in-20250528-IR-045250267NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20251158 Use Tax For the 2022 Tax Year HOLDING Individual established that he did not owe use tax on the transfer of a motor vehicle from his business to himself. ISSUE

I. Use Tax – Motor Vehicle.

Authority: I.R.C. § 301; I.R.C. § 731; 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 a transfer of a motor vehicle from his business to himself. STATEMENT OF FACTS Taxpayer, an Indiana resident, wholly owns an S corporation. In 2022, he transferred a motor vehicle from his business to himself, paying no money in return. The Indiana Bureau of Motor Vehicles referred his title application to the Indiana Department of Revenue (“Department”). The Department reviewed his title application and determined that he owed use tax because he underreported the sale price of the vehicle. The Department issued a proposed assessment to Taxpayer accordingly. Taxpayer timely protested, and this Letter of Findings results. Additional facts will be provided as necessary. Because Taxpayer waived his right to a hearing, this Letter of Findings relies on documents that Taxpayer provided and the Department’s records.

I. Use Tax – Motor Vehicle.

DISCUSSION Taxpayer argues that he does not owe use tax on a title change that did not result from a sale. As a threshold issue, it is a 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 in support of his position that he did not acquire the vehicle from his business in a sale. Taxpayer showed that he wholly owns the business that transferred the vehicle to him, and the application for title states that Taxpayer intended the car to “[go] from personal business to personal name,” which supports his assertion that no payment was made. Taxpayer has shown that he did not acquire title to this vehicle in a “sale,” and therefore, that he does not owe use tax on this transaction. However, although Taxpayer does not owe use tax on this transaction, Taxpayer may be liable for income tax on the transfer of the motor vehicle as a distribution of property under I.R.C. § 731. FINDING Taxpayer’s protest is sustained. March 14, 2025 Replaces Finding Document: New