United States

Indiana: Real Property Listings Database Not Subject to Tax

Dec 18, 2017
From KPMG TaxWatch

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In a recent Letter of Findings, the Indiana Department of State Revenue addressed whether a taxpayer was entitled to a refund of sales taxes paid on access to data. The taxpayer was an organization for real estate professionals. Members of the taxpayer’s organization were given access to an online database of real property listings. The taxpayer contracted with a vendor to compile the listings from information supplied to the vendor by the taxpayer’s members. The vendor used software to standardize the format of the information, and the reformatted data was made accessible to the taxpayer and its members within a searchable online database.

Earlier guidance from the Indiana Department of Revenue provides that the sale of reports or other information compiled by a computer is considered to be a taxable sale of tangible personal property unless the information was furnished by the same entity to which the finished report is sold, in which case the sale is considered to be a service. Later guidance provides that a subscription to an online database that allows a customer to download reports is not subject to tax if the customer does not gain control of the underlying database software. The transactions at issue met both these criteria. The agreement between the taxpayer and the vendor established that the taxpayer did not take possession of the software and had no ability to use, control or direct the database software. The taxpayer also maintained ownership of the data provided to the vendor for processing, so the reports were therefore received by the same entity that provided the data. The Department concluded that the taxpayer had purchased a nontaxable service and was entitled to the sales and use tax refund. For more information on this Letter of Findings, please contact Dave Perry at 513-763-2402. 


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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.