Taxpayer protests the Department's assessment of use tax on
certain transactions during the audit years of 2008, 2009, and 2010. Taxpayer
states that the transactions under protest are not subject to use tax since
they were either payments for services or since sales tax was paid at the time
of the transactions.
…
Taxpayer protests the imposition of use tax on some of the
items which the Department determined were subject to use tax. The first
category of items under protest involves rental of a piece of equipment at a
rate of $517.05 per month. Taxpayer states that sales tax was included in the
rental amount it paid to its vendor. In the course of the protest process,
Taxpayer provided documentation in support of its position. After review, this
documentation does establish that sales tax was included in the payments it
made to the vendor; therefore, Taxpayer has met the burden of proving the
proposed use tax assessments wrong regarding this category.
The second category under protest concerns monthly payments
of $2,086.07 and $760.00, which Taxpayer states had sales tax paid at the time
of purchase. In support of this position, Taxpayer provided an invoice from the
vendor which shows sales tax included in the total amount paid by Taxpayer.
After a review of the invoice and of the audit report, the Department notes
that, while the invoice offered in support of Taxpayer's position does show
sales tax included, there are no entries in the audit report in the amount of
that invoice and the monthly payments do not total the amount listed on the
invoice provided by Taxpayer. The Department cannot assume that a vendor
collected sales tax on every transaction, even if they did collect sales tax on
the invoice provided by Taxpayer. Since Taxpayer was not able to provide
invoices for the transactions listed on the audit report, Taxpayer has not met
the burden of proving the proposed assessments wrong, as required by IC §
6-8.1-5-1(c).
The third category under protest is for payments which
Taxpayer states were for services and not for tangible personal property.
Taxpayer states that it paid for a service agreement from this particular
vendor and that service was the only activity, without a transfer of tangible
personal property. In support of this position, Taxpayer provided a copy of the
service agreement. Unfortunately, the copy has apparently been faxed and copied
several times and is not legible. While it is labeled as a "Service
Agreement," the Department notes that a service agreement could contain an
agreement to periodically replace parts or refill depletable reserves such as
toner in a copier or coolant in a refrigeration system. Since the service
agreement is illegible, it is not possible for the Department to determine to
what Taxpayer and its vendor agreed. This document does not meet the
requirement of proving the proposed assessment wrong, as required by IC §
6-8.1-5-1(c).
