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 This document is effective as of its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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 he was not domiciled in Indiana in tax years 2011 or 2012. Therefore, Taxpayer was not required to file a 2011 Indiana income tax return, however, due to earning Indiana-source income in 2012, he was required to file an Indiana IT-40PNR income tax return for that year.

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 Dep't 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 utilized the homestead exemption on his Indiana property. As such, the Department concluded that Taxpayer was an Indiana resident who should have filed his Indiana income tax return and paid 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 he took the homestead exemption on his Indiana property. The Department therefore concluded that Taxpayer was domiciled in Indiana in 2011, and his income was subject to Indiana income tax. The Department thus assessed Taxpayer Indiana income tax, interest, and penalty.

Taxpayer contends that he moved to Florida in 2010 and that his Florida residence is his principal place of abode. Taxpayer claims that in 2011, after he moved to Florida, he requested that the homestead exemption be removed from his Indiana property. Thus, Taxpayer stated that his new domicile is Florida and he does not owe any Indiana income tax for tax year 2011.

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 Dep't 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. 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.

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 or maintain a permanent place of residence in Indiana and then spend more than 183 days in Indiana. Taxpayer returns to Indiana for the Holiday season each year, spending roughly four months in the state. Therefore, Taxpayer 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:

(Internal citations omitted) (Emphasis added).

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

(Internal citations omitted) (Emphasis added).

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 was an Indiana resident who moved to Florida in 2010. Since moving to Florida his only contacts with Indiana have been the property he owns, a few family members and a "back-up" heart doctor he visits should he have heart problems while visiting the state. In 2011 and 2012 Taxpayer was a part owner in an Indiana farm. He did not receive any income from the farm ownership in 2011. He did receive income from the farm in 2012 and filed and Indiana return claiming that income. The farm was dissolved by 2013.

Upon moving to Florida, Taxpayer registered to vote in Florida and obtained a Florida driver's license in February of 2010. He also moved his bank accounts to a bank in Florida and registered his vehicles in Florida. Taxpayer's social life and primary doctors are in Florida. He purchased a home in Florida in 2010 but retained his home in Indiana to use when he returned to Indiana to visit family. Taxpayer provided evidence that in May 2011 he submitted a form to the Indiana County in which his property is located, asking that the homestead exemption be removed from the property. The Department was able to verify that the homestead exemption was removed from the property for tax years 2011 and 2012. However, the exemption was taken again in tax years 2014 and 2015. The County in question was unable to explain why the exemption was reactivated in 2014, but did note that Taxpayer did not reapply for the homestead exemption.

Because Taxpayer has significantly reduced his Indiana contacts, indicating his intention to reside elsewhere, while successfully establishing domicile in Florida, Taxpayer is sustained.

Residency cases are particularly fact sensitive thus the position relayed within this document pertains only to this case and its specific set of facts.

Taxpayer's protest is sustained.