Continuously serving Kosciusko County since 1854
The cost of doing business with a business became a little dearer with the start of the new year.
Now the state government expects to collect taxes on delivery charges, installation charges and certain repairs and replacements.
The changes came as part of Public Law 257-2003 and amended Indiana Code 6-2.5-1-5.
The removal of tax from ice, bottled water and beverages with more than 50 percent fruit juice was widely advertised; the new tax on shipping and services was not.
Delivery charges are now included as gross retail income and subject to the state's 6 percent sales tax regardless of shipping terms.
Delivery made by or on behalf of the seller of tangible personal property is taxable whether or not the delivery charge is separately stated.
An installation charge is defined as a charge to add something new or different to tangible personal property and are now subject to Indiana sales tax, according to Indiana Department of Revenue Commissioner's Directive No. 22.
There are exceptions:
If a third party bills and furnishes the installation.
If the property sold is not subject to sales tax, then the installation will not be subject to sales tax.
Installation of permanent improvements to real property are not subject to sales tax. Examples are doors, garage doors, garage door openers, windows, cabinets, garbage disposals, water heaters, water softeners, alarms, furnaces, central air conditioning units, gutters and carpeting.
Taxable installations include items such as personal computers, home stereos, televisions, refrigerators, stoves, dishwashers, garbage compactors, washers, dryers and window air conditioning units.
Repair and replacement charges are not subject to sales tax if the repair restores an item to be used for its original purpose.
For example: If a sofa is being reupholstered, the material is subject to sales tax, the labor is not, if the items are separately stated on an invoice.
Replacement charges will not be subject to tax even if the replacement item is considered an upgrade or item of the exact same nature as the item it is replacing.
If a person buys a new set of after-market wheels for their car they are considered an upgrade. Sales tax will be paid on the wheels, but not on installation.
If a stereo with a CD player is installed in a vehicle that did not originally have a stereo with CD player, the unit is considered to be of the exact same nature even though it has additional capabilities. This installation is not subject to sales tax if stated separately.
However, the installation of a subwoofer is subject to sales tax because it is additional equipment and not a replacement or upgrade.
