendar year exceeded one thousand
dollars ($1,000), that person shall file the person's return for a particular
month and make the person's tax payment for that month to the
department not more than twenty (20) days after the end of that month.
(b) If a person files a combined sales and withholding tax report and
either this section or IC 6-3-4-8.1 requires sales or withholding tax
reports to be filed and remittances to be made within twenty (20) days
after the end of each month, then the person shall file the combined
report and remit the sales and withholding taxes due within twenty (20)
days after the end of each month.
(c) Instead of the twelve (12) monthly reporting periods required by
subsection (a), the department may permit a person to divide a year into
a different number of reporting periods. The return and payment for
each reporting period is due not more than twenty (20) days after the
end of the period.
(d) Instead of the reporting periods required under subsection (a), the
department may permit a retail merchant to report and pay the
merchant's state gross retail and use taxes for a period covering:
(1) a calendar year, if the retail merchant's average monthly state
gross retail and use tax liability in the previous calendar year does
not exceed ten dollars ($10);
(2) a calendar half year, if the retail merchant's average monthly
state gross retail and use tax liability in the previous calendar year
does not exceed twenty-five dollars ($25); or
(3) a calendar quarter, if the retail merchant's average monthly state
gross retail and use tax liability in the previous calendar year does
not exceed seventy-five dollars ($75).
A retail merchant using a reporting period allowed under this
subsection must file the merchant's return and pay the merchant's tax
for a reporting period not later than the last day of the month
immediately following the close of that reporting period.
(e) If a retail merchant reports the merchant's adjusted gross income
tax, or the tax the merchant pays in place of the adjusted gross income
tax, over a fiscal year or fiscal quarter not corresponding to the calendar
year or calendar quarter, the merchant may, without prior departmental
approval, report and pay the merchant's state gross retail and use taxes
over the merchant's fiscal period that corresponds to the calendar period
the merchant is permitted to use under subsection (d). However, the
department may, at any time, require the retail merchant to stop using
the fiscal reporting period.
(f) If a retail merchant files a combined sales and withholding tax
report, the reporting period for the combined report is the shortest
period required under:
(1) this section;
(2) IC 6-3-4-8; or
(3) IC 6-3-4-8.1.
(g) If the department determines that a person's:
(1) estimated monthly gross retail and use tax liability for the
current year; or
(2) average monthly gross retail and use tax liability for the
preceding year;
exceeds ten thousand dollars ($10,000), the person shall pay the
monthly gross retail and use taxes due by electronic funds transfer (as
defined in IC 4-8.1-2-7) or by delivering in person or by overnight
courier a payment by cashier's check, certified check, or money order
to the department. The transfer or payment shall be made on or before
the date the tax is due.
(h) If a person's gross retail and use tax payment is made by
electronic funds transfer, the taxpayer is not required to file a monthly
gross retail and use tax return. However, the person shall file a
quarterly gross retail and use tax return before the twentieth day after
the end of each calendar quarter.
(i) A person:
(1) who has voluntarily registered as a seller under the
Streamlined Sales and Use Tax Agreement;
(2) who is not a Model 1, Model 2, or Model 3 seller (as defined
in the Streamlined Sales and Use Tax Agreement); and
(3) whose liability for collections of state gross retail and use
taxes under this section for the preceding calendar year as
determined by the department does not exceed one thousand
dollars ($1,000);
is not required to file a monthly gross retail and use tax return.
SOURCE: IC 6-2.5-13-1; (06)CC025802.6. -->
SECTION 6. IC 6-2.5-13-1 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE UPON PASSAGE]: 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).
(h) This subsection applies to retail sales of floral products that
occur before January 1, 2008. Notwithstanding subsection (d), a
retail sale of floral products in which a florist or floral business:
(1) takes a floral order from a purchaser; and
(2) transmits the floral order by telegraph, telephone, or other
means of communication to another florist or floral business
for delivery;
is sourced to the location of the florist or floral business that
originally takes the floral order from the purchaser.
SOURCE: ; (06)CC025802.7. -->
SECTION 7.
An emergency is declared for this act.
(Reference is to ESB 258 as printed February 17, 2006.)
Conference Committee Report
on
Engrossed Senate Bill 258
Text Box
S
igned by:
____________________________ ____________________________
Senator KenleyRepresentative Espich
Chairperson
____________________________ ____________________________
Senator HumeRepresentative Kuzman
Senate Conferees House Conferees