in-20250528-IR-045250239NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20241039 Indiana Individual Income Tax For The Tax Year 2022 HOLDING Former Indiana Resident established that he was no longer an Indiana resident during 2022 and that the Department’s decisions assessing tax and denying a refund were both incorrect. ISSUE

I. Indiana Individual Income Tax – Residency.

Authority: IC 6-3-1-12; IC 6-3-1-13; IC 6-3-2-1; IC 6-8.1-5-1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Indiana Dep’t of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988); Croop v. Walton, 157 N.E. 275 (Ind. 1927); Lafayette Square Amoco, Inc. v. Indiana Dep’t of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 3.1-1-21; 45 IAC 3.1-1-22; 45 IAC 3.1-1-22.5; 45 IAC 3.1-1-23. Taxpayer protests the Department’s proposed assessment of additional Indiana income tax. STATEMENT OF FACTS Taxpayer was a former resident of Indiana. Taxpayer filed a 2022 individual income tax return. The Indiana Department of Revenue (“Department”) reviewed the return. The review resulted in an additional assessment of tax. In a letter dated June 2023, the Department issued Taxpayer a Notice of Proposed Assessment. The letter explained: The Department made line-item adjustments to the return as follows: Taxpayer disagreed with the assessment and submitted a protest to that effect. An administrative hearing was conducted by telephone during which Taxpayer explained the basis for the protest. This Letter of Findings results.

I. Indiana Individual Income Tax – Residency.

DISCUSSION The issue is whether Taxpayer has met his burden of establishing that he was no longer a resident of Indiana during 2022, the $600 assessment should be abated, and Taxpayer is now entitled to a refund of 2022 taxes erroneously withheld on his behalf by his Washington state employer. Taxpayer outlined the steps taken to sever his Indiana residency. Taxpayer asks that the Department bear in mind the “significant amount of time to process my return.” As mentioned, the 2022 return was submitted in February 2023, Taxpayer verified five months later that the return “was duly received by [the DOR] and still being processed.” The Department points out that it is Taxpayer’s responsibility to establish that the income tax assessment is wrong. As stated in IC 6-8.1-5-1(c), “The notice of proposed assessment is prima facie evidence that the department’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 Dep’t 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). Consequently, a taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department’s position is wrong. In considering Taxpayer’s 2022 return, the Department’s adjustments to that return, Taxpayer’s arguments, and the relevant law, the Department bears in mind that “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.’” Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). Thus, interpretations of Indiana tax law contained within this decision are entitled to deference. IC 6-8.1-5-1(b) requires of the Department as follows: Indiana imposes a tax “on the adjusted gross income of every resident person, and on that part of the adjusted gross income derived from sources within Indiana of every nonresident person.” IC 6-3-2-1(a). Indiana resident “includes (a) any individual who was domiciled in this state during the taxable year, or (b) any individual who maintains a permanent place of residence in this state and spends more than one hundred eighty-three (183) days of the taxable year within this state . . . .” IC 6-3-1-12. Nonresident is “any person who is not a resident of Indiana.” IC 6-3-1-13. For Indiana income tax purposes, resident “includes (a) any individual who was domiciled in this state during the taxable year, or (b) any individual who maintains a permanent place of residence in this state and spends more than one hundred eighty-three (183) days of the taxable year within this state . . . .” IC 6-3-1-12; see also 45 IAC 3.1-1-21. Nonresident is “any person who is not a resident of Indiana.” IC 6-3-1-13. 45 IAC 3.1-1-23 explains how “residency” affects a taxpayer’s income tax liability, in relevant part, as follows: The Department updated the Adjusted Gross Income Tax regulations. Some of the revisions were intended to clarify the definition of a person’s domicile for Indiana income tax purposes and provide additional factors to determine a person’s domicile. This Decision thus applies the new regulations accordingly. 45 IAC 3.1-1-22 (2017) states as follows: (Emphasis added). 45 IAC 3.1-1-22.5 (2017) further outlines the factors in determining a person’s domicile, as follows: (Emphasis added). Thus, a new domicile is not necessarily created when an individual moves to a place outside of Indiana. Instead, the individual must move to the new location and have an intent to remain there indefinitely. In Croop v. Walton, 157 N.E. 275 (Ind. 1927), a taxpayer, Mr. Walton, who was domiciled in Michigan sold his home in Michigan and moved to a new residence in Indiana where he and his Wife lived for several years for the benefit of his Wife’s health. Mr. Walton lived in the Indiana home “on account of the mental and physical condition of his Wife, and continued to occupy it until such time as she could safely return to [Michigan] to live.” Id. at 276. The court concluded that, based on the level of activity he maintained a residence in Michigan and lacked the intention to abandon his domicile, Mr. Walton did not change his domicile from Michigan to Indiana. The court explained, in relevant part, that: Id. (Internal citations omitted)(Emphasis added). In explaining the difference between “residence” and “domicile,” the court in Croop stated: In State Election Bd. v. Bayh, 521 N.E.2d 1313 (Ind. 1988), the Indiana Supreme Court considered the issue of the meaning of “domicile” in determining that Mr. Bayh met the residency requirement for the office of Governor. Mr. Bayh’s domicile remained in Indiana even though he moved to different states for various reasons for many years. The court stated, in pertinent part: Taxpayer provided the following information intended to buttress his argument that he abandoned his Indiana residency in 2021. Taxpayer has provided evidence establishing he moved from Indiana “with the intent of abiding permanently without Indiana,” 45 IAC 3.1-1-23, that he “maintained a permanent place of residence in [Washington],” 45 IAC 3.1-1-22.5(c), and provided evidence that he moved to Washington state in 2022 with an intent to remain there. Taxpayer has met the standard set out in Bayh, 521 N.E.2d at 1317, by establishing his intent to “abandon the old domicile; [with] the intention to acquire a new one.” The Department here notes that nothing in the Department’s communication sent Taxpayer challenges his assertion that he resided in Washington state from January 1, 2022, until December 31, 2022, and that he was requesting a refund of taxes withheld by his Washington state employer during 2022. The only communication sent Taxpayer noted a series of unrelated “line by line adjustments.” In other words, the Department provided nothing which challenges his claim that he resided in Washington state and nothing which explains why the Department was denying his refund claim. On the issues raised by Taxpayer and the information contained on his 2022 return, there is little here for Taxpayer to refute. As such, the Department here agrees that Taxpayer has met his statutory burden under IC 6-8.1-5-1 of establishing that the assessment was wrong and that the return should have been accepted as submitted. FINDING Taxpayer’s protest is sustained. March 4, 2025 Replaces Finding Document: New