Used Car Dealer's Purchases of Gasoline Taxable in Indiana

Thursday, January 2nd, 2014

 
 
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Indiana
General

The Indiana Department of Revenue ("Department") recently issued a Letter of Findings that held that a car dealer's purchases of gasoline were taxable.

The taxpayer sold new and used cars, and bought gasoline for use in its used cars. Indiana generally taxes sales of tangible personal property such as gasoline. Sales for resale, however, are not subject to tax. The taxpayer purchased the gasoline in bulk without paying sales tax at the time of purchase or remitting use tax to the Department. When it sold the used vehicles, the taxpayer did not charge separately for the gasoline. Instead, the taxpayer allocated $50 of gasoline to each used car and included the $50 amount in the selling price of the vehicle. The taxpayer argued that its gasoline purchases were exempt purchases for resale because the taxpayer's customers paid sales tax on the gasoline when they paid tax on the total purchase price charged for the used vehicle.

The Department held that the gasoline purchases were subject to tax. To prove that the purchase of an item is for resale, a taxpayer must show that it received itemized consideration for that item. The gasoline purchases did not qualify as purchases for resale because the taxpayer did not receive itemized consideration for the gasoline; there was neither a separate charge for the gasoline, nor separate bargaining for the gasoline. Therefore, the taxpayer was not reselling the gasoline and could not claim the resale exemption.

http://www.in.gov/legislative/iac/20131225-IR-045130550NRA.xml.html


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