in-20251126-IR-045250668NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20242108 Use Tax For the 2021 Tax Year HOLDING Individual established that the Indiana Department of Revenue’s assessment of use tax on his purchase of a motor vehicle was too high. ISSUE

I. Use Tax – Motor Vehicle.

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 2.2-1-1. STATEMENT OF FACTS Taxpayer is an Indiana resident. In April 2021, Taxpayer purchased a motor vehicle. On the title application, Taxpayer listed the sale price as $1.00. The Indiana Department of Revenue (“Department”) audited Taxpayer’s transfer and determined that Taxpayer had underreported the retail purchase price of the vehicle. The Department then assessed use tax based on the fair market value of the vehicle. Taxpayer timely protested, and the Department held an administrative hearing. This Letter of Findings results. Further facts will be provided as necessary.

I. Use Tax – Motor Vehicle.

DISCUSSION Taxpayer argues that the Department’s assessment was based on a price that was too high. Taxpayer argues that the vehicle’s fair market value was much lower than the price that the Department used because the car was nonfunctional and damaged. 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 Dep’t of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012) and Lafayette Square Amoco, Inc. v. Indiana Dep’t 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. Further, “[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). Thus, all interpretations of Indiana tax law contained within this decision shall be entitled to deference. 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) (emphasis added). 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 “an isolated or occasional sale.” 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 sales or use tax so long as they acquired the vehicle in a “sale.” When a taxpayer applies for title for a motor vehicle, the titling agency will charge use tax “based on the presumption that the sale price was the average selling price for that vehicle[.]” IC 6-2.5-3-6(e). However, the taxpayer may show through “documentation . . . sufficient to rebut the presumption” that the true sale price was lower. Id. Taxpayer argued at the hearing that he purchased the vehicle for $1. Taxpayer presented contemporaneous photos of the vehicle showing that it was in serious disrepair. Specifically, Taxpayer established via documentation that he purchased the vehicle without an engine or battery, and that the front bumper was missing. The Department therefore agrees that Taxpayer has carried his burden under IC 6-8.1-5-1(c) to show that its assessment was too high. However, Taxpayer could not show through documentation that the actual selling price of the vehicle was $1. The Department will therefore conduct a supplemental audit to determine what an appropriate valuation is for the vehicle that Taxpayer purchased, taking into consideration the condition of the vehicle at the time of purchase. FINDING Taxpayer’s protest is sustained to the extent that the Department will conduct a supplemental audit to determine what an appropriate valuation is for the vehicle that Taxpayer purchased. May 27, 2025 Replaces Finding Document: New