in-20250917-IR-045250462NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20242217 Sales and Use Tax For the Year 2021 HOLDING Indiana business established that use tax was not owed for a vehicle title transfer. ISSUE

I. Use Tax – Vehicle Title Transfer.

Authority: IC 6-2.5-1-2; IC 6-2.5-2-1; IC 6-2.5-2-2; IC 6-2.5-3-1; 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); Indiana Dept. of State Revenue v. Belterra Resort Indiana, LLC, 935 N.E.2d 174 (Ind. 2010); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); Grand Victoria Casino and Resort v. Indiana Dept. of State Revenue, 789 N.E.2d 1041 (Ind. Tax Ct. 2003); 45 IAC 2.2-1-1; 45 IAC 2.2-3-5; Sales Tax Information Bulletin 28S (February 2021). Taxpayer protests the assessment of use tax on a recreational vehicle title transfer. STATEMENT OF FACTS Taxpayer is an Indiana construction business that applied for a certificate of title on an RV it acquired. Taxpayer claimed the transfer was exempt from use tax. In May 2024, Taxpayer received a Notice of Proposed Assessment from the Indiana Department of Revenue (“Department”) for use tax on the title of the RV. Taxpayer protested the assessment. Taxpayer waived its right to an administrative hearing. This Letter of Findings is written in reliance on information provided by the Taxpayer and the Department’s records. Additional facts will be provided as necessary.

I. Use Tax – Vehicle Title Transfer.

DISCUSSION The Department received information from the Bureau of Motor Vehicles (“BMV”) that Taxpayer “purchased a vehicle below market value claiming a selling price of $0.00.” The Department issued an assessment for consumer use tax based on the average selling price of the vehicle as determined by a used vehicle guide. Taxpayer argues that the RV in question was purchased in June 2021 for personal use by its sole owner. The RV title was transferred from personal ownership to company ownership in August 2021. When Taxpayer transferred the vehicle title, it claimed an exemption on the Form ST-108E that the vehicle was transferred from one individual to another with no consideration involved. There was never any loan on the RV, and no loan was due at the time the title was transferred. 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 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); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). 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). 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 “isolated or occasional sale[s],” where the seller originally acquired the vehicle “for . . . use or consumption.” 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 use tax so long as they acquired it “for consideration.” The Department’s Sales Tax Information Bulletin 28S (February 2021), 20210331-IR-045210101NRA, states, “[a]bsent a statutory exemption, all sales of motor vehicles and trailers purchased in Indiana are subject to Indiana sales and use tax.” IC 6-2.5-3-6(d) notes, “a person liable for the use tax imposed in respect to a vehicle . . . shall pay the tax to the titling agency . . . unless the person presents proof to the agency that the use tax or state gross retail tax has already been paid with respect to the purchase of the vehicle . . . . ” Additionally, 45 IAC 2.2-3-5(d) states in part: When property is transferred without consideration as a capital contribution, the transfer is “not a retail sale subject to sales tax.” Grand Victoria Casino and Resort v. Indiana Dept. of State Revenue, 789 N.E.2d 1041, 1045 (Ind. Tax Ct. 2003). Similarly, capital contributions made without consideration do not constitute retail sales, meaning sales or use tax cannot be imposed. Indiana Dept. of State Revenue v. Belterra Resort Indiana, LLC, 935 N.E.2d 174, 178 (Ind. 2010). Taxpayer argues that it is not required to pay use tax on the vehicle title transfer because it already paid sales/use tax when the RV was first purchased. On the Form ST-108E provided by Taxpayer, it marked that the transfer was exempt from tax because the RV was transferred from one individual to another with no consideration involved. The vehicle title was transferred from personal ownership to a business, which it fully owns. When the title was transferred from personal ownership to Taxpayer, the paperwork listed the sales price and amount subject to tax as $0.00. Thus, when Taxpayer registered the vehicle in the business name, it did not pay use tax on the purchase of the vehicle. Taxpayer continued to operate the business. Therefore, the title transfer was a contribution to a business from its owner. Non-sale transfers of motor vehicles are not subject to sales or use tax under IC 6-2.5-3-2. Taxpayer was entitled to claim an exemption on the Form ST-108E for the title transfer with no consideration involved because the title transfer was a contribution from personal ownership to Taxpayer, and there was no assumption of loans. FINDING Taxpayer’s protest is sustained. July 30, 2025 Replaces Finding Document: New