Sales tax - in IN

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Ken,

    I am pleased to report that the State of Indiana agrees with me that alarm monitoring is not taxable in Indiana.   Many of you may recall that a reader posed this question in May.  I researched the issue and it did not appear taxable to me.  I then called the Indiana Department of Revenue Tax Policy Division and discussed it with one of their attorneys.  He told me that the Policy Committee was evenly split as to whether monitoring was “communications” pursuant to a section of the Indiana Administrative Code that imposes a tax on communications.

    I wrote the Tax Policy Division, explained what alarm monitoring is, discussed how it is different from telecommunications transmission as defined by the Code, and asked for guidance based upon my explanation.  They have agreed that alarm monitoring is not “communications,” and, therefore not taxable.  Please note that ADVISORY     LETTERS ISSUED BY TAXING AUTHORITIES ARE BASED UPON THE FACTS AS PRESENTED AND UNDERSTOOD AND ARE NOT BINDING ON THE AUTHORITIES.  DO NOT USE THIS EMAIL AS SUPPORT FOR A TAX POSITION OR INTERPRET IT AS TAX ADVICE.  If you would like us to look at a particular situation, especially taxability of monitoring in Indiana, we would be glad to advise you as a client.

    I am glad to have had the opportunity to research this question for Conrad because it points out that it is not only important for your professionals to understand the law or tax code, it is also important for them to understand what you do.  Ken and I specialize in the Security, Alarm, and Systems Integration Industry.  All of my firm’s clients are in this industry.  We understand what you do and can apply the law and tax codes to your specific circumstances.  If your professionals don’t understand what you do, call us, you could be wasting money, or more importantly, putting your Company at risk.

Mitch Reitman

S.I.C. Consulting, Inc.

Fort Worth, TX 76133

817-698-9999

WWW.SICC.US

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    Response

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Great job Mitch.

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Question - collections

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Ken,

    We have a relatively big customer that has been short paying invoices on signed proposals.  We previously installed multiple IP cameras, access control and a custom order NVR.  As part of the installation, we were given access to their network.  Are we legally able to turn off the NVR and lock them out due to non-payment (or short payment of invoices)? 

Thanks,

MS

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Answer

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    You'd be less confused and stuck if you used a proper contract instead of a proposal.  If you sell a system you cannot access it and turn it off if you're not paid.  It's no longer your system.  You have to sue.  Hopefully your "proposal" deals with that - which I am sure it doesn't.

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job with multiple renters

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Ken

    I have found the easiest way to handle renters, is to monitor via wireless only. This allows the company to disconnect the system, from monitoring, without going to the premise. It also allows the company to charge up front for the radio. 

By the property owner paying the alarm company, then collecting from the tenant, this places the property owner in a liability issue. The property owner is charging the tenant for alarm service and has no contract, or insurance, to cover the liabilities of being in the alarm business. Once this is explained, few property owners will even consider any other option. I have had attorneys thank me for pointing this out. I also suggest doing a 1 yr contract and billing a year in advance. Renters can be rather annoying to collect from.

Roger

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Response

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    In a multi family building it's ok to contract with the owner for alarm services for payment puuposes, but each end user should be signing a contract for monitoring and service if the tenant is responsible for service charges to the system in the tenant's unit.  Owner can protect themselves by incorporating proper protective provisions in the lease.  But that's not the alarm co's problem.  The alarm co has to protect itself from exposure from the owner, tenants and others on the premises.  You do that with a proper alarm contract.

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another contract question

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Ken,

    I hope all is well. I have a new customer that I am signing up this week, a country  club with five burg systems in five buildings on the property. 

Can I use one contract for all five buildings and would the general manager of the country club who is the person I've been dealing with qualify to sign the contracts.

Thanks for your advice. 

Mike 

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Answer

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Yes, one contract is sufficient.  Make sure it's the Commercial All in One.  The general manager can sign the contract.

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employee steals from sub

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Ken,

    Quick question. Do the standard alarm contracts protect the alarm dealer if one of his technicians

is a dishonest employee and steals customer's jewelry during the time  he is in the master bedroom

closet installing the system? Perhaps the limitation of Liability clauses take affect?

Thanks,

Tom

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Answer

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    It's not the contract that will protect you.  You shouldn't be liable for your employee unless you were negligent in the hiring process or retained the employee after you knew of the dishonest character.  This is usually a question of fact and you may get dragged in to a lawsuit.  Make sure you have insurance coverage for dishonest employees as opposed to a routine loss caused by a third party.  

    To all our insurance experts out there - is there difference in coverage in the policy?