in-20250326-IR-045250137NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 04-20241309 Use Tax For the Year 2021 HOLDING A review of Taxpayer’s account established the Department’s assessment of use tax on a vehicle purchase was incorrect. ISSUE

I. Use Tax – Imposition.

Authority: IC 6-2.5-2-1; IC 6-2.5-3-1; IC 6-2.5-3-2; IC 6-2.5-3-6; 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); Rhoade v. Indiana Dept. of State Revenue, 774 N.E.2d 1044 (Ind. Tax Ct. 2002); 45 IAC 2.2-2-1; 45 IAC 2.2-3-4; Bureau of Motor Vehicles - Sales and Use Tax, https://www.in.gov/bmv/titles/buying-and-selling. Taxpayer protests the assessment of consumer use tax on a vehicle purchase. STATEMENT OF FACTS Taxpayer is an Indiana resident. In August 2021, Taxpayer purchased a 2002 Chevrolet Silverado. Taxpayer registered the vehicle with the Indiana Bureau of Motor Vehicles (“BMV”). At the BMV, Taxpayer submitted documentation showing the purchase price was $500 and paid $35 in tax. The Indiana Department of Revenue (“Department”) later received information from the BMV regarding the purchase because the purchase price appeared significantly lower than the “blue book” value of the vehicle for the particular make and model. As a result of the review, the Department issued Taxpayer an assessment for use tax. Taxpayer protested the assessment and requested resolution with a hearing. A hearing was held, and this Letter of Findings results. Additional facts will be provided as necessary.

I. Use Tax – Imposition.

DISCUSSION The Department determined Taxpayer’s vehicle was subject to additional use tax after a review of information received from the BMV. Taxpayer protested the assessment. As a threshold issue, it is the 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 Dept. of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). An assessment is presumed valid. A taxpayer must provide documentation explaining and supporting that the Department’s position is wrong. Additionally, “[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). 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). Tangible personal property purchased in Indiana and stored, used, or otherwise consumed in Indiana is subject to Indiana use tax for such property unless the Indiana sales tax has been collected at the point of purchase. 45 IAC 2.2-3-4. IC 6-2.5-3-6 provides further guidance on the collection of use tax on the use, storage, or consumption of tangible personal property acquired in a retail transaction. The person liable for the use tax shall pay the use tax to the Department or, in the case of a vehicle, to the titling agency when the person applies for a title for the vehicle. IC 6-2.5-3-6(c) and (d)(1). Further, IC 6-2.5-3-6(e) states: (Emphasis added.) The Department reviewed Taxpayer’s vehicle purchase based on a request from the BMV. The BMV noted that the purchaser (Taxpayer) conducted a “transfer of ownership with little or no consideration.” Based upon this information, the Department completed a review and issued an assessment for use tax based upon the “blue book” value of the vehicle. Taxpayer protested the assessment. Taxpayer provided an explanation as to how he became the owner of the vehicle. Taxpayer’s boss purchased the truck for his business for $1,500. The truck was unreliable and stopped running fairly quickly after purchasing. It was going to cost more than the purchase price to fix the truck and get it running properly. Taxpayer’s boss told Taxpayer he could have the truck for $500 if he got it off the business’ property. Taxpayer agreed and purchased the truck from his boss. The purchase was completed, and Taxpayer registered the vehicle with the BMV. Taxpayer provided photos of the truck showing that the seats are ripped, the exterior is rusted, and the vehicle has over 200,000 miles. A review of the Department’s records provided a copy of the Certificate of Title that Taxpayer submitted to the BMV in order to have the vehicle titled in his name after the purchase. Per the instructions on the Certificate of Title, the seller completed the form and filled in the sales date and sales price. The Certificate of Title stated the selling price was $500. Taxpayer completed and signed the “Purchaser Information” section. Because the vehicle was a private purchase, Taxpayer was then responsible for paying any sales tax at the BMV when applying for a new Certificate of Title. See Bureau of Motor Vehicles - Sales and Use Tax, https://www.in.gov/bmv/titles/buying-and-selling (last visited November 26, 2024). Taxpayer paid the required tax, $35, when the vehicle was later registered with the BMV. After review of the documentation, it is clear the Department’s assessment was wrong under IC 6-8.1-5-1. Owner was within his right to sell the vehicle to Taxpayer for a sales price under the “blue book” value. Additionally, Taxpayer provided the required documentation when registering the vehicle with the BMV which showed the purchase price was $500. The BMV correctly assessed tax on Taxpayer’s purchase based on the selling price on the Certificate of Title. Taxpayer’s protest is sustained. FINDING Taxpayer’s protest is sustained. January 24, 2025 Replaces Finding Document at: New