The Indiana Tax Court held that the Indiana Board of Tax Review misapplied the law by applying a “per-se” burden-of-proof standard, which deemed the taxpayer to have satisfied its burden of proof merely by offering an appraisal that was prepared by an expert in accordance with generally accepted appraisal principles. The taxpayer, the owner and
Indiana
Indiana Department of Revenue rules that generative AI services are not subject to sales tax
By John Ormonde on
Posted in Sales and Use Tax
On July 23, 2025, the Indiana Department of State Revenue issued Revenue Ruling # 2025-02-RST holding that generative artificial intelligence (AI) services accessed through web browsers or application programming interfaces are considered services and not subject to sales/use tax. The ruling involved a company headquartered outside of Indiana that provides advanced AI services to customers…
Indiana bill would adopt social media tax
Posted in Digital Economy, Policy and Legislation
Representative J.D. Prescott (R) introduced Indiana HB 1517, which would impose a surcharge tax on social media providers. HB 1517 is similar to legislation introduced by Representative Prescott during the 2021 and 2022 legislative sessions that did not make it out of committee.
Specifically, HB 1517 would impose a surcharge tax on social media…
Income tax rate reduction legislation – watch list
By Nikki Dobay & Charlie Kearns on
Posted in Income Tax, Policy and Legislation
In just the first few months of the 2022 tax year, we have already seen several states introduce legislation that would decrease corporate and individual income tax rates. Idaho became the first state to pass such legislation this year, on February 4. The Eversheds Sutherland SALT team expects other states to follow and will provide…
Indiana updates sales tax guidance for marketplace facilitators
By Jonathan Feldman, Jeremy Gove & Alla Raykin on
Posted in Marketplace
The Indiana Department of Revenue modified Sales Tax Bulletin No. 89 to reflect the recent change (SB 382) clarifying that a marketplace facilitator is required to collect sales tax for each retail transaction it facilitates regardless as to whether the marketplace facilitator has a contractual relationship with the seller as long as the…
Booted out of Indiana: Indiana DOR finds that parent holding company has no nexus for combined return
By Elizabeth Cha & Cyavash Ahmadi on
Posted in Income Tax
The Indiana Department of Revenue found that a holding company was properly excluded as a member of its affiliates’ financial institutions tax (FIT) combined group return because the company failed to establish nexus with the state. The Department also decided that for purposes of the FIT, there is no distinction between business and nonbusiness income.…
Indiana manufacturer’s software service agreement not subject to sales tax
By Jonathan Feldman, Jeremy Gove & Alla Raykin on
Posted in Digital Economy
The Indiana Department of Revenue issued a protest ruling that an auto parts manufacturer was entitled to a refund on certain software service purchases for the 2017, 2018, and 2019 years. The taxpayer licensed software through a remote platform into which taxpayer loaded its own data for education services, cloud services, and manufacturing support services.…
Not my domicile: Indiana DOR drops assessment against taxpayer who moved out of state
By Daniel Schlueter on
Posted in Income Tax, State Domicile and Residency
On July 27, the Indiana Department of Revenue found that a taxpayer had abandoned her Indiana domicile and was therefore no longer subject to Indiana state income despite the taxpayer erroneously listing her permanent address with her employer as her old Indiana-based address.
The taxpayer protested the imposition of Indiana income tax and provided the…
Software production found not to satisfy Indiana research expense credit
By Jonathan Feldman, Jeremy Gove & Alla Raykin on
Posted in Digital Economy
The Indiana Department of State Revenue recently published Letter of Findings 01-20181612 (dated April 27, 2021), upholding the disallowance of a state research expense credit for the production of two enterprise level software applications. The Department found that the Indiana research expense credit claimed by the taxpayer was based on a similar federal credit, and…
Not so fast – Indiana Tax Court upholds pharmacy benefit management company’s sourcing of receipts from services
By Scott Wright & Justin Brown on
Posted in Noteworthy Cases
On May 14, 2021, the Indiana Tax Court upheld a pharmacy benefit management company’s sourcing of its receipts under Indiana’s costs of performance rules applicable to receipts from services. The court rejected the Indiana Department of Revenue’s position that the receipts should instead be sourced according to the rules for sales of tangible personal property.…