Indiana: Foreign Company Required to Register as a Retail Merchant

In a recent revenue ruling, the Indiana Department of State Revenue concluded that a print and production company domiciled in Europe was required to register as an Indiana retail merchant under the state’s economic nexus law. The company shipped raw materials to a printer located in Indiana. The Indiana printer produced catalogs from those materials to be distributed via direct mail. While the catalogs were still located at the printer, the company would sell them to retailers that distributed the catalogs to locations throughout the United States and Canada. Title to the catalogs passed to the retailers while at the printer, but the retailers did not take possession of the catalogs.

In response to whether the company was required to register with the Department for sales tax purposes, the ruling noted that Indiana currently enforces a $100,000 or 200 transactions economic nexus standard. Because title to the catalogs passed from the company to retailer customers in Indiana, those sales would be considered Indiana transactions in determining whether the economic nexus standard was met. In terms of collecting and remitting tax, the Department noted that the company, which met the $100,000 threshold, would be required to collect sales tax on the entire amount if the retail customers provided the company with no documentation or information on where the catalogs would be shipped. However, if a retailer presented the company with a direct-pay permit or direct mail exemption certificate, tax would generally be owed based on where the catalogs were delivered or distributed and remittance responsibilities would shift to the retail customers.  The Department also addressed a scenario in which the Indiana printer both produced the catalogs and mailed them directly to the company’s customers. In this situation, the Department concluded that either the company or the retailers would be responsible for remitting tax on catalogs shipped to Indiana customers.  Please contact Dave Perry at 513-763-2402 with questions on Indiana Revenue Ruling ST 19-04.