Nugent, 122711 INAGO, AGO 2011-8

• Case Date: December 27, 2011
• Court: Indiana

The Honorable Johnny Nugent AGO 2011-8 Official Opinion No. 2011-8 Indiana Attorney General Opinion December 27, 2011          The Honorable Johnny Nugent          Indiana State Senate          200 W. Washington          St. Indianapolis, IN 46204          RE: Sales tax collection obligations in relation to out-of-state purchasers          Dear Senator Nugent:          You have requested from this office an opinion on the following question: What is the responsibility of a licensed Indiana retail merchant to collect Indiana sales tax on a sale where the purchaser is a resident of another state and where the product will be used in the purchaser’s home state? You have also asked what tax collection duties an Indiana retailer has when he or she transports the property to another state and consummates the sale outside Indiana.          BRIEF ANSWER          Registered Indiana retail merchants are not required to charge sales tax to out of state residents as long as that person does not have a physical address or a billing address in Indiana and the transaction did not physically take place in the state. Also, when a retailer transports his or her product outside Indiana and consummates sales outside the state, the retailer neither collects Indiana sales tax nor remits it. The retailer, however, will be subject to the other state’s sales tax scheme. It may be required to register with that state and collect and remit that state’s sales tax.          ANALYSIS          The state gross retail tax is a sales tax on “retail transactions made in Indiana.” Ind. Code § 6-2.5-2-1. The person buying the property in the transaction is liable for the tax. Id. The retail merchant who is selling the property collects the tax as an “agent for the state.” Id. “A person is a retail merchant making a retail transaction” when he purchases and transfers property “in the ordinary course of his regularly conducted trade or business.” Ind. Code § 6-2.5-4-1(b). Retail merchants who make retail transactions in Indiana are required to register with the Indiana Department of State...