Indiana Administrative Code
Title 45 - DEPARTMENT OF STATE REVENUE
Article 2.2 - SALES AND USE TAX
Rule 6 - Returns, Remittances and Refunds
Section 6-11 - Recordkeeping requirements on exempt sales less than ten cents
Universal Citation: 45 IN Admin Code 6-11
Current through September 18, 2024
Authority: IC 6-8.1-3-3
Affected: IC 6-2.5
Sec. 11.
(a) In order to minimize the taxpayer's recordkeeping requirements, the department has prescribed a formula for determining the retail merchant's "income exclusion ration" for a tax year.
(1) The retail
merchant may determine the ration of 1¢ to 9¢ sales to total sales
from actual records of sales during a period of fifteen consecutive days during
the first quarter of the calendar year. However, the period of time may be
changed if the change is requested by the retail merchant because of his
peculiar accounting procedures or marketing factors.
(2) If a merchant has multiple selling
locations or different kinds of selling transactions, the merchant may apply in
advance to the Indiana department of revenue for permission to use a
"representative sampling of locations" at which such checks are to be made.
Sufficient information to establish the fact that such locations will be
"representative" of all locations will be required.
(3) The merchant using the sampling method
must keep an accurate record of the dollar amount of unitary transactions under
ten cents (10¢) during this fifteen day period. By dividing this total
amount of gross sales at the locations used for the fifteen day period, a
percentage can be determined which the merchant may apply against gross sales
to establish "sales not subject to the tax". This percentage factor is used
throughout the balance of the calendar year in which the sampling is made.
-EXAMPLE-
(A) Gross
sales for 15 consecutive days during first quarter
.................................... $2500.00
(B) Sales of 1¢ to 9¢ during same
period .................................................... 150.00
(C) $150.00 divided by $2500.00
............................................................. 6%
Accordingly, the merchant would deduct 6% of gross receipts as nontaxable 1¢ to 9¢ sales on line "D" of his sales and use tax reporting form ST-103.
(b) It is important that the percentage factor be arrived at from the merchant's actual records. These records must be maintained for four (4) years because the merchant will be required to substantiate the percentage factor used upon the request of the department.
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