in-20250430-IR-045250177NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE FINAL ORDER DENYING REFUND: 01-20241377 Individual Income Tax For the 2022 Tax Year HOLDING Individuals failed to establish that they were ever domiciled in a state other than Indiana. ISSUE

I. Individual Income Tax – Domicile.

Authority: IC 6-3-2-1; IC 6-3-1-12; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); 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); 45 IAC 3.1-1-22; Income Tax Information Bulletin 28 (February 2022). Taxpayers protest a denial of refund based on the Department’s determination that they were a full-year Indiana resident for tax purposes. STATEMENT OF FACTS Taxpayers are a husband and wife who regularly file joint Indiana tax returns. They filed a 2022 nonresident tax return with the Indiana Department of Revenue (“Department”). On their return, they alleged that they lived in Florida from January 1, 2022, through May 31, 2022, at which point they moved to Indiana, where they lived for the rest of the year. Taxpayers claimed on their return that their income from when they lived in Florida was not subject to Indiana state income tax. The Department disallowed this claim because Taxpayers’ W-2s indicated that all their income was properly sourced to Indiana. The Department accordingly granted only a partial refund to Taxpayers. Taxpayers timely protested this denial, and the Department held an administrative hearing. This Final Order Denying Refund results. Additional facts will be provided as necessary.

I. Individual Income Tax – Domicile.

DISCUSSION Taxpayers argue that they were not subject to Indiana income tax for part of the 2022 tax year because they were not residents of Indiana. Where a taxpayer is challenging the Department’s final determination, the taxpayer is required to provide documentation explaining and supporting its challenge. 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). Additionally, “when [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.’” Indiana Dep’t of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579, 583 (Ind. 2014). Thus, all interpretations of Indiana tax law contained within this decision are entitled to deference. Indiana imposes a tax on “the adjusted gross income of every resident person.” IC 6-3-2-1. Indiana law considers someone to be a resident of Indiana for tax purposes if they “[were] domiciled in this state during the taxable year[.]” IC 6-3-1-12. A taxpayer is “domiciled” in “the state or other place in which [they] intend[] to reside permanently or indefinitely and to return to whenever [they] leave[.]” 45 IAC 3.1-1-22(a). Once a taxpayer has established a domicile, they keep that domicile until they “voluntarily take[] affirmative action to become domiciled in another place.” 45 IAC 3.1-1-22(b). A taxpayer must do two things to establish a new domicile: they must (1) “be physically present at a place,” and (2) “have the simultaneous intent of establishing a permanent place of residence at that place.” 45 IAC 3.1-1-22(c) (emphasis added). The Department must determine whether a taxpayer has changed domicile based on “the totality of facts, supported by objective evidence, in each individual case.” 45 IAC 3.1-1-22(d). Taxpayers state that they were Indiana residents for many years up to 2021. In November 2021, they sold their old house, intending to move into a new house that they commissioned to be built, but the construction was delayed, and the house was not finished until June 2022. Taxpayers state that they moved to a home in Florida in November 2021 and did not move back to Indiana until June 2022. Taxpayers presented several documents in support of their residency claim. Taxpayers established that they registered to vote in Florida during the time they lived there, and they received state identification cards that they were required to surrender when they moved back to Indiana. Taxpayers also show that they were working remotely from Florida during this time, and that Wife changed the address on her W-2 to their Florida address. Taxpayers also showed that they did not close on their new home until June 2022, so they did not own a home in Indiana while they lived in Florida. However, even though Taxpayers lived in Florida for several months, they were still Indiana residents. Indiana law states that current Indiana residents only lose Indiana residency when they move out of the state intending the move to be permanent. Here, Taxpayers stated that this move was intended to be temporary, and the evidence supports that claim — Taxpayers began building a new permanent residence in Indiana before they moved to Florida. Further, Taxpayers had signed a contract that obligated them to purchase the home upon completion. The fact that Taxpayers did not work in Indiana during this time does not affect their tax burden. Indiana residents “must report all income that is reported for federal income tax purposes on their Indiana individual income tax return (Form IT-40). This includes all income, even if it is derived from sources outside Indiana.” Income Tax Information Bulletin 28 (February 2022), 20220223 Ind. Reg. 045220044NRA. To avoid double taxation, Indiana will generally allow resident taxpayers to claim a credit for income taxes paid to other states. See IC 6-3-3-3(a). However, since Florida does not have a state income tax, Taxpayers cannot claim this credit and owe Indiana income tax on all of their income from both Florida and Indiana. Taxpayers agree that they were Indiana residents before 2022. Taxpayers then allege that they gave up their Indiana residency when they moved to Florida temporarily. However, Indiana law states that temporary moves do not cause Indiana residents to lose their Indiana residency. The Department therefore cannot agree with Taxpayers that they were not Indiana residents for tax purposes at any point during the 2022 tax year. FINDING Taxpayers’ protest is respectfully denied. February 17, 2025 Replaces Finding Document at: New