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 This document is effective as of its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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.

Individual established that she was not required to file a 2011 Indiana individual income tax return because she was a Kentucky resident during that year. Taxpayer never lived in Indiana nor did she own property in Indiana. Taxpayer was registered to vote in Kentucky, had a Kentucky driver's license, registered her vehicle in Kentucky and built a home in Kentucky, thus establishing her residency in Kentucky.

I. Income Tax–Residency.

Authority: IC § 6-8.1-5-1; IC § 6-3-2-1; IC § 6-3-2-2; IC § 6-3-1-3.5; IC § 6-3-1-12; Dep't. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014); Indiana Dep't. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2011); State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988); Croop v. Walton, 157 N.E. 275 (Ind. 1927); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2011); Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 3.1-1-22.

Taxpayer protests the imposition of Indiana individual income tax for the 2011 tax year.

Taxpayer is an individual who did not file a 2011 Indiana individual income tax return. Based on the best information available to it, the Indiana Department of Revenue ("Department") determined that, for the 2011 tax year, Taxpayer received 1099 and W2 income which was subject to Indiana income tax. As such, the Department concluded that Taxpayer was an Indiana resident who did not file her Indiana income tax return and pay the income tax that was due. The Department thus assessed Taxpayer income tax, interest, and penalty for tax year 2011.

Taxpayer timely protested the assessment. An administrative phone hearing was held. This Letter of Findings results. Additional facts will be provided as necessary.

I. Income Tax-Residency.

The Department determined that Taxpayer was an Indiana resident during tax year 2011 because she received 1099 and W2 income listing an Indiana address as her address. The Department therefore concluded that Taxpayer had 2011 income and was domiciled in Indiana in 2011, thereby subjecting that income to Indiana income tax. The Department thus assessed Taxpayer Indiana income tax, interest and penalty.

Taxpayer contends that she lived in Kentucky for all of 2011. In early 2012 she briefly moved in with a friend in Indiana while her home in Kentucky was being built. During that time, she prepared her Federal and Kentucky tax returns using her friend's Indiana address on her 2011 tax returns for ease of correspondence.

As a threshold issue, all tax assessments are prima facie evidence that the Department's claim for unpaid tax is valid; the taxpayer bears the burden of proving that any assessment is incorrect. IC § 6-8.1-5-1(c); Indiana Dep't. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2011); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). Consequently, the taxpayer is required to provide documentation explaining and supporting its challenge that the Department's position is wrong. Poorly developed and non-cogent arguments are subject to waiver. Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138, 1145 (Ind. Tax Ct. 2010); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480, 486 n.9 (Ind. Tax Ct. 2011). Further, "[W]hen [courts] examine a statute that an agency is 'charged with enforcing . . . [courts] defer to the agency's reasonable interpretation of [the] statute even over an equally reasonable interpretation by another party.'" Dep't. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). Thus, all interpretations of Indiana tax law contained within this decision, shall be entitled to deference.

Indiana imposes a tax "upon 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. For Indiana income tax purposes, the presumption is that taxpayers properly and correctly file their federal income tax returns as required pursuant to the Internal Revenue Code. Thus, to efficiently and effectively compute what is considered the taxpayer's Indiana income tax, the Indiana statute refers to the Internal Revenue Code. IC § 6-3-1-3.5(a) provides the starting point to determine the taxpayer's taxable income and to calculate what would be their Indiana income tax after applying certain additions and subtractions to that starting point.

Residency cases are particularly fact sensitive thus the position relayed within this document pertains only to this case and its specific set of facts. Pursuant to IC § 6-3-1-12, a 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. . . ." In other words, a resident includes individuals who are domiciled in Indiana and/or maintain a permanent place of residence in Indiana and then spend more than 183 days in Indiana. In this case, Taxpayer was able to establish that she did not spend more than 183 days in Indiana during 2011. Therefore, in order to be considered a resident of Indiana during 2011, Taxpayer must have been domiciled in Indiana.

Domicile is defined by 45 IAC 3.1-1-22, which states:

Thus, a new domicile is not necessarily created when an individual moves to an address outside Indiana. Instead, the individual must move to the new non-Indiana address and have intent to remain at that non-Indiana address.

For example, in Croop v. Walton, 157 N.E. 275 (Ind. 1927), a taxpayer who was domiciled in Michigan sold his home in Michigan and moved to a new residence in Indiana where he and his wife lived for several years for the benefit of his wife's health. The taxpayer lived in the Indiana home "on account of the mental and physical condition of his wife, and continued to occupy it until such time as she could safely return to [Michigan] to live." Id. at 276. The court concluded that, based on the level of activity he maintained in Michigan and lack of intention to abandon his domicile, taxpayer did not change his domicile from Michigan to Indiana. The court explained, in relevant part, that:

In explaining the difference between "residence" and "domicile," the court in Croop stated:

In State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988) the Indiana Supreme Court considered the issue of the meaning of "domicile" in determining that Mr. Bayh met the residency requirement for the office of Governor. Mr. Bayh's domicile remained in Indiana even though he moved to different states for various reasons for many years. The court stated, in pertinent part:

Taxpayer has never lived in Indiana. Prior to and throughout 2011, Taxpayer lived and worked in Kentucky; and continues to do so. Taxpayer provided a copy of her Kentucky apartment lease dated August 2011 through 2012. Taxpayer chose to spend a few months staying with a friend in Indiana in 2012 as her home in Kentucky was being built. It was during that time that Taxpayer prepared and filed her Federal and Kentucky income tax returns. In doing so, she listed her address as her friend's Indiana address for ease of communication. Once her Kentucky home was complete, Taxpayer left her friend's Indiana home and moved into her Kentucky home. Taxpayer is not listed as an owner on her friend's Indiana home and does not own any other property in Indiana.

To further evidence her domicile in Kentucky for the tax year at issue, Taxpayer provided proof that she was registered to vote in Kentucky as of October 18, 2010. She had a Kentucky driver's license, registered her vehicle in Kentucky and provided a Kentucky driving record listing activity such as license renewals from 2010 through 2014. Taxpayer does not have any connections to Indiana and has established a home in Kentucky. Without further evidence to the contrary, Taxpayer was domiciled in Kentucky for tax year 2011.

Taxpayer's protest is sustained.