in-20250326-IR-045250139NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20242373 Use Tax For The Year 2023 HOLDING Taxpayer failed to establish that the Department’s assessment of use tax on a vehicle purchase was incorrect. ISSUE

I. Use Tax – Imposition.

DISCUSSION Indiana imposes an excise tax called “the state gross retail tax” or “sales tax” on retail transactions made in Indiana. IC 6-2.5-2-1(a); 45 IAC 2.2-2-1. A person who acquires property in a retail transaction is liable for the sales tax on the transaction. IC 6-2.5-2-1(b). Indiana also imposes a complementary excise tax called a “use tax” on “the storage, use, or consumption of tangible personal property in Indiana if the property was acquired in a retail transaction, regardless of the location of that transaction or of the retail merchant making that transaction.” IC 6-2.5-3-2(a). “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 a functional equivalent to the sales tax. See Rhoade v. Indiana Dept. of State Revenue, 774 N.E.2d 1044, 1047 (Ind. Tax Ct. 2002). At the time a person pays the use tax for the purchase of a vehicle to a titling agency pursuant to subsection (d), the titling agency shall compute the tax due based on the presumption that the sale price was the average selling price for that vehicle, as determined under a used vehicle buying guide to be chosen by the titling agency. However, the titling agency shall compute the tax due based on the actual sale price of the vehicle if the buyer, at the time the buyer pays the tax to the titling agency, presents documentation to the titling agency sufficient to rebut the presumption set forth in this subsection and to establish the actual selling price of the vehicle. Taxpayer protested the assessment and explained, “[Taxpayer] sold this vehicle for $20,000.00, not $0.00 as your documentation presents” Taxpayer provided a copy of the cashier’s check it issued to the seller, who is also an officer of the company. Taxpayer has provided facts inconsistent with information provided to the BMV. Taxpayer suggests it sold the vehicle for $20,000. This assessment is, however, related to its purchase of the vehicle. Further, the Application for Certificate of Title for a Vehicle provided to the Department was completed by Taxpayer’s Director of Finance at the time it registered the vehicle. The vehicle selling price on this document is listed as $0.00. The reverse side of the title also reflects a purchase price of $0.00. To support this, Taxpayer submitted a Form ST-108E when titling the vehicle claiming that it was exempt from sales and use tax because it was “transferred from one individual to another with no consideration.” Taxpayer did not pay sales or use tax at the time it titled the vehicle. Taxpayer states in its explanation that the transaction for the vehicle occurred on March 4, 2023. However, the check provided by Taxpayer for $20,000 is dated May 4, 2024. The purchase of the vehicle and the issuance of the check did not occur contemporaneously. Taxpayer has provided no other evidence to support its assertion that the $20,000 check was provided as consideration for the purchase of the vehicle or any indication as to why the check was issued to the seller more than a year after the purported purchase occurred. After review of the documentation, the Department cannot agree that Taxpayer has met its burden of showing that the proposed assessment was incorrect. Taxpayer’s argument is inconsistent with information and documentation it provided to the BMV. It is unclear whether Taxpayer gave no consideration for the purchase of the vehicle or paid $20,000 due to the contradictory information provided by Taxpayer. Regardless, this purchase was not exempt from use tax for the reason Taxpayer suggests on Form ST-108E. Taxpayer has not argued that it qualifies for any other exemption provided for on Form ST-108E. Finally, Taxpayer has not provided sufficient evidence to rebut the presumption stated in IC 6-2.5-3-6(e) to establish the actual sale price of the vehicle. Therefore, Taxpayer is liable for use tax based upon the average selling price for the vehicle. Even if the Department were to find that the actual sale price of the vehicle was $20,000, Taxpayer would still be liable for use tax on that amount. FINDING January 24, 2025 Replaces Finding Document at: New