in-20260930-IR-045260339NRA: LETTER OF FINDINGS: 01-20251497

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20251497 Income Tax For The Year 2021 HOLDING Individual failed to establish that 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; 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 protests the assessment of additional individual income tax. STATEMENT OF FACTS Taxpayer is an Indiana resident. 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 Taxpayer's Federal Adjusted Gross Income ("FAGI") was higher than the Adjusted Gross Income ("AGI") reported by Taxpayer on her Indiana return. 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. Taxpayer requested a resolution without an administrative hearing. This Letter of Findings results and is based on 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 AGI to match the FAGI on her federal return, resulting in an assessment of additional income tax liability. Taxpayer protested the assessment and argued she had accurately reported her income on her Indiana return. Taxpayer provided documents in support of her argument. As a threshold issue, it is Taxpayer's responsibility to establish that the income tax assessment is wrong. As stated in IC 6-8.1-5-1(c), "The notice of proposed assessment is prima facie evidence that the department's claim for the unpaid tax is valid. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made." 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). Consequently, a taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department's position is wrong. 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. In support of her protest, Taxpayer provided copies of her Form IT-40, her Schedule 3 Exemptions, her Form 1099-R, and her Form 1099-NEC. Taxpayer's Form 1099-R details distributions Taxpayer received from her retirement accounts. Taxpayer's Form 1099-NEC lists distributions Taxpayer received for contracted work as non-employee compensation. A review of these documents reveals the discrepancy in Taxpayer's federal and state AGI is the result of Taxpayer failing to include the income amount she received according to her Form 1099-NEC. Taxpayer's documentation supports the adjustment made by the Department to match her FAGI. Therefore, 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 21, 2026 Replaces Finding Document: New