Friday, July 20, 2012

Revenue Finds Taxpayer Failed to Sufficiently Support Contention Sales were made to Direct Pay Customer

Taxpayer sold lawn care services to one of its customers which held a "direct pay permit." …  Taxpayer failed to collect sales tax on any of its transactions; Taxpayer failed to self-assess use tax on any of the purchases it made such as "chain saws, mowers, trimmers, pruners, hoses, equipment rentals...." Therefore, the Department's audit assessed sales/use tax on the purchase of supplies and equipment Taxpayer acquired for its business.

However, Taxpayer has identified a series of equipment and supply purchases which it states were sold to the customer which held the direct pay permit. Based on that assertion, Taxpayer claims that it was error for the audit to include as taxable certain equipment and supplies purchased for or consumed in the provision of lawn care services for the direct pay customer.


Taxpayer cites to various purchases which it believes are exempt on the ground that the item or items purchased were provided to its single customer which held a direct pay permit. For example, Taxpayer cites to 2009 purchases from "John Deere Landscapes," a purchase from "Erosion Runner Midwest," and a series of purchases from "Advanced Turf Solutions." While the Department has no reason to doubt Taxpayer's good intentions, there is nothing in the record which indicates that these particular transactions were specifically intended for Taxpayer's direct pay permit customer.

Taxpayer's records do not support its contention. Indiana law requires that Taxpayer's maintain records sufficient to establish what is taxable and what is not taxable… Under IC § 6-8.1-5-1(c), Taxpayer has failed to meet its burden of establishing that the proposed assessment is wrong.