NOTICE: IC § 4-22-7-7 permits the publication of this document in the Indiana Register. The publication of this document provides the general public with information about the Indiana Department of Revenue's official position concerning a specific set of facts and issues. The "Holding" section of this document is provided for the convenience of the reader and is not part of the analysis contained in this Memorandum of Decision.

Company is entitled to its claim for refunds regarding its exemption for tangible personal property used in the provision of internet service to the extent that the invoices are applicable to the assessment at issue.

I. Sales Tax - Documentation.

Authority: IC § 6-8.1-9-1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); IC § 6-8.1-5-1; IC § 6-2.5-3-2; IC § 6-2.5-5-13; 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); 45 IAC 2.2-3-14.

Taxpayer protests the denial of its refund claim.

Taxpayer is an Indiana information technology provider that supplies internet and runs fiber optic cables in local counties. Taxpayer filed a GA-110L claiming a refund for equipment it believed to be exempt from Indiana gross retail tax. The Department denied the claim for refund and Taxpayer protested that denial. The Department conducted a hearing and this Memorandum of Decision results. Additional facts will be provided as necessary.

I. Sales Tax - Documentation.

Taxpayer claims it improperly paid sales tax on items bought in 2016 and 2017 which Taxpayer used to provide internet services to customers. Taxpayer filed GA-110Ls on December 31, 2019, for periods including January-April 2016, June-September 2016, October- December 2016, and May 2017. The Department contacted Taxpayer in May 2020 to obtain supporting documentation. On August 31, 2020, the Department denied Taxpayer's claim for refund stating that "No Response received before deadline."

"[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.

Sales tax is imposed by IC § 6-2.5-2-1, which states:

Per IC § 6-2.5-5-13, Transactions involving tangible personal property are exempt from the state gross retail tax, if:

Additionally, IC § 6-10-1-5 provides that neither Indiana nor a political subdivision of the state may impose, assess, collect, or attempt to collect a tax on Internet access or the use of Internet access.

The Indiana Code provides guidance on filing a refund claim. IC § 6-8.1-9-1(a) provides:

Taxpayer provided documentation including invoices and receipts of various types of equipment purchased during the periods in question. According to IC § 6-2.5-5-13(1)(C), "transactions involving tangible personal property are exempt from the state gross retail tax, if a part of a national, regional, or local headend or similar facility operated by a person furnishing Internet access services." Additionally, Taxpayer acquired the property to furnish Internet access services. IC § 6-2.5-5-13(2)(B). The documentation provided established that purchased equipment was related to providing Internet access services to residents in Indiana. Thus, Taxpayer's purchases are exempt under IC § 6-2.5-5-13 and IC § 6-10-1-5.

Because these were purchases as a customer and not sales as a retail merchant, the three-year deadline for filing a claim for refund runs from the end of the year in which the transaction occurred, as provided under IC § 6-8.1-9-1(a). Therefore, since the refund claims were timely filed, the Department will review the documentation supplied in the protest process and will adjust the assessments to reflect the verified and relevant invoices.

Taxpayer is sustained to the extent described above.

July 2, 2021