in-20251126-IR-045250661NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20251675 Individual Income Tax For The Year 2023 HOLDING Individual established that the Department’s assessment for individual income tax was incorrect. ISSUE

I. Individual Income Tax – 529 Tax Credit.

Authority: IC 6-3-2-1; IC 6-3-2-2; IC 6-3-3-12; IC 6-8.1-5-1; IC 6-8.1-10-2.1; 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); Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Income Tax Information Bulletin 98 (May 2020); Income Tax Information Bulletin 98 (November 2023). Taxpayer protests the assessment of individual income tax. STATEMENT OF FACTS Taxpayer is an Indiana resident who filed a 2023 Indiana Full-Year Resident Individual Income Tax Return (“Form IT-40”). On his Form IT-40, Taxpayer claimed a tax credit attributable to his contributions to the Indiana 529 Education Savings Plan (“529 Plan”). After review, Taxpayer received a proposed assessment from the Indiana Department of Revenue (“Department”) for individual income tax. The Department disallowed his tax credit for the 529 Plan contribution. Taxpayer protested and requested an administrative hearing. The Department discussed the matter with Taxpayer via a phone call, Taxpayer then agreed to waive the hearing. Additional facts will be provided as necessary.

I. Indiana Income Tax – 529 Tax Credit.

DISCUSSION The Department reviewed Taxpayer’s Form IT-40 for the 2023 tax year and disallowed a credit related to Taxpayer’s contribution to a 529 plan. Taxpayer argues that the Department erred by not recognizing his contribution to his Indiana 529 account, a tax-advantage plan which provides a way for taxpayers to save for their child’s college education. In support of his protest, Taxpayer submitted a copy of his Indiana 529 account statement. 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 6-8.1-5-19(c). The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made. Id. Consequently, a taxpayer must provide documentation explaining and supporting that the Department’s position is wrong. See 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). 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 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. IC 6-3-2-2(a) outlines what is income derived from Indiana sources and subject to Indiana income. Additionally, a taxpayer may qualify for tax credits related to contributions to education savings plans, which, in turn, may reduce his or her income tax liability. IC 6-3-3-12, in relevant part, outlines the requirements: The Department’s Income Tax Information Bulletin 98 (November 2023), 20200701-IR-045200338NRA, notes that this tax credit may be claimed for a previous tax year as long as the funds are transferred before April 15th of the current tax year. Additionally, if such a contribution is applied towards the previous tax year, then that contribution cannot be claimed as a credit for the current tax year. In other words, a taxpayer is prohibited from claiming the exact same tax credit for more than one tax year. Prior to 2023, the Department’s Income Tax Information Bulletin 98 (May 2020), 20231213-IR-045230767NRA, stipulated that any tax credit could only count towards the current tax year so long as the transfer was initiated by December 31st of that year. Taxpayer argues that because the contributions he made were initiated within the allowed timeframe, he is entitled to claim the tax credit for the 2023 tax year. A review of the account statement shows Taxpayer’s contributions were made on April 10, 2024. The deadline for claiming a tax credit for the 2023 tax year was April 15, 2024, the due date for tax returns for the 2023 tax year. Per the applicable rules that apply to tax year 2023, Taxpayer was allowed to make a contribution prior to the April 15 deadline and still claim the credit on his 2023 return. Taxpayer met the requirements and should be allowed the appropriate credit on his 2023 Form IT-40. The Department’s denial of the credit was incorrect. The Department notes that because Taxpayer claimed the credit for tax year 2023, he is not allowed to claim a credit related to the same 529 Plan contributions on his 2024 return. however, if Taxpayer made additional contributions to the 529 plan in tax year 2024 that met the guidelines, he may be entitled to a credit for those contributions. Taxpayer has met his burden as outlined under IC 6-8.1-5-19(c). The Department’s adjustment to Taxpayer’s return was incorrect. FINDING Taxpayer’s protest is sustained. August 5, 2025 Replaces Finding Document: New