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Indiana Department of Revenue

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Black Friday and Cyber Monday: Sales Tax vs. Use Tax

Nov. 18, 2014

Cyber MondayWhat’s your shopping style? Do you wake up early to snag the Black Friday deals, or do you prefer to shop virtually on Cyber Monday?

We hate to be the ones to ruin the holiday fun, but remember that whichever way you shop, both carry a tax: sales tax or use tax.

So, what’s the difference between sales tax and use tax?

Sales tax is a common tax paid on most items at retail stores. When you buy an item from a retailer, you’ll pay Indiana’s 7 percent sales tax on that purchase (though there are a few exceptions). The retailer collects the tax and sends it to the state.

On the other hand, use tax is owed when a sales tax is not paid on purchases made over the internet or while traveling outside Indiana. Hoosiers shopping on Cyber Monday should check and see if their online purchases charge a sales tax; if not, they will owe use tax to Indiana. Although less known, this tax has been collected on the state income tax return since 1969.

While sales tax is collected at the time you buy something, you usually won’t pay the use tax on your purchase until you file your Indiana income tax return. Because state tax returns will be filed in a few months time (tax season begins in January), here’s the two step process:

Step 1: Complete the worksheet in the IT-40, IT-40EZ or IT-40PNR instruction booklet (2014 forms will be available online the beginning of December) to help you figure how much use tax is owed.

Step 2: Enter the amount owed on Schedule 4 of Form IT-40, on Schedule E of Form IT-40PNR, or on line 8 on the Form IT-40EZ, depending on which form is filed.
For example, you paid $100 for a new winter coat and snow pants in 2014 and no sales tax was charged. You would report $7 use tax when filing your Indiana income tax return ($100 x 7%) during the upcoming 2015 tax season.

To learn more about Indiana’s use tax, read the Use Tax FAQs.

Food and Beverage Tax and County Innkeeper’s Tax Available Online

Nov. 12, 2014

For business owners, managing taxes is complicated. Usually many different taxes affect a single business, which requires keeping up to date on regular filings and payments.

Take a hotel for example, which could file and pay withholding tax, sales tax, county innkeepers tax, food and beverage tax, and possibly even more.

To help business owners, the department made food and beverage tax (FAB) and county innkeeper’s tax (CIT) available in INtax to file and pay online.

This new service represents the department’s continued effort to provide electronic self-service options for businesses to securely and conveniently file and pay taxes online.

INtax provides a quick, easy and secure mechanism for businesses to manage their tax filings and payments. INtax is available 24/7 and provides businesses the ability to check their accounts and payments without contacting the department. It also saves businesses from having to manage and mail paper coupons and paper checks.

More than 200,000 Indiana businesses already use INtax to manage their business tax requirements.

Taxpayers can pay FAB and CIT by ACH debit and credit card payments in INtax. The department will mail coupons in December to FAB and CIT taxpayers who have not filed using INtax.

These tax types will be automatically added to INtax accounts that are registered for FAB or CIT. Service providers must add FAB and CIT to client accounts using the “Maintain Client” tab in INtax.

Visit www.in.gov/dor/3469.htm to view CIT rates, and www.in.gov/dor/4039.htm for FAB rates.

Anyone with questions about filing or paying FAB and CIT through INtax, can contact the INtax hotline at (317) 233-8729.


If you would like to submit a question or topic suggestions, please send them to feedback@dor.in.gov
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