in-20250917-IR-045250463NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20251310 Use Tax For The Year 2023 HOLDING Taxpayer established the Department’s assessment of use tax on a vehicle purchase was incorrect. ISSUE

I. Use Tax – Imposition.

Authority: IC 6-2.5-2-1; IC 6-2.5-3-1; IC 6-2.5-3-2; IC 6-2.5-3-6; 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); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); Rhoade v. Indiana Dept. of State Revenue, 774 N.E.2d 1044 (Ind. Tax Ct. 2002); 45 IAC 2.2-2-1; 45 IAC 2.2-3-4. Taxpayer protests the assessment of consumer use tax on a vehicle purchase. STATEMENT OF FACTS Taxpayer is an Indiana resident. In August 2021, Taxpayer purchased a new vehicle. In 2023, Taxpayer executed an Abstract of Trust Agreement memorializing the living trust created in June 1997 wherein he is both the grantor and trustee. Taxpayer transferred ownership of the vehicle to the trust. Paperwork submitted at the Bureau of Motor Vehicles (“BMV”) showed a purchase price of zero when the title was transferred from Taxpayer’s name to the trust name. The Indiana Department of Revenue (“Department”) later received information from the BMV regarding the purchase price because the dollar amount was significantly below the “blue book” value of the vehicle. As a result, the Department issued Taxpayer an assessment for use tax. Taxpayer protested the assessment and waived his right to a hearing. This Letter of Findings is based on the information from Taxpayer and a review of the Department’s records. Additional facts will be provided as necessary.

I. Use Tax – Imposition.

DISCUSSION The Department determined Taxpayer’s vehicle purchase was subject to use tax after a review of information received from the BMV. Taxpayer protested the assessment and explained that in 2023, he titled the vehicle to a living trust in his name where he is both grantor and trustee. 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); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). An assessment is presumed valid. A taxpayer must provide documentation explaining and supporting that the Department’s position is wrong. 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 an excise tax called “the state gross retail tax” or “sales tax” on retail transactions made in Indiana. IC 6-2.5-2-1(a); 45 IAC 2.2-2-1. A person who acquires property in a retail transaction is liable for the sales tax on the transaction. IC 6-2.5-2-1(b). Indiana also imposes a complementary excise tax called a “use tax” on “the storage, use, or consumption of tangible personal property in Indiana if the property was acquired in a retail transaction, regardless of the location of that transaction or of the retail merchant making that transaction.” IC 6-2.5-3-2(a). “Use” means the “exercise of any right or power of ownership over tangible personal property.” IC 6-2.5-3-1(a). The use tax is a functional equivalent to the sales tax. See Rhoade v. Indiana Dept. of State Revenue, 774 N.E.2d 1044, 1047 (Ind. Tax Ct. 2002). Tangible personal property purchased in Indiana and stored, used, or otherwise consumed in Indiana is subject to Indiana use tax for such property unless the Indiana sales tax has been collected at the point of purchase. 45 IAC 2.2-3-4. IC 6-2.5-3-6 provides further guidance on the collection of use tax on the use, storage, or consumption of tangible personal property acquired in a retail transaction. The person liable for the use tax shall pay the use tax to the Department or, in the case of a vehicle, to the titling agency when the person applies for a title for the vehicle. IC 6-2.5-3-6(c) and (d)(1). Further, IC 6-2.5-3-6(e) states: Finally, Black’s Law Dictionary (11th Ed.) defines a sale as “the transfer of property or title for a price.” Consideration is defined as “something (such as an act, a forbearance, or a return promise) bargained for and received by a promisor from a promisee; that which motivates a person to do something, esp. to engage in a legal act.” Id. The Department reviewed Taxpayer’s vehicle transfer based on a request from the BMV. The BMV noted that the title was transferred without consideration from the grantor of the trust to the trust. Based upon this information, the Department completed a review and issued an assessment for use tax based upon the “average selling price” of that make and model of vehicle. Taxpayer protested the assessment and explained that in 2023, he titled the vehicle to a living trust in his name where he is both grantor and trustee. Taxpayer provided documentation related to the trust along with documents from the BMV transaction. The original vehicle title shows that there was no outstanding loan on the vehicle. Because there was no sale of the vehicle nor any consideration exchanged between Taxpayer and the trust, no sales or use tax is due. After reviewing the documentation, Taxpayer has met his burden under IC 6-8.1-5-1. In the course of the protest, Taxpayer provided documentation rebutting the presumption outlined under IC 6-2.5-3-6(e). The protest is sustained. FINDING Taxpayer’s protest is sustained. July 9, 2025 Replaces Finding Document: New