Tuesday, July 17, 2012

Revenue Finds Taxpayer Sufficiently Showed Payment of Taxes

Taxpayer, an out-of state company, has a facility in Indiana. The Indiana Department of Revenue ("Department") conducted a sales/use tax audit for tax years 2008, 2009, and 2010.


The Department's audit assessed use tax on certain purchases where Taxpayer did not have documentation showing that it paid sales tax at the time of the purchases or self-assessed and remitted use tax. Taxpayer claimed that the Department's audit made a calculation error in computing statutory interest on the proposed assessment.


At the administrative hearing, Taxpayer explained that it timely filed a ST-103 form, self-assessing and remitting use tax due for February 2008 tax period ("Tax Period at issue"), in the amount of $16,107.39. However, during the audit, the Department discovered that the return for the Tax Period at issue was not posted in the Department's computer system, resulting in an overpayment of $16,107.39. In the process of reconciling Taxpayer's records, the Department's audit assessed Taxpayer additional use tax for the Tax Period at issue plus interest, and treated this $16,107.39 payment as an overpayment, which subsequently was applied to the assessment in July 2011. While the Department treated the $16,107.39 payment as an overpayment, this $16,107.39 overpayment does not generate interest in the Department's system.


Upon reviewing Taxpayer's documentation, Taxpayer has provided sufficient documentation demonstrating that it timely filed and remitted the $16,107.39 tax for the Tax Period at issue. Thus, the Department will remove the items, for which Taxpayer timely paid the use tax, from the audit and recalculate interest in a supplemental audit.