NOTICE: IC § 4-22-7-7 permits the publication of this document in the Indiana Register. The publication of this document provides the general public with information about the Indiana Department of Revenue's official position concerning a specific set of facts and issues. The "Holding" section of this document is provided for the convenience of the reader and is not part of the analysis contained in this Final Order Denying Refund.

Non-profit Indiana Water Utility was not entitled to a refund of Utility Receipts Tax because the refund was barred by the three-year statute of limitations.

Taxpayer is an Indiana water utility company supplying water to approximately 300 customers. Taxpayer filed requests for a refund of Utility Receipts Tax (URT) on the ground that URT "returns were filed incorrectly and payments were made." The Indiana Department of Revenue ("Department") denied the refunds in October 2016 letters which both stated that Taxpayer's "claim is barred by the 3-year statute of limitations."

Taxpayer disagreed with the Department's decision and submitted a protest to that effect. An administrative hearing was conducted during which Taxpayer's representative explained the basis for the protest. This Final Order Denying Refund results.

I. Utility Receipts Tax - Statute of Limitations.

Authority: IC § 6-2.3-1-14; IC § 6-2.3-2-1; IC § 6-2.3-3-10; IC § 6-2.3-4-3; IC § 6-8.1-9-1(a); Commissioner's Directive 18 (August 2014).

Taxpayer argues that it is entitled to a refund of the URT paid over a period of seven years because the tax was never owed.

Over a seven-year period, Taxpayer explains that it paid URT to the Department, that it never owed the tax, and that it is now entitled to a refund of those amounts. Taxpayer explains that it is "not a Municipal Water Company, not a Municipality, and not a Political Subdivision." Instead, Taxpayer states that "it is a 501(c)(12) entity formed for the purpose of supplying water to [its] members."

The Utility Receipts Tax is imposed pursuant to IC § 6-2.3-2-1 which states:

IC § 6-2.3-1-14 states that:

(Emphasis added).

IC § 6-2.3-3-10 provides:

However, IC § 6-2.3-4-3 provides that the gross receipts received by "a nonprofit corporation formed solely for the purpose of supplying water to the public . . . are exempt from the utility receipts tax."

The exemption is reiterated at Commissioner's Directive 18 (August 2014), 20140924 Ind. Reg. 045140372NRA, which states that gross receipts received by "[a] nonprofit corporation formed solely for the purpose of supplying water to the public" are exempt from the URT.

In support of its position that it is exempt from the URT, Taxpayer provided a copy of its Bylaws which states "It is not anticipated that there will be any net income . . . ." Taxpayer's own registration with the Department (INBIZ) designates Taxpayer as a "Domestic Nonprofit Corporation."

Taxpayer argues that the URT returns should "never have been filed for the periods [2003 through 2009], because the tax was not owed" and that the person responsible "did not understand the regulations for filing and filed these [URT] forms in error."

Nonetheless, Taxpayer's refund request is barred by the three-year limitations period. IC § 6-8.1-9-1(a) provides:

Although ultimately irrelevant, the Department has no reason whatsoever to question whether or not Taxpayer qualifies for the URT exemption. However, IC § 6-8.1-9-1(a) binds both Taxpayer and the Department. Taxpayer is not entitled to receive a refund of tax paid outside the three-year limitations period and the Department is not permitted to issue a refund submitted past that same period. What Taxpayer seeks is clearly precluded by Indiana law.

Taxpayer's protest is respectfully denied.