in-20250528-IR-045250240NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20241067 Individual Indiana Income Tax For the Year 2022  HOLDING The Department held that it did not make a mistake when it issued Out-of-State Individual a proposed assessment of Indiana income tax because the assessment was based solely on Individual’s own Indiana return. ISSUE

I. Indiana Individual Income Tax – Indiana Taxable Income.

Authority: IC 6-3-1-3.5; IC 6-3-1-12; IC 6-3-2-1; IC 6-3-2-2; 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); Wendt LLP v. Indiana Dep’t of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2012); Scopelite v. Indiana Dep’t of Local Gov’t Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Lafayette Square Amoco, Inc. v. Indiana Dep’t of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007). Taxpayer argues that the Department made a mistake when it determined that income received from his out of state Indiana employer should have been sourced to Indiana and subject to Indiana income tax. STATEMENT OF FACTS Taxpayer filed a 2022 IT-40PNR (“Part-Year and Full-Year Nonresident Return”) together with Taxpayer’s spouse. As indicated on the 2022 return, Taxpayer has a Connecticut mailing address. The Indiana Department of Revenue (“Department”) reviewed the return. In a letter dated May 23, 2023, the Department issued Taxpayer a Notice of Proposed Assessment indicating that he owed approximately $3,000 in tax, interest, and penalty. Taxpayer disagreed with the assessment and submitted a protest to that effect. An administrative hearing was scheduled in order to allow Taxpayer an opportunity to explain the basis for the protest. This Letter of Findings results and is based on the information Taxpayer provided and on information available to the Department.

I. Indiana Individual Income Tax – Indiana Income.

DISCUSSION The issue is whether Taxpayer has established that the Department made a mistake when it issued Taxpayer a proposed assessment of 2022 Indiana income tax. As with any assessment, it is Taxpayer’s responsibility to establish that the tax assessment is incorrect. 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.” See also 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. To meet the IC 6-8.1-5-1(c) burden, the Department points out that 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); Wendt LLP v. Indiana Dep’t of State Revenue, 977 N.E.2d 480, 486 n.9 (Ind. Tax Ct. 2012). Further, the Department points out that “[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, interpretations of Indiana tax law contained within this decision, as well as the preceding return adjustment, are entitled to deference. 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. For income tax purposes, “The term ‘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. To correctly determine an Indiana resident’s state income tax, the Indiana law references the Internal Revenue Code. IC 6-3-1-3.5(a) provides the starting point in determining a taxpayer’s taxable income and calculating what would be the taxpayer’s Indiana income tax after applying certain additions and subtractions to that starting point. For nonresident persons, IC 6-3-2-2(a) outlines what is income derived from Indiana sources subject to Indiana income tax, in part: (1) income from real or tangible personal property located in this state; (2) income from doing business in this state; (3) income from a trade or profession conducted in this state; (4) compensation for labor or services rendered within this state; and (5) income from stocks, bonds, notes, bank deposits, patents, copyrights, secret processes and formulas, good will, trademarks, trade brands, franchises, and other intangible personal property to the extent that the income is apportioned to Indiana under this section or if the income is allocated to Indiana or considered to be derived from sources within Indiana under this section. (Emphasis added). Taxpayer argues that he and his spouse reside in Connecticut and receive income from a California based employer. Along with his protest, Taxpayer submitted wage and tax statements (“W-2s”). Taxpayer believes that the Department’s assessment was attributable to his California employer’s error in designating Indiana as his home address. As Taxpayer explained: Taxpayer bolstered his argument by providing a copy of a letter written by and received from his California employer. However, the issue raised here does not turn on a residency dispute or what address was printed on the W-2 but on determining if the Department made a mistake in assessing the $3,000 in tax, interest, and penalty. Given the available documentation and considering Taxpayer’s arguments, the Department does not agree that Taxpayer has met his burden of establishing that the Department’s assessment was wrong because the Department did not “adjust” his 2022 Indiana return. Instead, the Department treated the return exactly as he filed it. On that return, Taxpayer reported his federal income, his Indiana income, made the requisite adjustments called for under Indiana law, and calculated the amount of Indiana tax due. The only action the Department took was to forward a bill for the exact amount of Indiana tax the Taxpayer reported on his Indiana return. Whether Taxpayer established a residency in Connecticut, whether he worked inside Connecticut’s borders, or whether his employer made a mistake in preparing his W-2s is simply not relevant. The Department did exactly what it was required to do under IC 6-8.1-5-1(b), which requires that Department “shall make a proposed assessment of the amount of the unpaid tax on the basis of the best information available to the [D]epartment[.]” The Department here notes that it requested, in writing, that Taxpayer provide a copy of his 2022 Connecticut income tax return. That request went unanswered. The “best information” available to the Department was the Indiana return prepared and submitted by Taxpayer. The Department did not make a mistake in relying on the Indiana return prepared and submitted by Taxpayer. FINDING Taxpayer’s protest is respectfully denied. March 31, 2025 Replaces Finding Document at: New