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.

Ohio Car Dealer was entitled to a refund of money erroneously paid to the Indiana BMV; Dealer erroneously believed it was required to pay Indiana sales tax on behalf of its Indiana customer when Dealer had previously collected and remitted Ohio sales tax at the time of the vehicle transaction.

I. Gross Retail Tax - Sales Tax Refund.

Authority: IC § 6-2.5-2-1; IC § 6-2.5-9-3; IC § 6-2.5-3-5; Ohio Rev. Code Ann. § 5739.029; Indiana Dep't of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2012); Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Sales Tax Information Bulletin 28S (January 2023); Sales Tax Information Bulletin 28S (February 2021).

Ohio Taxpayer argues that it is entitled to a refund of sales tax paid Indiana on behalf of an Indiana customer who purchased a truck from the Ohio Taxpayer dealership.

Taxpayer is an automobile dealership located in Ohio. Taxpayer sold a truck to an Indiana customer. Taxpayer charged the customer 5.75 percent Ohio sales tax. The amount of Ohio tax was approximately $4,200. Taxpayer paid the $4,200 to the Hocking County Ohio title office at the time the vehicle was "titled" in that county.

Taxpayer then proceeded to pay Indiana sales tax to the Indiana Bureau of Motor Vehicles. Taxpayer paid approximately $5,400 in tax to the Indiana BMV. According to Taxpayer it paid both the $4,200 and the $5,400 on behalf of the Indiana customer who bought the truck.

Taxpayer then submitted a GA-110L claim for refund seeking a refund of $4,200. Taxpayer explained why it believed it was entitled to the refund.

In a letter dated September 2022, the Indiana Department of Revenue ("Department") denied the refund explaining as follows:

Taxpayer disagreed with the Department's decision denying the refund and submitted a protest to that effect. Accompanying the protest, Taxpayer provided a copy of the check sent to and cashed by the Indiana BMV. As explained by Taxpayer, "This 2nd payment resulted in [Taxpayer] overpaying sales tax for this customer by [$4,200]."

Taxpayer asked the Department to issue a "Final determination without a hearing." After reviewing the documentation provided by Taxpayer and the records available to the Department, this Memorandum of Decision is issued in response to the protest.

I. Gross Retail Tax - Sales Tax Refund.

The issue is whether this Ohio Taxpayer has established that it is entitled to a refund of the Indiana sales tax paid to Indiana on behalf of its Indiana truck customer.

Where, as here, a taxpayer is challenging the taxability of Indiana sales transactions, the taxpayer is required to provide documentation explaining and supporting its challenge. 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). When an agency is charged with enforcing a statute, the jurisprudence defers 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).

At the outset, it needs to be emphasized that Ohio did not - and does not - forward any portion of the Ohio sales tax it collected on the sale of a truck to an out-of-state - in particular Indiana - customer.

Ohio Rev. Code Ann. § 5739.029(A) provides as follows:

The amount of sales tax Ohio dealers collect on sales of motor vehicles to out of state residents who remove, title, and register the vehicle in Indiana is the lesser of the 5.75 percent sales tax due to Ohio or the amount of sales tax the nonresident would pay in the state of titling, registration, or use.

However of course, Indiana allows a "credit" for sales tax paid in another state such as Ohio. IC § 6-2.5-3-5 provides:

Sales Tax Information Bulletin 28S (February 2021) 20210331 Ind. Reg. 045210101NRA explains.

Taxpayer's Indiana customer was entitled to a 5.75 percent ($4,200) credit representing the Ohio sales tax Taxpayer collected and forwarded to the Hocking County Ohio title office.

Typically, vendors are not entitled to a refund of sales tax erroneously paid by or paid on behalf of a purchaser. IC § 6-2.5-2-1(b) states that the person who acquires property in a retail transaction is liable for the tax on the transaction and, except as otherwise provided by law, shall pay the tax to the retail merchant as a separate added amount to the consideration in the transaction. Pursuant to IC § 6-2.5-2-1(b), the retail merchant is required to collect the tax as agent for the state. IC § 6-2.5-9-3 states that a retail merchant has a duty to remit Indiana gross retail tax to the Department, holds those taxes in trust for the State, and is personally liable for the payment of those taxes to the State. Simply put, customers pay sales tax while vendors act as an "agent for the state" in collecting that tax and is required to remit the tax to the Department. In that respect, the analysis contained in the Department's September 2022 was correct.

However, in this case the $4,200 refund Taxpayer is not sales tax paid on behalf of its customers nor an amount paid by the truck customer. The $4,200 represents an amount Taxpayer gratuitously paid the Indiana BMV out of its own pocket. Taxpayer is entitled to a refund of $4,200.

Taxpayer's protest is sustained.

March 31, 2023