in-20250528-IR-045250255NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20241210 Sales Tax For the Tax Year 2023 HOLDING  Indiana Dealer was responsible for the sales tax on a recreational vehicle (“RV”) it sold to a Massachusetts resident because the transaction was subject to sales tax. ISSUE

I. Sales Tax – Recreational Vehicle.

Authority: IC 6-2.5-1-2; IC 6-2.5-2-1; IC 6-2.5-4-1; IC 6-2.5-5-39; IC 6-2.5-9-3; IC 6-2.5-13-1; IC 6-8.1-5-1; IC 6-8.1-5-4; Gregory v. Helvering, 293 U.S. 465 (1935); Richardson’s RV, Inc. v. Indiana Dep’t of State Revenue, 112 N.E.3d 192 (Ind. 2018); Indiana Dep’t of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Scopelite v. Indiana Dep’t of Local Gov’t Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Indiana Dep’t of State Revenue, Sales Tax Division v. RCA Corp., 310 N.E.2d 96 (Ind. Ct. App. 1974); 45 IAC 2.2-2-1; 45 IAC 2.2-8-12; Sales Tax Information Bulletin 28S (January 2023). Taxpayer claims that the assessment was incorrect because the transaction was exempt. STATEMENT OF FACTS Taxpayer is an Indiana RV dealer who sells RVs to customers in Indiana and other states. In 2023, the Indiana Department of Revenue (“Department”) found that Taxpayer sold a 2023 Palomino SS-1200 to an individual with a Massachusetts address without collecting sales tax on that transaction. The Department determined that the transaction was subject to tax and assessed Taxpayer accordingly. Taxpayer protested and requested that the Department make the “[f]inal determination without a hearing.” This Letter of Findings ensues.

I. Sales Tax – Recreational Vehicle.

DISCUSSION Taxpayer protested the Department’s proposed assessment concerning its sale of 2023 Palomino SS-1200 to a customer from Massachusetts. Taxpayer argued that it was not required to collect and remit the Indiana sales tax because it delivered the RV across the Indiana State line and to a Michigan address. The issue is whether Taxpayer met its burden of proof that it was not required to collect and remit the sales tax. A retail merchant, such as Taxpayer in this case, “must keep books and records, including all source documents,” as statutorily required, “so that the [D]epartment can determine the amount, if any, of the [retail merchant’s] liability for that tax by reviewing those books and records.” IC 6-8.1-5-4(a). All tax assessments are prima facie evidence that the Department’s claim for the unpaid tax is valid; the taxpayer bears the burden of proving that any assessment is incorrect. IC 6-8.1-5-1(c). The taxpayer is required to provide documentation to explain and support its challenge. When an agency is charged with enforcing a statute, the jurisprudence defers to the agency’s reasonable interpretation of that statute “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). 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). Indiana imposes an excise tax called “sales tax” on retail transactions made in Indiana. IC 6-2.5-2-1(a); 45 IAC 2.2-2-1. A retail transaction is a transaction made by a retail merchant that constitutes “selling at retail.” IC 6-2.5-1-2(a). Selling at retail occurs when a person “(1) acquires tangible personal property for the purpose of resale; and (2) transfers that property to another person for consideration.” IC 6-2.5-4-1(b). A person who acquires tangible personal property in a retail transaction (a “retail purchaser”) is liable for the sales tax on the transaction. IC 6-2.5-2-1(b). A retail sale is sourced to Indiana and thus is subject to Indiana sales tax when the transaction is a “retail sale . . . of a product” and “the product is received by the purchaser at a business location of the seller [in Indiana] . . . .” IC 6-2.5-13-1(d)(1). The purchaser generally “shall pay the tax to the retail merchant as a separate added amount to the consideration in the transaction.” IC 6-2.5-2-1(b). The “retail merchant [] shall collect the tax as agent for the state.” Id. If the retail merchant fails to collect the sales tax, the retail merchant “is personally liable for the payment of those taxes, plus any penalties and interest attributable to those taxes, to the state.” IC 6-2.5-9-3; 45 IAC 2.2-8-12. If the purchasers assert that the retail transactions are exempt from the sales tax pursuant to IC 6-2.5-5-39, the retail merchant is required to obtain properly executed exemption certificates. 45 IAC 2.2-8-12(f). The retail merchant must maintain proper records to substantiate sales of interstate commerce. 45 IAC 2.2-8-12(e). A statute which provides a tax exemption is strictly construed against the taxpayer. Indiana Dep’t of State Revenue, Sales Tax Division v. RCA Corp., 310 N.E.2d 96, 97 (Ind. Ct. App. 1974). “[W]here such an exemption is claimed, the party claiming the same must show a case, by sufficient evidence, which is clearly within the exact letter of the law.” Id. at 101 (internal citations omitted). Importantly, a transaction is not exempt from taxes if the transaction is structured solely for the purpose of avoiding taxes with no other legitimate business purpose. Following the ruling under Gregory v. Helvering, 293 U.S. 465 (1935), the Indiana Supreme Court in Richardson’s RV, Inc. v. Indiana Dep't of State Revenue found in favor of the Department. The Indiana Supreme Court explained, in relevant part: Taxpayer in this instant case stated that the 2023 Palomino SS-1200 was sold to the customer from Massachusetts “and was delivered across the Indiana State line in Michigan.” To support its protest, in addition to a Straight Bill of Lading, Taxpayer offered a Non-resident Purchaser’s Affidavit, which stated in part: [] WHITE PIGEON, MI 49099 Taxpayer in this case seemingly argued that it was not required to collect tax because (i) the Massachusetts customer “voluntarily stipulated that the unit be delivered by the seller to [him] outside the State of Indiana” and (ii) it delivered that RV “across the Indiana State line in Michigan.” Upon review, however, Taxpayer’s reliance of its documentation is misplaced. Similar to the petitioner in Richardson’s RV, Inc., Taxpayer offered no verifiable information or probable explanations to support such delivery to Michigan had a legitimate business purpose, especially considering that its customer was from Massachusetts. Even if, assuming that Taxpayer did deliver the RV across the Indiana State line in Michigan, “delivery into another state for the purpose of tax avoidance is still subject to Indiana sales tax.” See Sales Tax Information Bulletin 28S (January 2023), 20230125 Ind. Reg. 045230016NRA (explaining that transaction remains taxable when “delivery is made directly across the border” for the purpose of tax avoidance). In this case, Taxpayer did not provide any verifiable supporting documents, such as the terms and conditions of that delivery, any verifiable expenses associated with such delivery, and by whom the additional costs were born. Taxpayer’s supporting documents were self-serving at best and failed to substantiate that such delivery arrangement served a legitimate business purpose. To conclude, given the totality of the circumstances, in the absence of other verifiable supporting documents, the Department is not able to agree that Taxpayer met its burden of proof pursuant to IC 6-8.1-5-1. FINDING Taxpayer’s protest is denied. March 14, 2025 Replaces Finding Document: New