The Indiana Department of Revenue ("Department") recently denied a refund claim by a Mississippi resident for a motor vehicle purchased at an Indiana business location. The taxpayer took possession of the motor vehicle in Indiana. The taxpayer then drove the vehicle to Mississippi, where the taxpayer titled and registered the vehicle. Sales tax was paid in both Indiana and Mississippi.
Indiana taxes retail transactions made in the state. Indiana considers a retail transaction to take place in the state when a purchaser receives a product at an in-state business location of the seller. The transaction did not qualify for the interstate commerce exemption and there is no reciprocity between Indiana and Mississippi on motor vehicle sales. Tax was collected for Indiana at the Mississippi rate, but Mississippi did not recognize the taxpayer had already paid tax in Indiana. As a result, Mississippi required a tax payment upon titling and registering the vehicle in Mississippi. The Department determined that the sale was taxable in Indiana and denied the refund claim.