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 This document is effective as of its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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 did not establish that he had no Indiana domicile during 2013. Therefore, the Department's assessment for 2013 Indiana income tax is correct. Penalty is not abated.

I. Income Tax–Residency.

Authority: IC § 6-1.1-12-37; IC § 6-3-1-12; IC § 6-8.1-5-1; State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988); Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Indiana Dept. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 3.1-1-22; 50 IAC 24-2-5.

Taxpayer protests the imposition of Indiana individual income tax.

II. Tax Administration–Penalty.

Authority: IC § 6-8.1-10-3.

Taxpayer protests the imposition of a penalty.

Taxpayer is an individual. The Indiana Department of Revenue ("Department") determined that Taxpayer was domiciled in Indiana for the tax year 2013 but that Taxpayer neither filed a 2013 Indiana individual income tax return nor paid any 2013 Indiana individual income tax. Taxpayer protested the Department's determination of domicile and the imposition of income tax plus penalty. An administrative hearing was held and this Letter of Findings results. Further facts will be supplied as required.

I. Income Tax–Residency.

Taxpayer protests the imposition of Indiana adjusted gross income tax for the 2013 tax year. The Department determined that Taxpayer was an Indiana domiciliary for 2013 based primarily on the information that Taxpayer had claimed the homestead credit on an Indiana residence. Taxpayer states that he resided in and was domiciled in another state in 2013 and had not been a resident of Indiana since moving to another state in 2010. Further, Taxpayer states that he had shut off the water utility to the Indiana residence sometime around 2013. This, Taxpayer argues, is evidence that he could not have lived in the Indiana residence in 2013. Therefore, Taxpayer argues, he did not need to file a 2013 Indiana income tax return nor did he owe any Indiana income tax for that year.

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 Dept. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dept. 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.'" 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 shall be entitled to deference.

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

In other words, a resident includes individuals who are domiciled in Indiana and/or maintain a permanent place of residence in Indiana and then spend more than 183 days in Indiana. In this case, Taxpayer states that he did not spend more than 183 days in Indiana during 2013. Alternately, in order to be considered a resident of Indiana during 2013, Taxpayer must have been domiciled here.

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.

Since 45 IAC 3.1-1-22 referred to the homestead credit as a factor in determining domicile, the relevant statute regarding the homestead credit is IC § 6-1.1-12-37(a)(2) which states in relevant part:

Therefore, when he claimed the homestead deduction, Taxpayer claimed that the dwelling was his principal place of residence, as provided by IC § 6-1.1-12-37(a)(2). Also, 50 IAC 24-2-5 states:

Next, the Indiana Supreme Court considered the issue of the meaning of "domicile" in State Election Bd. v. Bayh, 521 N.E.2d 1313, 1317 (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.

In this case, the Department determined that, since he was listed as having claimed a homestead credit on an Indiana residence, Taxpayer was considered to have been domiciled in Indiana. Taxpayer states that he moved to another state in 2010 and that he has not returned to Indiana for any time greater than a visit since 2010. In the course of the protest process, Taxpayer provided copies of his W-2 tax form for the years 2009 through 2017. This, Taxpayer states, establishes that his employer withheld state taxes for the other state. During the administrative hearing, Taxpayer stated that he had records to support his position that the Indiana residence was uninhabitable beginning sometime around 2013 when he had the water utility disconnected. The Indiana house was thereafter used as a storage facility, according to Taxpayer. Taxpayer was allowed two weeks after the administrative hearing to find and send in such supporting documentation. After six weeks, no such documentation arrived and the Department makes its determination on the basis of what records supporting Taxpayer's position that he moved to another state are available.

After review of Taxpayer's W-2 tax forms, the Department is unable to conclude that Taxpayer has established that he moved to another state with the intent to remain in that state permanently and to abandon his Indiana domicile in 2010. While the W-2s do have an address in the state which Taxpayer says he moved to permanently in 2010, W-2s by themselves establish neither the duration of residency in the other state nor the intention of Taxpayer to abandon his Indiana domicile. Taxpayer has not met the burden imposed by IC § 6-8.1-5-1(c) of proving the proposed assessment wrong.

Taxpayer's protest is denied.

II. Tax Administration–Penalty.

Taxpayer protests the imposition of penalty pursuant to IC § 6-8.1-10-3, which provides:

In this case, Taxpayer did not file a return for 2013 Indiana income tax. IC § 6-8.1-10-3 contains no provision for waiver of the penalty imposed. If Taxpayer had been sustained in Issue I above, imposition of penalty would have been moot. However, Taxpayer did not provide documentation supporting his protest in Issue I and was denied. Therefore, penalty may not be waived.

Taxpayer's protest of the imposition of penalty is denied.

Taxpayer's Issue I protest regarding the imposition of adjusted gross income tax is denied. Taxpayer's Issue II protest regarding the imposition of penalty is denied.

July 16, 2019