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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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 was within its authority to adjust Individual's 2015 Indiana IT-40. Individual did not provide sufficient evidence to overcome her burden to prove the Department's adjustment incorrect.

I. Individual Income Tax - Indiana IT-40 Adjustment.

Authority: IC § 6-8.1-5-1; IC § 6-8.1-8-2; IC § 6-8.1-9.5-2; IC § 6-3-4-8; IC § 6-8.1-7-1; Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); 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. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); 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).

Taxpayer protests the Department's assessment.

Taxpayer is an Individual who lives in Indiana and filed a 2015 Indiana Individual income tax return ("2015 return"). The Indiana Department of Revenue ("Department") adjusted Taxpayer's 2015 return. The Department determined that Taxpayer did not make an estimated payment she had claimed on the 2015 return. The Department also offset Taxpayer's 2015 return refund with an outstanding liability from Taxpayer's previous business. An administrative hearing was held, in which Taxpayer's representative has explained Taxpayer's protest. This Letter of Findings results. Additional facts will be provided as necessary.

I. Individual Income Tax - Indiana IT-40 Adjustment.

As a threshold issue, it is the 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 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). Further, when an agency is charged with enforcing a statute, the courts defer to the agency's reasonable interpretation of that statute "over an equally reasonable interpretation by another party." Indiana Dep't of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). Thus, interpretations of Indiana tax law contained within this decision, as well as the preceding audit, are entitled to deference. A taxpayer is required to provide documentation explaining and supporting its challenge that the Department's denial 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).

If the Department reasonably believes that a taxpayer has not reported the proper amount of tax due, the Department shall propose an assessment of unpaid tax based on the best information available to the Department. IC § 6-8.1-5-1(b). The amount of the proposed assessment "is considered a tax payment not made by the due date" and is subject to penalties and interest. Id. Notice of the proposed assessment shall be sent to the taxpayer stating that it has sixty (60) days in which to pay the assessment or file a written protest. IC § 6-8.1-5-1(b) and (d). If the taxpayer does not pay the proposed assessment or file a written protest in the sixty (60) day period "[t]he department shall demand payment, as provided in IC 6-8.1-8-2(a), of any part of the proposed tax assessment, interest, and penalties . . . ." IC § 6-8.1-5-1(j). In these situations, the Department "shall make the demand for payment in the manner provided in IC 6-8.1-8-2." IC § 6-8.1-5-1(k). In addition IC § 6-8.1-9.5-2 allows the Department to offset a taxpayer's refund to resolve an outstanding liability.

In this case, Taxpayer timely filed her 2015 return. On that return Taxpayer claimed $2,650 in tax credits. Taxpayer claimed these credits were withholdings from her W2, Taxpayer maintains that she is entitled to a refund of the approximately $260.

Indiana's withholding provision is found at IC § 6-3-4-8(a) which states in part as follows:

Taxpayer believes that she is entitled to a refund of the $1,000 in withholding under the provisions of IC § 6-3-4-8(h) which provides as follows:

Taxpayer claims that she is entitled to the withholding stated on her return because her employer withheld Indiana state and county tax on her W2. In addition, Taxpayer claims that her paycheck shows taxes taken out as well. Taxpayer claims that her employer is no longer in business and therefore she cannot obtain a W2. Taxpayer requests the Department to look into her employer's taxes reported with the Department to show that they remitted the state and county taxes.

Taxpayer did not provide her paycheck, W2, or any other supporting documentation to support her protest. Furthermore, there is nothing in Indiana law which allows the Department to look at another taxpayer's tax records. Moreover, if the Department attempted to do as Taxpayer suggests, the Department would be violating the tax confidentiality requirements found in IC § 6-8.1-7-1(a) that prohibits the Department from sharing one taxpayer's information–i.e., the employee's tax information–with another taxpayer–i.e., the employer. Unlike the S-corporation withholding statute where the legislature has given the Department express authority, in IC § 6-3-4-13(i), for the shareholder's tax information to be shared with the S-corporation and to relieve the S-corporation of its withholding tax liability when the adjusted gross income tax has been paid by the shareholder, the Indiana legislature has not provided this remedy for employers with withholding tax liabilities.

Taxpayer claims that employer remitted state and county withholding tax, but Taxpayer has not provided any documentation to support this claim. IC § 6-8.1-5-1(c) places the burden on the Taxpayer to prove the assessment incorrect. Taxpayer has not met her burden as required by law, thus her protest is denied.

Taxpayer's protest is respectfully denied.

August 23, 2019.