NOTICE: IC § 6-8.1-3-3.5 and IC § 4-22-7-7 require the publication of this document in the Indiana Register. This document provides the general public with information about the Department's official position concerning a specific set of facts and issues. This document is effective as of its date of publication and remains in effect until the date it is superseded by the publication of another document in the Indiana Register. The "Holding" section of this document is provided for the convenience of the reader and is not part of the analysis contained in this Letter of Findings.

Married couple were residents of Indiana for part of 2011, and changed domicile from Indiana to Florida in June of 2011.

I. Indiana Individual Income Tax - Residency.

Authority: IC § 6-3-1-3.5; IC § 6-3-1-12; IC § 6-3-1-13; IC § 6-3-2-1; IC § 6-3-2-2; IC § 6-3.1-20-1; IC § 6-8.1-5-1; IC § 6-1.1-12-37; Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988); 45 IAC 3.1-1-21; 45 IAC 3.1-1-22; 45 IAC 3.1-1-23.

Taxpayers protest the Department's proposed assessment of Indiana income tax.

II. Tax Administration - Penalty and Interest.

Authority: IC § 6-8.1-10-3; IC § 6-8.1-10-1.

Taxpayers protest the imposition of the penalty and interest.

The Indiana Department of Revenue ("Department") issued a proposed assessment for Indiana income tax, penalty, and interest. Taxpayers (husband and wife), filed a protest of the Department's assessment. An administrative telephone hearing was held; this Letter of Finding results. Additional facts will be provided as necessary.

I. Indiana Individual Income Tax - Residency.

The Department's tax assessments are prima facie evidence that the Department's claim for the unpaid tax is valid; a taxpayer bears the burden of proving that any assessment is incorrect. IC § 6-8.1-5-1(c); Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007); Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012). Thus, a taxpayer is required to provide documentation explaining and supporting their challenge that the Department's assessment is wrong.

Indiana imposes a tax "on the adjusted gross income of every resident person, and on that part of the adjusted gross income derived from sources within Indiana of every nonresident person." IC § 6-3-2-1(a). IC § 6-3-2-2(a) specifically outlines what is income derived from Indiana sources and subject to Indiana income tax. IC § 6-3-1-3.5(a) provides the starting point to determine the taxpayers' taxable income and to calculate what would be their Indiana income tax after applying certain additions and subtractions to that starting point. Furthermore, IC § 6-3.1-20-1 defines Indiana income as "adjusted gross income of an individual taxpayer, and the individual's spouse, if the individual files a joint adjusted gross income tax return."

For Indiana income tax purposes, resident "includes (a) any individual who was domiciled in this state during the taxable year, or (b) any individual who maintains a permanent place of residence in this state and spends more than one hundred eighty-three (183) days of the taxable year within this state . . . ." IC § 6-3-1-12; see also 45 IAC 3.1-1-21. Nonresident is "any person who is not a resident of Indiana." IC § 6-3-1-13.

Additionally, 45 IAC 3.1-1-22 states:

Under Indiana law "[h]omestead" is defined as "an individual's principal place of residence that is located in Indiana" and that "the individual owns . . . ." IC § 6-1.1-12-37(a)(2). A taxpayer is entitled to claim a property tax deduction, known as the homestead deduction, against taxes imposed on his or her homestead property pursuant to IC § 6-1.1-12-37(e). When the taxpayer is no longer qualified for the homestead deduction, the taxpayer must notify the auditor of the county where the homestead is located within sixty days after the dated of that change. IC § 6-1.1-12-37(f).

The Department also notes 45 IAC 3.1-1-23, which states in relevant part:

In State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988), the Indiana Supreme Court determined that Mr. Bayh met the residency requirement for the office of Governor because Mr. Bayh's domicile remained in Indiana even though Mr. Bayh moved to different states for various reasons for many years. Specifically, the Supreme Court stated in relevant part:

Id. at 1317-18. (Internal citations omitted) (Emphasis added).

Turning to the facts of Taxpayers' protest, they state that they used to live in Florida and moved to Indiana when they bought a condo in 2007 in order to care for a relative. Taxpayers state that in April of 2011 they moved back to Florida after the relative passed away, thus for 2011 they were in Indiana for less than 183 days. As evidence that they intended Florida to be their domicile as of 2011, Taxpayers provided the Department with copies of a Florida driver's license, voter registration, and an adjusted county tax bill receipt regarding the homestead deduction. For example, the voter registration shows that they registered to vote in Florida in June 7, 2011. The husband's driver's license also shows June 7, 2011 as the issue date. Thus for 2011, Taxpayers were residents of Indiana for part of the year, with the documentation showing June 7, 2011, as the date which they changed domicile to Florida.

Based upon 45 IAC 3.1-1-23 and information provided by Taxpayers, the Department finds that Taxpayers were residents of Indiana until June 7, 2011; Taxpayer's domicile changed to Florida on June 7, 2011.

Taxpayers' protest is sustained in part and denied in part. Taxpayers' were residents of Indiana until June 7, 2011; Taxpayers' domicile changed to Florida on June 7, 2011. Thus Taxpayers' would owe Indiana income tax for the part of the year that they were Indiana residents.

II. Tax Administration - Penalty and Interest.

Taxpayers were assessed a penalty under IC § 6-8.1-10-3. The Department finds that Taxpayers contacted their county auditor's office, and per a letter from that office the "homestead deduction" was removed but inadvertently ("through a computer glitch") put back onto Taxpayers' Indiana property. Taxpayers' have provided sufficient explanation and documentation for waiver of the penalty.

Indiana imposes interest on overdue tax pursuant to IC § 6-8.1-10-1(a), which states:

Thus the Department is unable to waive any interest that is owed.

Taxpayer's protest of the penalty is sustained; the protest of the interest is denied.

For the reasons discussed above, Taxpayers' protest of the Department's proposed assessment for the 2011 tax year is sustained in part and denied in part. Taxpayers' protest of the penalty is sustained; the protest of the interest is denied.