Indiana Administrative Code › Title 45 - DEPARTMENT OF STATE REVENUE › Article 2.2 - SALES AND USE TAX › Rule 5 - Exempt Transactions of a Retail Merchant › Section 5-62 - Tangible personal property directly consumed in the rendering of public transportation

Current through July 10, 2024
Authority: IC 6-8.1-3-3
Affected: IC 6-2.5
Sec. 62.
(a) The
				state gross retail tax shall not apply to the sale, storage, or use of tangible
				personal property which is directly consumed in the rendering of public
				transportation of persons or property.
(b) Definition: Consumed. For purposes of
				this regulation
[45 IAC 2.2]
, "consumed" means the dissipation
				or expenditure by combustion, use, or application and shall not mean or include
				the obsolescence, discarding, disuse, depreciation, damage, wear, or breakage
				of tangible personal property.
(c)
				The exemption provided by this regulation
[45 IAC 2.2]
is
				limited to tangible personal property directly consumed in rendering public
				transportation. For rules governing materials consumed by persons engaged in
				manufacturing, processing, mining, repairing, and farming and not engaged in
				rendering public transportation, refer to Regulation 6-2.5-5-5.
(d) In order to qualify for exemption, the
				consumption of tangible personal property must be reasonably necessary to the
				rendering of public transportation.
(e) The following is a list of items which
				the department has determined to be reasonably necessary to the rendering of
				public transportation:
Roadway machinery and equipment;
Caboose and locomotive supplies such as fuses, lanterns,
				  batteries, and flags;
Equipment and items purchased to meet federal
				  requirements;
Tariff publications;
Vehicle used for public transportation;
Communication equipment;
All replacement parts, repair parts, and materials consumed
				  by exempt equipment;
Tools and equipment used to repair and maintain rolling stock
				  and track;
Vehicles used primarily for transportation of maintenance
				  crews;
Items used for repairs and maintenance of such
				  vehicles;
Items used for production of financial matters, insurance,
				  schedules, routes, and rates;
Items used to provide customer stations, handle baggage, sell
				  tickets;
Items used to keep vehicles clean and safe for the
				  passengers;
Machine shop and truck tools;
Equipment related to the construction and operation of
				  terminals;
Directories;
Gas storage facilities;
Caboose and locomotive compliments such as towels, masking
				  tape, powders, cleaners, ice, water coolers, and bottled water;
Cleaning supplies;
Employee uniforms;
Garage supplies.
(f) The following is a PARTIAL list of items
				which are not directly used or consumed in the rendering of public
				transportation and, therefore, are subject to tax:
Promotional expenses, matches, jackets, and promotional items
				  given away to existing or potential customers, advertising to the public,
				  except the printing of schedules and routes;
Sales expenses, sales telephones, and related computer
				  equipment used exclusively for sales activities such as marketing, sales
				  projection, and costing. Such equipment used to handle actual ticket sales
				  (i.e., at the reservation office) or to organize loads and dispatch trucks is
				  exempt;
Office supplies, furniture, equipment, and related items for
				  sales personnel executives, including ground and lawn care, except for grading
				  required for the vehicles directly used in the rendering of public
				  transportation;
Heating and air conditioning for separate, off-site executive
				  headquarters is subject to tax. Heating and air conditioning for reservation
				  area, vehicle maintenance areas, or switching yard control buildings is
				  exempt.
(g) Pre- and
				post-transportation activity. The purchase, storage, or use of tangible
				personal property consumed during activities prior to or subsequent to the
				rendition of public transportation is subject to tax. For purposes of this
				regulation
[45 IAC 2.2]
, transportation means the movement,
				transporting, or carrying of persons or property from one place to another and
				includes loading and unloading of persons or property into or from
				transportation vehicles.
(h) Fuel
				and lubricants. In general, fuel and lubricants are taxable except fuel and
				lubricants consumed by exempt transportation vehicles or other tangible
				personal property directly used in rendering public transportation.
-EXAMPLES-
(1) Fuel
				consumed by an exempt airplane is exempt from tax.
(2) Gasoline consumed by wreckers or repair
				vehicles is exempt from tax.
(3)
				Oil used to lubricate a conveyor system used to load cargo into or on an exempt
				trailer is exempt from tax.
(4)
				Fuel oil used to heat a carrier's terminals is exempt from tax.
(5) Fuel used to heat off-site, executive
				headquarters is taxable.