in-20250730-IR-045250353NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20241546 Individual Income Tax For the 2021 Tax Year HOLDING Taxpayer successfully established that the Department’s assessment was incorrect. ISSUE

I. Individual Income Tax – Federal Discrepancy.

Authority: I.R.C. § 62; IC 6-3-1-3.5; IC 6-3-2-1; 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); 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); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007). Taxpayer protests the Department’s adjustments to his federal adjusted gross income (“FAGI”), which resulted in increased tax owed. STATEMENT OF FACTS Taxpayer is a non-Indiana resident who filed a non-resident individual income tax return with the Indiana Department of Revenue (“Department”) for the 2021 tax year. On his original return, Taxpayer reported that he had a FAGI of $90,912 and an Indiana-source income of $439. The Department received information that Taxpayer’s FAGI was actually $109,482, and it adjusted Taxpayer’s return to match. The Department also attributed all of Taxpayer’s FAGI to Indiana, and it issued a Notice of Proposed Assessment for income tax on the entire amount. Taxpayer timely protested, and this Letter of Findings results. Because Taxpayer waived his right to a hearing, this Letter of Findings relies on documents supplied by Taxpayer and the Department’s records.

I. Individual Income Tax – Federal Discrepancy.

DISCUSSION Taxpayer argues that only $8,400 of his 2021 income is properly sourced to Indiana. Taxpayer points to an amended return that he filed before the Department’s proposed assessment where he changed his Indiana-source income to $8,400, and he provided supporting documentation, including W-2s and a wage statement from the Internal Revenue Service. 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) and Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). Where a taxpayer is challenging the Department’s final determination, 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). 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 tax on “the adjusted gross income of every resident person” and on “that part of the adjusted gross income derived from sources within Indiana of every nonresident person[.]” IC 6-3-2-1. The starting point for determining Indiana income tax is the taxpayer’s federal adjusted gross income as defined in I.R.C. § 62, which taxpayers are directed to enter on their Indiana return before making modifications that are outlined in IC 6-3-1-3.5. Taxpayer does not claim that he is an Indiana resident, nor does the Department claim that he is. Therefore, his Indiana income taxes are calculated based only on the income he earned in Indiana. Taxpayer provided documentation showing that most of his income was earned in other states, and that only $8,400 was earned in Indiana. Therefore, Taxpayer has carried the burden imposed under IC 6-8.1-5-1(c) to show that the Department’s assessment was incorrect. However, the Department was correct to the extent that Taxpayer’s FAGI was originally underreported, and Taxpayer did not show that the Department was wrong to increase his FAGI. The Department will recalculate his income tax owed using the correct figures as verified by the documentation supplied in the protest process. FINDING Taxpayers’ protest is sustained to the extent that the Department will recalculate his taxes owed using an FAGI of $109,482 and an Indiana-source income amount of $8,400. May 8, 2025 Replaces Finding Document: New