If you try to sit, I'll tax your seat.
If it gets too cold, I'll tax the heat.
If you take a walk, I'll tax your feet."
-- from the song Taxman, by George Harrison
Since this is April 15th, it means I finally finished getting my taxes filed two days ago. I was early this year.
I hate to whine, but I could not help noticing that some genius at the Indiana Department of Revenue thought it would be a good idea to increase the sheets of paper required to file my state taxes from two to six. Way to go green!
My pet peeve for today, though, concerns Schedule 4 of the Indiana tax form, which deals with "Use tax on out-of-state purchases," which we will henceforth refer to as UTOOOSP.
Indiana's sales tax rate has, over time, crept its way up to 7%. Every retail merchant in Indiana works as an unpaid tax collector every time they sell you something. Whatever you purchase in Indiana, from an Indiana merchant, automatically kicks back 7% to the state.
This is quite a tidy sum of revenue, but apparently not enough. Not satisfied with skimming 7% off the top on your in-state purchases, Indiana also has UTOOOSP.
What gives Indiana the right to tax a transaction that takes place in another state? Good question! Nonetheless, that is the law. Welcome to the world of UTOOOSP.
On page 22 of the IT-40 instructions booklet it states:
Schedule 4: Other TaxesThe accompanying worksheet is most helpful. It suggest some of the things you are invited to pay UTOOOSP on. Perhaps you bought a magazine subscription? Did you make any out-of-state mail order purchases? Have you purchased anything over the internet? Then you owe some UTOOOSP to the Indiana Department of Revenue.
Line 1 – Use tax on out-of-state purchases
If you have purchased items while you were outside Indiana, through the mail (for instance, by catalog or offer through the mail), through radio or television advertising and/or over the Internet, these purchases may be subject to Indiana sales and use tax, if sales tax was not paid at the time of purchase. This tax, called “use” tax, is figured at 7 percent.
When you make purchases from a company in Indiana, that company is responsible for collecting the Indiana sales tax from you. When youmake purchases from an out-of-state company, you are responsible for making sure the use tax is paid. Either the out-of-state company collects the tax from you, or you must pay the tax directly to the State of Indiana.
Complete the worksheet on page 23 to figure your tax. If you paid sales tax to the state where the item was originally purchased, you are allowed a credit against your Indiana use tax for an amount paid up to 7 percent.
But that just scratches the surface. We should all be doing a lot better job of tracking our UTOOOSP, lest we cause the state of Indiana to plummet into insolvency.
Remember that trip to Cincinnati last fall for Aunt Gertrude's 90th birthday party? Remember how you stopped for gas after you crossed the state line? And after picking up a couple of Cherry Cokes and some Moon Pies for the kids, you owed the clerk at the gas/convenience store $42.87? You think you are done with that transaction just because the clerk collected Ohio's 6.5% sales tax (5.5% state and 1.0% county) on that purchase?
Think again, you derelict scofflaw!
According to the IT-40 worksheet, you owe some UTOOOSP to Indiana. Since you only ponied up 6.5% to Ohio, Indiana wants that other 0.5%, and they want it now! By law, you are expected to save that receipt, calculate the difference between the Ohio tax and our Indiana tax, and remember to pay your UTOOOSP for what you spent on that trip to Aunt Gertrude's.
You will have spent all that time and energy to remember to pay Indiana an additional 21 cents in UTOOOSP.
If you travel much at all, you cannot help but be on the FBI's Most Wanted UTOOOSP list. Who in their right mind can keep track of such minutiae?
Just how much time does our state legislature think the average taxpayer has to waste? It's laws like UTOOOSP that give our otherwise esteemed Indiana General Assembly a bad reputation.
