in-20250326-IR-045250125NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20242236 Individual Income Tax For The Year 2023 NOTICE: IC 6-8.1-3-3.5 and IC 4-22-7-7 require the publication of this document in the Indiana Register. 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. This document is effective on its date of publication and remains in effect until the date it is superseded or deleted by the publication of another document in the Indiana Register. The “Holding” section of this document is provided for the convenience of the reader and is not part of the analysis contained in this Letter of Findings. HOLDING Individual established that the Department’s assessment of additional Indiana income tax was incorrect. ISSUE

I. Individual Income Tax – County Tax Withholding.

Authority: IC 6-3-2-1; IC 6-3-2-2; IC 6-3.6-2-13; IC 6-3.6-4-1; IC 6-3.6-8-3; IC 6-8.1-5-1; Indiana Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); 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). Taxpayer protests the Department’s assessment for additional Indiana income tax. STATEMENT OF FACTS Taxpayer is an Indiana resident who regularly files an Indiana individual income tax return (“Form IT-40”). In May 2024, Taxpayer received a Notice of Proposed Assessment indicating she owed additional Indiana income tax. Taxpayer disagreed with the assessment and submitted a protest to that effect. Taxpayer waived her right to an administrative hearing, and this Letter of Findings results. Additional facts will be provided as necessary.

I. Individual Income Tax – County Tax Withholding.

DISCUSSION The Department determined that Taxpayer owed additional Indiana income tax after reviewing information related to her 2023 IT-40. Taxpayer disagreed and protested the assessment. In support, Taxpayer provided a copy of her 2023 W-2 and Earnings Summary (“W-2”). 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. Consequently, a taxpayer must provide documentation explaining and supporting that the Department’s position is wrong. See 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). 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 a tax “upon the adjusted gross income of every resident person.” IC 6-3-2-1. IC 6-3-2-2(a) outlines what qualifies as income derived from Indiana sources and is subject to Indiana income tax. In terms of county taxes, such as local income taxes, IC 6-3.6-4-1 provides that, "a tax is imposed on the adjusted gross income of local taxpayers at a tax rate that is a sum of the tax rates imposed by the county's adopting body and in effect in the county.” Pursuant to IC 6-3.6-2-13, a local taxpayer is defined as "[a]n individual who resides in that county on the date specified in IC 6-3.6-8-3.” Taxpayer initially reported on her IT-40 that approximately $1,300 was withheld for local income tax throughout the 2023 tax year. The Department subsequently made an adjustment on Taxpayer’s IT-40 to reflect that only $101 had been withheld. Taxpayer provided a copy of her W-2 which reflects that she was sent two W-2’s for the 2023 tax year from the same employer. One of the W-2’s reflects $101 withheld for local income tax. When combined with the other W-2, the amount equals the approximately $1,300 as initially reported by Taxpayer. Taxpayer correctly reported her Indiana county tax withheld. The Department erred when it adjusted Taxpayer’s IT-40 and reduced her Indiana county income tax withheld. Therefore, the resulting assessment was incorrect. FINDING Taxpayer’s protest is sustained. January 17, 2024 Replaces Finding Document at: New