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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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

Despite having previously lived in Indiana and then returning to the state, Individuals established that they were not residents of Indiana during 2013; Individuals provided documents establishing that they lived and worked outside Indiana during 2013.

I. Indiana Individual Income Tax - Residency.

Authority: IC § 6-3-1-3.5(a); IC § 6-3-1-12; IC § 6-3-1-13; IC § 6-3-2-1(a); IC § 6-3-2-2(a); IC § 6-8.1-5-1(c); 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); Miller Brewing Co. v. Indiana Dep't of State Revenue, 903 N.E.2d 64 (Ind. 2009); 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(a); 45 IAC 3.1-1-22(b); 45 IAC 3.1-1-22(c); 45 IAC 3.1-1-22.5; 45 IAC 3.1-1-23.

Taxpayers protest the Department's assessment of additional 2013 individual income tax on the ground that they were not Indiana residents during 2013.

Taxpayers are former residents of Indiana. The Indiana Department of Revenue ("Department") contacted Taxpayers informing them that they were required to file for and pay 2013 Indiana tax on the ground that they were Indiana residents that year. The Department then issued a proposed assessment of additional 2013 Indiana income tax. Taxpayers disagreed with the assessment and submitted a protest to that effect. An administrative hearing was conducted during which Taxpayers explained the basis for the protest. This Letter of Findings results.

I. Indiana Individual Income Tax - Residency.

The issue is whether Taxpayers have established that they were not Indiana residents during 2013 and - as a result - not required to file an Indiana income tax return that year.

In this instance, Taxpayers' protest stems from the Department's proposed assessment of additional income tax. As a threshold issue, all such 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). "[E]ach assessment and each tax year stands alone." Miller Brewing Co. v. Indiana Dep't of State Revenue, 903 N.E.2d 64, 69 (Ind. 2009). Thus, the taxpayer is required to provide documentation explaining and supporting its 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 "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 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 also45 IAC 3.1-1-21. Nonresident is "any person who is not a resident of Indiana." IC § 6-3-1-13.

Recently, the Department revised the Adjusted Gross Income Tax regulations. Some of the revisions intended to clarify the definition of a person's domicile for Indiana income tax purposes and afford more considerations in determining a person's domicile. This Decision thus applies the new regulations accordingly.

Thus, a new domicile is not necessarily created when an individual moves to a place outside of Indiana. Instead, the individual must move to the new location and have an intent to remain there indefinitely.

In Croop v. Walton, 157 N.E. 275 (Ind. 1927), a taxpayer, Mr. Walton, 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. Mr. Walton 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, Mr. Walton 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 Croopstated:

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:

Taxpayers explain that they were former Indiana residents but that they moved to North Carolina in 2005. From North Carolina, Taxpayers further explain that they moved to Ireland in 2012 and were living and working in that country during 2013. Taxpayers explain they used an Indiana address - one of their parent's - as a convenient mailing address because it was difficult for all their mail to be forwarded to Ireland. In January 2014, Taxpayers returned to the United States and are now currently residents of Washington state.

Taxpayers provided documents purporting to establish that they were residents of Ireland during 2013.

• Irish rental agreement dated 2012 along with receipts for a security deposit on that rental unit;

• Irish "Certificate of Registration" from that country's immigration authority dated 2012;

• Monthly Bank of Ireland financial statements dated 2013;

• Statements from Irish utility vendors dated 2013;

• Household goods shipment forms indicating transport of household goods from North Carolina to Ireland;

• U.S. Customs and Border Protection form indicating movement of goods from Ireland to the United States dated January 2014;

• Documents dated 2014 establishing purchase of an Indiana home.

As mentioned earlier, "A person has only one (1) domicile at a given time even though that person may be statutorily a resident of more than one (1) state. . . ." 45 IAC 3.1-1-22(a). "Once a person is domiciled in Indiana, that status is retained until such time as he or she voluntarily takes positive action to become domiciled in another state or country and abandons the Indiana domicile by relinquishing the rights and privileges of residency in Indiana." 45 IAC 3.1-1-22(b). "To establish a new domicile, the person must be physically present at a place, and must have the simultaneous intent of establishing a permanent place of residence at that place." 45 IAC 3.1-1-22(c). "The intent to change one's domicile must be present and fixed and not dependent upon the happening of some future or contingent event. It is not necessary that the person intend to remain there until death; however, if the person, at the time of moving to the new location, has definite plans to leave that new location, then no new domicile has been established." 45 IAC 3.1-1-22(c). In other words, "[t]o effect a change of domicile, there must be an abandonment of the first domicile with an intention not to return to it, and there must be a new domicile acquired by residence elsewhere with an intention of residing there permanently, or at least indefinitely." Croop, 157 N.E. at 276; see also Bayh, 521 N.E.2d at 1317-18.

Taxpayers previously lived in Indiana, moved from there to North Carolina, then moved to Ireland, returned to Indiana, and currently reside in Washington. Based on the documentary evidence provided by Taxpayers and given a case-by-case review, there is insufficient evidence to conclude that Taxpayers "[were] domiciled in this state during the taxable year," "maintain[ed] a permanent place of residence in this state" or spent "more than one hundred eighty-three (183) days of the taxable year within this state . . . ." IC § 6-3-1-12.

Taxpayers' protest is sustained.