in-20260826-IR-045260285NRA: LETTER OF FINDINGS: 01-20241542

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20241542 Individual Income Tax For The Year 2019 HOLDING Individual failed to establish the Department’s assessment was incorrect. ISSUE

I. Individual Income Tax – Federal Discrepancy. 

Authority: I.R.C. § 62; IC 6-3-1-3.5; IC 6-3-2-1; IC 6-8.1-5-1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); 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). Taxpayer protests the assessment of additional Indiana individual income tax. STATEMENT OF FACTS In 2019, Taxpayer was an Indiana resident who filed an Indiana Individual income tax return. In February of 2023, the Indiana Department of Revenue (“Department”) issued Taxpayer a Notice of Proposed Assessment for Tax Year 2019 indicating that she owed additional Indiana individual income tax for the 2019 tax year. Taxpayer protested the assessment and an administrative hearing was held via telephone. This Letter of Findings is based on the information submitted by Taxpayer as part of the protest and a review of the Department’s records. Additional facts will be provided as necessary.

I. Individual Income Tax – Federal Discrepancy.

DISCUSSION The Department determined that Taxpayer underreported their federal adjusted gross income and assessed additional income tax, penalty, and interest. Taxpayer disagreed and stated, in part, that “[she had] never had an income that totals over $41,656.00.” As a threshold issue, it is the taxpayer’s responsibility to establish that the existing tax assessment is incorrect. A proposed assessment is prima facie evidence that the Department’s claim for the unpaid tax is valid. IC 6-8.1-5-1(c). The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made. Id.; See e.g., Indiana Dept. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). An assessment, including taxpayer’s penalty assessment, is therefore presumed valid. A taxpayer must provide documentation explaining and supporting that the Department’s position is wrong. Additionally, “[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). Indiana imposes a tax “upon the adjusted gross income of every resident person, and on that part of the adjusted gross income derived from sources within Indiana of every nonresident person.” IC 6-3-2-1(a). The starting point for determining Indiana income tax is the taxpayer’s federal adjusted gross income as defined in I.R.C. § 62, which taxpayers are directed to enter on their Indiana return before making the modifications outlined in IC 6-3-1-3.5(a). In October 2023, Taxpayer submitted a copy of her Internal Revenue Service (“IRS”) Account Transcript for the tax period ending December 31, 2019, as requested by the Department, to support her protest. Upon review, Taxpayers’ IRS Account Transcript demonstrated that the IRS determined that for the tax year 2019, Taxpayer had “unreported income” which increased her federal adjusted gross income. Such unreported income was also subject to Indiana income tax pursuant to IC 6-3-1-3.5(a) and IC 6-3-2-1(a). The Department adjusted its record to comport with the adjustments made by the IRS, resulting in additional tax, interest, and penalty. Based on the IRS Account Transcript provided by Taxpayer, the Department is not able to agree that Taxpayer met her burden of proof under IC 6-8.1-5-1(c). Additionally, Taxpayer argued that the change in the federal adjusted gross income may have resulted from her “Tax Preparer [making] a mistake by filing [her] 2018 W-2 [with her] 2019 return. [Her Tax Preparer] filed a[n] Indiana Amended Individual Income Tax Return Form in 2023 to correct this issue.” Taxpayer further argued that the discrepancy in the Federal Adjusted Gross Income was corrected with the IRS. However, Taxpayer did not provide any documentation to show that the 2019 IRS record of account had been updated to show that Taxpayer made a lower amount of Individual Income. Since this information formed the basis of the Department’s assessment, and since Taxpayer has not provided sufficient documentation to rebut that position, Taxpayer has not carried her burden to show that the Department’s assessment was incorrect as provided under IC 6-8.1-5-1(c). FINDING Taxpayer’s protest is denied. June 12, 2026 Replaces Finding Document: New