in-20250430-IR-045250203NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20242270 Use Tax For the 2021 Tax Year HOLDING Individual failed to establish that he did not owe use tax but successfully established that the Department’s assessment was too high. ISSUE

I. Use Tax – Motor Vehicle.

Authority: IC 1-1-4-1; IC 6-2.5-1-2; IC 6-2.5-3-2; IC 6-2.5-3-6; IC 6-2.5-5-15.5; IC 6-8.1-5-1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Indiana Dept. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); 45 IAC 2.2-1-1; Black’s Law Dictionary. Taxpayer protests the assessment of use tax on the transfer of a motor vehicle. STATEMENT OF FACTS Taxpayer is an Indiana resident. In May 2021, Taxpayer’s father-in-law transferred title of a motor vehicle to him. On the title application, his father-in-law listed the sale price as $1.00. The Indiana Department of Revenue (“Department”) received information that Taxpayer had underreported the retail purchase price of the vehicle. The Department then assessed use tax based on the fair market value of the vehicle. Taxpayer timely protested. The Department held an administrative hearing, and this Letter of Findings results. Further facts will be provided as necessary.

I. Use Tax – Motor Vehicle.

DISCUSSION Taxpayer argues that he does not owe use tax because the title transfer was exempt. As a threshold issue, it is a taxpayer’s responsibility to establish that the existing tax assessment is incorrect. A proposed assessment is prima facie evidence that the Department’s claim for the unpaid tax is valid. IC 6-8.1-5-1(c). The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made. Id.; See e.g., Indiana Dep’t of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012) and 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. Further, “[W]hen [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, all interpretations of Indiana tax law contained within this decision shall be entitled to deference. Indiana imposes an excise tax called the “use tax” on “the storage, use, or consumption of tangible personal property in Indiana if the property was acquired in a retail transaction.” IC 6-2.5-3-2(a). For sales of motor vehicles, the use tax is also imposed on “an isolated or occasional sale.”  IC 6-2.5-3-2(b)(1); 45 IAC 2.2-1-1(d). In other words, the purchaser of a motor vehicle must pay sales or use tax so long as they acquired the vehicle in a sale, i.e., a transfer for consideration. However, a taxpayer does not owe sales or use tax when they acquire a motor vehicle from a “spouse, child, grandparent, parent, or sibling[.]” IC 6-2.5-5-15.5. A taxpayer who purchases a motor vehicle is “personally liable for the use tax.” IC 6-2.5-3-6(b). A taxpayer who owes use tax on the purchase of a motor vehicle must pay the tax “to the titling agency when [they apply] for a title for the vehicle[.]” IC 6-2.5-3-6(d)(1). When it computes the tax, the titling agency will presume that the taxpayer paid the fair-market value for the vehicle unless the taxpayer presents documentation “sufficient to rebut [this] presumption . . . and to establish the actual selling price of the vehicle.” IC 6-2.5-3-6(e). Taxpayer’s purchase of the car was not exempt from use tax under IC 6-2.5-5-15.5. Taxpayer stated in his protest letter that he received the car from his father-in-law, and that his father-in-law qualifies as his parent for purposes of Indiana law. The term “parent” is not defined in the Indiana code for purposes of IC 6-2.5-5-15.5, so the Department must give the term its “plain, or ordinary and usual,” meaning. IC 1-1-4-1(a). Black’s Law Dictionary defines “parent” as the “lawful father or mother of someone.” Black’s Law Dictionary 1339–40 (11th ed. 2019). An “in-law,” by contrast, is a “relative by marriage.” Id. at 940. The Department therefore finds that the plain meaning of “parent” in IC 6-2.5-5-15.5 does not include parents-in-law. The Department cannot agree that Taxpayer’s purchase of his father-in-law’s car was exempt from Indiana use tax. However, Taxpayer has carried his burden to show that the Department overvalued the car when assessing him use tax. At the hearing, Taxpayer provided appraisals of his vehicle from several online sources, all of which valued the car at roughly $8,000. Taxpayer has carried his burden to show that the Department’s assessment was incorrect, and the Department will recalculate his use tax owed. Taxpayer purchased a car from his father-in-law. This purchase was subject to use tax. However, Taxpayer successfully showed that the car was worth less than the Department’s original assessment suggested. Taxpayer therefore owes use tax to the Department, but in an amount less than the original assessment. FINDING Taxpayer’s protest is sustained to the extent that the Department will recalculate his use tax owed and denied in all other respects. February 27, 2025 Replaces Finding Document at: New