Indiana—Sales and Use Tax: Manufacturer’s Various Purchases of Software

INDIANA: The Indiana Department of Revenue (department) discussed the applicability of sales and use tax to a manufacturer’s (taxpayer’s) various purchases of software. Generally, purchases of tangible personal property including computer software are subject to sales tax. However, the purchase of services is exempt from sales tax. In this matter, the taxpayer filed tax refund claims for software purchases based on various exemptions. The department denied majority of the taxpayer’s claim, and the taxpayer protested. It was noted that the taxpayer’s purchases of multi-state point-of-use software were exempt from tax because those were initially accessed via electronic download outside of Indiana. Further, some of the taxpayer’s purchases qualified for the research and development tax exemption, while others did not. Moreover, the taxpayer’s purchases of software as a service SaaS made after July 1, 2018, were not taxable, nor were those purchases of SaaS made between December 2016, and June 30, 2018. However, the taxpayer’s purchase of SaaS made before December, 2016 was taxable.


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