in-20250827-IR-045250413NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20242558 Sales and Use Tax For The Year 2023 HOLDING Individual failed to substantiate that his purchase and use of an all-terrain vehicle qualified for a statutory exemption. As such, the Department’s assessment for use tax was correct. ISSUE

I. Sales and Use Tax – Burden of Proof.    

Authority: IC 6-2.5-1-2; IC 6-2.5-2-1; IC 6-2.5-3-2; IC 6-2.5-4-1; IC 6-2.5-5-2; IC 6-8.1-5-1; IC 6-8.1-5-4; Indiana Dep’t of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); Dep’t of Revenue, State of Ind. v. Kimball Int’l, Inc., 520 N.E.2d 454 (Ind. Ct. App. 1988); Wendt LLP v. Indiana Dep’t of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2012); Scopelite v. Indiana Dep’t of Local Gov’t Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); 45 IAC 2.2-3-4; 45 IAC 2.2-5-8. Taxpayer argues that his purchase of an all-terrain vehicle (“ATV”) was exempt from Indiana sales and/or use tax on the basis that the vehicle is used in the production of agricultural products. STATEMENT OF FACTS Taxpayer, an Indiana resident, purchased an ATV from an Indiana dealer in 2023. Taxpayer did not pay sales tax at the time of the purchase or self-assess and remit use tax to the Indiana Department of Revenue (“Department”). When Taxpayer titled and registered the ATV with the Indiana Bureau of Motor Vehicles (“BMV”), he provided the BMV with Form ST-108E Certificate of Gross Retail or Use Tax Exemption for the Purchase of a Motor Vehicle or Watercraft (“Form ST-108E”). On the Form ST-108E, Taxpayer claimed the ATV was exempt from sales and use tax because it was being used in direct production of refining or harvesting agriculture commodities. Upon receiving Form ST-108E from the BMV, the Department requested a completed Form AGQ-100 Agriculture Equipment Exemption Usage Questionnaire (“Form AGQ-100”), a copy of Taxpayer’s purchase invoice, and a copy of Taxpayer’s Schedule F Profit or Loss From Farming (“Schedule F”) from his Federal Income Tax Return. Taxpayer did not complete Form AGQ-100 or provide a copy of his Schedule F. As a result, the Department determined that the purchase of the ATV was subject to use tax and issued an assessment. Taxpayer disagreed with the assessment and submitted a protest to that effect. Taxpayer waived his right to an administrative hearing. This Letter of Findings is written in reliance on information provided by Taxpayer and the Department’s records. Additional facts will be provided as necessary.

I. Sales and Use Tax – Burden of Proof.

DISCUSSION Taxpayer argues that the Department’s assessment for use tax on the purchase of an ATV is incorrect because the ATV is used for an exempt purpose. Specifically, Taxpayer argues that the ATV is used to spray corn and beans and, is thus used in the direct production of agricultural commodities. In support of his protest, Taxpayer provided a brief explanation of his argument. 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) and 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.’” Dep’t. 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 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 Dep’t. of State Revenue, 774 N.E.2d 1044, 1047 (Ind. Tax Ct. 2002). To trigger the imposition of Indiana’s use tax, tangible personal property must be acquired in a retail transaction. A taxable retail transaction occurs when (1) a party acquires tangible personal property as a part of its ordinary business for the purpose of reselling the property; (2) that property is exchanged between parties for consideration; and (3) the property is used in Indiana. See IC 6-2.5-1-2; IC 6-2.5-4-1(b) and (c); IC 6-2.5-3-2(a). Generally, “all purchases of tangible personal property by persons engaged in the direct production, manufacture, fabrication, assembly, or finishing of tangible personal property are taxable”. 45 IAC 2.2-5-8(a). 45 IAC 2.2-3-4 provides: Under Indiana law, certain items or transactions may be exempt from tax if certain conditions are met. See IC 6-2.5-5 et seq. However, “tax exemptions are strictly construed in favor of taxation and against the exemption.” Dep’t of Revenue, State of Ind. v. Kimball Int’l, Inc., 520 N.E.2d 454, 456 (Ind. Ct. App. 1988). One such exemption is found at IC 6-2.5-5-2, which states: In his protest letter, Taxpayer stated that his purchase of the ATV was exempt from Indiana sales tax because he was using the ATV for spraying corn and beans. Despite the Department’s request for additional information, Taxpayer did not offer any further explanation or verifiable documentation to substantiate his claim that the ATV is used for an exempt purpose. Specifically, the equipment must be directly used in the direct production, extraction, harvesting, or processing of agricultural commodities in order to qualify for the exemption provided under IC 6-2.5-5-2. Therefore, the Department is not able to agree that Taxpayer met his burden proving that the Department’s proposed assessment was wrong pursuant to IC 6-8.1-5-1(c). FINDING Taxpayer’s protest is denied. June 23, 2025 Replaces Finding Document: New