…
Taxpayer asserts that certain of its
purchases are not subject to use tax because the purchases qualify for the
public transportation exemption.
…
IC § 6-2.5-5-27 states:
Transactions involving tangible
personal property and services are exempt from the state gross retail tax, if
the person acquiring the property or service directly uses or consumes it in
providing public transportation for persons or property.
In Panhandle Eastern Pipeline Co. v.
Indiana Dep't. of State Revenue, 741 N.E.2d 816 (Ind. Tax Ct. 2001), the court
addressed the issue whether a taxpayer qualifies for the public transportation
exemption. The court stated:
The public transportation exemption
provided by section 6-2.5-5-27 is an all-or-nothing exemption. If a taxpayer
acquires tangible personal property for predominate use in providing public
transportation for third parties, then it is entitled to the exemption. If a
taxpayer is not predominately engaged in transporting the property of another,
it is not entitled to the exemption.
Id. at 819.
…
Accordingly, the public
transportation exemption applies to a taxpayer only when the taxpayer shows
that the equipment purchased was predominantly used to transport the property
of another for which the taxpayer received consideration.
…
Even if a person or company operates
under the appropriate authority, they also must transport people or property
for consideration. That is to say, a public transportation provider must be
compensated for transporting people or goods. The goods transported must be
goods owned by someone other than the public transportation provider. To qualify
for the exemption, the tangible personal property purchased must be
predominately used in providing public transportation. The tangible personal
property is predominately used in public transportation if more than
50[percent] of its use is attributable to transporting people or property for
hire.
Taxpayer asserts that it was
entitled to the public transportation exemption for the property purchased for
two of its semi trailers that were predominantly used to transport fuel that it
did not own. Taxpayer maintains that while the semi trailers are used to
transport its own fuel from the rack to its bulk storage facilities part of the
time, a majority of the time it uses the semi trailers to transport fuel that
it does not own. Taxpayer states that a majority of its customers hire Taxpayer
to deliver fuel that the customers have purchased directly from the rack to
their location. Taxpayer charges these transportation customers a fee based
upon the weight of the haul and number of miles the haul is driven.
During the course of the protest,
Taxpayer submitted additional documentation–including transportation invoices,
bills of lading, and a summary of the mileage for the two semi trailers–to
support its protest. While Taxpayer uses these two semi trailers to deliver
fuel it owns from the rack to its bulk storage facilities, Taxpayer's
documentation reflects that this accounts for less than forty percent of the
semi trailers' mileage. Thus, the documentation presented demonstrates that
over sixty percent of the mileage for these two semi trailers resulted from
transporting property owned by another for which Taxpayer was compensated.
Therefore, Taxpayer has provided sufficient documentation to establish that
Taxpayer was using these two semi trailers over fifty percent of the time–i.e.
predominantly–to transport property owned by someone other than Taxpayer for
consideration.
