Indiana businesses selling goods or services in reciprocal states benefit from simplified sales tax collection. You only collect Indiana sales tax from Indiana customers and the sales tax of the reciprocal state from customers located there. This avoids double taxation for customers.
Currently, Indiana has sales tax reciprocity with Kentucky and Ohio. This means that if your Indiana business has a physical presence (like a store or office) in Kentucky or Ohio, you collect the respective state’s sales tax from customers in those states. You do not collect Indiana sales tax on those sales. If your business is solely online, the situation is more complex; you’ll need to investigate your state’s specific rules and requirements for nexus and sales tax collection. You should consult a tax professional if you have any questions about online sales.
Properly handling reciprocal state sales tax requires careful record-keeping. Maintain separate records for sales in Indiana and sales in reciprocal states. This aids accuracy when filing sales tax returns for both states. Consistent accurate record-keeping minimizes the risk of audits and penalties.
| Indiana | N/A | 7% (Example) |
| Kentucky | Yes | 6% (Example) |
| Ohio | Yes | 5.75% (Example) |
Accurate tax compliance is paramount. Staying current with changes to state tax laws is vital. Consider using tax software or consulting a tax professional for assistance. These resources can help you manage sales tax complexities related to reciprocity and minimize potential tax liabilities.
