in-20250827-IR-045250404NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE FINAL ORDER DENYING REFUND: 03-20241456 Withholding Tax For The Year 2019 HOLDING Company failed to establish that its request for a refund was timely.

I. Withholding Tax – Statute of Limitations.

Authority: IC 6-3-4-8; IC 6-8.1-9-1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Medco Health Solutions, Inc. v. Indiana Dept. of State Revenue, 9 N.E.3d 263 (Ind. Tax Ct. 2014), 45 IAC 15-9-2; General Tax Information Bulletin 100 (December 2019). Taxpayer protests the Department’s denial of refund. STATEMENT OF FACTS Taxpayer is an Indiana company that elects to file as an S corporation. In September 2023, Taxpayer sought to establish a sales tax account with the Indiana Department of Revenue (“Department”). In order to establish a sales account, Taxpayer and its sole shareholder were required to be in good standing with the Department. Taxpayer paid an outstanding liability on its S corporation income tax account and the sole shareholder paid an outstanding liability on his individual income tax account. These payments resulted in both Taxpayer and sole shareholder being in good standing with the Department. While establishing the account, Taxpayer discovered it had paid more withholding tax than was due and requested a refund of the overpayment. The Department denied the request stating that the request was outside the statute of limitations. In October 2023, the Department also sent Taxpayer a Statement of Account showing that it had outstanding liabilities on its withholding account. Taxpayer disagreed and submitted a protest to that effect. An administrative hearing was held, and this Final Order Denying Refund results. Additional facts will be provided as necessary.

I. Withholding Tax – Statute of Limitations.

DISCUSSION Taxpayer protests the Department’s denial of its refund request for withholding tax remitted in the 2019 tax year. During the hearing Taxpayer explained that it believed some of the overpayment had been allocated by the Department to other liabilities. It requested the remaining amount after satisfaction of liabilities as a refund. When the Department denied the refund, Taxpayer believed the denial also resulted in reversion of the amount allocated to satisfy those other liabilities leaving the withholding account with a balance due. The Department takes this opportunity to explain that Taxpayer erroneously believes that the refund denial is related to a Statement of Account it received in October 2023 regarding a balance due on its withholding account. The Department’s records reflect that the overpayment was never applied to outstanding liabilities but rather was written off by the Department after it was determined to be outside of the statute of limitations. The balance due as listed on the Statement of Account is a result of unpaid penalty and interest from Taxpayer’s failure to timely remit withholding tax to the Department. Though Taxpayer received the refund denial letter and Statement of Account roughly a week apart, the two issues are not connected. At the outset, it should be noted 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.’” Indiana 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. Under IC 6-3-4-8(a), any employer “making payments of wages subject to tax under [Art. 6-3] . . . is required . . . to withhold, collect, and pay over income tax on wages paid . . . [and] deduct and retain therefrom the amount prescribed in withholding instructions issued by the department.” Generally, an employer shall pay withholding taxes to the Department monthly “no later than thirty (30) days after the end of that month.” IC 6-3-4-8(b). IC 6-3-4-8(e) provides that if an employer files monthly withholding tax returns, it must also file Form WH-3, the annual reconciliation form, no later than thirty-one days after the end of the calendar year. Indiana law affords taxpayers a statutory right to file a claim for refund. IC 6-8.1-9-1(a) provides, in part: It should be noted that “[t]he department has no legal method of generating a claim for refund on its own; rather, a claim for refund can only be initiated by a taxpayer pursuant to the procedure set forth in [IC] § 6-8.1-9-1.” Medco Health Solutions, Inc. v. Indiana Dept. of State Revenue, 9 N.E.3d 263, 266 (Ind. Tax Ct. 2014). See also 45 IAC 15-9-2. A review of Taxpayer’s account reflects that in 2019 it erroneously filed multiple withholding returns for three different months: March, April, and May. These errors resulted in Taxpayer’s Form WH-3 failing to reconcile with the monthly withholding returns. Therefore, Taxpayer did pay more withholding tax than was legally due in 2019. However, Taxpayer failed to request a refund of the overpayment both in a timely manner and through the means prescribed by the Department. As previously noted, the Department has no method of generating a claim for refund. “For employer withholding tax refunds, the WH-3 reconciliation return must be filed to claim an overpayment of tax remitted.” General Tax Information Bulletin 100 (December 2019), 20200401 Ind. Reg. 045200136NRA. Though Taxpayer filed a Form WH-3, it did not claim an overpayment on that return. Taxpayer did not realize that it had an overpayment of withholding tax until September 25, 2023. It submitted a request for refund that same day. The due date of the Form WH-3 is no later than thirty-one days after the close of the calendar year. In the case of withholding tax for the 2019 tax year, the Form WH-3 was due on January 31, 2020. Three years from the due date of filing Form WH-3 was January 31, 2023. As Taxpayer submitted the request for refund on September 25, 2023, the request was outside of the statute of limitations. The Department correctly denied Taxpayer’s request for refund. FINDING Taxpayers’ protest is denied. June 13, 2025 Replaces Finding Document: New