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 Final Order Denying Refund.

Taxpayer was properly charged seven percent tax on vehicles purchased in Indiana, but not titled outside of the state within 30 days.

I. Sales and Use Tax - Imposition.

Authority: IC 6-2.5-1-2; IC 6-2.5-2-1; IC 6-2.5-2-3; IC 6-2.5-4-1; Indiana Dep't of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); 45 IAC 2.2-2-1; Sales Tax Information Bulletin 84 (July 2020).

Taxpayer protests the assessment of sales tax on its purchase of motor vehicles.

Taxpayer is a company located in Illinois. In August 2021, Taxpayer purchased two vehicles from a dealership in Indiana. When purchasing these vehicles, Taxpayer signed an affidavit stating that these vehicles were going to be moved to and titled in Illinois. The dealership subsequently charged Taxpayer the Illinois sales tax rate on its purchase. Instead of titling the vehicles in Illinois, Taxpayer titled the vehicles in Georgia in November 2021 and paid Title Ad Valorem Tax to Georgia at that time. Taxpayer proceeded to file a refund request for sales tax paid in Indiana. Upon reviewing this request, the Indiana Department of Revenue ("Department") denied the refund and instead issued a proposed assessment of use tax for the difference between the Illinois sales tax rate paid and the Indiana sales tax rate owed. Taxpayer protested this decision and waived its right to an administrative hearing. This Final Order results from reviewing documents submitted alongside the Taxpayer's protest.

I. Sales and Use Tax - Imposition.

Taxpayer claims that it should not be charged Indiana sales tax as it has already paid Georgia tax on the vehicles. As a preliminary matter, "when [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).

Indiana imposes an excise tax called "the state gross retail tax" (or "sales tax") on retail transactions made in Indiana. IC 6-2.5-2-1(a); 45 IAC 2.2-2-1. A retail transaction is a transaction made by a retail merchant that constitutes "selling at retail." IC 6-2.5-1-2(a). Selling at retail occurs when a person "(1) acquires tangible personal property for the purpose of resale; and (2) transfers that property to another person for consideration." IC 6-2.5-4-1(b). A person who acquires tangible person property in a retail transaction (a "retail purchaser") is liable for the sales tax on the transaction. IC 6-2.5-2-1(b). The purchaser in general "shall pay the tax to the retail merchant as a separate added amount to the consideration in the transaction." Id. "The retail merchant shall collect the tax as agent for the state." Id.

Sales of vehicles in Indiana generally are subject to Indiana sales tax unless the transactions are specifically exempt under Indiana law. The sales tax treatment of a vehicle changes slightly, however, when the vehicle is purchased to be immediately transported out of state for use outside of Indiana. IC 6-2.5-2-3 explains the tax implications of this situation:

Specifically, IC 6-2.5-2-3 allows purchasers who purchase qualified motor vehicles in Indiana but intend to title and register the vehicles to be used in states other than Indiana (within 30 days after the sale) to pay the sales tax rate of the state for which the vehicles are ultimately titled, registered, and used. The Department's Sales Tax Information Bulletin 84 (July 2020), 20200729 Ind. Reg. 045200398NRA ("Information Bulletin 84") further explains the computation of the sales tax and specifically discusses Georgia as an example.

• Example []5: Customer, who is a resident of Georgia, comes into Indiana to buy a motor vehicle from a dealership in Indiana. Customer intends to title and register the vehicle for use in Georgia. In Georgia, the state's sales tax is not imposed on purchases of vehicles, but the state does impose an ad valorem tax on such purchases. Because an ad valorem tax is not a sales tax, the Indiana dealership would not be required to collect sales tax at the Georgia ad valorem tax rate. Furthermore, because Georgia's sales tax is not imposed on purchases of motor vehicles, the Indiana dealership would not collect sales tax at any rate (though Customer and the dealership would still have to fill out the ST-108NR).

Taxpayer's affidavit stated that the vehicles would be titled and located in Illinois within thirty days of purchase. Instead, Taxpayer waited more than twice that long to title its vehicles in Georgia. Included in Taxpayer's affidavit is the following language:

Had Taxpayer planned its purchases so the vehicles in question were titled and registered in Georgia within thirty days of their purchase, no Indiana sales or use tax would have been owed, since Georgia does not impose sales tax on motor vehicle purchases. As it stands, Taxpayer affirmed that it would title the vehicles in Illinois within thirty days, while also signing an affidavit stating that it would be responsible for Indiana sales and use tax if it failed to do so. Given the facts of this case, Taxpayer is liable for Indiana sales and use tax equaling seven percent of the vehicles' price.

Taxpayer's refund request is denied.

April 3, 2023