Section 45IAC2.2-5-25. Government agencies and units purchases; application of sales tax

   (a) There is not a blanket exemption from the sales tax for purchases by governmental agencies and units. It provides that only the purchase of tangible personal property used by the governmental agency in connection with a governmental function may be purchased exempt from sales tax.

  (b) Purchases by a governmental agency or subdivision to be used in connection with or for a proprietary activity are subject to the sales tax.

  (c) Proprietary activities by governmental agencies and subdivisions include:

(1) Activities in connection with the sale of tangible personal property, such as college book stores, food services, concessions, etc.

(2) Activities in connection with the rental of tangible personal property made to the general public.

  (d) In every case in which a governmental agency engages in a proprietary type activity as defined above, the agency must pay sales tax on the purchase of all tangible personal property used in connection therewith.

  (e) The construction of buildings and structures for use in proprietary activities such as concession stands, is subject to sales tax on the tangible personal property incorporated therein.

  (f) Governmental agencies should refer to the gross income tax regulations and instructions for other examples of proprietary type activities. (Department of State Revenue; Ch. 5, Reg. 6-2.5-5-16(020); filed Dec 1, 1982, 10:35 am: 6 IR 45)