Taxpayer Liable for Tax on Deliveries of Rock and Dirt in Indiana

Tuesday, June 3rd, 2014

Rock delivery truck.

The Indiana Department of Revenue ("Department") recently ruled that a taxpayer's "delivery" of rock and dirt was a taxable sale.

The taxpayer was a contractor that had an agreement with a local quarry where the taxpayer received yellow rock and dirt (a waste product) free of charge. The taxpayer then transferred the rock and dirt to its customers and charged them a hauling fee. The taxpayer argued that it did not sell the rock and dirt and only provided a nontaxable delivery service.

Indiana taxes sales of tangible personal property. It does not generally tax services. A taxable transaction occurs when a party acquires tangible personal property for resale as part of its ordinary business and then transfers that property to another person for consideration.

The Department ruled that the taxpayer sold the rock and dirt. The taxpayer, as a normal part of its business, acquired rock and dirt from the quarry. It then transferred the rock and dirt to customers in exchange for consideration. It did not matter that the taxpayer called the consideration a hauling fee. In essence, the transaction was a sale of tangible personal property. The taxpayer therefore had to collect tax on the sale.

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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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