DEPARTMENT OF STATE REVENUE
01-20110557.LOF
Letter of Findings Number: 01-20110557
Individual Income Tax
For the Years 2001-2009
NOTICE: Under IC § 4-22-7-7, this document is required to be published in the Indiana Register and is effective on its date of publication. It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register. The publication of this document will provide the general public with information about the Department's official position concerning a specific issue.
ISSUE
I. Individual Income Tax – Imposition.
Authority: IC § 6-8.1-5-1.
Taxpayer protests the assessment of individual income tax.
STATEMENT OF FACTS
Taxpayer is an individual residing in Indiana. Taxpayer operates a sole proprietorship in Indiana.
From 2001 to 2009, Taxpayer did not file Indiana individual income tax returns. The Indiana Department of Revenue ("Department") conducted an investigation of Taxpayer. As a result of the Department's audit, Taxpayer was assessed tax, interest, and a ten-percent negligence penalty for each of the years in question. Taxpayer protested the assessment.
By letter dated February 2, 2012, the Department scheduled an administrative hearing for March 6, 2012. On March 6, 2012, Taxpayer called the hearing officer and left a message that he was unable to appear at the hearing. The Department attempted to call Taxpayer on multiple occasions prior to the hearing; however, each call was unanswered and the Department was unable to leave a message. Thus, this Letter of Findings is based on the Department's audit report and information submitted by Taxpayer prior to the designated hearing time.
I. Individual Income Tax – Imposition.
DISCUSSION
Taxpayer protests the assessment of individual income tax for 2001 through 2009, inclusive. Under IC § 6-8.1-5-1(c), Taxpayer bears the burden of proof for demonstrating that a proposed assessment is incorrect.
The Department's method to determine Taxpayer's income is as follows. First, the Department determined Taxpayer's business receipts for each of the tax years. Next, the Department used information from bizstats.com--a website which provides averages of expenses in various industries--to derive Taxpayer's business expenses.
In some cases, Taxpayer had information to substantiate certain categories of expenses, such as employee wages for 2008 and 2009. For Taxpayer's wages paid in 2008 and 2009, along with rent, advertising, and repairs, the Department used Taxpayer's provided information as opposed to the average provided for wages and certain other categories.
Prior to hearing, Taxpayer provided federal Schedule Cs for each year. The Schedule Cs list a loss for each year. However, Taxpayer did not provide any source documentation or any other information to demonstrate that the numbers listed on his Schedule Cs were correct or that the Department's audit was incorrect. The Department's estimate of Taxpayer's adjusted gross income was a valid and reasonable method in this case and thus Taxpayer's protest is denied.
FINDING
Taxpayers' protest is denied.
Posted: 05/30/2012 by Legislative Services Agency
DIN: 20120530-IR-045120224NRA
Composed: Apr 20,2024 12:22:07PM EDT
A
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