in-20250625-IR-045250305NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE FINAL ORDER DENYING REFUND: 47-20242726 Proportional Use Fuel Tax Credit  For Year 2023 HOLDING Indiana Motor Carrier failed to meet its burden of establishing that it submitted its Proportional Use Credit (“PUC”) refund claim within the quarterly period for which the proportional credit was claimed. ISSUE

I. Motor Carrier Fuel Tax – Proportional Use Credit Refund.

Authority: IC 6-6-4.1-4.8; IC 6-6-4.1-10; IC 6-8.1-6-7; Indiana Dep’t of State Revenue v. Kimball Int’l Inc., 520 N.E.2d 454 (Ind. Ct. App. 1988). Taxpayer argues it timely filed a refund claim based on its Proportional Use Credit. STATEMENT OF FACTS Taxpayer is an Indiana Motor Carrier. Publicly available information indicates that Taxpayer offers a range of towing and hauling services, including heavy-duty towing and accident recovery services. Taxpayer operates a fleet of flat beds, tractors, and trailers. Taxpayer electronically submitted a “Claim for Proportional Use Credit” (“MCS-1789”) request for the first quarter of 2024 (“Q1 2024”) on April 18, 2024, through the Motor Carrier Services’ online portal. Taxpayer sought a refund in motor fuel tax for Q1 2024. Taxpayer claimed credit for fuel consumed during Q1 2024. The Indiana Department of Revenue (“Department”) denied Taxpayer’s claim for a refund. The denial letter explained the reason for denying the refund: “… refund claim was denied because the quarterly report, or the claim for refund … was received either without payment or after the due date. Therefore, you are ineligible to claim a refund for the quarter.” Taxpayer disagreed with the decision and submitted a protest to that effect. In that protest, Taxpayer argued that the Department was wrong when it denied the refund on the grounds that the claim was untimely filed.

I. Motor Carrier Fuel Tax – Proportional Use Credit Refund.

DISCUSSION The issue is whether Taxpayer has established that it timely filed its refund claim with the Department. In its initial refund review, the Department determined that Taxpayer's claim was untimely. Taxpayer protests the denial of the refund. Taxpayer argues that it electronically submitted its claim filing to the Department before the due date of the quarterly return for the taxable period for which the PUC was claimed. See IC 6-6-4.1-4.8. The corresponding due date to file a PUC refund claim for Q1 2024, per statute, was April 30, 2024. The credit is authorized under IC 6-6-4.1-4.8, which requires the Department to refund tax based on a carrier’s “proportional use” of motor fuel. IC 6-6-4.1-4.8(c) provides: The department shall determine the aggregate amount of proportional use credits claimed under section 4(d) of this chapter or section 4.5(e) of this chapter (before its repeal) for each quarter. The department may approve the full amount of a proportional use credit claimed by a carrier if the aggregate amount of proportional use credits claimed for the quarter and for the fiscal year do not exceed the limits set forth in subsection (d). If the aggregate amount of proportional use credits claimed in a quarter exceeds the limits set forth in subsection (d), the department shall pay the claims for that quarter on a pro rata basis. IC 6-6-4.1-4.8(d) imposes a “cap” on the dollar amount carriers may be refunded each year. In small part, IC 6-6-4.1-4.8(d) provides: The department may not approve more than three million five hundred thousand dollars ($3,500,000) of proportional use credits under this section in a state fiscal year. IC 6-6-4.1-4.8(c) provides additional requirements specifically addressing instances in which the total amounts claimed exceed the $3,500,000 limit. IC 6-6-4.1-4.8(b) explains the means by which a carrier is required to submit its claim. In part, the statute provides: In order to obtain a proportional use credit against taxes imposed under section 4 of this chapter or section 4.5 of this chapter (before its repeal) a carrier must file a claim with the department. The claim must be submitted on a form prescribed by the department and must be filed with the quarterly return for the taxable period for which the proportional use credit is claimed. IC 6-6-4.1-10 requires that a “carrier shall submit each quarterly report required under this subsection on or before the last day of the month immediately following that quarter.” IC 6-8.1-6-7 permits the Department to consider electronically filed documents; “notwithstanding any other provisions of this title, the commissioner may permit the filing of any return or document by electronic data submission.” The Department is required to address claims submitted on the MCS-1789 form. The form explains that in order to claim the credit, the carrier must, in part, “File the quarterly IFTA-101 or MCFT-101 tax returns on or before the due date shown on the return” and “Submit the [MCS- 1789] by the due date on the form.” Per IC 6-6-4.1-4.8, a PUC refund claim must also include the quarterly report that corresponds with the quarter in which the claim is being made. Here, the prescribed due date for a PUC claim is the filing deadline for the relevant quarterly taxable period. The filing deadline for the quarterly taxable period for Q1 2024 was April 30, 2024. Though Taxpayer electronically submitted its PUC refund claim online for Q1 2024 prior to the deadline, Taxpayer failed to provide the Department a copy of the corresponding quarterly tax return before the statutorily required deadline. As such, Taxpayer’s PUC refund claim was incomplete at the time of the deadline. In its protest submission, Taxpayer argued that it assumed since the Department was processing PUC claims online, it no longer needed to provide the Department with a copy of its quarterly return. Taxpayer stated that its failure to provide the Department with a copy of the quarterly return was an oversight on its part due to its misunderstanding of the current PUC claim process. In assessing Taxpayer’s objection, the Department bears in mind that the general rule is that “tax exemptions are strictly construed in favor of taxation and against the exemption.” Indiana Dep’t of State Revenue v. Kimball Int’l Inc., 520 N.E.2d 454, 456 (Ind. Ct. App. 1988). Based on the plain reading of IC 6-6-4.1-4.8, Taxpayer is required to provide the Department a copy of its quarterly tax return on or before the deadline of the relevant tax quarter. The Department’s determination that Taxpayer’s claim was untimely rests on the fact that Taxpayer failed to provide its quarterly tax return to the Department by the due date. Calculations and disbursements of PUC to eligible filers are based on timely filing, which allows the Department to adhere to applicable law. Though the Department acknowledges Taxpayer’s admission of misunderstanding the PUC claim process, Taxpayer has not provided any evidence to the Department that it provided its quarterly tax return to the Department before the deadline. Furthermore, Taxpayer has not referred to any statute, regulation, or court case which would permit the Department to process its PUC refund claim without also providing a tax return by the mandatory deadline, as required by Indiana law. Taxpayer has not proven that it timely filed a completed PUC claim with all the required documentation. Therefore, the protest is respectfully denied. FINDING Taxpayer’s protest is respectfully denied. April 07, 2025 Replaces Finding Document: New