in-20250528-IR-045250270NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 10-20221082 Food and Beverage Tax For the Years 2012 -2021 HOLDING Business, a retail merchant, was assessed food and beverage tax (“FAB”) by the Department; Business was able to establish the Department’s proposed assessments were incorrectly too high. ISSUE

I. Food and Beverage Tax – Proposed Assessment.

Authority: IC 6-9-12-3; IC 6-9-12-5; 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, 897 N.E.2d 289 (Ind. Tax Ct. 2007); Sales Tax Information Bulletin 29 (July 1, 2019); General Tax Information Bulletin 203 (September 2020). Taxpayer protests that the Department’s proposed assessments for food and beverage tax were incorrect. STATEMENT OF FACTS On March 8, 2022, the Indiana Department of Revenue (“Department”) sent a “Compliance Report Summary” to Taxpayer regarding Taxpayer’s food and beverage account for the periods 2012 through 2021. The Department’s report summary “propose[d] additional tax due” regarding food and beverage tax. Taxpayer, an Indiana retail merchant, filed a protest. A telephone hearing was held. Additional facts will be provided as necessary below.

I. Food and Beverage Tax – Proposed Assessment.

DISCUSSION Taxpayer is an Indiana business.  The Department’s “Explanation of Adjustments” states “[t]he Department received information that you were selling food and beverage subject to food and beverage tax in a jurisdiction where such tax is imposed.” The Department’s Explanation of Adjustments, under “Audit Findings,” states: With that in mind, the Department notes that as a threshold issue, it is Taxpayer’s responsibility to establish that the existing tax assessment is incorrect. As stated in IC 6-8.1-5-1(c), “[t]he notice of proposed assessment is prima facie evidence that the [D]epartment’s claim for the unpaid tax is valid. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made.” 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 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). By way of background, Sales Tax Information Bulletin 29 (July 1, 2019), 20190731 Ind. Reg. 045190365NRA, states that “[i]n Indiana, counties or municipalities that have been granted the necessary statutory authority may adopt a local food and beverage tax (“FAB” or “FAB tax”).” Additionally, the bulletin states: Taxpayer’s business activities occurred within Marion County which, at IC 6-9-12 et seq., imposes a food and beverage tax. Regarding the food and beverage tax, General Tax Information Bulletin 203, (September 2020), 20201028 Ind. Reg. 045200536NRA, states in pertinent part that taxable transactions include, “Food sold and served by a retail merchant that is performing catering activities[,]” “Food sold at a deli counter in a grocery store that is cooked or heated on the premises[,]” and “Where the seller provides eating utensils, including plates, knives, forks, spoons, glasses, cups, napkins, or straws.” IC 6-9-12-5(a) states in relevant part, “the county food and beverage tax imposed on a food or beverage transaction … equals one percent (1[percent]) of the gross retail income received by the retail merchant from the transaction.” IC 6-9-12-3 provides that: Taxpayer’s protest letter states the “proposed assessment is largely over assessed and I have gone out to each year and paid the appropriate food and beverage tax with interest and penalty” and further “I did not realize being a mobile food truck headquartered outside of Marion county, that we are supposed to pay the additional 2[percent] food and beverage tax for Marion County while operating as a mobile business in Marion County.” It should be noted that Taxpayer did not pay the Department’s total proposed assessment, but instead Taxpayer paid what Taxpayer believed it owed in outstanding food and beverage tax. Taxpayer states that “[m]ost of our sales in Marion County are at [] venues,” and that the “venue pays all sales tax and food and beverage tax . . . ” Although the tax collection requirements of a retail merchant cannot be contracted away, the information that Taxpayer provided as part of its protest established that agency relationships existed between it and venue companies (e.g., venue companies referred to herein as “Company R” and “Company E”) regarding sales at various venues within Marion County. Under the agency relationships Taxpayer was not the one obligated to remit FAB, but Company R and Company E were. The Department’s proposed assessment was based upon the best information available to the Department. IC 6-8.1-5-1(b). Based upon the information and documentation Taxpayer provided and the foregoing analysis, and the lack of information in the Department’s audit report, Taxpayer’s protest that the Department’s proposed assessments for Marion County FAB tax was incorrectly too high is sustained. Therefore, the Department agrees that the amount previously remitted by Taxpayer is the correct amount of Marion County FAB tax that was due, and Taxpayer is sustained regarding any remaining amount of the Marion County FAB assessments. FINDING Taxpayer’s protest that the Department’s proposed assessments for Marion County FAB tax was incorrectly too high is sustained. March 13, 2025 Replaces Finding Document: New