in-20260826-IR-045260293NRA: LETTER OF FINDINGS: 04-20241415

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20241415 Use Tax For The Year 2022 HOLDING Individual established the Department’s assessment of use tax on one vehicle purchase was overstated; however, Individual failed to establish the Department’s assessment of use tax on a second vehicle purchase was incorrect. ISSUE

I. Use Tax – Burden of Proof.

Authority: IC 6-2.5-1-2; IC 6-2.5-2-1; IC 6-2.5-3-1; IC 6-2.5-3-2; IC 6-2.5-3-6; IC 6-2.5-4-1; IC 6-2.5-13-1; 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); Scopelite v. Indiana Dept. of Local Gov't Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); Rhoade v. Indiana Dept. of State Revenue, 774 N.E.2d 1044 (Ind. Tax Ct. 2002); 45 IAC 2.2-2-1. Taxpayer protested the assessment of consumer use tax on two vehicle purchases. STATEMENT OF FACTS Taxpayer is an Indiana resident. In 2022, Taxpayer purchased two vehicles from two individuals in private sales. When titling the vehicles, Taxpayer reported to the Bureau of Motor Vehicles (“BMV”) a purchase price of $50 per vehicle. In 2023, Taxpayer received a Notice of Proposed Assessment (“NOPA”) from the Indiana Department of Revenue (“Department”) for use tax on the two vehicles due to Taxpayer’s reported purchase prices being significantly under the average market value of each vehicle. Taxpayer protested the assessment. An administrative hearing was held. This Letter of Findings is based upon information available to the Department and provided by Taxpayer. Additional facts will be provided as necessary.

I. Use Tax – Burden of Proof.

DISCUSSION The Department determined Taxpayer’s vehicle purchases were subject to use tax after a review of information received from the BMV. Taxpayer protested the assessment, stating the Department’s assessment was overstated due to Taxpayer only having paid $50 per vehicle. 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 is presumed valid. A taxpayer must provide documentation explaining and supporting 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). Poorly developed and non-cogent arguments are subject to waiver. Scopelite v. Indiana Dept. of Local Gov't Fin., 939 N.E.2d 1138, 1145 (Ind. Tax Ct. 2010). 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). “Use” means the “exercise of any right or power of ownership over tangible personal property.” IC 6-2.5-3-1(a). The use tax is a functional equivalent to the sales tax. See Rhoade v. Indiana Dept. of State Revenue, 774 N.E.2d 1044, 1047 (Ind. Tax Ct. 2002). 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 personal property in a retail transaction (a “retail purchaser”) is liable for the sales tax on the transaction. IC 6-2.5-2-1(b). A retail sale is sourced to Indiana and thus is subject to Indiana sales tax when the transaction is a “retail sale . . . of a product” and “the product is received by the purchaser at a business location of the seller [in Indiana] . . . ”. IC 6-2.5-13-1(d)(1). The purchaser in general “shall pay the tax to the retail merchant as a separate added amount to the consideration in the transaction.” IC 6-2.5-2-1(b). When a vehicle “(1) is acquired in a transaction that is an isolated or occasional sale; and (2) is required to be titled, licensed, or registered by this state for use in Indiana” under IC 6-2.5-3-2(b), the purchaser is responsible for the use tax. IC 6-2.5-3-6(e) states in relevant part that “the titling agency shall compute the tax due based on the presumption that the sale price was the average selling price for that vehicle,” and that “the titling agency shall compute the tax due based on the actual sale price of the vehicle if the buyer . . . presents documentation to the titling agency sufficient to rebut the presumption . . . and to establish the actual selling price of the vehicle.” The Department reviewed Taxpayer’s vehicle purchases and determined using publicly available information that the average selling price for Vehicle 1 was $3,189, and the average selling price for Vehicle 2 was $2,720. The resulting use tax assessed based on the combined average selling prices for both vehicles was approximately $450. During the administrative hearing, Taxpayer stated the vehicles were in disrepair when he bought them, and the previous owners were eager to part with them. Taxpayer stated it took him four weekends to repair the vehicles, but that he had no documentation to support time or resources spent repairing the vehicles, such as receipts for parts or labor, nor photographic nor video evidence of the state of the vehicles when he purchased them. To rebut the Department’s assessment, Taxpayer provided two handwritten statements, one purportedly from each individual who sold Taxpayer the vehicles, reflecting that they did so for $50. Each statement is on lined notebook paper, and neither indicate they were executed under penalty of perjury or before a notary. After the administrative hearing, Taxpayer was able to find and submit three photos of Vehicle 1 near the time of purchase, which showed portions of the vehicle having rust damage. No other documentation was submitted for Vehicle 2, and Taxpayer stated he no longer had that vehicle in his possession. Based on the documentation, including photographs of the rust-damaged areas of Vehicle 1, the Department agrees that the Kelly Blue Book value for Vehicle 1 places the average value of Vehicle 1 at $2,870. Therefore, as a result of the documentation provided in the protest process, the value of Vehicle 1 is less than originally determined by the Department, but is also higher than originally reported by Taxpayer. The assessment for Vehicle 1 will be recalculated to reflect this revised valuation. Taxpayer has partially met his burden under IC 6-8.1-5-1(c) as to Vehicle 1. Taxpayer, however, has not met his burden under IC 6-8.1-5-1(c) as to Vehicle 2, as Taxpayer provided no evidence to rebut the average value of Vehicle 2 at the time of purchase. FINDING Taxpayer’s protest is partially sustained as to Vehicle 1. Taxpayer’s protest is denied as to Vehicle 2. June 22, 2026 Replaces Finding Document: New