Taxpayer is an Indiana company which manufactures asphalt to be used in the construction of roads, parking lots, and driveways… Pursuant to an audit, the Department determined that Taxpayer did not pay sales tax on certain purchases of tangible personal property, including electricity…
Taxpayer protested the assessment on its purchases of electricity only.
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Throughout the protest process, Taxpayer revised its utility studies on multiple occasions, asserting changes of the factors in calculating its "predominant use" of the electricity. Taxpayer may, and rightly so, assert that its machinery was operated on an average of 9 hours, 12 hours, 15 hours, or even 16.6 hours; however, deciding which average hours per week for the utility study did not fall into the purview of a legal protest. The administrative hearing is not the proper forum to decide which version of Taxpayer's utility studies is more accurate and therefore more acceptable. Given the totality of the circumstances, in the absence of other supporting documentation, the Department is not able to agree that Taxpayer met its burden of proof demonstrating that it used its machinery more than 9 hours per week for its production.
In short, Taxpayer provided the actual exempt usage of the two conveyors, so the Department will allow 59.15 percent and 58.67 percent exemption for its use of the electricity for the two conveyors in a supplemental audit accordingly. However, the Department is not able to agree that Taxpayer met its burden of proof demonstrating that it used its machinery more than 9 hours per week for its production.
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If a person fails to file a return for any of the listed taxes, fails to pay the full amount of tax shown on the person's return by the due date for the return or the payment, or incurs a deficiency upon a determination by the department, the person is subject to interest on the nonpayment. Pursuant to IC § 6-8.1-10-1(e), the Department does not have the authority to waive the interest. Therefore, Taxpayer's protest is denied.
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Taxpayer has demonstrated that the imposition of the negligence penalty is not appropriate.
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Taxpayer's protest of the negligence penalty is sustained. Since Taxpayer paid the assessment prior to the protest, the Department will refund Taxpayer's overpayment accordingly.
