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SUBJECT: Entertainment Products

REFERENCES: IC 6-2.5-4-10; 45 IAC 2.2-4-27; 45 IA C 2.2-4-28; 45 IAC 2.2-4-29

INTRODUCTION

Generally, a person is considered a retail merchant when selling, renting, or leasing entertainment products. Entertainment products include, but are not limited to, motion picture film, audio tape, video tape, videos, video cassette recorders, video game machines, video game cartridges, DVDs, compact discs, and stereo equipment. A person who sells, rents, or leases entertainment products must register with the Department as a retail merchant and collect and remit Indiana gross retail tax on all subject transactions.

Sale and Rental of Entertainment Products

The sale of motion picture film, audio tape, video tape, DVDs, and other similar products is subject to sales tax, regardless of whether the product is used for public or private viewing. Likewise, the rental or leasing of entertainment products to a person not engaged in the movie theater or broadcast industry is subject to sales tax, even if the person imposes a "cover charge" to view the product (e.g., film).

However, the rental or leasing of motion picture film, audio tape, video tape, or similar products is exempt from sales tax if the person who pays to rent or lease the film or tape is regularly and ordinarily engaged in the business of broadcasting films or tapes to the general public for admission or for home viewing or listening.

Late Fees

Late fees assessed per day on the late return of entertainment products such as videos and video games are considered extensions of the underlying rental or lease and are subject to sales tax.

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John Eckart

Commissioner