in-20250430-IR-045250197NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20241520 Sales and Use Tax For the Tax Year 2021 HOLDING  Individual failed to document that he was not responsible for the use tax assessed based on fair market value of a 2001 Rinker 242 Fiesta Vee.

I. Sales and Use Tax – Imposition.

Authority: IC 6-2.5-2-1; IC 6-2.5-3-1; IC 6-2.5-3-2; IC 6-2.5-3-4; IC 6-8.1-5-1; IC 6-8.1-5-4; Indiana Dep’t of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Scopelite v. Indiana Dep’t of Local Gov’t Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Rhoade v. Indiana Dep’t of State Revenue, 774 N.E.2d 1044 (Ind. Tax Ct. 2002); Indiana Dep’t of State Revenue, Sales Tax Division v. RCA Corp., 310 N.E.2d 96 (Ind. Ct. App. 1974); 45 IAC 2.2-2-1; 45 IAC 2.2-3-4; 45 IAC 2.2-3-14. Taxpayer protests the proposed assessment of the use tax on a 2001 Rinker 242 Fiesta Vee. STATEMENT OF FACTS Taxpayer is an Indiana resident, who titled and registered a watercraft – 2001 Rinker 242 Fiesta Vee – at the Indiana Bureau of Motor Vehicles (“BMV”) in 2021. Taxpayer’s application for the title at the BMV stated that the selling price of that 2001 Rinker 242 Fiesta Vee was zero ($0). Taxpayer’s title application at the BMV was forwarded to the Indiana Department of Revenue (“Department”) for a review. Based on the best information available to the Department, the fair market value for that watercraft was determined to be $11,780. The Department after the review assessed Taxpayer an additional use tax, interest, and penalty. Taxpayer protested and requested that the Department make the “[f]inal determination without a hearing.” This Letter of Findings ensues.

I. Sales and Use Tax – Imposition.

DISCUSSION The Department reviewed Taxpayer’s application and determined that Taxpayer was responsible for the Indiana use tax concerning the title transfer of the boat. Taxpayer claimed that his brother owned the 2001 Rinker 242 Fiesta Vee and that he simply titled it on behalf of his brother. Thus, the issue is whether Taxpayer’s documents demonstrate that he was not responsible for the tax. A taxpayer “must keep books and records, including all source documents” under IC 6-8.1-5-4(a) “so that the [D]epartment can determine the amount, if any, of the person’s liability for that tax by reviewing those books and records.” All tax assessments are prima facie evidence that the Department’s claim for the unpaid tax is valid; the taxpayer bears the burden of proving that any assessment is incorrect. IC 6-8.1-5-1(c). The taxpayer is required to provide documentation to explain and support his or her challenge. When an agency is charged with enforcing a statute, the courts defer to the agency’s reasonable interpretation of that statute “over an equally reasonable interpretation by another party.” Indiana Dep’t of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). 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). Indiana imposes an excise tax called “sales tax” on retail transactions made in Indiana. IC 6-2.5-2-1(a); 45 IAC 2.2-2-1. In addition, the Indiana use tax is imposed “on the storage, use, or consumption of a . . . watercraft . . . if the . . . watercraft: (1) is acquired in a transaction that is an isolated or occasional sale; and (2) is required to be titled, licensed, or registered by this state for use in Indiana.” IC 6-2.5-3-2(b). “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 functionally equivalent to the sales tax. See Rhoade v. Indiana Dep’t of State Revenue, 774 N.E.2d 1044, 1047 (Ind. Tax Ct. 2002). An exemption from the use tax is granted for transactions where the sales tax was paid at the time of purchase pursuant to IC 6-2.5-3-4 and 45 IAC 2.2-3-4. There are additional tax exemptions available under Indiana tax law; these enumerated exemptions also apply to transactions which are subject to Indiana use tax. 45 IAC 2.2-3-14. A statute which provides a tax exemption, however, 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). Taxpayer in this instant case stated, in relevant part: Taxpayer in this case seemingly argued that he was not responsible for the tax because according to his protest letter, his brother was the owner of the boat, who resided in Illinois at the time when Taxpayer – on his brother’s behalf – titled that boat in Indiana. Additionally, Taxpayer seemingly argued that his brother “asked me to register the boat in my name” was a nontaxable intrafamilial transfer. Taxpayer, however, did not provide any verifiable source documents to support his protest. Upon review, Taxpayer is mistaken. Taxpayer did not act as an agent for his brother when he titled and registered that boat. Rather, Taxpayer put his name, as the applicant, in the application for the title, and as the owner during the physical inspection in July 2021. Taxpayer’s brother was never mentioned in his application for the Indiana Application for Certificate of Watercraft Title. The Department’s records contained a copy of the State of Illinois Watercraft Certificate of Title, and its front page stated that the owner of the boat was an Illinois resident with a different name, not the name of Taxpayer’s brother. Further, the Assignment of Title on the back of that Watercraft Certificate of Title stated that “the undersigned hereby certifies that the watercraft described in this title has been transferred to” Taxpayer. Therefore, Taxpayer did not acquire the boat from his brother. The title transfer from the owner of that boat to Taxpayer was subject to sales tax. Since Taxpayer did not pay sales tax at the transaction, he was responsible for the use tax when he titled and registered the boat at the BMV. To conclude, the State of Illinois Watercraft Certificate of Title speaks for itself. Given the totality of the circumstances, in the absence of verifiable source documents from Taxpayer to substantiate his protest, the Department is not able to agree that Taxpayer met his burden of proof under IC 6-8.1-5-1(c). FINDING Taxpayer’s protest is respectfully denied. February 28, 2025 Replaces Finding Document at: New