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 This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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

Individual's evidence did not show that the Department's assessment was incorrect. Taxpayer did show that his actions were not negligent and therefore the penalty is waived.

I. Sales & Use Tax - Doubtful Purchase.

Authority: IC § 6-2.5-2-1; IC § 6-2.5-3-2; IC § 6-8.1-5-1; 45 IAC 2.2-5-1; 45 IAC 2.2-5-4; 45 IAC 2.2-5-6; 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); 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 assessment of tax.

II. Tax Administration - Negligence Penalty.

Authority: IC § 6-8.1-10-2.1; 45 IAC 15-11-2.

Taxpayer protests the imposition of the ten percent negligence penalty.

Taxpayer is an individual residing in Indiana. Taxpayer owns and operates a towing company. In 2016 Taxpayer acquired a motorcycle from his towing company. The Indiana Department of Revenue ("Department") assessed Indiana use tax on the motorcycle pursuant to a "Doubtful Purchase" investigation. That investigation determined the actual value of the motorcycle to be $2,360. This is the sale price upon which additional use tax was imposed. Taxpayer timely protested the assessment of use tax and provided additional documentation to support his protest. An administrative hearing was held and this Letter of Findings ensues. Additional facts will be provided as necessary.

I. Sales & Use Tax - Doubtful Purchase.

The Department assessed Taxpayer use tax on the motorcycle. As a threshold issue, all 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). 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 sales tax on retail transactions and a complementary use tax on tangible personal property that is stored, used, or consumed in the state. IC § 6-2.5-2-1; IC § 6-2.5-3-2. In addition, IC § 6-2.5-3-2 states:

In this instance, Taxpayer's towing company obtained ownership of the motorcycle because it was abandoned by the prior owner. Taxpayer's company then attempted to auction off the motorcycle but no one purchased it. After the auction, Taxpayer's towing company transferred title to Taxpayer. When he went to title the motorcycle, Taxpayer was informed by the Indiana Bureau of Motor Vehicles ("BMV") that the transfer should be treated as a gift, and no sales tax was due at the time of titling. In his protest, Taxpayer provided the Mechanic's Lien Title Application Checklist, Application for Certificate of Title with the BMV, and the Mechanic's Lien Bill of Sale. Based on the above information, Taxpayer believes no use tax is due.

The Department, however, must disagree that no tax is due. The Department based its information on information provided by the BMV. According to IC § 6-2.5-3-2 use tax is due on the acquisition of the motorcycle from Taxpayer's own towing company. Taxpayer has provided no documentation to show that the transaction is exempt from use tax, nor any documentation that showed sales tax was already paid. Therefore Taxpayer has not met the burden as prescribed in IC § 6-8.1-5-1(c) and has not proven the assessment incorrect.

Taxpayer's protest is respectfully denied.

II. Tax Administration - Negligence Penalty.

Taxpayer also protests the imposition of the negligence penalty. Taxpayer states that he relied on the advice given from the BMV employee. Therefore, Taxpayer does not think he should owe penalty.

Pursuant to IC § 6-8.1-10-2.1(a), the Department may assess a ten (10) percent negligence penalty if the taxpayer:

The Department may waive a negligence penalty as provided in 45 IAC 15-11-2(c), in part, as follows:

Taxpayer has provided sufficient documentation establishing that his failure to pay tax or timely remit tax was due to reasonable cause and not due to negligence.

Taxpayer's protest on the imposition of the negligence penalty is sustained.

For the reasons discussed above, Taxpayer's protest of the assessment of use tax is denied. Taxpayer's protest of the imposition of the negligence penalty is sustained.

March 11, 2020