Information Bulletin #13 Page #3
Indiana law also provides an exemption from sales tax for transactions involving purchases of machinery, tools, and equipment that are directly used in the direct production of tangible personal property, and for purchases of materials directly consumed or directly incorporated in direct production. This exemption applies to purchases of utilities consumed in direct production.
NOTE: A refund claim based on the exemption provided for utilities used in the production process may not cover transactions that occur more than 18 months before the date of the refund claim.
Tangible personal property purchased to be used, consumed, or incorporated directly in the direct production of newspapers qualifies in the same manner for an exemption as purchases of any other tangible personal property used, consumed, or incorporated in manufacturing or production.
Production of the newspaper is considered to begin at the point at which news is gathered and ends with the packaging of the newspaper. Cameras, darkrooms, or supplies used to take photographs; computers or other equipment used to record stories; and equipment used to transmit or receive copy are considered to be used directly in the direct production of the newspapers.
IC 6-2.5-5-31(d) provides an exemption from sales tax for transactions involving a free- distribution newspaper or of printing services performed in publishing a free-distribution newspaper if the purchaser is the publisher of the free-distribution newspaper. IC 6-2.5-5- 31(c) provides a corresponding exemption from sales tax for transactions involving manufacturing machinery, tools, and equipment and other tangible personal property if the person acquiring that property acquires it for direct use or for direct consumption as a material to be consumed in that person’s direct production or publication of a free- distribution newspaper or for incorporation as a material part of a free-distribution newspaper published by that person.
The term “free-distribution newspaper” includes qualifying community newspapers, shopping papers, shoppers’ consumer papers, pennysavers, shopping guides, town criers, dollar stretchers, or other similar publications. To qualify, the newspaper must be distributed to the public on a community-wide basis, free of charge; be published at stated intervals of at least once a month; have continuity as to title and general nature of content from issue to issue; not constitute a book, either singly or when successive issues are put together; contain news of general or community interest, community notices, or editorial commentary by different authors in each issue; and must not be owned by, or under the control of, the owners or lessees of a shopping center, a merchant’s association, or a business that sells property or services (other than advertising) whose advertisements for their sales of property or services constitute the predominant advertising in the