in-20250827-IR-045250407NRA: DEPARTMENT OF STATE REVENUE 

DEPARTMENT OF STATE REVENUE  SUPPLEMENTAL LETTER OF FINDINGS: 04-20241043; 10-20241042  Gross Retail Tax and Food and Beverage Tax  For the Years 2011 to 2022 HOLDING  Food Truck Business provided reports for a portion of the years at issue; the Department’s audit division is instructed to review the reports and make any adjustments to the proposed assessments, as warranted.  ISSUE 

I. Gross Retail and Food and Beverage Tax – Food Truck Sales.

Authority: IC 6-2.5-2-1; IC 6-2.5-6-1; IC 6-2.5-9-3; IC 6-8.1-5-1; IC 6-8.1-5-4; IC 6-9-12-2; IC 6-9-12-3; IC 6-9-12-4; IC 6-9-12-7; Dep’t. 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); Erdmannsdorff v. Indiana Dept. of Revenue, 82 N.E.3d 952 (Ind. Tax Ct. 2015); Lafayette Square Amoco, Inc. v. Indiana Dep’t of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 15-51. Taxpayer protests the Department’s proposed assessments for sale tax and food and beverage tax.  STATEMENT OF FACTS Taxpayer is a food truck which sells food items at locations in Indianapolis and the adjacent metro areas. The Indiana Department of Revenue (“Department”) conducted a compliance review of Taxpayer’s business records and found that Taxpayer failed to report either sales or food and beverage (“F&B”) taxes during 2011 to 2022. The Department’s review resulted in proposed assessments for sales tax and F&B tax. Taxpayer protested and an administrative hearing was held. In 2024 the Department issued a Letter of Findings for sales tax and F&B tax (namely, Docket Numbers 04-20241043 and 10-20241042), which denied Taxpayer’s protest. Taxpayer disagreed with the denial and requested a rehearing. A rehearing was granted as it pertains to one issue—namely, reports/records. The administrative rehearing was held in-person on October 21, 2024, during which Taxpayer’s representative and Taxpayer attended. 

I. Gross Retail and Food and Beverage Tax – Food Truck Sales.

DISCUSSION  As a preliminary matter, the Department once again notes the following as it relates to Taxpayer’s protest.  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). A retail merchant – such as Taxpayer – is required to “collect the tax as agent for the state.” IC 6-2.5-2-1(b). The retail merchant “holds those taxes in trust for the state and is personally liable for the payment of those taxes . . . . ” IC 6-2.5-9-3. Indiana law permits local jurisdictions to impose an F&B tax. The city-county council of a county that contains a consolidated city may adopt an ordinance to impose an excise tax, known as the county F&B tax, on any transaction in which food or beverages are furnished, prepared, or served as provided by IC 6-9-12-3 and IC 6-9-12-2. The same exemptions that are allowed to retail merchants under IC 6-2.5 are allowed for taxpayers that are subject to Indiana’s county F&B tax. IC 6-9-12-4. The F&B tax “applies to any transaction in which food or beverage is furnished, prepared, or served.” IC 6-9-12-3. In Taxpayer’s case, it conducted its business in Marion County which, since 2005, has imposed a two percent F&B tax. IC 6-9-12-3. Similar to the sales tax under IC 6-2.5-9-3, the local F&B tax is a “trust tax.” As such, a responsible officer, such as owner/operator, may also be assessed for the payment of unremitted F&B taxes. Under IC 6-9-12-7: Accordingly, assessing “responsible officers” for the payment of county F&B taxes is authorized under IC 6-2.5-6-1(a) by means of the mandate provided in IC 6-9-12-7. In reviewing both the audit results and Taxpayer’s contentions, the Department points out that it is Taxpayer’s responsibility to establish that the tax assessment is incorrect. As stated in IC 6-8.1-5-1(c), “The notice of proposed assessment is prima facie evidence that the department's claim for the unpaid tax is valid, including during an action appealed to the tax court under this chapter. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made.” Indiana Dep’t of State Revenue v. Rent-ACenter 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. In assessing the audit report’s conclusion, the relevant Indiana law, and Taxpayer’s arguments, the Department bears in mind that “when [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, interpretations of Indiana tax law contained within this decision, as well as the original audit findings, are entitled to deference. As a business conducting retail transactions and collecting sales tax and F&B tax, Taxpayer is required to maintain accurate financial records. “Every person subject to a listed tax must keep books and records so that the Department can determine the amount, if any, of the person’s liability for that tax by reviewing those books and records.” IC 6-8.1-5-4(a). “If the [D]epartment reasonably believes that a person has not reported the proper amount of tax due, the [D]epartment shall make a proposed assessment of the amount of the unpaid tax on the basis of the best information available to the [D]epartment.” IC 6-8.1-5-1(b). See also 45 IAC 15-51.  Turning to the rehearing, the Department’s LOF stated: The Department granted Taxpayer’s request for a rehearing regarding one specific issue. The Department stated this to Taxpayer’s representative in an e-mail prior to the rehearing date: Taxpayer’s representative, in the rehearing request letter, stated in relevant part: Taxpayer’s reports are for the years 2011-2015, so the reports are only for a portion of the years at issue. Nonetheless, the Department’s audit division is instructed to review the reports and adjust the proposed assessments, which were based on the best information available at the time, as warranted.   FINDING  Taxpayer’s protest is partially sustained; the audit division is instructed to review the reports provided by Taxpayer and make adjustments to the proposed assessments as warranted.  June 25, 2025 Replaces Finding Document: New