The What and How of Sales Tax
May 29, 2007
Today’s installment of our summer business-tax series is hosted by Joetta and Jay, our fearless business-tax duo. It is rumored they have X-ray vision and can leap tall buildings in a single bound. After reading this installment, you decide.
Congratulations on taking the steps to start your own business! Now that you’ve taken the plunge, it’s time to roll up your sleeves and get busy. You’ve picked out that catchy business name, you’ve taken care of the details (like the color of the table cloths in your new restaurant), and you’re ready to open the doors for business. The last thing in the world you want to think about is what kind of tax forms you have to file.
One thing we’ve learned here at the Indiana Department of Revenue: most taxpayers, like you, are hard-working, honest Hoosiers who really make every effort to do the right thing. And even though tax forms aren’t exactly a taxpayer’s cup of tea, he understands that they are necessary.
So, today we’ll focus on sales tax and how to file it. After reading today’s blog, you’ll understand why we’re throwing this big one at you first.
Any business selling tangible personal property (that’s “stuff” you can touch, feel, grab) is required to collect sales tax. Sales tax is fascinating, in a way, because there are more twists and turns than an episode of Heroes. Lots of quirks, for example:
- Restaurants – The food-items bought for resale in a restaurant may be purchased tax free, as well as the equipment used directly to prepare the food, or sold with the food. Paper napkins, utensils, paper plates and even stoves make sense. Refrigerators are not included. Some counties or cities have a food & beverage tax that businesses must collect from consumers in addition to sales tax.
- Hotels/Motels – These businesses must collect sales tax on all fees connected with lodging. As for the business owner(s), furnishings in the hotel are subject to tax, but consumables (those cute little bar soaps and shampoos) are exempt from tax. And some counties require businesses to collect a county innkeeper’s tax.
- Gas/Service Stations – These businesses must collect sales tax on all sales of fuel. Gasoline is subject to prepaid sales tax on the purchase of gasoline from whoever is your gas distributor.
- Businesses that sell tires – These businesses must collect and remit the Indiana tire fee of 25 cents per tire. All tires mounted on propelled vehicles are subject to the tire fee, except for garden tractors propelled with less than 25 horsepower motors. Non-self-propelled vehicles (trailers) are not subject to the tire fee.
There are many other types of businesses, but these are a few of the more common ones. To help you wade through all the intricate details, we’ve developed a sales-and-use-tax guide. It’s available on the Department of Revenue Web site at www.in.gov/dor/files/salescod.pdf. Whether you’re a barber, beautician, candy retailer, out-of-state merchant, telecommunications business, or putting on a garage sale, this is a good guide to get you off on the right foot. And it’s also good for insomniacs jazzed up on too many vanilla lattes.
Despite all the technical details of who, what, when, where, and how in collecting the various sales taxes, completing the returns is pretty simple. Sales tax returns (Form ST-103) are typically due monthly, quarterly, annually or seasonally. The filing schedule is determined by the Department and is based on the amount of sales tax remitted during the past year ending in November. To help you stay on track, we recommend marking your calendar with the due date for your sales tax returns.
If all this still seems a bit intimidating, we’ve got more helpful information, such as:
- Sales Tax Charts, County Innkeeper’s Charts, Food & Beverage Details, all available at www.in.gov/dor/3343.htm
- A calendar of forms and their filing deadlines—very helpful—can be found at www.in.gov/dor/3344.htm
- And if you’ve become a computer user extraordinaire, or just getting the hang of the online thing, and you want to file everything electronic -- we like your style! Take a quick tour of INtax, Indiana’s online business tax center at https://www.intax.in.gov/Web/default.aspx
And, finally, one last note before we sign off. Let’s say you’re registered as a business with the Department, but you’re not quite ready to actually begin business. Or…ooh, even better, business is going so well that you manage to take off and do some tropical island vacationing several months out of the year. Even if you have no sales tax activity for the period of time covered on your voucher, you must still submit a “zero” return. Just put your zeros on the return (voucher), sign it, date it, and send it in. This keeps you in good standing and let’s us know what’s going on. We don’t like to have to guess about your business activity (or lack thereof), and some taxpayers have colorfully let us know how they feel about our guesses!
Now that you have the basics down, go forth and conquer! (And, of course, check us out in two weeks for our blog on withholding tax.) We admirably salute your entrepreneurial spirit and gumption. And, if you get a little confused along the way about the business tax, give us a call at 317.233.4015. We’re always happy to help.
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- Where do I go for tax forms?
- Where is my state tax refund?
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- Know when I will receive my tax refund.
- File a part-year Indiana tax return.
- File my taxes as an Indiana resident while I am in the military, but my spouse is not an Indiana resident.
- Take the renter's deduction.
- Pay my tax bill in installments.
- Claim a gambling loss on my Indiana return.
- Have more time to file my taxes and I think I will owe the Department.
Welcome to Tax Talk, hosted by DiB (dye-bee), the Indiana Department of Revenue’s individual income tax guru. DiB, who says she’s been with the Department “since the earth cooled” (though it’s actually 30+ years), writes and develops Indiana’s individual income-tax instruction booklets and forms. DiB created Tax Talk to address Indiana individual income tax questions and issues during the filing season. If you would like to submit a question or topic suggestions, please send those to DiB at feedback@dor.in.gov
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