in-20250528-IR-045250272NRA: DEPARTMENT OF STATE REVENUE 

DEPARTMENT OF STATE REVENUE  FINAL ORDER DENYING REFUND: 66-20232186 Proportional Use Fuel Tax Credit For the Year 2022 HOLDING Indiana Motor Carrier failed to meet its burden of establishing that it submitted its Proportional Use Credit refund claim and Fuel Tax Return within the quarterly period for which the proportional credit was claimed. ISSUE

I. Motor Carrier Fuel Tax – Proportional Use Credit Refund.

Authority: IC 1-1-4-1; IC 6-6-4.1-4.8; 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 a refund claim based on its proportional use fuel tax credit. STATEMENT OF FACTS Taxpayer is an Indiana Motor Carrier in the business of transporting aggregates such as top-soil, gravel, and stone. Taxpayer also provides its customers with other hauling services. Publicly available information indicates that Taxpayer operates eighteen conveyor and dump trucks. Taxpayer has twenty-five employees. Taxpayer submitted a “Claim for Proportional Use Credit” (MCS-1789). In that claim, Taxpayer sought a refund of approximately $4,800 in motor fuel tax. The Taxpayer’s MCS-1789 form sought a refund of fuel tax paid during the fourth quarter of 2022. In a letter dated February 9, 2023, the Indiana Department of Revenue (“Department”) denied the refund. The letter explained the reason for denying the refund. Taxpayer then filed the missing fourth quarter of 2022 “Intrastate Motor Carrier Quarterly Fuel (MCFT) Tax Return.” On that return, Taxpayer reported the “total miles operated in Indiana,” the “total taxable gallons of motor fuel,” and “total taxable gallons of motor fuel purchased in Indiana.” Taxpayer explained that “[it] filed, paid the [$50] penalty fee and submitted the supporting documents per the [February 9, 2023] letter.” The Department responded again denying the refund explaining that “[w]e are unable to accept the MCS-1789 for 4Q22. If 4th quarter 2022 and the MCS-1789 was not filed timely (by Jan 31st) we are unable to accept.” Taxpayer disagreed with the Department’s decision continuing to deny the $4,800 proportional use tax refund and submitted a protest to that effect. In its protest request, Taxpayer asked for a “[f]inal determination without a hearing.”

I. Motor Carrier Fuel Tax – Proportional Use Credit Refund.

DISCUSSION The issue is whether Taxpayer has established that the Department erred in denying the refund because it did everything required of it to correct its failure to timely file the 2022 4th quarter MCS-1789. This order references and is dependent on two separate documents: Taxpayer’s MCFT-101 fuel tax return and the MCS-1789 refund claim. The refund credit is authorized under IC 6-6-4.1-4.8 requiring the Department to refund tax based on the carrier’s “proportional use” of motor fuel. IC 6-6-4.1-4.8(c) provides: IC 6-6-4.1-4.8(d) imposes a “cap” on the dollar amount refunded carriers. In small part, IC 6-6-4.1-4.8(d) provides: However, that limitation is not relevant here. The only issue is whether or not the MCS-1789 refund was timely filed. 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: The Department is required to address claims submitted on the MCS-1789. The form explains that in order to claim the credit, the carrier must “Submit the MCS-1789 (Claim for Proportional Use Credit) by the due date on the form.” Taxpayer’s claim was for the fourth quarter of 2022. Taxpayer’s MCS-1789 is dated January 31, 2023. 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). Taxpayer argues that the Department issued contradictory instructions in its February letter and that it did exactly what the Department told it to do in order to obtain the refund. In its February 9, 2023 letter initially denying the refund under IC 6-6-4.1-4.8(b)(1), the Department provided a “remedy” under which Taxpayer was instructed to file the missing fuel tax return. Taxpayer did exactly that; it filed the missing 2022 4th quarter MCFT-101. In effect, Taxpayer late filed its fourth quarter fuel tax return, resubmitted the proportional use claim, but – according to the Department – the resubmitted refund claim is now barred by the limitations period. A late filed MCS-1789 is, of course, barred by the statute of limitations if the MCS-1789 is untimely filed. In this instance, that is not the case. The MCS-1789 refund request was timely filed but was barred because Taxpayer had not filed the corresponding fuel tax return. The Department’s February letter does not indicate that the MCS-1789, (dated January 31, 2022), was untimely only that the claim was barred because Taxpayer had not filed the MCFT-101 fuel tax return. The Department notified Taxpayer of its failure to file the MCFT-101 but then offering a “remedy” while cautioning “[u]ntil corrected, no refund will be issued.” Taxpayer “corrected” its failure to file the fuel tax return, and the Department is equitably required to do what it said it would do which was to recognize that the MCS-1789 refund was filed on January 31, 2022, when first submitted. However, the “remedy” offered was simply unavailable because, given the timeline limitations, there simply was no “remedy” available. By the time Taxpayer submitted the MCS-1789, it was not possible to timely file the MCFT-101. In this instance, the Department must balance the Taxpayer’s entirely reasonable argument against the plain words of the statute which provides “[t]he 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 6-6-4.1-4.8(b). The Department is bound by IC 1-1-4-1 which states that “ The construction of all statutes of this state shall be by the following rule[] . . . . Words and phrases shall be taken in their plain, or ordinary and usual, sense.” The “plain and ordinary” language of IC 6-6-4.1-4.8(b) means that the refund request must be denied. This Final Order Denying Refund addresses only the question of whether the MCS-1789 was submitted within the “taxable period for which the proportional use credit is claimed” as called for by IC 6-6-4.1-4.8(b). FINDING Taxpayer’s protest is respectfully denied. March 19, 2025 Replaces Finding Document at: New