- Tax Ruling Overview: The Indiana Department of Revenue ruled that a wholly owned subsidiary of a large logistics provider qualifies as a “fulfillment company,” meaning its non-returnable wrapping materials and machinery and equipment (M&E) used in assembly and packaging are subject to sales and use tax.
- Rejection of Exemption Claims: The ruling dismissed the subsidiary’s argument that it functioned as an industrial processor, which would allow for exemption on the wrapping materials, stating that these items do not qualify due to their non-returnable nature and the lack of direct production use.
- Scope of Services: The subsidiary provides a broad range of services, including supply chain management, manufacturing, and order fulfillment, but these do not change the taxability of the materials and equipment used in its operations, as determined by the ruling.
Source Deloitte
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