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 Memorandum of Decision.

Business provided sufficient documentation to establish that sales tax at issue in a refund claim was paid by business to its exempt customer. Since the customer was exempt from paying sales tax and since Business refunded the previously collected sales tax to that customer, the purchases at issue were not subject to sales tax and refund to Business is appropriate.

I. Sales Tax–Refund.

Authority: IC § 6-2.5-2-1; IC § 6-2.5-5-8; IC § 6-8.1-9-1; IC § 6-2.5-6-14.1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014).

Taxpayer protests the denial of a claim for refund.

Taxpayer is an out-of-state business with operations in Indiana. Taxpayer filed a claim for refund of sales tax it collected from one customer in May of 2013 on purchases of tangible personal property ("TPP"). Taxpayer claimed that its customer qualified for the resale exemption on the purchase of the TPP. After review, the Indiana Department of Revenue ("Department") denied the claim on the basis that Taxpayer had not supplied sufficient documentation to grant the claimed refund. Taxpayer later refiled the claim. The Department then denied the claimed refund on the basis that it was filed past the statute of limitations for claiming a refund. Taxpayer protested both denials of the claim for refund. An administrative hearing was held and this Memorandum of Decision results. Further facts will be supplied as required.

I. Sales Tax–Refund.

Taxpayer protests the Department's denial of its claim for refund of sales tax which it had collected from its customer in May of 2013. The Department denied the claim after determining that there was insufficient documentation supplied to verify either that Taxpayer's customer was exempt or that Taxpayer had refunded the amount at issue to its customer. Taxpayer refiled the claim for refund along with additional documentation supporting its claim. The Department then denied the claim on the basis that the claim with additional supporting documentation had been filed past the statutory deadline for claiming a refund. Taxpayer states that it believed the refiling of the claim with additional documentation to be a continuation of the original filing, since it had been in contact with the Department after the initial denial regarding the claim and the type of documentation which would be required.

As an initial point, the Department notes that, "[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.'" Dept. 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 initial refund determination, shall be entitled to deference.

Sales tax is imposed by IC § 6-2.5-2-1, which states:

Next, IC § 6-2.5-5-8(b) provides:

Next, IC § 6-8.1-9-1(a) provides:

Also, the Department refers to IC § 6-2.5-6-14.1, which states:

In this case, Taxpayer states that its customer purchased the TPP for resale. In the course of the refund claim and administrative protest process, Taxpayer provided sufficient documentation to establish that its customer was in the business of reselling the TPP in question without changing the form of the property, as required to qualify for the exemption provided by IC § 6-2.5-5-8(b). Taxpayer also provided sufficient documentation to establish that it refunded the amount of sales tax at issue to its customer as required by IC § 6-2.5-6-14.1 for it as the retail merchant to claim a refund of the sales tax itself. Finally, since the initial refund request was filed within the three year deadline established under IC § 6-8.1-9-1(a) and since Taxpayer continued discussions with the Department regarding the level of documentation required, the second refund request was an unnecessary refiling of the initial refund claim and the statute of limitations had not expired. Therefore, Taxpayer has established that it met the requirements to receive a refund of the sales tax which it refunded to its exempt customer.

Taxpayer's protest is sustained.