in-20251126-IR-045250662NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20252199 Individual Income Tax For the 2024 Tax Year HOLDING Individual failed to establish that she was entitled to a refund. ISSUE

I. Individual Income Tax – Burden of Proof.

Authority: I.R.C. § 62; IC 6-3-1-3.5; IC 6-3-2-1; IC 6-3-3-1; IC 6-8.1-5-1; IC 6-8.1-5-4; Stinson Estate v. United States, 214 F.3d 846 (7th Cir. 2000); 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); Tell City Boatworks, Inc. v. Indiana Dep’t of State Revenue, 162 N.E.3d 603 (Ind. Tax Ct. 2020); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2012); Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007). Taxpayer protests the Department’s assessment of additional Indiana income tax. STATEMENT OF FACTS Taxpayer is an individual who lives in a state outside of Indiana. Taxpayer timely filed a nonresident income tax return for the 2024 tax year with the Indiana Department of Revenue (“Department”) on which she claimed a refund. The Department denied her refund request and issued a proposed assessment for additional tax. Taxpayer timely protested, and this Letter of Findings results. Since Taxpayer waived her right to a hearing, this Letter of Findings relies on the Department’s records and documents that Taxpayer submitted.

I. Individual Income Tax – Burden of Proof.

DISCUSSION Taxpayer argues that she is entitled to claim a credit for taxes withheld from her income. The Department denied her refund request because its records do not reflect that any taxes were withheld on her behalf. 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) and Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). Where a taxpayer is challenging the Department’s final determination, the taxpayer is required to provide documentation explaining and supporting its challenge. Poorly developed and non-cogent arguments are subject to waiver. Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138, 1145 (Ind. Tax Ct. 2010); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480, 486 n.9 (Ind. Tax Ct. 2012). Additionally, “when [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.’” Indiana Dep’t 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 are entitled to deference. Indiana imposes a tax on “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. The starting point for determining Indiana income tax is the taxpayer’s federal adjusted gross income as defined in I.R.C. § 62, which taxpayers are directed to enter on their Indiana return before making modifications that are outlined in IC 6-3-1-3.5. IC 6-8.1-5-4(a) requires that “[e]very person subject to a listed tax must keep books and records so that the [D]epartment can determine the amount, if any, of the person’s liability for that tax by reviewing those books and records. The records [] include all source documents necessary to determine the tax, including invoices, register tapes, receipts, and canceled checks.” The person also “must allow inspection of the books and records and returns by the [D]epartment or its authorized agents at all reasonable times.” IC 6-8.1-5-4(c). Individuals may claim tax credits for taxes withheld from income and paid to the Department. IC 6-3-3-1. Like deductions, exemptions, and exclusions, tax credits are matters of legislative grace. Stinson Estate v. United States, 214 F.3d 846, 848 (7th Cir. 2000). Tax credits are narrowly construed, and the burden rests with the taxpayer to demonstrate that it qualifies for any claimed credits. Id.; Tell City Boatworks, Inc. v. Indiana Dep’t of State Revenue, 162 N.E.3d 603, 626 (Ind. Tax Ct. 2020). Taxpayer argued that her employer withheld and remitted income tax to the Department on her behalf, and she provided a copy of her W-2 to support her claim. However, the Department has no record that Taxpayer’s employer withheld any taxes on her behalf. Indeed, the Department has no record that Taxpayer’s employer has withheld any taxes on any employee’s behalf. The Department therefore cannot agree that Taxpayer is entitled to claim a credit for withheld taxes. If Taxpayer can provide documentation from her employer establishing that it withheld taxes and paid them to the Department (for example, monthly pay stubs or a signed letter on company letterhead), the Department will consider them on rehearing. FINDING Taxpayer’s protest is denied. July 23, 2025 Replaces Finding Document: New