in-20251126-IR-045250654NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20241960 Individual Income Tax For the 2022 Tax Year HOLDING Individual failed to establish that he was not an Indiana resident, and he failed to establish that his income was not properly sourced to Indiana. ISSUE

I. Individual Income Tax – Income Source.

Authority: IC 6-3-2-1; IC 6-3-1-12; IC 6-3-3-3; IC 6-8.1-5-1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Indiana Dep’t of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dep’t of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 3.1-1-22; Income Tax Information Bulletin 28 (February 2022). Taxpayer protests an assessment based on the Department’s determination that he owed taxes on income earned in Indiana. STATEMENT OF FACTS Taxpayer, an individual, worked for a California business (“Employer”) on a temporary basis during the 2022 tax year. Employer reported on Taxpayer’s W-2 that Taxpayer earned income in Indiana, and Employer withheld Indiana state and local taxes from Taxpayer’s paychecks. Taxpayer filed a 2022 Indiana Part-Year or Full-Year Nonresident Individual Income Tax Return (“IT-40PNR”) with the Indiana Department of Revenue (“Department”) on which he claimed that he had no income subject to Indiana state income tax. The Department adjusted Taxpayer’s return to add the income from the W-2 issued to him by Employer and issued a Notice of Proposed Assessment. Taxpayer timely protested, 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 that Taxpayer provided and the Department’s records.

I. Individual Income Tax – Income Source.

DISCUSSION Taxpayer argues that he was not subject to Indiana income tax for the 2022 tax year because he was not an Indiana resident. 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 Dep’t of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); 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 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. Indiana law considers someone to be a resident of Indiana for tax purposes if they “[were] domiciled in this state during the taxable year[.]” IC 6-3-1-12. A taxpayer is “domiciled” in “the state or other place in which [they] intend[] to reside permanently or indefinitely and to return to whenever [they] leave[.]” 45 IAC 3.1-1-22(a). Once a taxpayer has established a domicile, they keep that domicile until they “voluntarily take[] affirmative action to become domiciled in another place.” 45 IAC 3.1-1-22(b). A taxpayer must do two things to establish a new domicile: they must (1) “be physically present at a place,” and (2) “have the simultaneous intent of establishing a permanent place of residence at that place.” 45 IAC 3.1-1-22(c) (emphasis added). The Department must determine whether a taxpayer has changed domicile based on “the totality of facts, supported by objective evidence, in each individual case.” 45 IAC 3.1-1-22(d). Taxpayer argues that he does not owe income tax to Indiana because he did not live in Indiana during 2022. He states that he gave his employer his mother’s Indiana address for mailing, and he did not intend to declare Indiana as his state of residency. Taxpayer claims that he was a California resident in 2021 and 2022. He provided a copy of his 2022 California resident income tax return as proof of residency and taxes paid. Even if the Department assumes that Taxpayer was not an Indiana resident during 2022, Taxpayer would still owe income tax on this income because Taxpayer did not provide evidence sufficient to carry his burden to establish that his income was not earned in Indiana. Taxpayer states that his income was incorrectly reported as Indiana-sourced income to the Department. However, Taxpayer has provided no documentation supporting this statement. Without a corrected W-2 from Taxpayer’s employer, or a signed statement from Employer that no work for the company was done in Indiana in 2022, Taxpayer cannot show that Employer erred by withholding Indiana tax on his behalf. As it stands, the best evidence before the Department shows that Taxpayer had Indiana income in 2022. Taxpayer argues that he should not owe tax to Indiana on this income because he already paid taxes on this income to California. While Indiana does allow certain taxpayers to claim a credit for taxes paid to another state, Taxpayer is not eligible to claim this credit. See IC 6-3-3-3; Income Tax Information Bulletin 28 (February 2022), 20220223-IR-045220044NRA. Indiana and California do not have a reciprocal agreement such as those discussed in Information Bulletin 28. Taxpayer argues he earned no income in Indiana, and he argues that he should not owe tax on income already taxed by California. But Taxpayer did not present documentation sufficient to rebut the Department’s assessment. In fact, in the only documentation available to the Department which directly addresses Taxpayer’s income, Taxpayer’s employer reported that income as subject to Indiana state income tax. As such, under IC 6-3-2-1 that income is subject to Indiana state income tax. The Department is thus unable to agree that Taxpayer does not owe Indiana state income tax. FINDING Taxpayer’s protest is respectfully denied. April 9, 2025 Replaces Finding Document: New