Indiana: Commissioner's Directive construes tax exemptions related to the Final Four

The Indiana Department of Revenue (INDOR) published a Commissioner’s Directive (Directive) late last year to provide guidance to the National Collegiate Athletic Association (NCAA) and retail merchants on tax exemptions during the Final Four event that takes place in Indiana, including all ancillary associated events. 

Under Indiana state law, the following are exempt from taxation for all purposes: Revenues, expenditures, and transactions resulting from holding the actual event or from making preparatory advance visits to Indiana. And all property owned by the National Collegiate Athletic Association (NCAA) and its affiliates in connection with a Final Four event in Indiana.

Here are the categories of tax exemptions:

Sales and use taxes

Purchases of tangible personal property or taxable services by the NCAA or an affiliate in connection with a Final Four event are exempt from sales and use taxes, as long as the purchase was made directly by the NCAA or an affiliate.

The Directive explains that there is no exemption if the purchaser is an NCAA employee unless the purchaser has a master account with the retail merchant. The purchaser must:

• Provide a list of employees authorized to make charges to the master account;
• Provide the master account information to the INDOR; and
• Submit an exemption certificate to the retail merchant.

Refunds are available by filing a properly supported claim with the INDOR.

In addition, sales by the NCAA and affiliates are exempt from sales and use taxes. To the extent that it has gross receipts that would otherwise be subject to tax, the NCAA or affiliate must timely file monthly sales tax returns with the INDOR for any month in which it has tax-exempt sales.

Excise taxes

Purchases and sales made by the NCAA and affiliates are exempt from state and county excise taxes. This includes gasoline or motor fuel tax, special fuel tax, auto rental and county auto rental excise tax, county food and beverage tax, innkeeper’s tax, and county admission tax. Refunds are available by filing a properly supported claim with the INDOR.

Income taxes

To claim this exemption, the NCAA or affiliate must comply with the following:

• Submit a report by the appropriate filing date detailing the exempt income; and
• Include this report as an enclosure with the income tax return, if required to file one.

Withholding taxes

The NCAA and affiliates are exempt from the withholding tax on the wages and salaries of employees unless the employees are residents of Indiana.

The Directive offers several examples to illustrate how these exemptions work in practice.