NOTICE: IC § 4-22-7-7 permits the publication of this document in the Indiana Register. The publication of this document provides the general public with information about the Indiana Department of Revenue's official position concerning a specific set of facts and issues. The "Holding" section is provided for the convenience of the reader and is not part of the analysis contained in this document.

Indiana Company provided sufficient documentation to show it is entitled to a refund of sales tax.

I. Sales and Use Tax–Software.

Authority: IC § 6-2.5-1-2; IC § 6-2.5-2-1; IC § 6-2.5-4-1; IC § 6-2.5-4-16.7.

Taxpayer protests the Department's refund denial.

Taxpayer is a company that operates in Indiana. Taxpayer requested a refund of sales tax paid to the Indiana Department of Revenue ("Department"). The Department denied Taxpayer's request. Taxpayer protested the refund denial. An administrative hearing was conducted and this Memorandum of Decision results. Further facts will be presented as required.

I. Sales and Use Tax–Software.

Taxpayer requested a refund of sales tax paid to Indiana on software purchased by customer. The Department denied Taxpayer's request because Taxpayer did not provide any invoices. Taxpayer protested the denial because it states that it paid the sales tax to Indiana.

Pursuant to IC § 6-2.5-2-1, a sales tax, known as state gross retail tax, is imposed on retail transactions made in Indiana unless a valid exemption is applicable. IC § 6-2.5-1-2 defines a retail transaction as "a transaction of a retail merchant that constitutes selling at retail as described in IC § 6-2.5-4-1 . . . or that is described in any other section of IC § 6-2.5-4." A retail transaction is defined as occurring when a person "acquires tangible personal property . . . and transfers that property to another person for consideration." IC § 6-2.5-4-1(b)(1)-(2).

Indiana specifically addresses prewritten software for sales tax purposes.

IC § 6-2.5-4-16.7.

Taxpayer provided documentation to show that they are in fact selling software and that the software is being delivered electronically. Taxpayer also provided invoices and the sales tax payment made to the state. Thus, pursuant to IC § 6-2.5-4-16.7 the sale of software delivered electronically is not a retail transaction. Taxpayer has showed that its transactions meet the requirement of IC § 6-2.5-4-16.7 and its refund should therefore be granted.

Taxpayer's protest is sustained.

October 30, 2019