in-20250625-IR-045250288NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20241154 Individual Income Tax For The Tax Year 2022 HOLDING Individuals were not entitled to an additional refund because based on verifiable supporting documents submitted, a partial refund was properly granted during a subsequent review. ISSUE

I. Individual Income Tax – Burden of Proof.

Authority:  I.R.C. § 61; IC 6-3-1-3.5; IC 6-3-2-1; IC 6-8.1-5-1; IC 6-8.1-5-4; Indiana Dep’t of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Miller Brewing Co. v. Indiana Dep’t of State Revenue, 903 N.E.2d 64 (Ind. 2009); Scopelite v. Indiana Dep’t of Local Gov’t Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010).  Taxpayers protest the proposed assessment of individual income tax and the subsequent partial refund denial for 2022. STATEMENT OF FACTS Taxpayers (Husband and Wife) are Indiana residents. In 2023, Taxpayers filed their Indiana Full-Year Resident Individual Income Tax Return (“IT-40”) and requested a refund of $2,083 for the 2022 tax year. The Indiana Department of Revenue (“Department”) cross-referenced its system and found that Taxpayers underreported their income subject to income tax. The Department determined that Taxpayers owed additional Indiana and county income tax and assessed Taxpayers additional tax, penalty, and interest. Taxpayers disagreed and submitted additional documents to support their $2,083 refund request. The Department reviewed the additional documentation submitted and cancelled the assessment. In April 2024, the Department granted a partial refund of $1,703.36 as a result. Taxpayers continued protesting the partial refund denial and requested that the Department make the final determination without a hearing. This Letter of Findings ensues based on the documents submitted and information available within the protest file.

I. Individual Income Tax – Burden of Proof.

DISCUSSION Based on their W-2 Wage and Tax Statements (“W-2s”), the Department granted Taxpayers a partial refund. Taxpayers continued protesting the Department’s partial refund denial. The issue thus is whether Taxpayers demonstrated that they were entitled to an additional refund. IC 6-8.1-5-4(a) requires that “[e]very person subject to a listed tax must keep books and records so that the [D]epartment can determine the amount, if any, of the person’s liability for that tax by reviewing those books and records. The records [] include all source documents necessary to determine the tax, including invoices, register tapes, receipts, and canceled checks.” The person also “must allow inspection of the books and records and returns by the [D]epartment or its authorized agents at all reasonable times.” IC 6-8.1-5-4(c). When the person subject to the listed tax fails to keep books and records, pursuant to IC 6-8.1-5-1(b), the Department “shall make a proposed assessment of the amount of the unpaid tax on the basis of the best information available to the [D]epartment” if the Department “reasonably believes that a person has not reported the proper amount of tax due.” All tax assessments are prima facie evidence that the Department’s claim for the unpaid tax is valid; the taxpayer bears the burden of proving that any assessment is incorrect. IC 6-8.1-5-1(c). Importantly, “each tax year stands alone.” Miller Brewing Co. v. Indiana Dep’t of State Revenue, 903 N.E.2d 64, 69 (Ind. 2009). The taxpayer is required to provide documentation to explain and support his or her challenge. When an agency is charged with enforcing a statute, jurisprudence defers to the agency’s reasonable interpretation of that statute “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). 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). 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(a). Indiana law refers to the Internal Revenue Code to compute what is considered the taxpayer’s Indiana income tax. A resident taxpayer’s income is determined by starting with the federal adjusted gross income and making certain adjustments. IC 6-3-1-3.5. Gross income includes “all income from whatever source derived[.]” I.R.C. § 61(a). In this case, during the initial review of Taxpayers’ tax filing, the Department found that “[a]n error was made in determining [their] income subtotal.” Subsequently, the Department reviewed additional documents submitted by Taxpayers, including their W-2 Wage and Tax Statements (“W-2s”). In April 2024, the Department granted a partial refund of $1,703.36. Taxpayers protested and stated, in part: Upon review, however, Taxpayers are mistaken. Taxpayers referenced their Federal Form 1040, line 11, to support their refund request. But, Taxpayers’ W-2s – Box 16 (State wages) and Box 18 (Local wages) – speak for themselves and offer different information. Specifically, Taxpayers erroneously relied on Box 1 of their W-2s and underreported the income subject to Indiana state and county income tax according to their W-2s, Box 16 and Box 18. Thus, Taxpayers’ reliance of their 2022 tax filing was misplaced. To conclude, given the totality of the circumstances and according to Taxpayers’ own W-2s, the Department is not able to agree that Taxpayers are entitled to an additional refund. FINDING Taxpayers’ protest is respectfully denied. April 28, 2025 Replaces Finding Document: New