in-20251126-IR-045250671NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20242752 Use Tax For The Year 2021 HOLDING Taxpayer established that the Department’s assessment of use tax on Taxpayer’s purchase of a recreational vehicle (“RV”) was incorrect. ISSUE

I. Use Tax – Imposition.

Authority: IC 6-2.5-1-2; IC 6-2.5-3-2; IC 6-2.5-3-6; IC 6-2.5-4-1; 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); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 2.2-2-1; 45 IAC 2.2-3-4; 45 IAC 2.2-3-5. Taxpayer protests the assessment of consumer use tax on his purchase of an RV. STATEMENT OF FACTS Taxpayer is an Indiana resident. In October 2020, Taxpayer purchased an RV from his uncle, a Kentucky resident. In May 2023, Taxpayer applied to title the RV at the Indiana Bureau of Motor Vehicles (“BMV”). At the BMV, Taxpayer stated that he bought the RV for $100, and Taxpayer paid use tax at that time based on the $100 purchase price. The Indiana Department of Revenue (“Department”) later received information from the BMV regarding the purchase because the purchase price appeared significantly lower than the fair market value of the RV. As a result of the review, the Department issued Taxpayer an assessment for use tax. Taxpayer protested the assessment, and this Letter of Findings results. Additional facts will be provided as necessary. Because Taxpayer waived his right to a hearing, this Letter of Findings relies on documents submitted by the Taxpayer and the Department’s records.

I. Use Tax – Imposition.

DISCUSSION Taxpayer argues that the actual purchase price of the RV was $100, and the Department was wrong to assess him use tax on the fair market value. The Department determined that the low selling price listed for the RV was not supported by substantial evidence, so it assessed Taxpayer for additional tax based on an assumption that he paid fair market value for the RV as determined by a consumer guide. As a threshold issue, it is a 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). Indiana imposes an excise tax called the “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). A “retail transaction” occurs when a person or business makes a “sale at retail.” See IC 6-2.5-1-2. A “sale at retail” occurs when, “in the ordinary course of . . . regularly conducted trade or business,” a person or business buys property “for the purpose of resale” and transfers it to someone else “for consideration.” IC 6-2.5-4-1(b). For sales of motor vehicles, the use tax is also imposed on “isolated or occasional sale[s],” where the seller originally acquired the vehicle “for . . . use or consumption.” IC 6-2.5-3-2(b)(1); 45 IAC 2.2-1-1(d). In other words, the purchaser of a motor vehicle must pay use tax so long as they acquired it in a “sale.” Tangible personal property purchased in Indiana and stored, used, or otherwise consumed in Indiana is subject to Indiana use tax for such property unless the Indiana sales tax has been collected at the point of purchase. 45 IAC 2.2-3-4. IC 6-2.5-3-6 provides further guidance on the collection of use tax on the use, storage, or consumption of tangible personal property acquired in a retail transaction. The person liable for use tax on the purchase of a motor vehicle shall pay the use tax to the registering agency at the time the person applies for a title for the vehicle. IC 6-2.5-3-6(d)(1). IC 6-2.5-3-6 provides guidance on how the titling agency should determine the taxable price of vehicle: The Department’s regulations state that a taxpayer may establish the actual selling price using an affidavit: 45 IAC 2.2-3-5. (Emphasis added). Here, the Department’s records reflect that Taxpayer submitted the seller’s old Kentucky title as part of his application for title. The back side of the Kentucky title features a section labeled “APPLICATION FOR TITLE/ AFFIDAVIT OF TOTAL CONSIDERATION.” In this section, Taxpayer has written a sale price of $100, and both he and the seller have signed underneath a statement which reads “Seller and buyer certify pursuant to the penalty provisions of KRS 190.990 (5), that each has supplied true and correct total consideration information to the best of his knowledge and belief, in this document, including the above affidavit.” 45 IAC 2.2-3-5 is clear that use tax owed is based on the actual selling price as represented on “an affidavit signed under penalty of perjury,” and only if there is no such affidavit will the fair market value be considered. Taxpayer presented such an affidavit, as discussed above. Under 45 IAC 2.2-3-5, the taxable amount is based on the actual sale price of the RV, and the Department’s records make plain that Taxpayer has already paid use tax based on that price. Taxpayer’s protest is sustained, and he does not owe Indiana use tax. FINDING Taxpayer’s protest is sustained. May 13, 2025 Replaces Finding Document: New