in-20250430-IR-045250188NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE Final Oder Denying Refund: 01-20251006 Income Tax For the Year 2020 HOLDING Individual was not entitled to an additional refund of income tax because Individual’s income was attributable to Indiana sources and her request was not timely. ISSUE

I. Income Tax – Statute of Limitations.

Authority: IC 6-3-1-3.5; IC 6-3-1-12; IC 6-3-1-13; IC 6-3-2-1; IC 6-3-2-2; IC 6-3-4-8; IC 6-3.6-8-3; IC 6-3.6-8-6; IC 6-8.1-9-1; Indiana Dep’t of State Rev. v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Miller Brewing Co. v. Indiana Dep’t of State Revenue, 903 N.E.2d 64 (Ind. 2009); Scopelite v. Indiana Dep’t of Local Gov’t Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); 45 IAC 3.1-1-23; 45 IAC 3.1-1-97; 45 IAC 15-9-2; Income Tax Information Bulletin 28 (November 2016); Income Tax Information Bulletin 28 (February 2022); Income Tax Information Bulletin 32 (July 2008); Income Tax Information Bulletin 32 (December 2022). Taxpayer protested the refund denial, claiming that she was entitled to an additional refund because her employer erred in withholding and remitting income tax on her behalf. STATEMENT OF FACTS Taxpayer is an individual who currently resides in another state. Taxpayer requested a tax refund for 2020, stating that she moved to another state after April 1, 2020. The Indiana Department of Revenue (“Department”) reviewed, processed, and ultimately denied Taxpayer’s refund request in July 2024 because the request was not timely. Taxpayer protested the refund denial and asked that the Department make the final determination without a hearing. This Final Order Denying Refund results.

I. Income Tax – Statute of Limitations.

Discussion The Department reviewed and denied Taxpayer’s refund request. Taxpayer contended that she was entitled to an additional refund because she relocated to another state after April 1, 2020, and her employer erred in withholding Indiana taxes on her behalf. The issue is whether Taxpayer’s documents demonstrated that she was entitled to the refund.  The Department generally “has no legal method of generating a claim for refund. A claim for refund can only be initiated pursuant to IC 6-8.1-9-1.” 45 IAC 15-9-2(b). To obtain a refund, the person must file the claim with the Department “within three (3) years after the later of . . . [t]he due date of the return [or the] date of payment.” IC 6-8.1-9-1(a). The claim must include certain verifiable information such as the amount of the refund to which the person is entitled, the reasons why the person is entitled to the refund, the tax period for which the overpayment is claimed, and the year and date of the overpayment. 45 IAC 15-9-2(d). A claim for refund is required to be filed on the form prescribed by the Department. Id. Importantly, “each tax year stands alone.” Miller Brewing Co. v. Indiana Dep’t of State Revenue, 903 N.E.2d 64, 69 (Ind. 2009). The taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department made an error. When an agency is charged with enforcing a statute, the jurisprudence defers 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 adjusted gross income tax on all residents. IC 6-3-2-1. An Indiana resident taxpayer’s income is determined by starting with the federal adjusted gross income and making certain adjustments. IC 6-3-1-3.5. The Indiana statute refers to the Internal Revenue Code to compute what is considered the taxpayer’s Indiana income tax. For corporations or nonresidents, IC 6-3-2-2(a) provides what is income derived from Indiana sources and subject to Indiana income tax. The term “resident,” under IC 6-3-1-12, “includes (a) any individual who was domiciled in this state during the taxable year, or (b) any individual who maintains a permanent place of residence in this state and spends more than one hundred eighty-three (183) days of the taxable year within this state.” Nonresident is “any person who is not a resident of Indiana.” IC 6-3-1-13. An Indiana resident who, “on or before the last day of the taxable year, changes his [or her] residence or domicile from Indiana to a place without Indiana, with the intent of abiding permanently without Indiana, is subject to adjusted gross income tax on all taxable income earned while an Indiana resident.” 45 IAC 3.1-1-23(2). In other words, for state income tax purposes, “Indiana will not tax income of a taxpayer who moves from Indiana and becomes an actual domiciliary of another state or country except that income received from Indiana sources will continue to be taxable.” Id. Nonetheless, as to county income tax, IC 6-3.6-8-3(b) states: A taxpayer is entitled to a tax credit for income tax paid to a local government outside of Indiana pursuant to IC 6-3.6-8-6(a), in part, states: Income Tax Information Bulletin 28 (November 2016), 20161228 Ind. Reg. 045160560NRA, in part, explains that “[p]art-year Indiana residents must file an Indiana individual income tax return (Form IT-40PNR). They are subject to tax on that part of their total federal income that was received while they were residents of Indiana. . . . [T]hey are also taxable on income from Indiana sources received while they were nonresidents of Indiana.” See also Income Tax Information Bulletin 28 (February 2022), 20220223 Ind. Reg. 045220044NRA. Income Tax Information Bulletin 32 (July 2008), 20080827 Ind. Reg. 045080659NRA, provides a general guidance for the county income tax withholding based on county of residence and county of work. Therefore, as of January 1 each year, if an employee works for an employer within a county in Indiana, the employer is required to “withhold, collect, and pay over income tax on wages paid by such employer to such employee . . . [in] the amount prescribed in withholding instructions issued by the [D]epartment.” IC 6-3-4-8(a). The employer is the withholding agent for the state of Indiana and “shall make return of and payment to the Department [] tax due, for either County and State.” 45 IAC 3.1-1-97. Taxpayer in this case claimed that the Department erred in denying her refund request. In a letter, Taxpayer stated:  Taxpayer further asserted that she was entitled to the refund because it was her employer who erred. As such, Taxpayer maintained that the three-year statute of limitations was not applicable in this instance. To support her protest, Taxpayer offered a letter from her employer, a residential lease agreement, and a partial tenant ledger.   Upon review, however, Taxpayer was mistaken. Unequivocally, as of January 1, 2020, Taxpayer resided and worked in Marion County, Indiana. Thus, for county income tax purposes, Taxpayer was deemed a resident under IC 6-3.6-8-3(b) and, therefore, her employer properly withheld county income tax on wages paid. Additionally, Taxpayer’s wage income prior to April 1, 2020, was attributable to Indiana income sources based on her supporting documents. Thus, for Indiana income tax purposes, her income attributable to Indiana was subject to Indiana income tax pursuant to IC 6-3-2-2(a) and 45 IAC 3.1-1-23(2). As mentioned, if Taxpayer believed that she overpaid the county and Indiana income taxes – she had three years – on or before May 21, 2024 – to request the refund under IC 6-8.1-9-1(a). The due date of the original Indiana income tax return for the 2020 year was May 21, 2021. However, Taxpayer did not do so. A review of the Department’s record showed that Taxpayer submitted the required supporting documents to support her refund claim in July 2024, which was more than three years. To conclude, given the totality of the circumstances, the Department is not able to agree that Taxpayer was entitled to the refund because her claim was not timely. Taxpayer was a resident for county income tax purposes and her wage prior to April 1, 2020, was subject to Indiana income tax. Finding Taxpayer’s protest is denied. February 28, 2025 Replaces Finding Document at: New