Indiana: Sales Tax Handbook
What constitutes sales tax nexus in Indiana?
One of the more complicated aspects of Indiana sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of Indiana, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in Indiana, the vendor must register for a Indiana sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in Indiana.
Sales Tax Nexus in Indiana
The Indiana Department of Revenue will declare sales tax obligations on your business if you are considered to be â€œengaged in business in Indiana.
The state defines business within state lines to encompass four different guidelines. If your business falls into any of these parameters, you are considered to be doing business in Indiana, and you are, therefore, considered to have tax obligations to the state.
The four parameters for you to examine to determine tax nexus in Indian are: owning or leasing a physical location, employing sales representatives within state lines, storing inventory in the state, or delivering a service within state lines.
If your business meets even one of these guidelines, you have tax obligations to Indiana. Your business does not have to fall into all four categories.
For additional details on sales tax nexus law in Indiana, see the nexus information page from the Department of Revenue at http://www.in.gov/legislative/iac/20090218-IR-045090131NRA.xml.pdf
Taxation of Internet-Based Sales in Indiana
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Generally, Indiana does not charge sales tax on Internet-based transactions determined to have nexus within the state. This means that purchases from Amazon.com and other Internet-based retailers may be sales-tax-free.
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within Indiana, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in Indiana?
The folks at the sales tax compliance company Avalara are an approved Indiana sales tax partner, and you can use their free Indiana nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay Indiana sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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