Taxpayer is an Indiana municipal utility. As the result of an audit, the Indiana Department of Revenue ("Department") determined that Taxpayer had not collected and remitted sales tax on certain transactions during the tax years 2009 and 2010. The Department therefore issued proposed assessments for sales tax and interest for those years.
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Taxpayer protests the imposition of sales tax on some transactions it conducted as a retail merchant during the tax years 2009 and 2010. The Department based its determination on the fact that Taxpayer is a retail merchant and that there was no documentation to establish the nature of the transactions. Taxpayer argues that the transactions were only maintenance fees and access fees, without any transfer of tangible personal property ("TPP"), which in this case is water...
[S]ince Taxpayer is a retail merchant, it is responsible for collecting and remitting sales tax when it sells tangible personal property to its customers in retail transactions. In this case, the Department determined that Taxpayer was selling tangible personal property (i.e: water) to its customers but that it had not collected and remitted sales tax on some of those transactions. Taxpayer protests that it was not selling tangible personal property in the transactions in question and that those transactions were therefore not taxable.
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[S]ince Taxpayer is a retail merchant, it is responsible for collecting and remitting sales tax when it sells tangible personal property to its customers in retail transactions. In this case, the Department determined that Taxpayer was selling tangible personal property (i.e: water) to its customers but that it had not collected and remitted sales tax on some of those transactions. Taxpayer protests that it was not selling tangible personal property in the transactions in question and that those transactions were therefore not taxable.
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According to Taxpayer, the "maintenance fees" are a separate, line item on the consumers' water bill, are segregated in Taxpayer's financial records, and are used for the maintenance and update of the public fire hydrant system. Taxpayer is correct; the "maintenance fees" are not subject to the state's gross retail tax because the fees are separately stated and do not represent the transfer of "tangible personal property." Taxpayer has met the burden imposed by IC § 6-8.1-5-1(c).
