The Indiana Department of Revenue has updated Information Bulletin # 28S to reflect the taxation of Document Fees effective April 2, 2019. Although no laws or Indiana Code Sections have been changed or updated, the Department of Revenue is making policy changes regarding documentation fees.
According to Information Bulletin 28S dated January 2019 and Effective April 2, 2019, fees for services performed after the transfer of a vehicle or trailer are not considered part of the sales price and, therefore, are not subject to sales tax. Transfer of a vehicle or trailer takes place upon physical delivery when the purchaser takes possession and control of the property, even though the title may not have yet been transferred. The dealer must maintain adequate records to show which services pertain to the fees charged and that the services were performed after the transfer of the vehicle or trailer to be exempted from sales tax. Fees charged for services performed prior to the customer taking physical possession of the vehicle or trailer are subject to sales tax.
Historically, separately stated fees labeled as “documentation fees” were presumed to be at least partially excluded from gross retail income because all or part of the fee was considered to be compensation for preparing and submitting documents to the Indiana Bureau of Motor Vehicles on behalf of the purchaser to complete titling and in some cases registration of the vehicle. Such services were considered to be a separately bargained for service that took place after the transfer of possession of the vehicle to the customer. However, the General Assembly added IC 9-14.13-3 effective July 1, 2016, which established a separate “convenience fee” that allowed dealers to charge for performing the services that have historically been excluded from the retail unitary transaction and represented by the documentation fee. As such, fees that meet the definition of a separately stated “convenience fee” are not subject to sales tax. While dealers may still charge a separate documentation fee in addition to the convenience fee, the services attributable to documentation fees will be considered to be charges by the seller for services necessary to complete the sale per IC 6-2.5-1-5(a)(3) and will be subject to sales tax.
To: Secretary of State Auto Dealer Services Division
From: Indiana Bureau of Motor Vehicles Titles Department
Date: Mar. 27, 2019
Re: Title Printing Issue
On March 6, 2019, there was a printing issue with Indiana Certificates of Title. On the back of titles printed on this date, the odometer digit boxes and the Seller and Purchaser Information boxes may have faded or missing lines in them.
The alignment of the reassignment boxes may be skewed as well.
If a customer presents a title with faded, missing, or skewed lines on the back of it and the issue date on the title is March 6, 2019, dealers may accept these titles and make reassignments as normal.
The BMV will also replace misprinted titles at no charge at the vehicle owner’s request.
For any questions, email the Titles Department at firstname.lastname@example.org.