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Crown Point, Indiana                    Attorney General of Indiana

                             ANGELA L. MANSFIELD
Deputy Attorney General
                            Indianapolis, Indiana

JOHN KOKAJKA,                                                             )
            Petitioner,                                                            )
v.                                                                             ) Case No. 49T10-9704-SC-00141
INDIANA DEPARTMENT OF                                                       ) 
STATE REVENUE,                                                                 )
            Respondent.                                                            )                 


October 2, 1997


    John Kokajka appeals a final determination of the Department of State Revenue (Department). On July 31, 1997, the parties tried this cause before this Court on Kokajka's notice of claim and the answer of the Department. Kokajka claims that he was not an Indiana resident during the tax years at issue. The Department's answer asserts that Kokajka was a full-time Indiana

resident and contains the affirmative defense that this Court is without jurisdiction to hear this cause because the petitioner has not complied with all statutory prerequisites for filing an original tax appeal.

    The Department reviewed Kokajka's IT40PNR tax returns for the tax years 1992 through 1995 in which Kokajka claimed that he was a part-year Indiana resident.See footnote 1 In the course of this review, the Department concluded that Kokajka was not a part-year resident. Consequently, the Department determined that Kokajka owed back taxes for those years. The Department mailed Kokajka notices of proposed assessmentSee footnote 2 for the 1992, 1993, 1994, and 1995 tax years on June 20, 1996, September 29, 1996, June 20, 1996, and June 20, 1996, respectively.
    Because the Department believed that Kokajka did not dispute the proposed assessment, the Department issued no letter of findings concerning Kokajka's tax liability.See footnote 3 Kokajka then filed this original tax appeal as a small tax claim on March 22, 1997. Subsequently, on April 18, 1997, Kokajka paid $953.17 on his 1992 tax liability, $555.18 on his 1994 tax liability, and $645.90 on

his 1995 tax liability through collection by the Lake County Sheriff.

    This Court reviews the Department's final determinations de novo and is bound by neither the evidence nor the issues raised at the administrative level. See Ind. Code Ann. § 6-8.1-5-1(h) (West Supp. 1997); ANR Pipeline Co. v. Department of State Revenue, 672 N.E.2d 91, 93 (Ind. Tax Ct. 1996).
    This Court first evaluates its jurisdiction to hear this appeal. The Indiana General Assembly has made it quite clear that this Court is without jurisdiction to hear an appeal "if a taxpayer fails to comply with any statutory requirement for the initiation of an original tax appeal." Ind. Code Ann. § 33-3-5-11(a) (West 1996). See also id. § 6-8.1-5-1(g) (West Supp. 1997); GasAmerica Servs. v. Department of State Revenue, 552 N.E.2d 860 (Ind. Tax Ct. 1990) (holding that where taxpayer failed to comply with statutory prerequisites for appeal, Tax Court was without jurisdiction to hear appeal). See also Evansville Concrete Supply, Inc. v. Department of State Revenue, 571 N.E.2d 1350, 1351-52 (Ind. Tax Ct. 1991).
    Because the taxes at issue had not been paid at the time Kokajka initiated this appeal, Kokajka had to comply with the procedures outlined in Ind. Code Ann. § 6-8.1-5-1 (West Supp. 1997) to invoke the jurisdiction of this Court.See footnote 4 Those procedures give a taxpayer the right to

dispute the amount of the proposed assessment by filing a written protest within sixty days of the mailing of the notice of proposed assessment. See Ind. Code Ann. § 6-8.1-5-1(c). The Department denies a written protest by issuing a letter of findings. See id. § 6-8.1-5-1(e). The taxpayer then has 180 days from the issuance of the letter of findings to appeal to this Court. See id. § 6-8.1-5-1(g).
    In this case, notices of proposed assessment for the 1992, 1994, and 1995 tax years were mailed on June 20, 1996. Kokajka testified that he mailed written protests to the Department concerning these proposed assessments. However, the Department has no record of receipt of these protests for these tax years (Aff. of Robert Robinson ¶ 4, Ex. I), and Kokajka could not testify with specificity as to the dates he mailed them (other than to state that he did so before the due date), nor could he provide copies of the protests that he claims to have sent. Even if this Court were to conclude that Kokajka did mail the protests, there is no evidence to show that they were correctly addressed. This Court therefore finds that Kokajka has not demonstrated that he properly filed a protest for the tax years 1992, 1994, and 1995. Because Kokajka did not comply with the procedures outlined in section 6-8.1-5-1, this Court is without jurisdiction to hear Kokajka's appeal of the assessments for those tax years.See footnote 5
    This determination is not inconsistent with this Court's recent decision in Indiana Sugars, Inc. v. State Bd. of Tax Comm'rs, No. 49T10-9603-TA-00028 (Ind. Tax Ct. Aug. 19, 1997). In Indiana Sugars, this Court concluded that the State Board acted arbitrarily and capriciously when it determined that an applicant for an exemption had not mailed the application when the applicant's

agent stated that he had personally reviewed the application, personally checked the postage and the addresses and personally went to the post office and mailed the application before the due date. In this case, the only evidence that Kokajka presented was his testimony that he mailed a protest. Although "the sworn testimony of a witness constitutes sufficient evidence to prove timely mailing," Indiana Sugars, slip op. at 8, a litigant cannot expect to testify only that he mailed a protest and nothing more and carry his burden of demonstrating a proper filing. Kokajka simply did not make the detailed showing that the applicant did in Indiana Sugars.
    As for the 1993 tax year, the Department mailed a notice of proposed assessment on September 29, 1996. Kokajka again testified that he mailed a protest. The Department alleged in its answer that Kokajka did not; however, the Department only proffered evidence at trial that it had no record of Kokajka filing a protest within sixty days of the mailing of the notices of proposed assessment for the tax years 1992, 1994, and 1995.See footnote 6 (Aff. of Robert Robinson ¶ 4, Ex. I). Certainly, this Court may assume that if the Department had competent evidence to show that Kokajka's protest was not timely filed, that evidence would be before this Court. Consequently, this Court finds that Kokajka properly filed a protest and that it has jurisdiction to entertain Kokajka's appealSee footnote 7 for the 1993 tax year.

    Kokajka averred on his 1993 IT40PNR that he was a part-year resident of Indiana during January 1993 and a resident of Nevada for the rest of the year. Kokajka also filed a 1993 Illinois tax return in which he averred that he was a part-year resident of Illinois. He signed the Indiana return on February 28, 1994, and listed his address as 3498 Marine Drive, Crown Point, Indiana. He signed his Illinois return on April 5, 1994, also using his Indiana address. Kokajka (jointly with his wife) has also claimed a homestead exemption for the Crown Point residence since 1979.     Kokajka also testified that during 1992-1995, he spent the bulk of his time in Nevada and that he spent approximately one month per year in Indiana and one month per year in Illinois. He also testified that he held an Illinois driver's license during that time.See footnote 8 Upon questioning by this Court and the deputy attorney general, Kokajka testified that he had not registered to vote in Nevada, that he owned no property there and that he only received pension, investment and social security income (i.e., received no income from employment in Nevada).
    A taxpayer domiciled in Indiana is an Indiana resident for tax purposes. See Ind. Code Ann. § 6-3-1-12(a) (West 1989); Ind. Admin. Code tit. 45, r. 3.1-1-21 (1996). Indiana residents

are subjected to taxation on all adjusted gross income, even income earned outside Indiana. See Ind. Code Ann. § 6-3-2-1(a) (West 1989); see also generally Thomas v. Department of State Revenue, 675 N.E.2d 362 (Ind. Tax Ct. 1997). This tax burden may be mitigated in two ways: 1) an Indiana resident taxpayer may receive a credit for income taxes paid to another state, see Ind. Code Ann. § 6-3-3-3(a) (West 1989), and 2) a taxpayer who changes his domicile (either to or from Indiana) during a taxable year will not be forced to pay Indiana adjusted gross income taxes for the entire year, but only taxes accruing during the taxpayer's Indiana residency, as well as non- resident taxes. See Ind. Admin. Code tit. 45, r. 3.1-1-23(1), -23(2).
    Kokajka does not argue that he is entitled to a credit for payment of other state income taxes or that his status changed during 1993. Rather, Kokajka argues that he was not an Indiana resident at all during 1993.See footnote 9 One of the regulations applicable to whether Kokajka was an Indiana resident during 1993 states: "Persons residing in Indiana but living part of the year in other states or countries will be deemed residents of Indiana unless it can be shown that the [other] abode is of a permanent nature." Ind. Admin. Code tit. 45, r. 3.1-1-23(4) (1996).
    It is undisputed that Kokajka resided in Indiana during part of 1993. Therefore, without a

showing that he had a permanent place of abodeSee footnote 10 elsewhere, Kokajka will be deemed an Indiana resident (i.e., subject to tax on all of his adjusted gross income). Merely presenting evidence inconsistent with Indiana residency will not be sufficient to overcome the operation of this rule. Instead, Kokajka must affirmatively demonstrate a permanent place of abode outside Indiana.
    The evidence presented at trial demonstrated that Kokajka had connections with two other states during 1993: Illinois and Nevada. Kokajka's testimony that he spent the bulk of his time in Nevada eliminates Illinois as a possible permanent place of abode without Kokajka having any other connection to Illinois besides the possession of an Illinois driver's license and spending approximately one month per year there.
    As for Nevada, Kokajka's possession of an Illinois driver's license may be somewhat inconsistent with Indiana residency, but it hardly establishes Nevada residency. Kokajka has testified that he spent the bulk of his time in Nevada and nothing more. He has not provided any other evidence to establish that his abode in Nevada is permanent. He has not registered to vote there; he has not registered an automobile there; he has not purchased residential property there, nor has he prepared a will there. See Ind. Admin. Code tit. 45, r. 3.1-1-22 (giving non-exclusive list of relevant facts in determining whether new domicile has been established). Additionally, in early 1994, he gave an Indiana address for his 1993 Indiana and Illinois tax returns, which suggests Indiana residency for 1993 and is at least inconsistent with Kokajka having a permanent abode in Nevada. These facts taken together do not demonstrate a permanent residence outside Indiana.

    The domicile rules contained in the Indiana Administrative Code provide an independent basis for this conclusion. "Once a domicile has been established, it remains until the conditions necessary for a change of domicile occur." Ind. Admin. Code tit. 45, r. 3.1-1-22. Therefore, the regulation places the burden of affirmatively demonstrating a change in domicile on Kokajka. This he must do to escape taxation on all of his adjusted gross income for 1993. Kokajka has not done so. The establishment of a new domicile requires more than merely spending the bulk of one's time in a particular state. That is all Kokajka has shown; it is not enough.
    This Court, therefore, finds that Kokajka has not met the burden of affirmatively demonstrating a permanent residence outside Indiana imposed by Department regulations. Consequently, Kokajka is deemed an Indiana resident during 1993. As a result, Kokajka is subject to taxation on all of his adjusted gross income for that year, and the Department properly assessed Kokajka on that basis.

    Accordingly, this Court now enters judgment on behalf of the Department and against Kokajka.

Footnote:     1 At trial, Kokajka claimed non-residency. See infra note 9.
Footnote:     2 See Ind. Code Ann. § 6-8.1-5-1 (a) (West Supp. 1997). The Department issues a notice of proposed assessment when it determines that a taxpayer has not reported the proper amount of tax due. The notice of proposed assessment contains the amount of tax that the Department contends that the taxpayer owes.
Footnote:     3 The Department contends that Kokajka did not file a protest at all for three of the four tax years in question, and the Department contends that Kokajka did file a protest for the other year, but did not do so on time. Without record of a protest, the Department will not issue a letter of findings, which serves as the Department's final determination in these cases.
    The question arises whether this Court may treat the Department's actions with respect to the taxes at issue in this case as a final determination. The Court finds that it may do so. Remanding this case to the Department for it to simply memorialize its position that Kokajka did not file timely protests would serve no useful purpose.

Footnote:     4 Had Kokajka paid the taxes at issue before the filing of this appeal, Kokajka would have been required to file a claim for refund with the Department rather than a written protest. See Ind. Code Ann. § 6-8.1-9-1 (West Supp. 1997); GasAmerica, 552 N.E.2d at 862 (discussing difference between refund cases and protest cases). That Kokajka involuntarily paid the taxes (and would receive a refund if successful in this case) through the Lake County Sheriff's collection efforts after the filing of this appeal does not retroactively change the procedural posture of this case from a refund case to a protest case. The collection also does not give Kokajka the right to start the whole process anew by making a refund claim with the Department.
Footnote:     5 This Court is not faced with the situation where the Department has decided to issue a final determination on the merits despite a taxpayer's failure to comply with the statutory procedures for disputing proposed assessments or claiming refunds.
Footnote:     6 The deputy attorney general stated at trial that the Department did have a record of a protest by Kokajka, but that it was not timely filed. (Tr. at 10). This Court may properly consider counsel's admission that the Department received Kokajka's protest. See Ind. Evid. R. 801(d)(2)(C). However, this Court may not consider counsel's representation that the protest was not timely filed.
Footnote:     7 This Court sua sponte raises the issue of whether this original tax appeal was properly filed as a small tax claim. This Court is required to "establish a small claims docket." Ind. Code Ann. § 33-3-5-12 (West 1996). The cases that may be properly entered on the small claims docket are those involving refund claims that are less than $5000 for any year or appeals of final determinations of assessed value where the disputed amount is less than $15,000 for any year. Id. § 33-3-5-12(a). This is not a refund case, nor is it an appeal of a property assessment; therefore, it

does not fall into either category of small tax claims. Because neither party objected to the placement of this case on the small claims docket, and the parties tried this case as a small tax claim, this Court sees no reason to transfer this case to its plenary docket at this late date.

Footnote:     8 Kokajka argues that the fact that he held an Illinois driver's license is determinative of his part-year status. He may have obtained that notion from the notices of proposed assessment sent to him by the Department. All of those notices contain the instruction: "To verify part year or nonresident status, you must submit a copy of the other state's tax return. For those states with no state tax [i.e., Nevada], please submit a copy of your driver's license, vehicle registration or voter's registration." (Exs. E-H) (emphasis added). The problem with this instruction is that it equates a taxpayer holding an out-of-state driver's license (or filing a tax return in another state) with part-year or non-resident status. This oversimplifies the relevant law, which calls for a detailed factual inquiry into a taxpayer's residency status. See Ind. Admin. Code tit. 45, r. 3.1-1- 22 (1996) ("The determination must be made on the facts present in each individual case.") (emphasis added).
Footnote:     9 Kokajka should have claimed non-residency on his Indiana income tax return. See Ind. Code Ann. § 6-3-2-2 (West Supp. 1997) (taxation of non-residents). A person is an Indiana resident if domiciled in Indiana or if the person maintained a permanent residence in Indiana and spent more than 183 days in Indiana during the taxable year. See Ind. Code Ann. § 6-3-1-12 (West 1989); Ind. Admin. Code tit. 45, r. 3.1-1-21 (1996). According to Kokajka, he was neither domiciled in Indiana, nor did he spend 183 days here in 1993.
    The term, part-year resident, does not exist in the Adjusted Gross Income Tax Act of 1963 (as amended). The Act has only two categories of taxpayers, residents and non-residents. The part-year resident or part-time resident category exists only in the Indiana Administrative Code and was likely promulgated to deal with taxpayers who changed status (i.e. resident to non- resident or vice versa) during the taxable year. Kokajka does not claim a change of status during 1993.

Footnote:     10 The regulation states that the taxpayer must show "that the abode . . . is of a permanent nature." The Court therefore uses term, permanent place of abode, in this discussion. The Court sees little, if any difference between that term and domicile. Any difference is of no consequence in this case.

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