in-20250625-IR-045250298NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20242535 Use Tax For the 2022 Tax Year HOLDING Corporation failed to establish that it did not owe Indiana use tax. ISSUE

I. Use Tax – Exempt Sales.

Authority: IC 6-2.5-1-2; IC 6-2.5-3-2; IC 6-2.5-4-1; IC 6-2.5-5-5.1; 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, 292 (Ind. Tax Ct. 2007); 45 IAC 2.2-1-1; 45 IAC 2.2-5-8. Taxpayer protests the imposition of use tax on its purchase of a fire truck for use at a power plant. STATEMENT OF FACTS Taxpayer is a corporation that operates power plants in Indiana. In 2022, Taxpayer purchased a fire truck for use at one of its plants. Taxpayer did not pay sales tax when it purchased the fire truck, and it claimed an exemption from use tax when it titled the truck at the Indiana Bureau of Motor Vehicles. The Indiana Department of Revenue (“Department”) reviewed Taxpayer’s purchase, and it determined that Taxpayer’s claimed exemption was invalid. The Department accordingly assessed use tax against Taxpayer for the full purchase price of the vehicle. Taxpayer timely protested, and the Department held an administrative hearing. Additional facts will be provided as necessary.

I. Use Tax – Exempt Sales.

DISCUSSION Taxpayer argues that its purchase of the fire truck should be exempt from use tax because it is used in the direct production of electricity. 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); Lafayette Square Amoco, Inc. v. Indiana Dep’t 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 law contained within this decision are 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). 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.” Transactions that would otherwise be taxable are exempt from use tax if they are acquired “for direct consumption as a material to be consumed in the direct production of other tangible personal property[.]” IC 6-2.5-5-5.1(b). The Department’s regulations state that “[s]afety . . . equipment which is required to allow a worker to participate in the production process without injury” qualifies for this exemption. 45 IAC 2.2-5-8(c)(2)(F). However, “equipment used in . . . non-operational activities . . . [including] safety or fire prevention equipment which does not have an immediate effect on the product” does not qualify. 45 IAC 2.2-5-8(j). Further, “[t]he fact that particular property may be considered essential to the conduct of the business of manufacturing because its use is required either by law or by practical necessity does not itself mean that the property” is exempt from tax. 45 IAC 2.2-5-8(g). Taxpayer argues that the fire truck is an essential component of its production process. It provided the Department with an affidavit from its plant manager stating that it is “required by law” to maintain a fire suppression system to allow its workers to “participate in the production process without injury.” However, 45 IAC 2.2-5-8(j) is clear: fire suppression equipment is subject to use tax, even if it is required by law. The Department is therefore unable to agree that Taxpayer’s purchase of the fire truck is exempt from tax. FINDING Taxpayer’s protest is denied. April 4, 2025 Replaces Finding Document: New