in-20260930-IR-045260328NRA: Corporate Income Tax Collection Fees

DEPARTMENT OF STATE REVENUE ORDER DENYING REFUND: 04-20251802; 04-20251803; 04-20251804; 04-20251805; 04-20251806; 04-20251807 Corporate Income Tax Collection Fees For the Year 2019 - 2021 HOLDING Company failed to provide sufficient information to establish that it was entitled to a refund of collection costs and fees on sales tax and use tax levied against its bank account. ISSUE

I. Tax Administration - Collection Costs.

Authority: IC 6-8.1-3-11; IC 6-8.1-5-1; IC 6-8.1-8-2; IC 6-8.1-8-4; IC 6-8.1-9-1; 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); PIS, Inc. v. Ind. Dept. of State Revenue, 853 N.E.2d 1051 (Ind. Tax Ct. 2006); Ennis v. Department of Local Government Finance, 835 N.E.2d 1119 (Ind. Tax Ct. 2005). Taxpayer argues that the Department erred in denying it a refund of collection costs and fees. STATEMENT OF FACTS Taxpayer is an out-of-state company that operates retail stores in Indiana. The Indiana Department of Revenue ("Department") conducted an audit of Taxpayer's sales tax and use tax returns for tax years 2019 - 2021. The Department determined that Taxpayer had not reported sales tax and use tax for several reporting periods. As a result, the Department issued Notices of Proposed Assessments related to the tax periods for which sales and/or use tax was underreported. After receiving additional information from Taxpayer and additional review, the Department refunded Taxpayer's base tax, interest and penalties, less collection fees. Taxpayer filed requests for refund for the collection fees, which the Department denied. Taxpayer protested and an administrative hearing was held in which Taxpayer's representative explained the basis for the protest. This Order Denying Refund results. Additional facts will be provided as necessary.

I. Tax Administration - Collection Costs.

DISCUSSION Taxpayer protests the denial of its refund claim for collection fees, stating that Department never mailed the Company Notices of Assessments nor the Demand for Payment letters. IC 6-8.1-9-1(a) affords a taxpayer a statutory right to file a claim for refund. This statute provides, in part: If the Department reasonably believes that a taxpayer has not reported the proper amount of tax due, the Department shall propose an assessment of unpaid tax based on the best information available to the Department. IC 6-8.1-5-1(b). All tax assessments are prima facie evidence that the Department's claim for unpaid tax is valid, and each taxpayer bears the burden of proving that any assessment is incorrect. IC 6-8.1-5-1(c); 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). The amount of the proposed assessment "is considered a tax payment not made by the due date" and is subject to penalties and interest. Id. Notice of the proposed assessment shall be sent to the taxpayer stating that it has sixty (60) days in which to pay the assessment or file a written protest. IC 6-8.1-5-1(b) and (d). If the taxpayer does not pay the proposed assessment or file a written protest in the sixty (60) day period "[t]he department shall demand payment, as provided in IC 6-8.1-8-2(a), of any part of the proposed tax assessment, interest, and penalties . . . " IC 6-8.1-5-1(j). In these situations, the Department "shall make the demand for payment in the manner provided in IC 6-8.1-8-2." IC 6-8.1-5-1(k). IC 6-8.1-8-2 provides that the Department must issue a demand notice for payment which grants the taxpayer a ten (10) day period of time in which to "either pay the amount demanded or show reasonable cause for not paying the amount demanded." IC 6-8.1-8-2(a). If a taxpayer "does not pay the amount demanded or show reasonable cause for not paying the amount demanded within the ten (10) day period, the department may issue a tax warrant for the amount of the tax, interest, penalties, collection fee, sheriff's costs, clerk's costs," and other fees. IC 6-8.1-8-2(b). When the Department has issued a tax warrant, the Department may contract with a collection agency to collect delinquent tax plus interest, penalties, collection fees, and other fees and costs. IC 6-8.1-8-4(a). Additionally, "a collection fee of ten percent (10 percent) of the unpaid tax is added to the total amount due." Id. When a tax warrant is filed, "the total amount of the tax warrant becomes a judgment against the person owing the tax." IC 6-8.1-8-2(e). As to the Department's mailing requirements, IC 6-8.1-3-11(2)(b), states in part: The Indiana Tax Court has provided guidance on this issue in PIS, Inc. v. Ind. Dept. of State Revenue, 853 N.E.2d 1051 (Ind. Tax Ct. 2006). In that decision, the court explained that the petitioner was responsible for paying collection fees because it had not rebutted the presumption that it received notices which the Department mailed and - as a result - had not timely responded to the notices. Id. at 1054-55. The court explained that the petitioner in that case merely asserted that it had not received the notices and that the Department explained it had not received the notices back by return mail. Id. The court concluded that the petitioner was presumed to have timely received the demand notices, and therefore was not entitled to a refund of collection fees that attached upon the issuance of the tax warrants. Id. at 1055. Taxpayer explained that because of the corporate changes involving the merger of two companies, it never received the Notices of Proposed Assessments nor the Demands for Payment letters. Taxpayer stated that business activities historically reported by it were reported by the new parent corporation. The correspondence sent to Taxpayer by the Department were: Taxpayer failed to respond to this correspondence. Taxpayer's representative acknowledged that the address for Taxpayer had not changed, but that the parent company was responsible for making sales tax and use tax payments. Taxpayer argues it is the Department's burden to prove the notices were mailed. IC 6-8.1-3-11 does not require that Department correspondence be mailed certified mail. PIS, Inc. stands for the common law "mail-box rule" where there is a presumption that mail sent via U.S. postal service was received by the recipient. The burden shifts to the recipient that the letter was not received. The presumption is rebuttable; however, if a taxpayer states only that the notices were not received, the presumption has not been rebutted. Id; Ennis v. Department of Local Government Finance, 835 N.E.2d 1119 (Ind. Tax Ct. 2005). In this case, Taxpayer has not provided any documentation showing that any of the twenty letters mailed by the Department were not received. Taxpayer failed to contact the Department for approximately eleven months to notify the Department that its sales taxes and use taxes were being paid by another corporate entity. Based on the information available to the Department at the time of the assessments, the assessments correctly advanced to demand notices followed by tax warrants and collection action. Once Taxpayer contacted the Department to inform it of the new, accurate mailing address and withholding responsibilities, the Department corrected its own record and issued a refund, including base tax, penalties and interest which were levied. Taxpayer's argument that the Department bears the burden to prove that it mailed over twenty notices is incorrect. As provided by IC 6-8.1-8-4(a), the Department was justified in engaging a Collection Agent to collect taxes merited by assessments based on best information known at the time. Therefore, the Department is not required to refund any collection fees. Taxpayer has not established that the Department's denial of its refund is incorrect. FINDING Taxpayer's protest is denied. July 24, 2026 Replaces Finding Document: New