in-20250625-IR-045250287NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20231654 Indiana Individual Income Tax For the Year 2019 HOLDING Married couple protested the Indiana Department of Revenue’s (“Department”) proposed assessment of additional Indiana individual income tax for the year 2019; however, the documentation shows that the Department correctly assessed additional tax. ISSUE

I. Individual Income Tax – Proposed Assessment.

Authority: IC 6-3-1-3.5; IC 6-3-2-1; IC 6-3-2-2; 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). Taxpayers protest the proposed assessment of additional Indiana income tax for the year 2019. STATEMENT OF FACTS Taxpayers are a married couple. One of the spouses filed a Protest Submission Form (“Form”) protesting the Department’s proposed assessment of additional Indiana individual income tax for the tax year 2019.  On the Form the spouse checked the box indicating that Taxpayer was submitting “new documentation that ha[d] not previously [been] reviewed,” and that Taxpayer wanted a “Final determination without a hearing.” The latter states that a taxpayer waives the right to a hearing and “asks the Department to make its decision based on the written protest and documentation . . . .” Additional facts will be provided as necessary below.

I. Individual Income Tax – Proposed Assessment.

DISCUSSION The Department’s Notice of Proposed Assessment (“NOPA,” dated February 7, 2023) stated that a “review of your Indiana Individual Income tax for the tax period ending December 31, 2019, indicates you owe an additional $184.31.” The “Explanation of Tax Assessment” for the tax period 2019 states the Department “has determined your reported federal adjusted gross income is understated based on information received from external third-party sources” such as “information received from the Internal Revenue Service.” Additionally, the NOPA states that the “bill is for the state and county tax amount due for this unreported income.” As a threshold issue, it is Taxpayer’s responsibility to establish that the existing tax assessment is incorrect. As stated in IC 6-8.1-5-1(c), “[t]he notice of proposed assessment is prima facie evidence that the [D]epartment’s claim for the unpaid tax is valid. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made.” 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). Consequently, a taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department’s position is wrong. Further, “[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). Indiana imposes an adjusted gross income tax on all residents. IC 6-3-2-1(a). Taxpayer’s Indiana income is determined by starting with the federal adjusted gross income and making certain adjustments. IC 6-3-1-3.5(a). IC 6-3-2-2(a) specifically outlines what is income derived from Indiana sources and subject to Indiana income tax. The protest letter states in pertinent part: For the tax year 2019, Taxpayers took a $4,000 “Tuition and Fees Deduction” that was disallowed by the Internal Revenue Service (IRS), which increased Taxpayers Federal adjusted gross income. That, in turn, resulted in Taxpayers owing additional Indiana income tax for the year 2019, since it increased their Federal adjusted gross income (See IC 6-3-1-3.5(a) for the meaning of adjusted gross income in Indiana). In the present case, the documentation establishes that Taxpayers did not report the correct amount of federal adjusted gross income on their Indiana tax return. Taxpayers have not met the burden of proving the proposed assessment is wrong, as required under IC 6-8.1-5-1(c). FINDING Taxpayers’ protest is denied. April 16, 2025 Replaces Finding Document: New