Indiana
Sales Tax Will Change to 7 Percent – Effective April 1, 2008
With the passage of House Enrolled Act 1001, the Indiana sales tax rate will
increase to 7 percent effective April 1, 2008. This one-percent increase is
intended to help offset new limits on property taxes in Indiana.
Below is a detailed list of changes that HEA 1001 will affect:
* New sales tax rate – All transactions* occurring on or after April 1, 2008,
will be subject to a 7-percent sales tax rate. Utility companies, along with
cable, satellite, television and radio service providers, are not required to
collect the 7-percent rate until a customer bill is issued after April 30, 2008.
* New multiplier on gasoline and special fuels – The new sales tax gas
multiplier will be 6.54 percent for gasoline and special-fuel retailers,
effective for all transactions on or after April 1, 2008.
* New sales-tax collection allowance – Effective for reporting periods beginning
after June 30, 2008, the sales tax collection allowances for retail merchants
will change to:
o 0.73% if the total sales tax collected was less than $60,000.
o 0.53% if the total sales tax collected was between $60,000 and $600,000.
o 0.26% if the total sales tax collected was more than $600,000.
*Please note that property and services that are delivered after March 31, 2008,
but paid for prior to April 1, 2008, are not subject to the new 7-percent sales
tax.
Revised sales tax vouchers for the months of April, May and June 2008 will be
mailed to retail merchants by April 30, 2008, and will reflect the new 7-percent
sales tax rate. Retail merchants should continue to use their existing return
envelopes.
If you should have any questions about the new sales tax rate, please call us at
317.233.4015, Monday – Friday, 8 a.m. to 4:30 p.m.
Information Kit
[CLICK HERE]
FAQ
- New Sales-Tax Rate FAQ (Frequently Asked Questions)
1. When does the new sales-tax rate go into effect?
The new sales-tax rate of 7 percent is effective for
all transactions* occurring on or after April 1, 2008.
2. What transactions are taxable when the new sales-tax rate goes into
effect?
There are no changes to the categories of transactions that are taxable. To get
a complete list of transactions exempt from the sales tax, please call the
Department at 317.233.4015.
3. Will collection allowances for retail merchants be adjusted due to the new
sales-tax rate?
Beginning after June 30, 2008, sales-tax collection allowances for retail
merchants will be adjusted as follows:
* 0.73% if the total sales tax collected is less than $60,000
* 0.53% if the total sales tax collected is between $60,000 and $600,000
* 0.26% if the total sales tax is more than $600,000.
4. How will business taxpayers be informed of the new sales-tax rate?
The Department is using the following means to communicate the rate change
to businesses:
* Direct-mail letters sent to retail businesses registered in Indiana to collect
sales tax
* E-mail notices to all INtax-registered users
* ST-103MP letters to prepaid gas taxpayers
* Voice-mail and hold messages on DOR phones
* Flyers and door signs posted in district office locations
* DOR Web site updated with information specific to business taxpayers
* A column written in the Tax Talk blog
5. How will practitioners be informed of the new sale- tax rate?
The Department is using the following means to communicate the rate change
to practitioners:
* Direct-mail letters sent to practitioner offices
* Voice-mail notices placed on the practitioner phone line
* Communication kits e-mailed to 16 associations to share with their members
* DOR Web site updated with information specific to practitioners
* Feature article written in the Tax Dispatch e-newsletter that goes out to all
practitioner offices
6. Will software developers be notified of the new sales-tax rate?
Yes. The same communication kits used for business taxpayers and/or
practitioners will be forwarded to software developers who produce substitute
tax forms.
7. How will HEA 1001 impact taxpayer’s property-tax bills?
Questions regarding HEA 1001’s impact on taxpayers’ property-tax bills should be
directed to the Department of Local Government Finance at 317.232.3777.
* Please note that property and services that are delivered after March 31,
2008, but paid for prior to April 1, 2008, are not subject to the new 7-percent
sales tax.
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