in-20250430-IR-045250199NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE FINAL ORDER DENYING REFUND: 04-20241779 Sales Tax For the Tax Year 2023 HOLDING  Individual was the purchaser who (i) provided his Indiana address to complete the retail purchase agreement and (ii) took possession of the vehicle at the dealership’s business location in Indiana. Individual was not entitled to a refund of sales tax on a vehicle that he purchased from an Indiana dealership because the transaction was an Indiana sale subject to Indiana sales tax. ISSUE

I. Sales Tax – Refund.

Authority: IC 6-2.5-1-2; IC 6-2.5-2-1; IC 6-2.5-2-3; IC 6-2.5-4-1; IC 6-2.5-5-24; IC 6-2.5-13-1; Indiana Dep’t of State Revenue, Sales Tax Division v. RCA Corp., 310 N.E.2d 96 (Ind. Ct. App. 1974); United States v. McFerrin, 570 F.3d 672 (5th Cir. 2009); 45 IAC 2.2-2-1; 45 IAC 2.2-5-53; 45 IAC 2.2-5-54; Sales Tax Information Bulletin 28S (January 2023). Taxpayer protests the refund denial of sales tax which was collected at the time of the sale. STATEMENT OF FACTS Taxpayer, an individual, purchased a motor vehicle from an Indiana dealership (“Dealership”) in July 2023. Taxpayer completed and signed a Retail Purchase Agreement which recorded his Indiana address and took possession of the vehicle at the Dealership’s location in Indiana. The Dealership collected and remitted Indiana sales tax at a tax rate of seven percent and provided Taxpayer with a Form ST-108. In December 2023, Taxpayer filed a Form GA-110L Claim for Refund, requesting a $3,261.86 refund. Upon an initial review, the Indiana Department of Revenue (“Department”) denied Taxpayer’s refund claim. Taxpayer protested the refund denial and requested that the Department make the “[f]inal determination without a hearing.” This final determination results.

I. Sales Tax – Refund.

DISCUSSION The Department denied Taxpayer’s request. In a letter, the Department explained, in part, the following: Taxpayer protested the refund denial, claiming that he was entitled to the refund because he (i) was an Arkansas resident and voter and (ii) registered the vehicle in Arkansas. The issue is whether Taxpayer demonstrated that he was entitled to the refund of Indiana sales tax which was collected and remitted by the Dealership in July 2023. Indiana imposes an excise tax called “the state gross retail tax” (“sales tax”) on retail transactions made in Indiana. IC 6-2.5-2-1(a); 45 IAC 2.2-2-1. A retail transaction is a transaction made by a retail merchant that constitutes “selling at retail.” IC 6-2.5-1-2(a). Selling at retail occurs when a person “(1) acquires tangible personal property for the purpose of resale; and (2) transfers that property to another person for consideration.” IC 6-2.5-4-1(b). A person who acquires tangible personal property in a retail transaction (a “retail purchaser”) is liable for the sales tax on the transaction. IC 6-2.5-2-1(b). A retail sale is sourced to Indiana and thus is subject to Indiana sales tax when the transaction is a “retail sale . . . of a product” and “the product is received by the purchaser at a business location of the seller [in Indiana] . . . .” IC 6-2.5-13-1(d)(1). The purchaser in general “shall pay the tax to the retail merchant as a separate added amount to the consideration in the transaction.” IC 6-2.5-2-1(b). The “retail merchant . . . shall collect the tax as agent for the state.” Id. A taxpayer may be able to claim a tax credit or exemption concerning a retail transaction. But “[t]ax credits are a matter of legislative grace” and “are only allowed as clearly provided for by statute, and are narrowly construed.” United States v. McFerrin, 570 F.3d 672, 675 (5th Cir. 2009) (citing Stinson Estate v. United States, 214 F.3d 846, 848 (7th Cir. 2000)). A statute which provides a tax credit or exemption is strictly construed against the taxpayer. Indiana Dep’t of State Revenue, Sales Tax Division v. RCA Corp., 310 N.E.2d 96, 97 (Ind. Ct. App. 1974). “[W]here such an exemption is claimed, the party claiming the same must show a case, by sufficient evidence, which is clearly within the exact letter of the law.” Id. at 101 (internal citations omitted). One example relevant to this case is the change of the Indiana sales tax rate concerning sales of motor vehicles to out-of-state purchasers. Beginning July 1, 2014, Indiana’s sales “tax rate on a motor vehicle that a purchaser intends to: (1) transport to a destination outside Indiana within thirty (30) days after delivery; and (2) title or register for use in another state or country . . . is the rate of that state or country (excluding any locally imposed tax rates) as certified by the seller and purchaser in an affidavit . . . .” IC 6-2.5-2-3(b). (Emphasis added). In this case, Taxpayer stated that he was required to pay the sales tax the second time to register and title that vehicle in Arkansas. Taxpayer thus contended that he was entitled to the refund because the vehicle was to be titled and registered in Arkansas. To support his protest, Taxpayer provided the following: Upon review, Taxpayer here seemingly argued that (i) he was an Arkansas resident and voter, (ii) he intended to register the vehicle in Arkansas, and (iii) he was entitled to the refund of Indiana sales tax collected and remitted to Indiana. Taxpayer’s reliance on his documentation, however, is misplaced because his supporting documents failed to substantiate his argument, and whether he was an Arkansas resident and voter at the time of the purchase is beyond the scope of his protest. Taxpayer in this case was the purchaser of the vehicle. According to the signed Retail Purchase Agreement and ST-108, Taxpayer provided his Indiana address to the Dealership to complete his purchase at the Dealership’s location in Indiana. That is, Taxpayer accepted the delivery and took possession of the vehicle at the Indiana Dealership’s business location. Therefore, the transaction occurred in Indiana – was an Indiana sale – subject to Indiana sales tax pursuant to Indiana tax law. The Dealership correctly collected and remitted the Indiana sales tax at seven percent based on the information – an Indiana address – provided by Taxpayer at that time. Even if Taxpayer was an Arkansas resident at the time of the transaction and he intended to title and register the vehicle in Arkansas, Taxpayer’s documentation showed that he registered the vehicle with the State of Arkansas in late November 2023, which was more than thirty days from his initial purchase. Further, the transaction did not qualify for the interstate commerce exemption under IC 6-2.5-5-24(b), and there is no reciprocity between Indiana and Arkansas on motor vehicle sales. See also 45 IAC 2.2-5-53; 45 IAC 2.2-5-54, Sales Tax Information Bulletin 28S (January 2023), 20230125 Ind. Reg. 045230016NRA. As mentioned earlier, tax credits are a matter of legislative grace and are “only allowed as clearly provided for by statute, and are narrowly construed.” McFerrin, 570 F.3d at 675. In this instance, IC 6-2.5-2-3(b) specifically states “the state gross retail tax rate on a motor vehicle that a purchaser intends to: (1) transport to a destination outside Indiana within thirty (30) days after delivery; and (2) title or register for use in another state . . . is the rate of that state . . . .” The statutory language of IC 6-2.5-2-3(b) is plain and clear. To conclude, Taxpayer’s supporting documentation demonstrated that he purchased the vehicle and accepted the delivery at the Dealership’s location in Indiana. Taxpayer provided his Indiana address to the Dealership to complete the Retail Purchase Agreement and ST-108. Taxpayer’s purchase was an Indiana retail transaction subject to Indiana sales tax. The Dealership correctly collected and remitted Indiana sales tax at seven percent in July 2023. The Department correctly denied Taxpayer’s claim pursuant to the applicable Indiana law. FINDING Taxpayer’s protest is respectfully denied. February 3, 2025 Replaces Finding Document at: New