January 20, 2010
SENATE BILL No. 250
_____
DIGEST OF SB 250
(Updated January 19, 2010 11:32 am - DI 58)
Citations Affected: IC 6-2.5.
Synopsis: Streamlined sales and use tax agreement. Makes changes in
the gross retail and use tax laws to conform to the requirements of the
Streamlined Sales and Use Tax Agreement. Provides that gross retail
income does not include telecommunications nonrecurring charges.
Defines telecommunications nonrecurring charges as amounts billed
for installation, connection, change, or initiation of a
telecommunications service. Defines a computer software maintenance
contract as a contract that obligates a person to provide a customer with
future updates or upgrades of computer software. Adds any
electronically transferred product to the list of digital products. Defines
transferred electronically as not being transferred using tangible
storage media. Eliminates the tax rate brackets. Restates the rounding
rule without change. Provides that the sale of a digital code that may be
used to later obtain a product transferred electronically is taxed the
same as the product. Exempts the sale or rental of mobility enhancing
equipment from the gross retail tax if the sale or rental is prescribed by
a person licensed to issue the prescription. Provides that dietary
supplements are not food under the gross retail tax. Provides that a
certified service provider or a seller using a certified automated system
that obtains a taxability matrix from the department is not liable for
sales or use tax collection errors that result from relying on the
taxability matrix.
Effective: July 1, 2010.
Kenley
, Hershman, Broden
January 11, 2010, read first time and referred to Committee on Tax and Fiscal Policy.
January 19, 2010, reported favorably _ Do Pass.
January 20, 2010
Second Regular Session 116th General Assembly (2010)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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Conflict reconciliation: Text in a statute in
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between statutes enacted by the 2009 Regular and Special Sessions of the General Assembly.
SENATE BILL No. 250
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 6-2.5-1-5; (10)SB0250.1.1. -->
SECTION 1. IC 6-2.5-1-5, AS AMENDED BY P.L.182-2009(ss),
SECTION 174, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2010]: Sec. 5. (a) Except as provided in
subsection (b), "gross retail income" means the total amount of
consideration, including cash, credit, property, and services, for which
tangible personal property is sold, leased, or rented, valued in money,
whether received in money or otherwise, without any deduction for:
(1) the seller's cost of the property sold;
(2) the cost of materials used, labor or service cost, interest,
losses, all costs of transportation to the seller, all taxes imposed
on the seller, and any other expense of the seller;
(3) charges by the seller for any services necessary to complete
the sale, other than delivery and installation charges;
(4) delivery charges; or
(5) consideration received by the seller from a third party if:
(A) the seller actually receives consideration from a party
other than the purchaser and the consideration is directly
related to a price reduction or discount on the sale;
(B) the seller has an obligation to pass the price reduction or
discount through to the purchaser;
(C) the amount of the consideration attributable to the sale is
fixed and determinable by the seller at the time of the sale of
the item to the purchaser; and
(D) the price reduction or discount is identified as a third party
price reduction or discount on the invoice received by the
purchaser or on a coupon, certificate, or other documentation
presented by the purchaser.
For purposes of subdivision (4), delivery charges are charges by the
seller for preparation and delivery of the property to a location
designated by the purchaser of property, including but not limited to
transportation, shipping, postage, handling, crating, and packing.
(b) "Gross retail income" does not include that part of the gross
receipts attributable to:
(1) the value of any tangible personal property received in a like
kind exchange in the retail transaction, if the value of the property
given in exchange is separately stated on the invoice, bill of sale,
or similar document given to the purchaser;
(2) the receipts received in a retail transaction which constitute
interest, finance charges, or insurance premiums on either a
promissory note or an installment sales contract;
(3) discounts, including cash, terms, or coupons that are not
reimbursed by a third party that are allowed by a seller and taken
by a purchaser on a sale;
(4) interest, financing, and carrying charges from credit extended
on the sale of personal property if the amount is separately stated
on the invoice, bill of sale, or similar document given to the
purchaser;
(5) any taxes legally imposed directly on the consumer that are
separately stated on the invoice, bill of sale, or similar document
given to the purchaser; or
(6) installation charges that are separately stated on the invoice,
bill of sale, or similar document given to the purchaser; or
(7) telecommunications nonrecurring charges.
(c) A public utility's or a power subsidiary's gross retail income
includes all gross retail income received by the public utility or power
subsidiary, including any minimum charge, flat charge, membership
fee, or any other form of charge or billing.
SOURCE: IC 6-2.5-1-14.5; (10)SB0250.1.2. -->
SECTION 2. IC 6-2.5-1-14.5 IS ADDED TO THE INDIANA
CODE AS A
NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2010]: Sec. 14.5. "Computer software
maintenance contract" means a contract that obligates a person to
provide a customer with future updates or upgrades of computer
software.
SOURCE: IC 6-2.5-1-26.5; (10)SB0250.1.3. -->
SECTION 3. IC 6-2.5-1-26.5, AS ADDED BY P.L.19-2008,
SECTION 5, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2010]: Sec. 26.5. "Specified digital products" means
electronically transferred:
(1) digital audio works;
(2) digital audiovisual works; or
(3) digital books; or
(4) products.
SOURCE: IC 6-2.5-1-27.2; (10)SB0250.1.4. -->
SECTION 4. IC 6-2.5-1-27.2 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2010]: Sec. 27.2. "Telecommunication
nonrecurring charges" means an amount billed for installation,
connection, change, or initiation of a telecommunications service
received by a customer.
SOURCE: IC 6-2.5-1-28.5; (10)SB0250.1.5. -->
SECTION 5. IC 6-2.5-1-28.5 IS ADDED TO THE INDIANA
CODE AS A NEW SECTION TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2010]: Sec. 28.5. "Transferred
electronically" means obtained by a purchaser by means other
than tangible storage media.
SOURCE: IC 6-2.5-2-2; (10)SB0250.1.6. -->
SECTION 6. IC 6-2.5-2-2, AS AMENDED BY P.L.146-2008,
SECTION 310, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2010]: Sec. 2. (a) The state gross retail tax is
measured by the gross retail income received by a retail merchant in a
retail unitary transaction and is imposed at
the following rates:
STATE
GROSS RETAIL INCOME
GROSS
FROM THE
RETAIL
RETAIL UNITARY
TAX
TRANSACTION
$ 0
less than $0.08
$ 0.01
at least $ 0.08 but less than $0.21
$ 0.02
at least $ 0.21 but less than $0.36
$ 0.03
at least $ 0.36 but less than $0.51
$ 0.04
at least $ 0.51 but less than $0.64
$ 0.05
at least $ 0.64 but less than $0.79
$ 0.06
at least $ 0.79 but less than $0.93
$ 0.07
at least $ 0.93 but less than $1.07
On a retail unitary transaction in which the gross retail income received
by the retail merchant is one dollar and seven cents ($1.07) or more,
the state gross retail tax is seven percent (7%) of that gross retail
income.
(b) If the tax computed under subsection (a) carried to the third
decimal place results in a fraction of one-half cent ($0.005) or more,
the numeral in the third decimal place being greater than four (4),
the amount of the tax shall be rounded to the next additional cent.
SOURCE: IC 6-2.5-4-16.4; (10)SB0250.1.7. -->
SECTION 7. IC 6-2.5-4-16.4, AS ADDED BY P.L.1-2009,
SECTION 48, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2010]: Sec. 16.4. (a) As used in this section, "end user" does
not include a person who receives by contract a product transferred
electronically for further commercial broadcast, rebroadcast,
transmission, retransmission, licensing, relicensing, distribution,
redistribution, or exhibition of the product, in whole or in part, to
another person or persons.
(b) A person is a retail merchant making a retail transaction when
the person:
(1) electronically transfers specified digital products to an end
user; and
(2) grants to the end user the right of permanent use of the
specified digital products that is not conditioned upon continued
payment by the purchaser.
(c) The sale of a digital code that may be used to obtain a
product transferred electronically shall be taxed in the same
manner as the product transferred electronically. As used in this
subsection, a digital code means a method that permits a purchaser
to obtain at a later date a product transferred electronically.
SOURCE: IC 6-2.5-4-17; (10)SB0250.1.8. -->
SECTION 8. IC 6-2.5-4-17 IS ADDED TO THE INDIANA CODE
AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2010]: Sec. 17. A person is a retail merchant making a retail
transaction when the person enters into a computer software
maintenance contract to provide future updates or upgrades to
computer software.
SOURCE: IC 6-2.5-5-18; (10)SB0250.1.9. -->
SECTION 9. IC 6-2.5-5-18, AS AMENDED BY P.L.182-2009(ss),
SECTION 178, IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2010]: Sec. 18. (a) Sales of durable medical
equipment,
mobility enhancing equipment, prosthetic devices,
artificial limbs, orthopedic devices, dental prosthetic devices,
eyeglasses, contact lenses, and other medical supplies and devices are
exempt from the state gross retail tax, if the sales are prescribed by a
person licensed to issue the prescription.
(b) Rentals of durable medical equipment,
mobility enhancing
equipment, and other medical supplies and devices are exempt from
the state gross retail tax, if the rentals are prescribed by a person
licensed to issue the prescription.
(c) Sales of hearing aids are exempt from the state gross retail tax
if the hearing aids are fitted or dispensed by a person licensed or
registered for that purpose. In addition, sales of hearing aid parts,
attachments, or accessories are exempt from the state gross retail tax.
For purposes of this subsection, a hearing aid is a device which is worn
on the body and which is designed to aid, improve, or correct defective
human hearing.
(d) Sales of colostomy bags, ileostomy bags, and the medical
equipment, supplies, and devices used in conjunction with those bags
are exempt from the state gross retail tax.
(e) Sales of equipment and devices used to administer insulin are
exempt from the state gross retail tax.
(f) Sales of equipment and devices used to monitor blood glucose
level, including blood glucose meters and measuring strips, lancets,
and other similar diabetic supplies, are exempt from the state gross
retail tax, regardless of whether the equipment and devices are
prescribed.
SOURCE: IC 6-2.5-5-20; (10)SB0250.1.10. -->
SECTION 10. IC 6-2.5-5-20, AS AMENDED BY P.L.195-2005,
SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2010]: Sec. 20. (a) Sales of food and food ingredients for
human consumption are exempt from the state gross retail tax.
(b) For purposes of this section, the term "food and food ingredients
for human consumption" includes the following items if sold without
eating utensils provided by the seller:
(1) Food sold by a seller whose proper primary NAICS
classification is manufacturing in sector 311, except subsector
3118 (bakeries).
(2) Food sold in an unheated state by weight or volume as a single
item.
(3) Bakery items, including bread, rolls, buns, biscuits, bagels,
croissants, pastries, donuts, danish, cakes, tortes, pies, tarts,
muffins, bars, cookies, and tortillas.
(c) Except as otherwise provided by subsection (b), for purposes of
this section, the term "food and food ingredients for human
consumption" does not include:
(1) candy;
(2) alcoholic beverages;
(3) soft drinks;
(4) food sold through a vending machine;
(5) food sold in a heated state or heated by the seller;
(6) two (2) or more food ingredients mixed or combined by the
seller for sale as a single item (other than food that is only cut,
repackaged, or pasteurized by the seller, and eggs, fish, meat,
poultry, and foods containing these raw animal foods requiring
cooking by the consumer as recommended by the federal Food
and Drug Administration in chapter 3, subpart 3-401.11 of its
Food Code so as to prevent food borne illnesses);
(7) food sold with eating utensils provided by the seller, including
plates, knives, forks, spoons, glasses, cups, napkins, or straws (for
purposes of this subdivision, a plate does not include a container
or packaging used to transport the food); or
(8) tobacco; or
(9) dietary supplements.
SOURCE: IC 6-2.5-11-10; (10)SB0250.1.11. -->
SECTION 11. IC 6-2.5-11-10, AS AMENDED BY
P.L.182-2009(ss), SECTION 183, IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2010]: Sec. 10.
(a) A certified
service provider is the agent of a seller, with whom the certified service
provider has contracted, for the collection and remittance of sales and
use taxes. As the seller's agent, the certified service provider is liable
for sales and use tax due each member state on all sales transactions it
processes for the seller except as set out in this section. A seller that
contracts with a certified service provider is not liable to the state for
sales or use tax due on transactions processed by the certified service
provider unless the seller misrepresented the type of items it sells or
committed fraud. In the absence of probable cause to believe that the
seller has committed fraud or made a material misrepresentation, the
seller is not subject to audit on the transactions processed by the
certified service provider. A seller is subject to audit for transactions
not processed by the certified service provider. The member states
acting jointly may perform a system check of the seller and review the
seller's procedures to determine if the certified service provider's
system is functioning properly and the extent to which the seller's
transactions are being processed by the certified service provider.
(b) A person that provides a certified automated system is
responsible for the proper functioning of that system and is liable to the
state for underpayments of tax attributable to errors in the functioning
of the certified automated system. A seller that uses a certified
automated system remains responsible and is liable to the state for
reporting and remitting tax.
(c) A seller that has a proprietary system for determining the amount
of tax due on transactions and has signed an agreement establishing a
performance standard for that system is liable for the failure of the
system to meet the performance standard.
(d) A certified service provider or a seller using a certified
automated system that obtains a certification or taxability matrix from
the department is not liable for sales or use tax collection errors that
result from reliance on the department's certification or taxability
matrix. If the department determines that an item or transaction is
incorrectly classified as to the taxability of the item or transaction, the
department shall notify the certified service provider or the seller using
a certified automated system of the incorrect classification. The
certified service provider or the seller using a certified automated
system must revise the incorrect classification within ten (10) days
after receiving notice of the determination from the department. If the
classification error is not corrected within ten (10) days after receiving
the department's notice, the certified service provider or the seller using
a certified automated system is liable for failure to collect the correct
amount of sales or use tax due and owing.
(e) If at least thirty (30) days are not provided between the
enactment of a statute changing the rate set forth in IC 6-2.5-2-2 and
the effective date of the rate change, the department shall relieve the
seller of liability for failing to collect tax at the new rate if:
(1) the seller collected the tax at the immediately preceding
effective rate; and
(2) the seller's failure to collect at the current rate does not extend
beyond thirty (30) days after the effective date of the rate change.
A seller is not eligible for the relief provided for in this subsection if
the seller fraudulently fails to collect at the current rate or solicits
purchases based on the immediately preceding effective rate.
(f) The department shall allow any monetary allowances that are
provided by the member states to sellers or certified service providers
in exchange for collecting the sales and use taxes as provided in article
VI of the agreement.