Taxpayer is a vision care and hearing loss center. Taxpayer
provides eye care services, vision testing, Lasik surgery, and cataract
treatment. Taxpayer sells contact lenses, eye glasses, hearing aids, and
certain other related items. The Department of Revenue ("Department")
conducted an audit review of Taxpayer's records. The audit resulted in the
assessment of additional sales/use tax.
…
Taxpayer argues that the audit assessed sales/use tax on
transactions for which it did not acquire "tangible personal
property."
…
45 IAC
2.2-4-2 contains a provision exempting the purchase of services from sales
tax. 45
IAC 2.2-4-2(a) states that, "Professional services, personal services,
and services in respect to property not owned by the person rendering such services
are not transactions of a retail merchant constituting selling at retail, and
are not subject to gross retail tax." However, "Where, in conjunction
with rendering professional services... the serviceman also transfers tangible
personal property for a consideration, this will constitute a transaction of a
retail merchant constituting selling at retail...." Id.
Taxpayer paid money to "Aesthetic Advancements."
Taxpayer explains that the payments were the price paid for its employees to
receive specialized training. Taxpayer's documentation is sufficient to
establish that the payments were indeed for the purchase of
"intangibles" and that no tangible personal property was acquired.
Taxpayer paid money to "Cumulus" which Taxpayer
indicates were costs charged for radio advertising. Taxpayer has provided
documentation sufficient to establish that the charges were attributable to the
cost of "intangible" advertising services and not subject to sales or
use tax.
Taxpayer paid money to Yodle, Inc. Taxpayer states that the
company "provides local online advertising...." and that Yodle
"provides only non-taxable services...." To that end, Taxpayer has
provided a copy of the business's web page from which the Department is asked
to determine the nature of the transaction Taxpayer entered into with Yodle.
Taxpayer asks too much; the documentation is insufficient to discern the nature
of the transaction or whether the transaction involved the provision of
tangible personal property.
Taxpayer paid money to "Glacial Multimedia" and
that "[n]o physical product is involved in this process...." Taxpayer
has provided copies of both the invoices and a description of Glacial
Multimedia's services. Based on that information, Taxpayer has met its burden
of demonstrating that the purchases were not subject to sales or use tax.
Taxpayer paid money to "Aesthetic Advancements"
for "injectable product." Taxpayer explains that the "injectable
product" is "available by prescription only... and is not subject to
sales or use tax." Taxpayer has not explained or defined the exact nature
of this "injectable" product.
Taxpayer apparently relies on IC § 6-2.5-5-18(a) as the
basis for its argument that the purchase of "injectable product" is
exempt:
Sales or rentals of durable medical equipment, mobility
enhancing equipment, prosthetic devices, artificial limbs, orthopedic devices,
dental prosthetic devices, eyeglasses, contact lenses, and other medical
supplies and devices are exempt from the state gross retail tax, if the sales
or rentals are prescribed by a person licensed to issue the prescription
Under IC § 6-8.1-5-1(c), Taxpayer has failed to establish
whether the "injectable product" is exempt or was used in a taxable
or non-taxable fashion. If the product was simply used or consumed in
Taxpayer's medical practice and not prescribed to a patient, then the product
was taxable. See 45 IAC
2.2-5-36 ("The gross retail tax shall apply to the following purchase
transactions made by licensed practitioners... medical supplies consumed in
professional use.")
…
Taxpayer paid money to "The Great Frame Up."
Taxpayer was unable to supply a copy of the invoices but assures that
Department that sales tax must have been paid at the time of the original transaction
because Taxpayer does "not have a sales tax exemption certificate "
Taxpayer concludes that sales tax must have been paid to the vendor at the time
of the original sale.
Taxpayer may well be correct but the documentation is
insufficient to sustain Taxpayer's position. The Department is unable to
conclude that Taxpayer has met its burden of demonstrating under IC §
6-8.1-5-1(c) of demonstrating that the assessment was incorrect.
…
Taxpayer paid money to Wisconsin Vision Associates. Taxpayer
was unable to locate the original invoices but has provided information which
purports to establish that Wisconsin Vision is exclusively in the business of selling
contact lenses and that Taxpayer purchased the lenses to resell the lenses to
its own patients.
IC § 6-2.5-5-8(b) provides an exemption for transactions in
which tangible personal property is purchased with the intent of reselling that
property:
Transactions involving tangible personal property... are
exempt from state gross retail tax if the person acquiring the property
acquires it for resale, rental, or leasing in the ordinary course of the
person's business without changing the form of the property.
Given the nature of both the transactions and the vendor,
the Department is prepared to agree that the Taxpayer has met its burden under
IC § 6-8.1-5-1(c) of demonstrating that purchase of contact lenses was exempt.
However, Taxpayer is cautioned that under IC § 6-8.1-5-4(a), taxpayers are
required to keep books and records adequate to determine whether or not tax is
due and that credit card receipts standing alone may be insufficient to make
that determination:
Every person subject to a listed tax must keep books and
records so that the department can determine the amount, if any, of the
person's liability for that tax by reviewing those books and records. The
records referred to in this subsection include all source documents necessary
to determine the tax, including invoices, register tapes, receipts, and
cancelled checks.
