in-20250430-IR-045250200NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20241832 Use Tax For The Year 2022 HOLDING Taxpayer showed the Department’s assessment related to the transfer of a vehicle title was incorrect. ISSUE

I. Use Tax – Imposition.

Authority: IC 6-2.5-2-1; IC 6-2.5-3-1; IC 6-2.5-3-2; IC 6-2.5-3-6; 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); Rhoade v. Indiana Dept. of State Revenue, 774 N.E.2d 1044 (Ind. Tax Ct. 2002); 45 IAC 2.2-2-1; 45 IAC 2.2-3-4. Taxpayer protests the assessment of consumer use tax on a vehicle purchase. STATEMENT OF FACTS Taxpayer is an Indiana resident.  In March 2022, Taxpayer purchased a 2016 vehicle with an odometer reading of approximately 68,000 miles.  Taxpayer titled the vehicle with the Indiana Bureau of Motor Vehicles (“BMV”).  Paperwork submitted at the BMV showed a purchase price of $8,000.  Taxpayer paid $560 in sales tax, which was calculated based on the vehicle selling price. The Indiana Department of Revenue (“Department”) later received information from the BMV regarding the purchase price of the vehicle because the selling price appeared below “blue book” value of the vehicle.  As a result, the Department issued Taxpayer an assessment for use tax based on a higher selling price.  Taxpayer protested the assessment and requested resolution without a hearing.  This Letter of Findings is based on the information submitted by Taxpayer along with additional information Taxpayer provided at the Department’s request and a review of the Department’s records.  Additional facts will be provided as necessary.

I. Use Tax – Imposition.

DISCUSSION The Department determined Taxpayer’s vehicle purchase was subject to additional use tax after a review of information received from the BMV.  Taxpayer protested the assessment and stated that he purchased the vehicle for the sales price stated on the title paperwork.  Taxpayer also explained that the car was previously in an accident, as reported by Carfax, had cosmetic damage and mechanical work that needed to be completed, and required new tires and brakes. As a threshold issue, it is the 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); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007).  An assessment is presumed valid.  A taxpayer must provide documentation explaining and supporting that the Department’s position is wrong.  Additionally, “[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). Indiana imposes an excise tax called “the state gross retail tax” or “sales tax” on retail transactions made in Indiana.  IC 6-2.5-2-1(a); 45 IAC 2.2-2-1.  A person who acquires property in a retail transaction is liable for the sales tax on the transaction.  IC 6-2.5-2-1(b).  Indiana also imposes a complementary excise tax called a “use tax” on “the storage, use, or consumption of tangible personal property in Indiana if the property was acquired in a retail transaction, regardless of the location of that transaction or of the retail merchant making that transaction.”  IC 6-2.5-3-2(a).  “Use” means the “exercise of any right or power of ownership over tangible personal property.”  IC 6-2.5-3-1(a).  The use tax is a functional equivalent to the sales tax.  See Rhoade v. Indiana Dept. of State Revenue, 774 N.E.2d 1044, 1047 (Ind. Tax Ct. 2002). Tangible personal property purchased in Indiana and stored, used, or otherwise consumed in Indiana is subject to Indiana use tax for such property unless the Indiana sales tax has been collected at the point of purchase.  45 IAC 2.2-3-4.  IC 6-2.5-3-6 provides further guidance on the collection of use tax on the use, storage, or consumption of tangible personal property acquired in a retail transaction.  The person liable for the use tax shall pay the use tax to the Department or, in the case of a vehicle, to the titling agency when the person applies for a title for the vehicle.  IC 6-2.5-3-6(c) and (d)(1). Further, IC 6-2.5-3-6(e) states: The Department reviewed Taxpayer’s vehicle purchase based on a request from the BMV.  The BMV noted the “[t]transfer of ownership [appeared] with little or no consideration.”  Based on this information, the Department completed a review and issued an assessment for use tax based on a selling price of $16,550. Taxpayer protested the assessment and provided information related to the vehicle.  The Bill of Sale shows a sales price of $8,000.  A Carfax report confirms Taxpayer’s assertions that the vehicle was in a prior accident and had some minor damage from the incident.  Additionally, Taxpayer stated he was required to complete some mechanical work and replace the tires and brakes.  Finally, Taxpayer said there were issues with the odometer display and the vehicle maintaining the correct fuel level.  The odometer issue also seems to be supported by information contained in the Carfax report. After reviewing the documentation, Taxpayer has met his burden under IC 6-8.1-5-1.  Taxpayer provided a copy of the Bill of Sale which shows a purchase price of $8,000.  The Bill of Sale plus other documentation provided during the protest rebuts the presumption outlined under IC 6-2.5-3-6(e).  Taxpayer’s protest is sustained. FINDING Taxpayer’s protest is sustained. February 6, 2025 Replaces Finding Document at: New