in-20250326-IR-045250123NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20242166 Individual Income Tax For the Year 2023 HOLDING Indiana Resident failed to meet his burden of establishing that both the Department’s adjustments to his 2023 return and a proposed assessment of additional tax were wrong. ISSUE

I. Indiana Individual Income Tax – Business Expenses.

Authority: IC 6-8.1-5-1; IC 6-8.1-5-4; 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 15-5-1. Taxpayer argues that the Department made a mistake when it assessed additional income tax and failed to accept Taxpayer’s 2023 return as filed. STATEMENT OF FACTS Taxpayer is an Indiana resident who routinely files for and pays Indiana income tax. The Indiana Department of Revenue (“Department”) reviewed Taxpayer’s 2023 return and assessed additional Indiana income tax. Taxpayer received a written “Notice of Proposed Assessment” dated May 2024 detailing the adjustments made to Taxpayer’s originally filed return. Taxpayer disagreed with the assessment and submitted a protest to that effect. Upon receipt of Taxpayer’s protest, the Department requested that Taxpayer provide additional information. In a letter dated September 26, 2024, the Department asked for “receipts, paid invoices, bank statements, and cleared checks to substantiate Schedule C [proprietorship income and loss] income or expenses claimed.” In particular, the Department asked for details of Taxpayer’s gross income, contract labor, insurance, and car and truck expenses. An administrative phone hearing was scheduled in order to allow Taxpayer to explain the reasons for his protest. However, Taxpayer chose not to take part. This Letter of Findings is based on a review of the original return, Taxpayer’s protest letter, and on information available to the Department.

I. Indiana Individual Income Tax – Business Expenses.

DISCUSSION The issue is whether Taxpayer has met his burden of establishing that the Department’s adjustments to his 2023 return were wrong. IC 6-8.1-5-4(a) requires that “[e]very person subject to a listed tax must keep books and records so that the [D]epartment can determine the amount, if any, of the person’s liability for that tax by reviewing those books and records. The records . . . include all source documents necessary to determine the tax, including invoices, register tapes, receipts, and canceled checks.” The person also “must allow inspection of the books and records and returns by the [D]epartment or its authorized agents at all reasonable times.” IC 6-8.1-5-4(c). The assessment was issued 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. Taxpayer has the responsibility of establishing that the Department’s adjustments to his return were wrong. 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 . . . The burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made.” 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). In order to meet that burden, a protesting taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department’s position is wrong. Further, “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 with the Department’s adjustments to the 2023 return, are entitled to deference. Taxpayer’s argument is straightforward. In full, Taxpayer states that “[u]pon reviewing my 2023 Tax Return, I do not owe Indiana State Taxes for the year 2023.” Unfortunately, Taxpayer failed to respond to the Department’s request for additional information contained in the September 2024 letter. The failure to provide the information does nothing to buttress his arguments and is in contravention of IC 6-8.1-5-4(c), which mandates that Indiana taxpayers “allow inspection of the books and records and returns ” What remains is Taxpayer’s barebones statement that he does not owe state taxes. The statement does not meet the burden of proof required under IC 6-8.1-5-1. FINDING Taxpayer’s protest is respectfully denied. January 31, 2025 Replaces Finding Document at: New