in-20251126-IR-045250648NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDING: 01-20232152 Individual Income Tax For The Year 2022  HOLDING Individual is responsible for additional Indiana income tax for the 2022 tax year. ISSUE

I. Individual Income Tax – County Withholding Tax Credits.

Authority: IC 6-3-1-3.5; IC 6-3-2-1; IC 6-3.6-4-1; IC 6-3.6-8-3; IC 6-8.1-5-1; IC 6-8.1-9-1; State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988); 45 IAC 3.1-4-10; Income Tax Information Bulletin 32 (July 2007). Taxpayer protests the Department’s assessment of individual income tax for the 2022 tax year. STATEMENT OF FACTS Taxpayer is an Indiana resident. For tax year 2022, she worked for two entities located in an Indiana county. For the year at issue, Taxpayer filed her Indiana Full-Year Resident Individual Income Tax Return (“Form IT-40PNR”), reporting both Indiana and local income taxes. She later submitted an amended return, which included additional income in her Federal Adjusted Gross Income. As a result, the Indiana Department of Revenue (“Department”) conducted an examination of her 2022 filing and cross-referenced information in its records. The Department then issued an assessment for additional individual county income tax owed. Taxpayer protested the assessment. Taxpayer also requested that the Department issue its final decision without holding a hearing. This Letter of Findings results. Because taxpayer waived her right to a hearing, this Letter of Findings relies on Taxpayer’s documents and the Department’s records. Additional facts will be provided as necessary.

I. Individual Income Tax – County Withholding Tax Credits.

DISCUSSION After review, the Department determined that Taxpayer overstated her withholding tax credit and that Taxpayer owed additional income tax based on her adjusted 2022 IT-40 return. The Department issued a Notice of Proposed Assessment and Taxpayer protested. Taxpayer submitted supporting documentation, including copies of her “W-2 Wage and Tax Statement” (“Form W-2”) from both employers for tax year 2022. 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 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. 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 6-3-1-3.5(a) provides the starting point in determining the taxpayer’s taxable income and calculating what would be their Indiana income tax after applying any particular additions and subtractions. The statute provides in part that Indiana adjusted gross income starts with “‘adjusted gross income’ (as defined in Section 62 of the Internal Revenue Code) . . . ” Id. Counties in Indiana impose an adjusted gross income tax on their local county residents. IC 6-3.6-4-1. A taxpayer is a local county resident if he resides in the county “on January 1 of the calendar year in which the individual’s taxable year commences.” IC 6-3.6-8-3(b). A taxpayer may be eligible, however, for a credit to reduce their local tax liability. Income Tax Information Bulletin 32 (July 2007) 20070801-IR-045070440NRA. If a taxpayer’s income is subject to a local income tax in another state, the taxpayer may receive a credit for the lesser of: “(1) the amount of local income tax actually paid to the locality in the other state; (2) the amount of income taxed by the locality outside of Indiana multiplied by the Indiana county tax rate to which the taxpayer is subject; or (3) the actual amount of county income tax due.” Id.; see 45 IAC 3.1-4-10. To prove eligibility for the credit, a taxpayer must provide either (1) a copy of the tax return filed with the out-of-state locality or (2) a copy of the W-2 form showing the local tax withheld. Id. In support of her protest, Taxpayer provided a copy of her 2022 Form IT-40PNR and Form W-2 from her employers, which detailed the amounts withheld for state and local income taxes. One of the W-2s reported $56.04 in local income tax withheld, listed under the locality name “TOTAL.” However, a review of the Department’s records shows that only $20 in local income tax was withheld and paid to the Department on Taxpayer’s behalf. After reviewing the documentation provided by Taxpayer, along with information available to the Department, Taxpayer failed to show that the proposed assessment was incorrect, as required by IC 6-8.1-5-1(c). Accordingly, the Department properly adjusted Taxpayer’s return to align with its records. FINDING Taxpayer’s protest is respectfully denied. August 14, 2025 Replaces Finding Document: New