in-20250326-IR-045250115NRA: DEPARTMENT OF STATE REVENUE

DEPARTMENT OF STATE REVENUE LETTER OF FINDINGS: 01-20241599 Individual Income Tax For the Year 2020 HOLDING Indiana Individual failed to meet his burden of challenging the Department’s decision adjusting the federal adjusted gross income tax reported on his Indiana return to mirror the amount reported on his federal return. ISSUE

I. Indiana Individual Income Tax – Federal and Indiana Adjusted Gross Income.

Authority: IC 6-3-1-3.5; IC 6-3-2-1; IC 6-8.1-5-1; Dept. of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014); Indiana Dep’t of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 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 Dep’t of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007). Taxpayer argues that the Department erred when it made a correction to Taxpayer’s 2020 tax return and assessed additional tax called for by the adjustment. STATEMENT OF FACTS Taxpayer is an Indiana resident who timely filed a 2020 IT-40 Individual Income Tax Return. On that return, Taxpayer reported receiving approximately $14,500 in federal adjusted gross income (“AGI”). The Indiana Department of Revenue (“Department”) reviewed the return and, in 2023, adjusted the return. The Department increased the AGI to approximately $20,500. In effect, the Department found that Taxpayer underreported his taxable income by approximately $6,000. In a letter dated November 2023, the Department issued Taxpayer a “Notice of Proposed Assessment” for approximately $325 in additional 2020 income tax. The letter explained as follows: . . . . The November letter suggested that, if the Taxpayer disagreed with the assessment, “You must submit an IRS Record of Account to show a reduced FAGI.” Alternatively, the letter indicated that Taxpayer was entitled to “file a protest.” Taxpayer contacted the Department asking for an explanation. The Department responded in a letter dated June 2024. The June letter explained as follows: Federal Adjusted Gross Income (AGI) ≈$20,500 Federal AGI, as reported to Indiana (line 1, IT-40) ≈$14,500 Unreported income ≈$6,000 . . . . Taxpayer disagreed with the Department’s proposed assessment of additional 2020 Indiana individual income tax and submitted a protest to that effect. This Letter of Findings is based on information provided by Taxpayer and information available to the Department.

I. Indiana Individual Income Tax – Federal and Indiana Adjusted Gross Income.

DISCUSSION The issue is whether Taxpayer has met his burden of establishing that the Department made a mistake when it issued a notice of proposed assessment based on Taxpayer’s purportedly underreported 2020 FAGI. The Department points out that it is Taxpayer’s responsibility to establish that the income tax adjustment is 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 Dep’t of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dep’t of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007). Consequently, a taxpayer is required to provide documentation explaining and supporting his or her challenge that the Department’s position is wrong. 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). In considering Taxpayer’s 2020 Indiana return, the Department’s adjustments to that return, Taxpayer’s arguments, and the relevant law, the Department bears in mind that “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 are entitled to deference. IC 6-8.1-5-1(b) requires of the Department as follows: Indiana imposes a tax “on the adjusted gross income of every resident person, and on that part of the adjusted gross income derived from sources within Indiana of every nonresident person.” IC 6-3-2-1(b). IC 6-3-1-3.5(a) provides the starting point in determining the taxpayer’s taxable income and calculating what would be their Indiana income tax after applying any particular additions and subtractions. The statute provides in small part that Indiana adjusted gross income starts with “‘adjusted gross income’ (as defined in Section 62 of the Internal Revenue Code) . . .” Taxpayer pointed out that he was only “recently informed I owed from 2020 taxes [and] had no knowledge of what I owed from 2020 [until] now.” Taxpayer offered a transcript to support his protest. However, the transcript Taxpayer provided along with his protest simply confirms the federal AGI amount, and the Department correctly made the adjustment in 2023. Indiana law simply requires that, in calculating his Indiana tax liability, Taxpayer utilize the AGI as reported on his 2020 federal return. In the absence of evidence to the contrary, that number is approximately $20,500. Under IC 6-8.1-5-1(b), the Department was obligated to issue the notice of proposed assessment. Taxpayer has not met his burden under IC 6-8.1-5-1 of establishing that the Department’s assessment was wrong. FINDING Taxpayer’s protest is respectfully denied. January 28, 2025 Replaces Finding Document at: New