in-20250625-IR-045250299NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20242598 Use Tax For the 2023 Tax Year HOLDING Individual established that he did not owe use tax on the transfer of two motor vehicles. ISSUE

I. Use Tax – Motor Vehicle.

Authority: IC 6-2.5-1-2; IC 6-2.5-3-2; IC 6-2.5-4-1; 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); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 2.2-1-1. Taxpayer protests the assessment of use tax on the transfer of a motor vehicle from his employer to him and on the transfer of a motor vehicle between two parties that are unrelated to him. STATEMENT OF FACTS Taxpayer, an Indiana resident, acquired a motor vehicle in April 2023 from his employer. His employer treated the vehicle transfer as wage compensation and included its fair market value on Taxpayer’s 2023 W-2. Taxpayer titled the vehicle with the Indiana Bureau of Motor Vehicles. On the title application, he wrote that the sale price was $0. The Indiana Department of Revenue (“Department”) reviewed Taxpayer’s title application and determined that he had underreported the sale price. The Department assessed Taxpayer use tax on the value of the transferred vehicle. The Department also assessed Taxpayer use tax on another vehicle, which the Department believed Taxpayer purchased without paying use tax. Taxpayer timely protested, and the Department held an administrative hearing. This Letter of Findings results. Additional facts will be provided as necessary.

I. Use Tax – Motor Vehicle.

DISCUSSION Taxpayer argues that he does not owe use tax on his acquisition of the 2023 vehicle because he already paid the appropriate tax in the correct amount, and that he does not owe tax on the other vehicle because he was not the purchaser. 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). 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). Thus, all interpretations of Indiana tax law contained within this decision shall be entitled to deference. Indiana imposes an excise tax called the “use tax” on “[the] storage, use, or consumption of tangible personal property in Indiana if the property was acquired in a retail transaction.” IC 6-2.5-3-2(a) (emphasis added). A “retail transaction” occurs when a person or business makes a “sale at retail.” See IC 6-2.5-1-2. A “sale at retail” occurs when, “in the ordinary course of . . . regularly conducted trade or business,” a person or business buys property “for the purpose of resale” and transfers it to someone else “for consideration.” IC 6-2.5-4-1(b). For sales of motor vehicles, the use tax is also imposed on “isolated or occasional sale[s],” where the seller originally acquired the vehicle “for . . . use or consumption.” IC 6-2.5-3-2(b)(1); 45 IAC 2.2-1-1(d). In other words, the purchaser of a motor vehicle must pay use tax so long as they acquired it in a “sale.” Taxpayer has presented documentation sufficient to show that he did not acquire the 2023 vehicle in a sale. Taxpayer demonstrated that the vehicle was paid to him as a bonus by his employer — that is, he acquired it not through a sale, but as compensation for his work. Taxpayer’s employer added the fair market value of the vehicle to his W-2, and Taxpayer paid income tax on the value of the vehicle. Taxpayer therefore did not acquire the 2023 vehicle in a sale, whether a retail transaction or an “isolated or occasional sale,” and he does not owe use tax on his acquisition of this vehicle. Taxpayer also presented documentation sufficient to show that he did not purchase the other vehicle, but that it was purchased by an unrelated third party. He has carried his burden to show that he does not owe use tax on the purchase of that vehicle either. Taxpayer acquired a motor vehicle as payment from his employer for services rendered. Because Indiana use tax applies to motor vehicle transactions only when they are sales, Taxpayer does not owe use tax on his acquisition of this vehicle, as provided by IC 6-2.5-3-2(a). Further, Taxpayer showed that the transfer of the second vehicle had nothing to do with him, and the Department was therefore wrong to assess him use tax for that transaction. FINDING Taxpayer’s protest is sustained. April 4, 2025 Replaces Finding Document: New