By David Pope and Andrew Appleby

The Indiana Department of Revenue determined that storage of advertising catalogs in Indiana, for a taxpayer’s out-of-state clients, did not create corporate income tax nexus for such clients. The taxpayer, located in Indiana, stored and distributed catalogs for its clients. Indiana does not define “doing business” statutorily, but the Department considered Indiana’s regulatory definition to determine whether the taxpayer’s out-of-state clients had corporate income tax nexus by storing advertising catalogs in the state. The Department reasoned that the “mere presence” of catalogs did not generate any income, nor did it constitute “doing business” in Indiana. The Department concluded that the taxpayer’s out-of-state clients did not have any Indiana income tax filing requirement based solely on the presence of advertising catalogs. Indiana Revenue Ruling No. IT 13-03 (Dec. 3, 2013). The Department drafted Revenue Ruling No. ST 13-08 on the same facts for sales and use tax nexus purposes, similarly concluding that the taxpayer’s out-of-state clients did not have sales and use tax nexus.