in-20250326-IR-045250122NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20242025 Individual Income Tax For the 2019, 2020, and 2021 Tax Years HOLDING Individual showed that an adjustment in the Department’s audit was based on incorrect information. ISSUE

I. Individual Income Tax – Best Information Available.

Authority: IC 6-3-2-1; IC 6-3-4-1; 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); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480 (Ind. Tax Ct. 2012); Scopelite v. Indiana Dep't of Local Gov't Fin., 939 N.E.2d 1138 (Ind. Tax Ct. 2010); Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007). Taxpayer protests an assessment based on the Department’s determination that he had failed to report business income on his personal income tax return. STATEMENT OF FACTS Taxpayer, an individual, timely filed his 2020 and 2021 tax returns with the Indiana Department of Revenue (“Department”). In 2023, the Department performed an audit of Taxpayer’s returns based on information provided to it that he ran a business and did not report the income on his tax returns. As a result of this audit, the Department determined that Taxpayer had additional income that he had failed to report, and it assessed him additional income tax based on the best information available. Taxpayer timely protested, and this Letter of Findings results. Because Taxpayer waived his right to a hearing, this Letter of Findings relies on documentation provided by Taxpayer and the Department’s records.

I. Individual Income Tax – Best Information Available.

DISCUSSION Taxpayer argues that the Department incorrectly determined that he had additional business income because, despite what the Department’s audit claimed, he was not running a business out of his home. 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) and Lafayette Square Amoco, Inc. v. Indiana Dept. of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). Where a taxpayer is challenging the Department’s final determination, the taxpayer is required to provide documentation explaining and supporting its challenge. 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); Wendt LLP v. Indiana Dep't of State Revenue, 977 N.E.2d 480, 486 n.9 (Ind. Tax Ct. 2012). Additionally, “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.’” Indiana Dep’t 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 are entitled to deference. Indiana imposes a tax on “the adjusted gross income of every resident person.” IC 6-3-2-1. Individual taxpayers are required to file a return with the Department. IC 6-3-4-1. If the Department “reasonably believes that a person has not reported the proper amount of tax due,” it is required to propose an assessment for the unpaid tax. IC 6-8.1-5-1(b). The Department must base its assessment “on the basis of the best information available” to it. Id. Taxpayer provided documentation, including bank statements for each month under audit and a reconciliation form, to one of the Department’s regional offices to show that the Department’s audit was incorrect. Upon further review, the documentation and subsequent explanations that Taxpayer provided are sufficient to show that the Department was incorrect to assess any of the credits to his bank account as business income. Further, his documentation and explanation are sufficient to show that the Department’s original assessment of business income was incorrect. Taxpayer has shown that he does not owe the Department additional tax for the years under audit. Taxpayer presented documentation sufficient to carry his burden to prove that the Department’s assessment was incorrect. Therefore, Taxpayer’s protest is sustained, and he does not owe the Department for additional tax based on the result of the 2023 audit. FINDING Taxpayer’s protest is sustained. January 7, 2025 Replaces Finding Document at: New