IN Sales Tax 101 States

Indiana Sales Tax Guide for Business

by Mark Faggiano

Indiana Sales Tax

This blog post may now be out of date. For our most up-to-date info on Indiana sales tax, check out our “Indiana Sales Tax Guide for Businesses.”

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:

sales tax nexus in Indiana

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.

  • Josh

    We are a truck leasing business in Indiana with a customer in Illinois. As far as we know, they have no “nexus” in Indiana and we definitely don’t have a “nexus” in Illinois. We have been charging them Indiana sales tax because we never received an Indiana exemption certificate from them (most of our truck leases are sales tax exempt). They have an auditor who is saying we should accept their Illinois exemption certificate because we should have been charging Illinois sales tax all along (apparently it’s taken them over a year to realize they’ve been paying sales tax). We only have an Indiana sales tax permit. Can we accept their Illinois certificate without having a collection permit in Illinois?

  • This is a great question, Josh, but we don’t want to give out accounting advice specific to your situation. I recommend a sales tax expert. You can find a list of TaxJar vetted experts here: http://www.taxjar.com/sales-tax-accountant-directory/

  • Pingback: A Guide to Sales Tax Nexus in All U.S. States()

  • Tam

    What if your business is located in Indiana but your customer is from another state and product will be shipped there? Also, for this same business located in Indiana, customer in another state but product is shipped from a manufacturer from a 3rd state. (Not Indiana or the customer’s state.) Thanks!

  • Fullcom Tech

    Hi,
    I am a international seller from Taiwan. I just start my retail business on Ebay. I have no office nor representative in US. I am using FBA multi-channel to stock and fulfill shipping. The warehouse is in Indiana. I know I have a nexus and need to file sales tax to Indiana. If I don’t have an EIN, how can I apply for one? Could you give me any assistance?

    Thanks.

  • Fullcom Tech

    Hi,
    I am a international seller from Taiwan. I just start my retail business on Ebay. I have no office nor representative in US. I am using FBA multi-channel to stock and fulfill shipping. The warehouse is in Indiana. I know I have a nexus and need to file sales tax to Indiana. If I don’t have an EIN, how can I apply for one? Could you give me any assistance?

    Thanks.

  • Vince

    I would like to buy kitchen cabinets from a small group of Amish craftsman in Indiana for a home in North Carolina. Should I pay Indiana sales tax?

    • Hi Vince,

      It depends on the point of sale and whether the sellers have sales tax nexus there. For instance, if you order these and have them shipped to your home in NC and the sellers don’t have sales tax nexus in NC, then they likely won’t charge you sales tax. You will be on the hook for consumer use tax in NC, though that’s often not enforced.

      But if the point of sale is in Indiana and the sellers have nexus in Indiana then you’ll likely pay sales tax. I hope this helps!

Start your 30 day free trial of TaxJar. No credit card required.
Processing...
Thank you! Your subscription has been confirmed. You'll hear from us soon.
Subscribe to the TaxJar Sales Tax Blog
ErrorHere