45 IAC 2.2-5-24 Sales to Indiana and its instrumentalities

Authority: IC 6-8.1-3-3

Affected: IC 6-2.5

Sec. 24. (a) As used in this rule, "predominantly for use in the performance of a governmental function" means that the property acquired will be used for more than fifty percent (50%) for the performance of a governmental function.

(b) The state gross retail tax shall not apply to sales to the state of Indiana, its agencies and instrumentalities, all counties, townships, and municipal corporations, their respective agencies and instrumentalities, and all other state governmental entities and subdivisions of tangible personal property and public utility services and commodities predominantly for use in the performance of governmental functions.

(c) Purchases by all state governmental agencies of tangible personal property, public utility services, and commodities are exempt from the gross retail tax, provided such purchases are used predominantly in the performance of governmental functions. This exemption applies only to those purchases which are directly invoiced to the governmental entity and paid out of government funds.

(d) Purchases must be predominantly for use in performance of governmental functions. Purchases of tangible personal property, public utility services, and commodities by the state or subdivisions thereof are exempt from gross retail tax provided the items purchased are predominantly used in the performance of governmental functions.

(e) Purchases must be invoiced directly to the governmental entity and paid out of governmental funds. Purchases of tangible personal property, public utility services, and commodities by the state or a subdivision thereof are exempt from gross retail tax, provided the purchases are invoiced directly to the governmental entity and paid for out of government funds. Purchases which are for use by the governmental entity, but which are not invoiced directly to the state or subdivision or are not paid for out of governmental funds, are subject to the gross retail tax.

(f) Purchases of tangible personal property to be incorporated into improvements to real estate owned by a governmental unit by contractors under a contractual obligation with a governmental entity of tangible personal property incorporated into real property used for a governmental purpose are exempt from the gross retail tax. However, purchases of machinery, tools, forms, and supplies which are used in the construction but are not incorporated into the structure are subject to tax.

(g) All purchases of public utility services used predominantly for governmental functions by the state or qualified subdivisions thereof are exempt.

(Department of State Revenue; Ch. 5, Reg. 6-2.5-5-16(010); filed Dec 1, 1982, 10:35 a.m.: 6 IR 44; filed Dec 11, 1992, 5:00 p.m.: 16 IR 1366)