Revenue Finds Taxpayer Failed to Show Purchases were Exempt from Use Tax

Taxpayer is an Indiana corporation engaged in the construction business. Taxpayer works as a contractor, generally working on tax-exempt projects such as university and high school facilities. After an audit, the Indiana Department of Revenue ("Department") determined that Taxpayer owed additional use tax on various purchases for the tax years 2009 and 2010. The Department found that Taxpayer has made taxable purchases that did not become part of the improvement to real estate. Also, Taxpayer did not have valid exemption certificates on file with respect to the purchases.
…

As provided by IC § 6-2.5-8-8(a), a seller accepting a valid exemption certificate has no duty to collect or remit the state gross retail or use tax on a purchase. However, Taxpayer did not accept valid exemption certificates from the organizations in question.

Taxpayer also purchased items, such as tools, office supplies, and blue prints that were used for the daily operation of the business. Even though Taxpayer asserts that most of Taxpayer's work is for exempt organizations, any purchases that do not become part of the improvement to real estate are not exempt regardless of the exempt status of the organization pursuant to 45 IAC 2.2-3-12(c).

Furthermore, Taxpayer purchased construction materials for which there was no valid exemption certificates on file. Since Taxpayer failed to provide any evidence to support its protest, the Department properly assessed use tax on the purchases.

FINDING

Taxpayer's protest is respectfully denied.

http://www.in.gov/legislative/iac/20120229-IR-045120086NRA.xml.pdf