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 This document is effective as of its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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 was required to pay use tax on certain purchase made in tax year 2016, 2017, and 2018.

I. Use Tax - Applicability.

Authority: IC § 6-8.1-5-1; IC § 6-2.5-3-2; 45 IAC 2.2-3-14; 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); Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, (Ind. 2014).

Taxpayer is an Indiana resident who owns a vehicle repair shop. After an audit, the Indiana Department of Revenue ("Department") issued proposed use tax assessments for tax years 2016, 2017, and 2018. Taxpayer protested the proposed assessments. A hearing was conducted and this Letter of Finding results. Additional facts will be provided as necessary.

I. Use Tax - Applicability.

The Department's audit discovered purchases of taxable personal property upon which Taxpayer should have remitted use tax during the years at issue. The property includes two large capital assets and multiple purchases of consumable supplies. Taxpayer argues that he paid sales tax on these items at the time of purchase and provided documentation in support of the argument. Taxpayer provided multiple estimates and a self-created spreadsheet as documentation.

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.

IC § 6-2.5-3-2 in relevant parts provides guidance on use tax:

After review, the Department cannot agree with Taxpayer's protest. All of the items at issue are subject to use tax under IC § 6-2.5-3-2, since they were acquired in retail transaction and used in Indiana. Taxpayer did not provide sufficient documentation to support his argument that use tax is not due. Taxpayer provided a self-created Microsoft Excel spreadsheet which appears to show sales taxes paid monthly during the years and three estimates. This does not establish that Taxpayer paid sales at the time of the purchase. Taxpayer argues that sales tax was included in every sale and that this is proven by the estimates. He also argues that estimates do not itemize the consumable supplies but that they are included. The Department would need to see invoices rather than estimates and actual receipts instead of a self-created Excel Spreadsheet. Taxpayer has not met his burden under IC § 6-8.1-5-1(c), and is therefore proposed assessment is correct.

Taxpayer's protest is denied.

May 5, 2020