in-20260826-IR-045260278NRA: MEMORANDUM OF DECISION: 04-20253054

DEPARTMENT OF STATE REVENUE MEMORANDUM OF DECISION: 04-20253054 Sales Tax For The Years 2022, 2023, 2024, 2025 HOLDING Business established that it is entitled to a refund of sales tax. ISSUE

I. Sales Tax - Refund.

Authority: IC 6-2.5-2-1; IC 6-2.5-3-2; IC 6-2.5-13-3; IC 6-8.1-9-1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); 45 IAC 2.2-2-1; 45 IAC 15-9-1; 45 IAC 15-9-2; Sales Tax Information Bulletin 54 (April 2023). Taxpayer protests the denial of refund for sales tax. STATEMENT OF FACTS Taxpayer is an out-of-state business which conducts direct mail business with an Indiana-based printer (“Printer”). Taxpayer submitted a refund claim for sales tax paid on Indiana transactions conducted with Company. The Indiana Department of Revenue (“Department”) denied Taxpayer's refund request. Taxpayer protested the denial, and an administrative hearing was held. This Memorandum of Decision results. Additional facts will be provided as necessary.

I. Sales Tax - Refund.

DISCUSSION Taxpayer requested a refund for sales tax after it determined it overpaid on its Indiana transactions. The request concerned Taxpayer's direct mail business and the source of its transactions when calculating the amount of sales tax due. Taxpayer's direct mail business provides samples of its clients' products to Printer which then distributes the samples along with additional printed materials. The packet with the samples and printed materials is then distributed to prospective customers within a designated demographic. The Department reviewed Taxpayer's refund request and denied the refund in full, basing its decision on Sales Tax Information Bulletin 54. Taxpayer protested the denial. In support of its protest, Taxpayer provided an explanation of its business model and sales data concerning its transactions with Printer during each relevant tax year. As a threshold issue, “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.'” Indiana Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). Thus, all interpretations of Indiana tax law contained within this decision shall be entitled to deference. IC 6-8.1-9-1(a) affords the taxpayer a right to file a claim for refund if a taxpayer determines that they paid more tax than the amount is legally due for a particular taxable period. “A claim for refund can only be initiated pursuant to IC 6-8.1-9-1” because the Department “has no legal method of generating a claim for refund.” 45 IAC 15-9-2(b). Crucially, the Department has no legal authority to automatically “refund or credit this overpayment to the taxpayer.” 45 IAC 15-9-2(b). “Instead, the taxpayer must file a claim for refund as prescribed in IC 6-8.1-9-1 and 45 IAC 15-9-1.” Id. Such a refund claim must include certain verifiable information, which may include the amount of the refund to which the person is entitled, the reasons why the person is entitled to the refund, the tax period for which the overpayment is claimed, and the year and date of the overpayment. 45 IAC 15-9-2(d). The claim for refund is required to be filed on the form prescribed by the Department. Id. 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 person who acquires property in a retail transaction is liable for the sales tax on the transaction. IC 6-2.5-2-1(b). Indiana also imposes a complementary excise tax called a “use tax” on “the storage, use, or consumption of tangible personal property in Indiana if the property was acquired in a retail transaction, regardless of the location of that transaction or of the retail merchant making that transaction.” IC 6-2.5-3-2(a). Sales Tax Information Bulletin 54 (April 2023), 20230510-IR-045230258NRA, instructs that when an out-of-state purchaser “does not have a direct payment permit or an exemption certificate, they may provide the printer with information to show the jurisdictions to which the advertising and promotional direct mail is delivered to recipients.” When an out-of-state purchaser does not enjoy either a permit or an exemption, it can provide information for which transactions are sourced to Indiana and therefore are subject to Indiana sales tax. IC 6-2.5-13-3. Taxpayer is an out-of-state purchaser which regularly works with Printer. Part of Taxpayer's business includes utilizing a direct mail service which sends samples of a client's product to a targeted demographic. Taxpayer uses Printer to carry out this service in Indiana. Printer ships the samples directly from Indiana to the specified demographic across the country, including Indiana. Taxpayer does not have a direct-mail permit or an exemption certificate. However, under IC 6-2.5-13-3 and as explained in Sales Tax Information Bulletin 54, Taxpayer provided sufficient documentation to establish which transactions were subject to Indiana sales tax and which were sourced to other jurisdictions. Based on the information provided, Taxpayer is entitled to a refund for Indiana sales tax to the extent that it is overpaid. FINDING Taxpayer's protest is sustained. June 4, 2026 Replaces Finding Document: New