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Most businesses starting in Indiana that are selling a product or offering certain services will need to register for a Registered Retail Merchant’s Certificate (RRMC). This is commonly referred to as a sales tax permit, seller’s permit, sales tax license, sales tax number or sales tax registration.
The Registered Retail Merchant’s Certificate is obtained through the Indiana Department of Revenue as a part of applying for the Indiana Business Tax Application.
Check out the rest of this guide to find out who needs a Registered Retail Merchant’s Certificate, what products and services are taxable, how to register for a permit and reporting requirements.
Who needs a Registered Retail Merchant’s Certificate in Indiana?
A business must register for a Registered Retail Merchant’s Certificate in Indiana when:
- A business has “nexus” (significant presence in the state) such as a retail store, office or warehouse where products are produced, stored and/or delivered
- Sales representatives work for the company within Indiana
- Sell a taxable product or service in the state
- An online business located in Indiana is selling taxable products to Indiana residents
- An out-of-state business selling to Indiana residents and one of the
- Total sales of tangible personal property to Indiana residents is $100,000 or more; or
- 200 or more transactions of tangible personal property is sold to Indiana residents.
What products and services are taxable in Indiana?
There are a few exceptions, but almost all physical products are taxable when sold at retail in Indiana. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Groceries, prescriptions, medical devices and certain manufacturing equipment is tax-exempt.
Labor in most cases isn’t taxable in Indiana. For instance, let’s say you broke the screen to your cell phone and take it to a cell phone repair shop to have it fixed. Sales tax would be added to the selling price of the new screen and any additional parts to fix the phone. The labor to replace the screen isn’t taxable. However, a business that makes furniture will indirectly have sales tax on labor. In this instance, let’s say this business is building a dining room table for a customer. Through labor, the pieces of wood are shaped, sanded and painted to build this piece of furniture. While the labor isn’t directly taxable, sales tax is charged to the final selling price of the table.
Digital products are taxable in Indiana.
Most services aren’t taxable in Indiana, however short-term accommodations of 30 days or less are.
How to register for a Registered Retail Merchant’s Certificate in Indiana
Information needed to register includes:
- Federal Employer Identification Number (FEIN), or SSN if a sole proprietorship with no employees
- Business name and address
- Type of business entity (Sole Proprietorship, Partnership, Corporation, LLC)
- Names and addresses of owners/officers/members
- Projected monthly sales
- Seasonality of the business
- Information about the products or services are being sold
- North American Industry Classification System (NAICS) code
- Accounting period
- Date business activities began or will begin
- Projected monthly taxable sales
- Employee information
How much does a Registered Retail Merchant’s Certificate cost in Indiana?
An Indiana Registered Retail Merchant’s Certificate costs $25. Every business location will need to register for a separate BT-1 certificate.
How long does it take to get an Indiana Registered Retail Merchant’s Certificate?
Expect up to 2 business days when registering online or 2-3 weeks when applying by mail.
Do you have to renew your Indiana Registered Retail Merchant’s Certificate?
The Registered Retail Merchant’s Certificate has to renewed every two years, but there is no charge to do renew. Be mindful that if any information about the business changes before the renewal is due, such as the mailing address, additional locations or change in ownership, those changes need to be updated with the Department of Revenue.
Sales tax reporting
How is sales tax collected?
When a business makes a sale of a taxable product or service, the business charges the appropriate sales tax rate to the customer. This tax is collected by the business who then sends it to the Indiana Department of Revenue.
How much sales tax is charged?
Indiana’s sales tax rate is a flat 7%.
When are Indiana sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected volume of annual sales, which will be monthly, quarterly, semiannually or annually. Generally, a business collecting over $12,000 in sales tax annually will file monthly.
Filings are due the 20th day of the month following the reporting period, unless the 20th falls on a weekend or federal holiday, in which case would move to the next business day.
Even if the business had no sales during the reporting period, a filing is still required indicating no sales occurred.
Sales tax on purchases for resale
A business is able to purchase items to resell without paying state sales tax. The tax liability is passed from the distributor to the retailer who will then charge sales tax to the end user of the item.
Wholesalers and distributors will require a sales tax number, and in many cases require the reseller to fill out the General Sales Tax Exemption Certificate (Form ST-105) to document the items being purchased are for resale.
If you have questions about the Registered Retail Merchant’s Certificate, the Indiana Department of Revenue has more information about sales taxes in Indiana or can be contacted by calling 317-232-2165.