Sales, Use and International Tax Activity Update - January 2010

Indiana DoR Offers Insight on Layaway Fees

The Indiana Department of Revenue has released an information bulletin regarding the application of sales and use taxes to layaway fees.

Initial and interim layaway payments are not retail sales and are not subject to sales tax at the time they are made. The retailer must report the total amount received from the sale, excluding any layaway fee that has been separately stated, when the item has been conveyed to the customer.

If the layaway fee is not separately stated, it must be included in the total amount and remains taxable. If the layaway fee is forfeited because of a canceled sale, it is not subject to sales tax.

The full publication can be viewed on the IN.gov Web site.

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