in-20250625-IR-045250303NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE FINAL ORDER DENYING REFUND: 47-20242402 Proportional Use Fuel Tax Credit For Years 2023 and 2024 HOLDING Out-of-state Taxpayer failed to meet its burden of establishing that it submitted its Proportional Use Credit (“PUC”) refund claims within the quarterly periods for which the proportional credits were 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 refund claims based on its Proportional Use Credit. STATEMENT OF FACTS Taxpayer is an out-of-state motor carrier. Publicly available information indicates that Taxpayer operates 233 power units (trucks) and 534 trailers. Taxpayer primarily transports liquid and dry sweetener, liquid chocolate, vegetable oil, flour, and starch products in temperature-controlled transports. Taxpayer electronically submitted “Claim for Proportional Use Credit” (“MCS-1789”) requests for the fourth quarter of 2023 (“Q4 2023”) and the first quarter of 2024 (“Q1 2024”) through the Motor Carrier Services’ (MCS) online portal. Taxpayer sought a refund of approximately $4,580 in motor fuel tax for Q4 2023 and a refund of approximately $5,318 for Q1 2024. Taxpayer claimed credit for fuel consumed during Q4 2023 and Q1 2024. The Indiana Department of Revenue (“Department”) denied both claims for refunds. The denial letters 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 decisions and submitted a protest to that effect. In that protest, Taxpayer argued that the Department was wrong when it denied the refunds on the grounds that the claims were 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 claims with the Department. In its initial refund reviews, the Department determined that Taxpayer's claims were untimely. Taxpayer protests the denials of the refunds. Taxpayer argues that it electronically submitted its claim filings to the Department before the due dates of the corresponding quarterly returns for the taxable periods for which the PUCs were claimed. See IC 6-6-4.1-4.8. The corresponding due date to file a PUC refund claim for Q4 2023, per statute, was January 31, 2024. The corresponding due date 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.” Taxpayer filed its Q4 2023 PUC refund claim on January 1, 2024, and its Q1 2024 PUC refund claim on April 23, 2024. In filing its MCS-1789 forms online, Taxpayer is required to provide information from its out-of-state IFTA tax returns and upload those returns on the portal. Furthermore, when the online filing for a PUC refund claim is completed, the MCS online portal notified Taxpayer that the submissions were under analyst review and that Taxpayer “must submit a copy of the quarterly tax return submitted to a jurisdiction other than Indiana for Proportional Use Credit.” 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 deadlines for the quarterly taxable periods of Q4 2023 and Q1 2024 were January 31, 2024, and April 30, 2024, respectively. Though Taxpayer electronically submitted its PUC refund claims online for both Q4 2023 and Q1 2024 prior to their respective deadlines, Taxpayer failed to provide the Department copies of the corresponding quarterly tax returns before the statutorily required deadlines. As such, Taxpayer’s PUC refund claims were incomplete at the time of their respective deadlines. In its protest submission, Taxpayer provided the Department with additional documentation which Taxpayer claims supports its position that it had complied with the statute and filed its PUC claims by their relevant deadlines, including screenshots of its online PUC claim summaries and copies of its corresponding quarterly tax returns. However, Taxpayer’s submission did not include any documentation showing that the quarterly returns were provided to MCS on or before the deadlines. The Department conducted an internal inquiry to determine if MCS had received Taxpayer’s quarterly returns for Q4 2023 and Q1 2024; but the Department confirmed that MCS has no record of previously receiving Taxpayer’s quarterly tax returns for Q4 2023 and Q1 2024. In addition, the Department contacted Taxpayer requesting it provide the Department with documentation showing it timely submitted its quarterly returns. However, Taxpayer was unable to provide any additional documentation. 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 copies of its quarterly tax returns on or before the deadline of the relevant tax quarter. The Department’s determination that Taxpayer’s claims were untimely rests on the fact that Taxpayer failed to provide their quarterly tax returns to the Department by their respective due dates. Calculations and disbursements of PUC to eligible filers are based on timely filing, which allows the Department to adhere to applicable law. Taxpayer has not provided any evidence to the Department that it provided its quarterly tax returns 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 claims without also providing tax returns. 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 7, 2025 Replaces Finding Document: New