in-20250730-IR-045250367NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 18-20241499 Financial Institution Tax For the Years 2017-2019 HOLDING Taxpayer did not establish that the Department’s removal of certain entities from its combined reporting return and proposed assessment was incorrect. ISSUE

I. Financial Institution Tax – Unitary Group.

Authority: IC 6-5.5-1-17; IC 6-5.5-1-18; IC 6-5.5-3-1; IC 6-5.5-5-2; 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); 45 IAC 17-3-5. Taxpayer protests the removal of certain entities from its Indiana filing group and the assessment proposed by the Department. STATEMENT OF FACTS Taxpayer is a bank holding company that is not based in Indiana (“Parent Company”) and its subsidiaries. Parent Company receives dividends from its subsidiaries. The Indiana Department of Revenue (“Department”) audited Taxpayer and removed certain entities from Taxpayer’s Indiana combined filing group, which led to a proposed assessment. Taxpayer protested removal of Parent Company along with other entities and the corresponding assessment. Taxpayer requested resolution with a hearing. A hearing was held, and this Letter of Findings results. Additional facts will be provided as necessary.

I. Financial Institution Tax – Unitary Group.

DISCUSSION The Department disallowed certain entities from Taxpayer’s Indiana combined group and issued Taxpayer an assessment. Taxpayer protested the disallowance of certain entities and the assessment. Taxpayer argues that the Department “lacks statutory authority to exclude unitary group members from the Indiana combined group.” Taxpayer further states that Parent Company derives receipts in Indiana and is thus transacting business in Indiana. 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). IC 6-5.5-5-2 states, “A combined return must include the adjusted gross income of all members of the unitary group, even if some of the members would not otherwise be subject to taxation under this article.” According to 45 IAC 17-3-5(d): IC 6-5.5-1-18 defines: (Emphasis added.) IC 6-5.5-3-1 states: Taxpayer states that Parent Company is a “banking holding corporation registered under the Bank Holding Company Act of 1956.” Taxpayer further states that Parent Company is not a traditional bank, but rather it provides financial services to institutions, corporations, and individual investors. Parent Company earns much of its income from fee revenue from custody services, net interest income, and clearing services to the Federal Reserve. Taxpayer argues that the aforementioned statutes and regulations do not exclude bank holding companies and that Parent Company is transacting business in Indiana. Although there is a presumption that Taxpayer is a unified group for the purposes of filing a return, that does not mean that Parent Company meets the definition of a unitary business under IC 6-5.5-1-18. IC 6-5.5-1-18 defines a unitary business as “business activities or operations that are of mutual benefit, dependent upon, or contributory to one another, individually or as a group, in transacting the business of a financial institution.” Receiving dividends as a holding company does not constitute transacting business in Indiana under IC 6-5.5-3-1. Taxpayer provided no additional documentation to show other transactions between the entities and Parent Company. While Taxpayer is part of the unitary group, because it does not transact business in the state of Indiana, it is not a unitary business. After reviewing the documentation, Taxpayer has not met the burden of proving the proposed assessment wrong, as provided by IC 6-8.1-5-1(c). Because Taxpayer did not establish that it is transacting business in the state of Indiana in accordance with IC 6-5.5-3-1, Taxpayer’s protest is denied. FINDING Taxpayer’s protest is denied. May 9, 2025 Replaces Finding Document: New