in-20250326-IR-045250133NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE MEMORANDUM OF DECISON: 04-20231193 Sales Tax For The Tax Year 2022 NOTICE: IC 4-22-7-7 permits the publication of this document in the Indiana Register. The publication of this document provides the general public with information about the Indiana Department of Revenue’s official position concerning a specific set of facts and issues. The “Holding” section of this document is provided for the convenience of the reader and is not part of the analysis contained in this Memorandum of Decision. HOLDING Individual was entitled to a refund of sales tax on the purchase of a motor vehicle because the vehicle was purchased in interstate commerce. ISSUE

I. Sales Tax – Refund.

Authority: IC 6-8.1-9-1; IC 6-2.5-2-1; IC 6-2.5-13-1; Dept. of Revenue, State of Indiana v. Kimball International, Inc., 520 N.E.2d 454 (Ind. Ct. App. 1988); 45 IAC 2.2-2-1; Sales Tax Information Bulletin 28S (February 2021). Taxpayer protests the refund denial of sales tax collected at the time of the sale. STATEMENT OF FACTS Taxpayer is an Arkansas resident. In 2022, Taxpayer purchased a van from a dealership located in Indiana. Dealership collected Indiana sales tax on the purchase at a rate of six and one-half percent (the Arkansas rate of sales tax). Taxpayer states that she subsequently had to also pay sales tax to Arkansas to register the vehicle. Because of this, Taxpayer filed a claim for refund with the Indiana Department of Revenue (“Department”) on June 13, 2022. The Department denied Taxpayer’s refund request. Taxpayer then filed a protest, and an administrative hearing was subsequently held. This Memorandum of Decision results. Additional facts will be provided as necessary.

I. Sales Tax – Refund.

DISCUSSION The Department determined that Taxpayer was not entitled to a refund because the dealership correctly charged Indiana sales tax at the Arkansas rate of six and one-half percent. IC 6-8.1-9-1(a) affords a taxpayer a statutory right to file a claim for refund. This statute provides, in part: 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 retail sale is sourced to Indiana and subject to Indiana sales tax when the transaction is a “retail sale” and the product is received by the purchaser at the business’ location in Indiana. IC 6-2.5-13-1(d)(1).A retail merchant that has a physical presence in Indiana shall collect the tax as an agent for the State. IC 6-2.5-2-1(b). Tax exemptions are strictly construed against the taxpayer. Dept. of Revenue, State of Indiana v. Kimball International, Inc., 520 N.E.2d 454, 456 (Ind. Ct. App. 1988). The taxpayer has the burden of establishing qualification under the terms of the exemption. Id. The Department’s Sales Tax Information Bulletin 28S, 20210331 Ind. Reg. 045210101NRA (February 2021), provides guidance on vehicle purchases that are Indiana transactions where the vehicle will later be transported out-of-state. The Bulletin explains, in part: Taxpayer stated on her Indiana Claim for Refund form that, “I am a nonresident and purchased a vehicle from Indiana. I paid sales tax to Indiana upon purchase, but then had to pay sales tax to Arkansas to register the vehicle.” In support of the protest, Taxpayer provided a written explanation of her protest, and copies of the Bill of Lading/Vehicle Inspection Report, the Purchase Agreement, a copy of the business card of the dealership’s salesperson, and a copy of a screenshot of text messages with the dealership’s customer service representative (“CSR”). In her protest, Taxpayer argues: Further, Taxpayer states that “even though the Indiana sales tax was collected at the Arkansas rate, since I didn’t take possession until the vehicle was at my home in Arkansas, this vehicle purchase qualifies as a transaction made in interstate commerce.” Regarding interstate commerce, the Sales Tax Information Bulletin 28S in effect for the time period states: (Emphasis in the original). In the present case, Taxpayer points out that on her “purchase agreement with the dealer, [she] was charged a fee of $920 for shipping by the dealer.” The purchase agreement does in fact show “$920 for shipping to [area code] Arkansas sales tax included.” Additionally, Taxpayer provided copies of a text conversation screenshot with the dealership’s CSR (the telephone number of the dealership on the business card matches the screenshot) showing the CSR stating, “Paperwork is all good. We are putting up for shipping now. I will let you know when one of our [i.e., dealership] Third Company jumps on it” and that the “[v]an is getting picked up on 5/20/2022 and should be delivered on 5/21/2022. [Car hauling company] will call you when there [sic] are around 3 hours away.” To summarize: Taxpayer purchased a van from an Indiana dealership; Taxpayer states that she “was never physically present in Indiana for the entirety of this transaction” and that the van “was transported to [her] in Arkansas by a third-party carrier hired by the dealer.” The evidence provided as part of the protest establishes this—both the purchase agreement and the screenshot of the text messaging with the dealership’s CSR. Taxpayer has met her burden of proof that the transaction was in interstate commerce, and thus is entitled to the requested refund. FINDING Taxpayer’s protest is sustained. January 15, 2025 Replaces Finding Document at: New