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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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

For purposes of the Indiana individual income tax, Husband and Wife appropriately filed the 2012 and 2013 Indiana Individual income tax returns because Wife became an Indiana resident and 2012 and Husband became an Indiana resident in 2013.

I. Indiana Individual Income Tax - Residency: Domicile.

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 § 6-8.1-5-1; 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); Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2012); Croop v. Walton, 157 N.E. 275 (Ind. 1927); State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988); 45 IAC 3.1-1-21; 45 IAC 3.1-1-22.

Taxpayers protest the Department's proposed assessments for the 2012 and 2013 tax years.

The Indiana Department of Revenue ("Department") determined that Taxpayers were Indiana residents for the tax year 2012 and 2013, that Taxpayers failed to correctly file their 2012 and 2013 Indiana income tax returns and that additional Indiana income tax was due.

Taxpayers disagreed with the assessments and submitted protests to that effect. An administrative hearing was conducted during which Taxpayers explained the basis for the protest. This Letter of Findings results. Additional facts will be provided as necessary.

I. Indiana Individual Income Tax - Residency: Domicile.

The Department assessed Taxpayers additional income tax for the 2012 and 2013 tax years on the ground that Taxpayers were Indiana residents, that they failed to file correctly their 2012 and 2013 Indiana income tax returns, and that additional Indiana income tax was due.

Taxpayers contended that Wife moved to Indiana in March 2012 to care for an aging family member. Taxpayers contended that Husband moved to Indiana in June 2013. Specifically, Taxpayers asserted that Husband was domiciled in Florida from 1999 to June 2013. Additionally, Taxpayers claimed that they filed the 2012 return to reflect Wife as a resident of Indiana from March 2012 to December 31, 2012. Taxpayers filed the 2013 return to reflect Wife as an Indiana resident and Husband as an Indiana resident from June 30, 2013 to December 31, 2013. Taxpayers provided copies of the Indiana tax returns that they filed.

The issue is whether, for the tax years 2012 and 2013, Husband was an Indiana resident and therefore subject to Indiana income tax.

As a threshold issue, all tax assessments are prima facie evidence that the Department's claim for the unpaid tax is valid; the 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, taxpayers are required to provide documentation explaining and supporting their challenge that the Department's assessment 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. 2012).

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. 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 taxpayers' 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 taxpayers' taxable income and to calculate what would be their Indiana income tax after applying certain additions and subtractions to that starting point.

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:

Thus, a new domicile is not necessarily created when individuals move to a new place. Rather, the individuals must move to the new place and have intent to remain there indefinitely.

In Croop v. Walton, 157 N.E. 275 (Ind. 1927), a taxpayer, Mr. Walton, moved from Sturgis, Michigan to Elkhart, Indiana by selling his Michigan residence and purchasing a residence in Indiana, where he and his wife lived for several years for the benefits of his wife's health. Indiana assessed Mr. Walton state income tax on his intangible property. Id. at 276-78. Mr. Walton disagreed, arguing that his intangible property was not subject to Indiana taxes because he was domiciled in Michigan. Id. The court found that Mr. Walton owned and managed a company and stores in Michigan; that Mr. Walton maintained his membership with lodges, clubs, and a church in Sturgis, Michigan; that Mr. Walton on various occasions exercised his civil and political rights in Sturgis, Michigan; and that Sturgis, Michigan was used in Mr. Walton's legal documents, including policies of insurance, mortgages, leases, contracts, and other instruments. Id. Ruling in favor of Mr. Walton, the court concluded that Mr. Walton did not change his domicile from Michigan to Indiana and his intangible property was not subject to certain Indiana taxes. Id. The court explained, in relevant part, that:

In State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988), the Indiana Supreme Court reiterated similar analysis and 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 court illustrated, in relevant part, that:

During the protest process, Taxpayers submitted additional documentation to support their assertions that Husband was not an Indiana resident until June 30, 2013 and did not owe any additional Indiana income tax for tax years 2012 and 2013. Specifically, Taxpayers' supporting documents included:

• Husband's Florida driver's license records from 1999

• Copies of actual Florida driver's licenses issued June 2, 2006 and July 31, 2012.

• Warranty Deed for Florida home dated March 1, 2012.

• Husband's lease agreement in Florida through May 9, 2013.

• Utility activity in the Florida residence through June 2013.

• Letter from Husband's employer confirming residency and fulltime employment through August 2013.

• Husband's voting record in Florida through the 2012 Presidential election

• Husband's Indiana driver's license issued in August 27, 2013.

Upon review, Taxpayers' supporting documentation demonstrated that Husband was not domiciled in Indiana until June 30, 2013. While Taxpayers did purchase a house in Indiana in 2011, the records supported that Wife did not physically move to Indiana until March 2012 and Husband until 2013.

In short, any individual who was domiciled in this state during the taxable year is a resident in this State. IC § 6-3-1-12(a). "A change of domicile requires an actual moving with an intent to go to a given place and remain there. 'It must be an intention coupled with acts evidencing that intention to make the new domicile a home in fact. . . . [T]here must be the intention to abandon the old domicile; the intention to acquire a new one; and residence in the new place in order to accomplish a change of domicile."' Bayh, 521 N.E.2d at 1317-18. In short, the Department agrees that Taxpayers met their burden of proof to demonstrate that Wife was an Indiana resident in 2012 and Husband was not an Indiana resident until June 30, 2013.

Taxpayers' protest is sustained.