in-20260930-IR-045260329NRA: LETTER OF FINDINGS: 04-20251908

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20251908 Use Tax For The Year 2022 HOLDING Business established the Department's assessment of use tax on a vehicle title transfer was incorrect. ISSUE

I. Use Tax – Vehicle Title Transfer. 

Authority: IC 6-2.5-2-1; IC 6-2.5-2-2; IC 6-2.5-3-1; IC 6-2.5-3-2; IC 6-2.5-3-6; 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); Indiana Dept. of State Revenue v. Belterra Resort Indiana, LLC, 935 N.E.2d 174 (Ind. 2010); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); Grand Victoria Casino & Resort v. Indiana Dept. of State Revenue, 789 N.E.2d 1041 (Ind. Tax Ct. 2003); Rhoade v. Indiana Dept. of State Revenue, 774 N.E.2d 1044 (Ind. Tax Ct. 2002); 45 IAC 2.2-3-5; Sales Tax Information Bulletin 28S (February 2021). Taxpayer protests the assessment of use tax on a vehicle title transfer. STATEMENT OF FACTS Taxpayer is an Indiana limited liability company ("Business"). In December of 2024, Taxpayer received a Notice of Proposed Assessment ("NOPA") from the Indiana Department of Revenue ("Department") for "Consumer Use" tax on the transfer of a vehicle title. Taxpayer protested the assessment and requested a Final Determination without a hearing. This Letter of Findings is written based upon information provided by Taxpayer. Additional facts will be provided as necessary.

I. Use Tax – Vehicle Title Transfer.

DISCUSSION The Department received information from the Bureau of Motor Vehicles ("BMV") that Taxpayer "purchased a vehicle below market value claiming a selling price of $0.00." The Department's correspondence noted: The Department issued an assessment for consumer use tax based on the listed market value for the vehicle as determined by a used vehicle guide. 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 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). Pursuant to IC 6-2.5-2-1(a), sales tax, also known as state gross retail tax, is imposed on retail transactions made in Indiana unless a valid exemption is applicable. Sales tax is imposed at a rate of seven percent. IC 6-2.5-2-2(a). 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 . . . . " 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). IC 6-2.5-3-6(b) states, "[t]he person who uses, stores, or consumes the tangible personal property acquired in a retail transaction is personally liable for the use tax." The Department's Sales Tax Information Bulletin 28S (February 2021), 20210331-IR-045210101NRA, states, "[a]bsent a statutory exemption, all sales of motor vehicles and trailers purchased in Indiana are subject to Indiana sales and use tax." IC 6-2.5-3-6(d) notes, "a person liable for the use tax imposed in respect to a vehicle . . . shall pay the tax to the titling agency . . . unless the person presents proof to the agency that the use tax or state gross retail tax has already been paid with respect to the purchase of the vehicle . . . . " Additionally, 45 IAC 2.2-3-5(d) states: When property is transferred without consideration as a capital contribution, the transfer is "not a retail sale subject to sales tax." Grand Victoria Casino & Resort v. Indiana Dept. of State Revenue, 789 N.E.2d 1041, 1045 (Ind. Tax Ct. 2003). Similarly, capital contributions made without consideration do not constitute retail sales, meaning sales or use tax cannot be imposed. Indiana Dept. of State Revenue v. Belterra Resort Indiana, LLC, 935 N.E.2d 174, 178 (Ind. 2010). Taxpayer argued that they are not required to pay use tax on the vehicle title transfer because they already paid sales/use tax when the vehicle was first purchased. The Department notes that sales tax and use tax are imposed on transactions involving tangible personal property. Each transaction may be taxable depending on the circumstances of that transaction. Thus, any tangible personal property, such as the vehicle at issue, could be sold several times and each sale may be subject to sales tax or use tax. A review of the Department's records showed for the transaction at issue that on the Form ST-108E, Taxpayer marked the vehicle transfer as exempt from tax because the vehicle was transferred from one individual to another with no consideration involved. The vehicle title was transferred from personal ownership to Business. In the instant case, when the title was transferred from personal ownership to Taxpayer, the paperwork listed the sales price and amount as $0.00. Thus, when Taxpayer registered the vehicle in the business name, they did not pay use tax on the purchase of the vehicle. Taxpayer continued to operate the business. Therefore, the title transfer was a contribution to a business from its owner. Non-sale transfers of motor vehicles are not subject to sales or use tax under IC 6-2.5-3-2. Taxpayer was entitled to claim an exemption on the Form ST-108E for the title transfer with no consideration involved because the title transfer was a contribution from personal ownership to Taxpayer. Taxpayer has carried their burden to show that the Department's assessment was incorrect as provided under IC 6-8.1-5-1. FINDING Taxpayer's protest is sustained. July 10, 2026 Replaces Finding Document: New