in-20250827-IR-045250403NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE MEMORANDUM OF DECISION: 02-20242201 Sales Tax For the Tax Year 2020 HOLDING Limited liability company established that it had documentation to support its claim for a refund of sales tax. ISSUE

I. Sales Tax – Exemptions.

Authority: IC 6-2.5-2-1; IC 6-2.5-5 et seq; IC 6-2.5-5-5.1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); 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); Rotation Prods. Corp. v. Dep’t of State Revenue, 690 N.E.2d 795 (Ind. Tax Ct. 1998). Taxpayer protests the denial of requested Indiana sales tax refunds. STATEMENT OF FACTS Taxpayer is an Indiana limited liability company that operates a restaurant in Indiana. In December 2023, Taxpayer filed a claim for refund of sales tax with the Indiana Department of Revenue (“Department”). Taxpayer presented itemized receipts for its purchases.  The Department denied the refund request because Taxpayer had not provided all the necessary invoices. Taxpayer timely protested, and the Department held an administrative hearing. This Memorandum of Decision results. Additional facts will be provided as necessary.

I. Sales Tax – Exemptions.

DISCUSSION Taxpayer argues that it is entitled to a refund of sales tax that it paid on purchases of exempt items for its business. The Department based its refund denial on the grounds that Taxpayer had not provided sufficient documentation to support the requested refund amount. Where, as here, a taxpayer is challenging the imposition of a tax, the taxpayer is required to provide documentation explaining and supporting its challenge. Poorly developed and non-cogent arguments are subject to waiver. Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138, 1145 (Ind. Tax Ct. 2010); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480, 486 n.9 (Ind. Tax Ct. 2012). When a taxpayer seeks an exemption, the exemption statute is strictly construed against the taxpayer, and it will have the burden to prove that it qualifies for the exemption. Rotation Prods. Corp. v. Dep’t of State Revenue, 690 N.E.2d 795, 798 (Ind. Tax Ct. 1998). Additionally, “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 are entitled to deference. Indiana imposes a sales tax on all retail transactions made in Indiana. IC 6-2.5-2-1(a). The purchaser is “liable for the tax on the transaction” and “shall pay the tax to the retail merchant as a separate added amount . . . . ” IC 6-2.5-2-1(b). However, some retail transactions are exempt from the sales tax. See IC 6-2.5-5 et seq. Among those transactions exempt from the sales tax are transactions where the purchaser buys “tangible personal property . . . for direct consumption as a material to be consumed in the direct production of other tangible personal property . . . . ” IC 6-2.5-5-5.1(b). Indiana law affords a taxpayer a statutory right to file a claim for refund. IC 6-8.1-9-1(a). A taxpayer “may file a claim for a refund with the department” if the taxpayer “has paid more tax than [it] determines is legally due for a particular taxable period[.]” Id. “The claim must set forth the amount of the refund to which the person is entitled and the reasons that the person is entitled to the refund.” Id. Taxpayer included with its protest copies of invoices that the Department did not have access to at the refund review stage. Therefore, the Department agrees that Taxpayer has carried its burden under IC 6-8.1-9-1(a) to show that the Department’s refund denial was incorrect. The Department will conduct a supplemental review of Taxpayer’s invoices and determine to what extent Taxpayer is entitled to a refund based on this new documentation. FINDING Taxpayer’s protest is sustained to the extent that the Department will review its new documentation. June 6, 2025 Replaces Finding Document: New