in-20260930-IR-045260324NRA: LETTER OF FINDINGS: 01-20251506

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20251506 Individual Income Tax For The Year 2021 HOLDING Individual failed to establish the Department's assessment of additional income tax was incorrect. ISSUE

I. Individual Income Tax – Federal Discrepancy.

Authority: IC 6-3-1-3.5; IC 6-3-2-1; IC 6-3-2-2; 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); 45 IAC 15-5-1. Taxpayer protested the Department's assessment of additional income tax. STATEMENT OF FACTS Taxpayer is an Indiana resident. For the 2021 tax year, Taxpayer filed both federal and Indiana state tax returns. Thereafter, the Indiana Department of Revenue ("Department") received notice from the Internal Revenue Service ("IRS") that it had made adjustments to Taxpayer's return, increasing her Federal Adjusted Gross Income ("FAGI"). The Department then adjusted Taxpayer's state return to match her federal return, which resulted in the Department's issuance of a Notice of Proposed Assessment ("NOPA") to Taxpayer reflecting additional income tax liability. Taxpayer protested the assessment, and elected to proceed without a hearing. This Letter of Findings is based on the information provided by Taxpayer and a review of the Department's records. Additional facts will be provided as necessary.

I. Individual Income Tax – Federal Discrepancy.

DISCUSSION The Department adjusted Taxpayer's adjusted gross income to match the income increase adjustment on her federal return. Taxpayer protested the assessment and argued she had previously paid an assessment for the same tax year. Taxpayer provided documents in support of her argument. 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 a 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). IC 6-3-2-2(a) outlines what is income derived from Indiana sources and subject to Indiana income tax. There is a presumption that a taxpayer files his/her federal income tax return as required by the Internal Revenue Code. Thus, to effectively compute what is considered a taxpayer's Indiana income tax, Indiana law refers to the Internal Revenue Code. IC 6-3-1-3.5 provides a starting point in determining a taxpayer's taxable income and calculating what would be his/her Indiana income tax after applying certain additions and subtractions, with any necessary modifications following. Modifications are outlined in IC 6-3-1-3.5(a). IC 6-8.1-5-1(b) mandates that "[i]f the department reasonably believes that a person has not reported the proper amount of tax due, the department shall make a proposed assessment of the amount of the unpaid tax on the basis of the best information available . . . " (Emphasis added); see also 45 IAC 15-5-1. Taxpayer submitted a copy of her IRS Account Transcript and bank statements in which she highlighted specific payments made, which she believed settled her assessment liability. Taxpayer's IRS Account Transcript, however, matches the adjustments made by the Department. Therefore, the Department's adjustments conform with the requirements outlined in IC 6-3-2-2(a) and IC 6-3-1-3.5. Additionally, Taxpayer's highlighted bank statements show Taxpayer having made federal tax payments to the IRS only. The bank statements do not reflect Taxpayer having made payments to the Department for her state income tax liability. Thus, Taxpayer has failed to establish the Department's assessment is incorrect under IC 6-8.1-5-1(c). FINDING Taxpayer's protest is denied. July 2, 2026 Replaces Finding Document: New