Wondering if you need to collect sales tax on sales made to your customers in Indiana? Compared with most states, Indiana happens to be one of the more sales tax friendly states. However, there’s still a lot to figure out, so let’s get started.
You’re an online seller living anywhere but Indiana
Does your business exist outside of Indiana? Do you have zero physical presence (i.e. sales tax nexus) in the state? Then you shouldn’t have anything to worry about sales tax. Congrats! You’re in the clear.
You live and/or operate your business in Indiana
If you operate your business within the state of Indiana, you automatically have nexus there. This means you must worry about sales tax.
Before you can even start operating your store, you must register with the state of Indiana. Form BT-1 must be filed with the Indiana Department of Revenue to register your business so you can begin selling and collecting sales tax.
Here’s where things get surprisingly simple: all you have to do is collect 7% from every customer in the state. This means there’s no big changes between every county or city or neighborhood or anything else. Just 7% for every customer in Indiana. How nice!
You live out-of-state but use a 3rd party fulfillment service like FBA
If your business physically exists out of the state but you have nexus in the state, then you must register with the state and collect sales tax. What is nexus, though? This is any presence you have in Indiana, like an office, an employee, or even inventory in a warehouse.
If you sell via Amazon FBA, there are several FBA warehouses in Indiana that could give you nexus. They are:
– Jeffersonville (Clark County)
– Plainfield (Hendricks County)
– Whitestown (Boone County)
– Indianapolis (Marion County)
If you do have nexus, then you are required to collect and pay sales tax to the state. Again, though, you don’t have to worry about multiple rates in different counties all over the state. The base rate for Indiana is 7% and that’s all you have to collect. If you have nexus at all in Indiana, 7% is your number.
Here is a screenshot from the Indiana Department of Revenue website about nexus:
Filing Sales Tax in Indiana
From the state’s department of revenue website:
The Indiana Department of Revenue assigns a filing frequency (quarterly prepay, quarterly, monthly, fiscal yearly, yearly) based on your reported sales tax or your anticipated taxable sales at the time of registration. Find your filing frequency below for your due dates:
- If the average monthly sales or use tax liability for the period year is $1,000 or more, the payment is due within 20 days after the end of each month.
- If the average monthly sales or use tax liability for the period year is less than $1,000, the payment is due within 30 days after the end of each month.
- Or, the Department may permit a retail merchant to report and pay the sales and use taxes annually, if the retail merchant’s average monthly liability is less than $10 per month. All annual returns are due by the last day of the month following the end of that reporting period.
Sales Tax on Shipping
Shipping or delivery charges are considered as taxable components of a sale. So yes, charge sales tax on shipping and handling charges in Indiana.
Summary: Indiana’s destination based sales tax is fairly simple
If you don’t have sales tax nexus, you don’t have anything to worry about collecting and remitting sales tax in Indiana. However, if your business operates within Indiana or you have physical nexus because of a warehouse or something else, you have to collect and pay sales tax.
However, it’s not too complicated, as Indiana only has a flat statewide sales tax of 7%. There’s no different rate for various cities or counties, just 7% no matter where your customers live. This keeps things surprisingly simple.