Sales, Use and International Tax Activity Update - July 2010

Indiana Says, “Own It Before You Install It”

A taxpayer’s purchase of a CCTV/Access Security system, which included tangible personal property and labor installation services, was subject to Indiana use tax because the services were provided prior to the transfer of the property.

Indiana law does not permit deduction from gross receipts for labor performed prior to the property’s transfer.

The purchaser claimed the installation services were not taxable because the charge for the services was stated separately from the charge for property in an e-mail from the vendor. The e-mail was insufficient for the purchaser to meet its burden in challenging the Department of Revenue’s determination of a retail unitary transaction.

The purchaser was not subject to a negligence penalty because it showed reasonable cause for its failure to pay tax on the purchase of the CCTV/Access Security.

Letter of Findings No. 09-0822P, Indiana Department of Revenue, May 26, 2010.

The Letter of Findings No. 09-0822P can be viewed on the Indiana Department of Revenue Web site.

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