The Indiana Department of Revenue (DOR) is taking steps to encourage the donation of medical supplies and other goods to help fight the COVID-19 pandemic.
On March 6, 2020, Governor Eric Holcomb issued Executive Order 20-02, declaring a public health disaster emergency in Indiana due to the coronavirus (COVID-19). Later, on March 19, 2020, Gov. Holcomb issued Executive Order 20-05 to provide the following tax incentives for COVID-19 donations:
1. Manufacturers making donations of medicine, medical supplies or other eligible items to fight the COVID-19 pandemic in Indiana will not incur a use tax obligation for those donations; and
2. Groups or organizations making donations of medicine, medical supplies or other goods will not incur a use tax obligation for those donations if sales tax was not paid when receiving the item.
“Gov. Holcomb is inspiring us all to do everything we can to help Hoosiers during this medical emergency,” said DOR Commissioner Bob Grennes. “Waiving use tax for COVID-19 supplies will empower more companies and organizations to help Hoosiers battle the spread of COVID-19.”
Use tax typically applies to retail transactions when items are not subject to sales tax at the time of purchase. Eligible items for the COVID-19 use tax waiver include, but are not limited to:
• Medical supplies (such as personal protective equipment, ventilators and dialysis machines)
• Food donated to food banks or other charities helping feed those in need because of the COVID-19 crisis.
• Clothing, bedding or personal care products donated to homeless shelters or other charities helping those displaced or in jeopardy because of the COVID-19 crisis.
• Soaps, sanitizers, disinfectants, detergents and other cleaning supplies to medical facilities and the charities mentioned above.
• Building supplies, beds and other materials used to construct and furnish field hospitals or other temporary medical facilities.
Companies and organizations must get approval from DOR to use the COVID-19 waiver by emailing COVID19donations@dor.in.gov and providing the following information:
1. Name of the donor.
2. The donor’s Tax ID or Federal Employer Identification Number (FEIN).
3. Identify if the donor is the manufacturer or purchaser of the donated items.
4. A list of all items donated, including the cost or purchase price of the items.
5. The organization(s) receiving the listed items.
6. A confirmation by the receiving organization(s) that the items have been or will be donated. Email confirmations are accepted.
After reviewing the information, DOR will confirm if the donation has been approved for the waiver. If approved, the donor will not be required to report the use tax on their next sales and use tax return, their income tax return or a consumer use tax return.
Eligible donations made prior to March 19, 2020, will be considered; however, donation of such items will not entitle the donor to a refund of any sales or use tax previously paid to DOR or to a vendor.
Any changes to this guidance, additional modifications to normal operations or changes to tax filing and payment deadlines will be posted on DOR’s website, as well as DOR’s social media accounts.