NOTICE: IC 4-22-7-7 permits the publication of this document in the Indiana Register. 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. This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register.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 Memorandum of Decision.

Taxpayer provided documentation showing its refund requests were timely and not outside the statute of limitations.

I. Corporate Income Tax - Notification of Federal Modification.

Authority: IC 6-3-4-6; IC 6-8.1-9-1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Smith v. Indiana Dept. of State Revenue, 122 N.E.2d 484 (Ind. Tax Ct. 2019).

Taxpayer protests the denial of refunds.

Taxpayer is an out-of-state company operating in Indiana and other states. Taxpayer was notified of deficiencies at the federal level related to tax years 2011 and 2012. In May 2019, the federal adjustments were finalized. In August 2019, Taxpayer filed amended Indiana corporate income tax returns for the affected tax years. The amended returns calculated refunds due of approximately $800,000 for tax year 2011 and approximately $1.4 million for tax year 2012.

The Indiana Department of Revenue ("Department") denied the refunds as outside the three-year statute of limitations provided in IC 6-8.1-9-1. Taxpayer protested the denial and requested resolution without a hearing. The Memorandum of Decision results. Additional facts will be provided as necessary.

I. Corporate Income Tax - Notice of Federal Modification.

The Department determined that Taxpayer was not entitled to refunds because the requests were outside of the statute of limitations. Taxpayer protested the denials and argued that its amended returns were timely filed, thus, Taxpayer was entitled to the requested refunds.

As a threshold issue, a taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department's position is wrong. "[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).

This statute also allows a taxpayer to file a claim for refund after a modification by the Internal Revenue Service of the taxpayer's federal taxable income, federal adjusted gross income, or federal income tax liability, and the modification results in a reduction of tax legally due. IC 6-8.1-9-1(j)(2)(A). Such refund requests must be made within 180 days after the date of the modification. Id.

Indiana statutes provide guidance on when a modification occurs and when a modification is final. IC 6-3-4-6(c) states, in part, a modification occurs on the date on which a:

Determining which federal document provides the finality required under Indiana Code § 6-3-4-6(c) is a fact sensitive inquiry. See Smith v. Indiana Dept. of State Revenue, 122 N.E.2d 484, 488 (Ind. Tax Ct. 2019).

Finally, IC 6-3-4-6(e) reaffirms that if the federal modification results in a change in the taxpayer's federal or Indiana adjusted gross income, the taxpayer shall file an Indiana amended return within 180 days after the modification is made (when the modification is made after December 31, 2010).

Taxpayer explained that it was notified of federal deficiencies related to tax years 2011 and 2012. In late June 2018, Taxpayer executed Federal Form 870 ("Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment"). Taxpayer later amended its federal returns, which were subject to additional federal review. Taxpayer's federal returns were finalized on May 9, 2019.

Taxpayer's returns for tax years 2011 and 2012 were subject to federal modifications. The related modifications were finalized on May 9, 2019. Pursuant to IC 6-3-4-6(d), an amended Indiana tax return was due 180 days later or by November 5, 2019. Taxpayer filed its amended Indiana return on August 14, 2019, well before the 180-day deadline. This was within the required timeframe and not outside the statute of limitations.

The Department notes that this Memorandum of Decision only addresses the issue of timeliness. The substantive issue of whether the amended Indiana returns accurately reflect any underlying liabilities and whether Taxpayer is entitled to refunds is not at issue here and not addressed with this decision. As discussed, Taxpayer's amended returns were timely filed. Further review by the Department may determine whether Taxpayer is entitled to refunds for tax years 2011 and 2012.

Taxpayer's protest is sustained.

June 8, 2023