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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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

Individual residing in Qatar provided sufficient documentation to show that he was not a resident and therefore cannot be domiciled in Indiana for 2011, because Individual left Indiana after college and holding an Indiana's driver's license is not enough to establish residency.

I. Indiana Individual Income Tax - Residency - Domicile.

Authority: IC § 6-3-1-12; IC § 6-3-1-13; IC § 6-3-2-1; IC § 6-8.1-5-1; IC § 9-24-1-1.5; Dep't of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Lafayette Square Amoco, Inc. v. Ind. Dep't of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); Ind. 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.

Taxpayer protests the Department's assessment for the 2011 tax year.

Taxpayer is an individual who has resided in Qatar since 2010. The Indiana Department of Revenue ("Department") determined that Taxpayer was an Indiana resident for the tax year 2011 based upon information received indicating that he held an Indiana driver's license and that he had listed an Indiana address on his Federal income tax return. The Department, therefore, issued a proposed assessment for 2011 for income tax, penalty, and interest.

Taxpayer protested the proposed assessment. An administrative phone hearing was held. The Department issued Letter of Findings 01-20160544 denying Taxpayer's protest. Taxpayer timely requested a rehearing, which the Department granted. A rehearing was held and this Supplemental Letter of Findings ensues. Additional facts will be provided as necessary.

I. Indiana Individual Income Tax - Residency - Domicile.

As a threshold issue, it is Taxpayer's responsibility to establish that the existing tax assessment is incorrect. As stated in IC § 6-8.1-5-1(c), "The notice of proposed assessment is prima facie evidence that the department's claim for the unpaid tax is valid. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made." Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). Consequently, a taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department's position is wrong. 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, as well as the preceding audit, 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). For income tax purposes, "The term '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. A nonresident is "any person who is not a resident of Indiana." IC § 6-3-1-13.

Pursuant to IC § 6-3-1-12, a resident is defined as follows:

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.

The Indiana Supreme Court considered the issue of the meaning of "domicile" in State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988), in which the court provided:

Therefore, an examination of Taxpayer's acts is required to determine if Taxpayer had the intention to acquire a new domicile outside Indiana and to abandon his domicile in Indiana.

A review of the domiciliary criteria listed under 45 IAC 3.1-1-22 is illuminating in this matter. As is common for college students, Taxpayer's indicia of domicile were minimal while attending school. As explained by the court in Bayh, the domicile of an unemancipated minor is determined by the domicile of his parents and it was this childhood domicile which continued for Taxpayer through college. As a student, he did not have the resources to acquire the material and social indicia of what the Bayh court described as "domicile by choice." After graduating from college in 2001, Taxpayer left Indiana to attend graduate school in Illinois. Taxpayer graduated from graduate school and moved to Georgia where he began his career. Taxpayer lived and worked in Georgia from 2006-2010. Taxpayer moved to Qatar in 2010 and has remained there ever since.

During the protest, Taxpayer submitted numerous documents to the Department in support of his argument that he was not an Indiana resident and was not domiciled in Indiana during the relevant tax year. Taxpayer provided his Permanent Residency card for Qatar showing an expiration of July 2012, a Qatar identification card, and his letter of employment for the years 2010-2012. Taxpayer also included visas and passport information for his entire family. Taxpayer explained that he grew up in Indiana and graduated from an Indiana University in 2001 and moved to Illinois, after that he then moved to Georgia in 2006. Taxpayer also provided his 2006 W-2 from his Illinois employer listing an Illinois address, and his 2009 federal tax return with his Georgia address. Taxpayer also provided his 2009 Georgia state income tax return. Taxpayer also provided information on his home purchased in Georgia in 2007, Taxpayer's Georgia driving record, Georgia birth certificates of his children, his children's' social security cards, which were sent to Taxpayer's Georgia address, and the medical bill for his children's birth. Taxpayer explained that the Indiana address used is his wife's parents' address.

The Department based its assessment on Taxpayer's possession of an Indiana's driver's license for 2011-2017 and use of an Indiana mailing address. In the course of the protest process, Taxpayer has provided documentation and analysis to support his protest that he was not a resident of Indiana during 2011. The possession of an Indiana driver's license, by itself, is not conclusive of a finding of Indiana residency, as the Indiana Bureau of Motor Vehicles is authorized to issue driver's licenses to non-residents. IC § 9-24-1-1.5. Taxpayer was able to show that he effectively abandoned his Indiana domicile and establish a new domicile elsewhere. Taxpayer met his burden to show that the assessment of tax for 2011 is incorrect as required by IC § 6-8.1-5-1(c).

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.