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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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

The Department agreed that Individual presented "substantial contrary evidence" establishing that he was not a full-year resident during 2013; Individual provided a copy of his Canadian passport and other documentation establishing that he was a resident elsewhere that year. However, based on evidence that he received Indiana source income during 2013, Individual was required to file a 2013 IT-40PNR return and remit Indiana individual income tax.

I. Individual Income Tax - Non-Filer / Residency.

Authority: IC § 6-1.1-12-37(a)(2); IC § 6-1.1-12-37(e); IC § 6-1.1-12-37(f); 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; 45 IAC 3.1-1-22.5; 45 IAC 3.1-1-23; 50 IAC 24-2-5; Government of Canada - Canadian Passports, https://www.canada.ca/en/immigration-refugees-citizenship/services/canadian-passports/canadian-

eligibility-requirements.html.

Taxpayer argues that the Indiana Department of Revenue erred when it assessed Taxpayer Indiana income tax with Taxpayer claiming he was not an Indiana resident during 2013.

Taxpayer is an individual with a current Florida mailing address. The Indiana Department of Revenue ("Department") determined that Taxpayer was an Indiana resident during 2013 and was required to file and pay Indiana individual income tax. The Department issued proposed notices of assessment and - in the face of what the Department regarded as Taxpayer's failure to respond to the notices - took steps to collect the assessment. The matter was forwarded to the Department's collection agent which proceeded to place a levy on Taxpayer's bank account and to collect money from that account. Taxpayer objected stating the original notices of proposed assessment were never received. The Department agreed after finding that the original notices were returned to the Department as "undeliverable." The Department recognized its error, "backdated" the assessments, and returned the amount collected together with the attendant collection fees and costs.

On the ground that its initial residency analysis was correct, the Department proceeded to reissue updated assessments. In a letter sent to Taxpayer, the Department explained:

Taxpayer responded January 2018 stating that he is a Canadian citizen who worked outside the United States during 2013. Taxpayer provided a copy of his Canadian passport issued in 2013 and his Canadian driver's license issued October 2014. Taxpayer's written response was sent from a Florida address.

Taxpayer's attorneys sent a letter January 2018 stating that the Taxpayer was a Canadian citizen, worked outside the United States during and prior to 2013, and did not own Indiana property. Taxpayer's representatives stated that Taxpayer and his wife filed separate 2013 federal returns and that Taxpayer's wife lived in Indiana during 2013. In support of Taxpayer's argument, Taxpayer's representative sent copies of Taxpayer and his wife's 2015 joint federal tax return. Taxpayer's representatives concluded that the assessments were incorrect on the ground that Taxpayer was not required to either file a 2013 Indiana income tax return or pay Indiana individual income tax because he was not "domiciled" in Indiana that year.

An administrative hearing was conducted during which Taxpayer and his representatives explained the basis for the protest. This Letter of Findings results.

I. Individual Income Tax - Non-Filer / Residency.

The issue is whether Taxpayer has met his burden of establishing that he did not have an Indiana domicile during 2013 and was not required to file for and pay Indiana individual income tax.

In this instance, Taxpayer's protest stems from the Department's assessment of additional individual 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. 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 also 45 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. For reference sakes, this Letter of Findings cites to these regulations as guidance.

(Emphasis added).

(Emphasis added).

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 Croop stated:

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:

Indiana law defines "[h]omestead" as "an individual's principal place of residence . . . that is located in Indiana" and that "the individual owns . . . ." IC § 6-1.1-12-37(a)(2). "'Principal place of residence' means an individual's true, fixed, permanent home to which the individual has the intention of returning after an absence." 50 IAC 24-2-5. A taxpayer is entitled to claim a deduction, known as homestead deduction (or exemption), against taxes imposed on his or her homestead property pursuant to IC § 6-1.1-12-37(e). When the taxpayer is no longer qualified for the homestead deduction (or exemption), the taxpayer must notify the auditor of the county where the homestead is located within sixty days after the date of that change. IC § 6-1.1-12-37(f).

The Department's records indicated that Taxpayer received 2013 Indiana W-2s (Wage and Tax Statements), 1099-B's (Proceeds from Broker and Barter Exchange Transactions), 1099-INT's (Interest Income), Form 5498's (IRA Contribution Information), and 1099-DIV's (Dividends and Distributions). Taxpayer's representative and tax preparer were asked to provide copies of these documents but were unable to do so. Therefore, there is a rebuttable presumption that Taxpayer received adjusted gross income derived from sources within Indiana. IC § 6-3-2-2(a).

As to the Homestead Credit, the Department was able to verify information that although the credit was claimed, the ownership of the house was in the name of Taxpayer's wife. The Department was also able to verify that Taxpayer had or has a Texas driver's license, had or has a Texas home, and previously registered his vehicles in Texas.

Taxpayer has also provided a copy of his Canadian passport issued in 2013 and a copy of his 2013 federal return listing Taxpayer's Florida address. Publicly available information establishes that "[y]ou must be a Canadian citizen to apply for a new Canadian passport." Government of Canada - Canadian Passports, https://www.canada.ca/en/immigration-refugees-citizenship/services/canadian-passports/canadian-

eligibility-requirements.html. (Last visited October 10, 2018).

However, the Department bears in mind that the Tax Court has held that "each assessment and each tax year stands alone." Miller Brewing Co., 903 N.E.2d at 69. Given the totality of the circumstances, the Department is prepared to agree that for the year 2013, Taxpayer has met his burden of establishing that he was not an Indiana resident during 2013 because Taxpayer presented "substantial contrary evidence" contradicting the Department's determination that he was required to file and pay Indiana individual income tax as a full-year "resident." However, given that Taxpayer - based on the evidence available to the Department - received Indiana source income during 2013, Taxpayer is required to file a 2013 IT-40PNR (Indiana Part-Year or Full-Year Nonresident Individual Income Tax Return). IC § 6-3-2-1(a); IC § 6-3-2-2(a). Thus, Taxpayer is required to file a 2013 IT-40PNR return and remit Indiana tax.

Taxpayer's protest is sustained provided that he files the required 2013 Indiana IT-40PNR return and pays the amount due within 30 days from the date this decision is issued and pays whatever tax may be due. In the event Taxpayer fails to file the IT-40PNR return, Taxpayer's protest is respectfully denied.

October 17, 2018