Although sellers are supposed to collect sales tax, the law in Indiana places liability upon you, as purchaser to actually pay the sales tax. While it may be impractical for the state to pursue the purchaser for this tax, the state clearly reserves for itself this right. So, since you have ultimate liability for payment of the tax, we recommend that you review the following section to find out how to handle these sales tax issues.

Sales tax exemptions. Indiana provides sales tax exemptions based on the type of transaction (such as for resale), or the nature of the organization purchasing the product (such as a charitable organization). If you qualify for any of these exemptions, you must present the seller with a valid exemption certificate that contains an active registration number.

Resale exemptions. If you purchase goods or products and will resell them in your business, or include them as part of the service you provide, you may claim a resale exemption from sales or use taxes. However, you will have to collect sales tax from your customers when they purchase the goods or products.

Resale exemption certificate. In order to obtain a resale exemption, the seller may require you to present, in good faith, a resale certificate. The state doesn't provide a specific certificate form for you to use, so you're free to develop your own resale certificate document. With that said, though, the document should at least contain the following information:

• your and the seller's name and address
• an indication of the general character of the property you are purchasing
• your retail merchant's certificate number

Blanket resale certificate. Indiana allows you to use blanket resale certificates. A blanket resale certificate is a resale certificate that you provide to a seller from whom you make numerous exempt resale purchases. The idea is that by providing a blanket resale certificate, both you and the seller can avoid the hassle of having to deal with a new certificate every time you make a purchase. The law does not set forth any specific procedures for accepting a blanket resale certificate. However, you should present, in good faith, a blanket resale certificate to the seller that includes the same information as a regular resale certificate.

Use tax liability on out-of-state purchases. If you buy tangible personal property from an out-of-state purchaser, you will be responsible for paying a use tax on the purchase price of the property. This tax should be paid directly to the state.

Small business deductions or credits. The state allows you to take a credit against use tax if you have already paid sales or use tax to another state on tangible personal property purchased. This credit, however, cannot exceed the amount of sales tax assessed in Indiana. Furthermore, the credit does not apply to use tax paid on vehicles, aircraft, or watercraft, registered or licensed by Indiana.