NOTICE: IC § 6-8.1-3-3.5 and IC § 4-22-7-7 require the publication of this document to 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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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.

Individual provided sufficient documentation to show that he was not domiciled in Indiana during 2013. However, Individual was required to file a Full-Year Nonresident Indiana income tax return because he had Indiana-sourced income.

I. Individual Income Tax - Indiana Residency.

Authority: IC § 6-3-2-1; IC § 6-3-1-12; IC § 6-8.1-5-1; IC § 6-3-1-3.5; Dep't of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); State Election Board v. Bayh, 521 N.E.2d 1313 (Ind. 1988); Croop v. Walton, 157 N.E. 275 (Ind. 1927); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2012); Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 3.1-1-22.

Taxpayer argues that he was not an Indiana resident during 2013 and was not required to file an Indiana income tax return for that year.

Taxpayer is a former Indiana resident who has lived in Florida since 1996. The Indiana Department of Revenue ("Department") notified Taxpayer that "[b]ased on information reported to the [Department], we have determined that you have unreported income for tax year 2013." As such, the Department requested that Taxpayer either provide a 2013 Indiana individual income tax return or send a letter explaining why he is not required to file a 2013 Indiana individual income tax return.

Taxpayer responded that he was a Florida resident. An administrative hearing was held during which Taxpayer explained the basis for his protest. This Letter of Findings results. Additional facts will be provided as necessary.

I. Individual Income Tax - Indiana Residency.

The Department assessed Taxpayer Indiana income tax for 2013 because Taxpayer did not timely file his Indiana individual income tax return by the due date. Taxpayer argued that he was not required to file an Indiana income tax return in 2013 because he has lived in Florida since 1996.

The issue is whether Taxpayer was required to file an Indiana income tax return for tax year 2013. Information available to the Department created a rebuttable presumption that Taxpayer was a resident of Indiana in 2013. Further, Taxpayer claimed a Homestead Exemption Credit on his Indiana property in 2013.

As a threshold issue, all tax assessments are prima facie evidence that the Department's claim for the unpaid tax is valid, and each taxpayer bears the burden of proving that any assessment is incorrect. IC § 6-8.1-5-1(c); 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). Thus, a taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department's position 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). In reviewing a taxpayer's argument, the Indiana Supreme Court has held, that when it examines a statute that an agency is "charged with enforcing . . . we 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).

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 compute what is considered the taxpayer's 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 calculate what would be their Indiana income tax after applying certain additions and subtractions to that starting point.

Indiana imposes an income tax on "that part of the adjusted gross income derived from sources within Indiana of every nonresident person . . . ." IC § 6-3-2-1(a).

Indiana also imposes an income tax on "the adjusted gross income of every resident 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.

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.

For example, in Croop v. Walton, 157 N.E. 275 (Ind. 1927), a taxpayer 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. The taxpayer 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, taxpayer 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 Croop stated:

Subsequently, in State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988), the Indiana Supreme Court further considered the meaning of "domicile" in determining that Mr. Bayh met the residency requirement for the office of Governor. The court concluded that Mr. Bayh's domicile remained in Indiana even though he moved to different states for various reasons for many years. The court explained, in pertinent part:

Accordingly, even when a taxpayer moves from Indiana for years, the taxpayer is presumed to be an Indiana resident if the taxpayer is domiciled in Indiana and has no intention to abandon his or her Indiana domicile. The taxpayer may rebut that presumption.

In this instance, Taxpayer provided several items of documentation to show that he was not domiciled in Indiana. Taxpayer provided a Florida Declaration of Domicile signed April 1996, his Florida income tax return showing his Florida address, information regarding his attempt to pay back the homestead exemption, and other tax documents showing his Florida address. Regarding Taxpayer's Indiana homestead exemption, he stated that the county auditor would not assess Taxpayer for more than three years prior when Taxpayer offered to pay back the homestead. Taxpayer did provide documentation that the Indiana house was sold in 2015.

Upon review of the documentation, the Department agrees that Taxpayer was not domiciled in Indiana for 2013. However, review of Taxpayer's tax documentation also shows that he was a partner in an Indiana business for the year at issue. Taxpayer had a 2013 K-1 for an Indiana business. Thus, according to IC § 6-3-2-1(a) Taxpayer had Indiana-sourced income. Since Taxpayer is determined to not be domiciled, but has Indiana sourced income, he is required to file a 2013 PNR for Indiana income tax purposes.

Taxpayer's protest is denied in part and sustained in part.