Marketing and Sales Company Unable To Claim Public Transportation Exemption

Monday, September 9th, 2013


In a recent Letter of Findings, the Indiana Department of Revenue held that a marketing company's purchases did not qualify for the public transportation exemption.

The marketing company made purchases for a related trucking company. The marketing company marketed and sold the trucking company's services to customers. The marketing company purchased goods and supplies for the trucking company and passed along its costs to the trucking company. The trucking company consumed the goods and supplies in providing public transportation services. Although they were separate entities, the companies filed consolidated Indiana corporate tax returns together.

Indiana exempts sales of tangible personal property and services to a person who directly uses or consumes them in providing public transportation. The marketing company argued that its purchases were exempt because the marketing and trucking companies were collectively in the business of providing public transportation.

The Department held that the marketing company did not qualify for the exemption. The exemption applies only when the purchaser itself provides public transportation services. Because the two companies were separate entities and the marketing company itself did not provide public transportation services, it could not claim the exemption. The trucking company could not "pass through" its exemption to the marketing company. The marketing company's purchases were therefore subject to tax.

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TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

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