in-20250430-IR-045250181NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20241744 Indiana Individual Income Tax For the Year 2020 HOLDING The Department disagreed with Indiana Individual that the Department made a mistake when it adjusted the Individual’s income tax return by increasing his reported 2020 FAGI. ISSUE

I. Indiana Individual Income Tax – Federal Adjusted Gross Income.

Authority: IC 6-3-1-3.5; IC 6-3-2-1; 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); Lafayette Square Amoco, Inc. v. Indiana Dep’t of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 15-5-1. Taxpayer protests the Department’s assessment of 2020 individual income tax believing that the Department made a mistake when it increased his Federal Adjusted Gross Income (“FAGI”). STATEMENT OF FACTS Taxpayer is an Indiana resident who routinely files Indiana income tax returns. Taxpayer submitted his 2020 Indiana return. Taxpayer reported that he had received approximately $59,000 in FAGI. In a letter dated November 2023, the Department issued Taxpayer a “Notice of Proposed Assessment” explaining that Taxpayer owed approximately $6,000 in additional tax. The letter explained further: In order to correct the purported federal error, Taxpayer was requested to obtain and submit a federal account transcript by August 2024. While Taxpayer had originally reported $59,000 in FAGI, the Department increased that amount to approximately $170,000. Taxpayer disagreed with the assessment of additional Indiana income tax and submitted a protest to that effect. An administrative hearing was conducted by telephone during which Taxpayer explained the basis for the protest.

I. Indiana Individual Income Tax – Federal Adjusted Gross Income.

DISCUSSION The issue is whether Taxpayer has provided information sufficient to establish that the FAGI reported on his original return was correct and the Department’s assessment wrong. The underlying issue stems from the Department’s decision to increase Taxpayer’s federal adjusted gross income. 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, including during an action appealed to the tax court under this chapter. The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made.” 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. In weighing the Department’s original income tax adjustment, the relevant Indiana law, Taxpayer’s 2020 Indiana return, Taxpayer’s federal income tax transcript, and Taxpayer’s arguments, the Department bears in mind that “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.’” 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 Department’s decision increasing the amount of FAGI, are entitled to deference. The Department’s adjustments were made in fulfilling the Department’s responsibility set out in IC 6-8.1-5-1(b). That statute defines the Department’s responsibility. “If the [D]epartment reasonably believes that a person has not reported the proper amount of tax due, the [D]epartment shall make a proposed assessment of the amount of the unpaid tax on the basis of the best information available to the [D]epartment.” (Emphasis added). See also 45 IAC 15-5-1. 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(a). To correctly compute what is considered a resident/taxpayer's Indiana income tax, the Indiana statute refers to the Internal Revenue Code. IC 6-3-1-3.5(a) provides the starting point in determining the taxpayer's taxable income and to calculate what would be his or her Indiana income tax after applying certain additions and subtractions to that starting point. According to the Department’s secondary sources, Taxpayer underreported his FAGI by approximately $112,000. Taxpayer speculates that the $112,000 is not subject to FAGI because, as Taxpayer explains, “The amount due is incorrect because my taxes were not filed accurately in 2021 and need to be redone for 2020.” Taxpayer continues, “The CPA, [] will be refiling the taxes and [has] been attempting to gain access to my file with the state of Indiana.” The Department here is unable to agree that Taxpayer has met his burden, under IC 6-8.1-5-1(c), of establishing that the assessment is wrong. The proposed assessment was issued in November 2023 and Taxpayer’s protest was submitted in January 2024. It appears that Taxpayer’s advisor has been unable to submit the amended returns as Taxpayer suggests. As it stands, Taxpayer’s protest cannot be sustained. FINDING Taxpayer’s protest is respectfully denied. February 26, 2025 Replaces Finding Document at: New