Indiana Sales Tax Guide
Chapter 3: Getting registered to collect Indiana sales tax
The first step toward proper management of Indiana sales tax involves getting registered with the Indiana Department of Revenue. We get a lot of questions regarding this and recognize it may be the most difficult hurdle for small businesses to overcome. Registering to collect sales tax in Indiana means you've acknowledged your legal responsibility to collect and consequently file and remit sales tax to the state.When do I need to register to collect sales tax in Indiana?
There are two ways to think about this question. The first involves a topic called "nexus". Nexus, in the tax world refers to a company's connection to a state. While this connection is typically that of a physical nature (warehouse in the Indiana, inventory in Indiana, etc.), nexus is not limited to a physical presence. There are many nexus triggers we won't delve into here and, more importantly, nexus is often determined by a combination of events rather than a single event.
If it is determined you have nexus in Indiana, the Indiana Department of Revenue has the legal right to require you to collect, file, and pay sales tax.
If you've determined you have nexus in Indiana, the second question involves a topic we call "materiality". In short, you'll want to ask yourself whether the amount of sales tax you are required to collect and remit to the Indiana Department of Revenue is enough to put you at an unacceptable level of penalty and interest risk. As everyone's level of risk tolerance is different, this is a question that can only be answered by you, the business owner.
Prior to selling taxable goods or offering taxable services in Indiana, a business that has established nexus within the state is required to register for an Registered Retail Merchant Certificate (RRMC).What triggers nexus in Indiana?
Nexus is a complex topic that, depending on your situation, may require the in-depth knowledge of a qualified tax professional. That being said, there are a few common business events and situations that are known to trigger nexus in Indiana. The most common include the following:
- Opening an office in Indiana
- Storing inventory in a warehouse in Indiana
- Having remote employees located in Indiana
Businesses may register for an Indiana Registered Retail Merchant Certificate (RRMC) online by visiting the Indiana Department of Revenue and following the instructions provided.
It is also possible to get registered for a Registered Retail Merchant Certificate (RRMC) by completing and mailing in a Business Tax Application (BT-1), but this approach is not recommended. Form based registration is being phased out in favor of online registration. It’s fast, free, and more reliable than mailing in a completed paper form.What information is required to register for a Indiana Registered Retail Merchant Certificate (RRMC) ?
When applying for a Indiana Registered Retail Merchant Certificate (RRMC), there are a number of pieces of information that may be required. These include, but are likely not limited to:
- Business name
- Business entity type
- Description of business activities
- Date business activities began or will begin
- Business address and mailing address
- Business contact information
- The North American Industry Classification System (NAICS) code that best matches your business
- Federal Employer Identification Number (FEIN)
- Your name, Social Security Number (SSN), driver license number, personal address, and personal contact information of owner/sole proprietor
- List of business officers, partners, managing members, and/or trustees
- Employment information (date of hire, number of employees, payroll amounts, payroll agent’s PTIN, if applicable)
The cost to register for a Indiana Registered Retail Merchant Certificate (RRMC) is currently $25.Do I need a Federal EIN in order to register in Indiana?
The Indiana Department of Revenue requires businesses requesting a new Registered Retail Merchant Certificate (RRMC) to supply a valid Federal EIN number during the initial registration process. You can apply for an EIN number online by visiting the IRS website.Which Indiana governement agencies do I need to register with in order to get a new Registered Retail Merchant Certificate (RRMC)?
We recommend you contact the Indiana Department of Revenue to verify which government agencies you will be required to register with. Potential agencies include the following:
- Indiana Department of Revenue
- Indiana State Employment Agency
- Indiana State Department of Labor
- Indiana Local Tax Jurisdictions
Yes! Indiana Registered Retail Merchant Certificate (RRMC) registration is unique to the state of a business. The Indiana Department of Revenue requires all registered businesses to have current business owner name and contact information on file.