Taxpayer is an Indiana corporation. Taxpayer operates gas stations in Indiana. Taxpayer also has a related company that hauls and delivers bulk fuel in tankers. During the time period at issue, Taxpayer did not hold an Indiana gasoline distributor's license, a special fuel supplier license, a special fuel importer license, or a transporter license with the Indiana Department of Revenue ("Department").
In 2007, Taxpayer entered into a business arrangement with another fuel company ("Company A"). Taxpayer would purchase gasoline or diesel fuel from a fuel terminal ("Company B") using Company A's fuel card. The fuel would then be placed in vehicles owned by one of Taxpayer's related companies. Company A would then bill Taxpayer for the fuel. However, this arrangement was not agreed upon in writing. The vehicles owned by one of Taxpayer's related companies would then transport the fuel back to Taxpayer's Indiana service stations, and unload the fuel in the station's fuel tanks.
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Taxpayer does not have, or at the least did not have at the time of the purchases at issue, an Indiana gasoline distributor's license for the purposes of the Indiana gasoline tax.
IC §§ 6-6-1.1-202 through -207 detail when gasoline is actually received for the purposes of applying the gasoline tax. IC § 6-6-1.1-203 states that "Gasoline is received by the owner at the time it is unloaded in this state if it is imported into this state and placed in storage at a place other than a refinery or terminal."
45 IAC 12-2-9(b) provides that:
In instances where gasoline is being imported to or for the account of a person other than a licensed distributor and section 205 [IC 6-6-1.1-205] is not applicable, gasoline which is imported into this state by tank car, tank truck, transport, or other motor vehicle, and is subsequently placed into storage at a place other than a refinery or terminal is received by the person for whom the gasoline is being imported.
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Although Company A's fuel card was used to purchase the fuel from Company B, the fuel was deposited in Taxpayer's vehicle. Title passes instantaneously from Company A to Taxpayer, since Taxpayer had possession of the fuel. As in Example (5), Taxpayer has title when it imported the gasoline into Indiana, and therefore "the gasoline is received by Taxpayer B at the time of unloading."
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IC § 6-6-1.1-504 provides that:
Every person other than a licensed distributor who purchases or otherwise acquires taxable gasoline and unknowingly fails to pay the gasoline tax to either a licensed Indiana distributor or Indiana dealer shall make the same reports and payment required of distributors under this chapter. However, the person is not entitled to any deductions or credits.
Accordingly, even though Taxpayer is an unlicensed Indiana gasoline distributor, Taxpayer would still be legally obligated under IC § 6-6-1.1-504 to remit gasoline tax on the purchase of gasoline to the Department. Taxpayer was the distributor who first received gasoline in the State of Indiana when the fuel was imported by Taxpayer and delivered to its fueling stations, and Taxpayer did not pay the tax to a licensed distributor prior to receiving the gasoline. IC § 6-6-1.1-103. Despite Taxpayer's protestations that there are no forms or means for Taxpayer to have remitted Indiana gasoline taxes to the Department, IC § 6-6-1.1-504 makes it clear that unlicensed distributor's are to "make the same reports and payment required of distributors under this chapter."
Taxpayer makes the argument that Company A should have collected Indiana tax at the time of sale in Ohio. However, Taxpayer has not pointed to any statute or court case to show that if title passes outside Indiana, then Company A, even as an Indiana licensed gasoline distributor, would be legally obligated under Indiana law to collect and remit gasoline tax on the sale of gasoline in Ohio. Instead, the statutes and regulations cited above clearly place the burden of remitting Indiana gasoline tax on Taxpayer. Taxpayer alternatively argues that Company A should have collected Ohio fuel taxes on the sale of gasoline in Ohio; however, Ohio has apparently decided not to pursue the collection of Ohio fuel taxes, and it is not the Department's responsibility to determine whether Ohio tax should or should not have been collected.
Taxpayer has not demonstrated that Taxpayer does not owe the Indiana gasoline tax that has been assessed. Therefore, Taxpayer failed to meet its burden of proof to establish that the findings of the audit were incorrect.
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Taxpayer also used Company A's fuel card to purchase diesel fuel at Company B's terminal. IC § 6-6-2.5-28(a) imposes an excise tax on the sale of special fuel. Special fuel basically refers to most combustible fuel that is not considered gasoline, which includes diesel fuel. IC § 6-6-2.5-22.
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IC § 6-6-2.5-35 provides in subsection (a) that "[t]he tax on special fuel received by a licensed supplier in Indiana that is imposed by section 28 of this chapter shall be collected and remitted to the state by the supplier who receives taxable gallons in accordance with subsection (b)" (Emphasis added). Taxpayer does not have, or at the least did not have at the time of the purchases at issue, a special fuel supplier license for purposes of the Indiana special fuel tax.
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IC § 6-6-2.5-13 defines "import" as:
(1) with respect to a seller, when special fuel is delivered into Indiana from out-of-state by or for the seller; and
(2) with respect to a purchaser, when special fuel is delivered into Indiana from out-of-state by or for the purchaser.
The latter definition of "importing" would apply to Taxpayer. IC § 6-6-2.5-28(d) provides that "[t]he tax imposed by [IC § 6-6-2.5-28(a)] on special fuel imported into Indiana, other than into a terminal, is imposed at the time the product is entered into Indiana and shall be measured by invoiced gallons received at a terminal or at a bulk plant." IC § 6-6-2.5-35 goes on to state in relevant part that:
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Since the diesel fuel was imported into Indiana by Taxpayer, the tax would have been imposed when the diesel fuel entered Indiana. IC § 6-6-2.5-28(d). Therefore, Taxpayer was required under IC § 6-6-2.5-41(f) & (g) to have obtained an Indiana importer's license and remit special fuel tax when the diesel fuel was imported into Indiana.
Taxpayer has not demonstrated that Taxpayer does not owe the Indiana special fuel tax that has been assessed. Therefore, Taxpayer failed to meet its burden of proof to establish that the findings of the audit were incorrect.
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Taxpayer also has also been assessed unpaid oil inspection fees on the gasoline and special fuel that Taxpayer imported into Indiana during the period at issue.
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Pursuant to IC § 16-44-2-18(c), Taxpayer owed oil inspection fees on gasoline to the Indiana State Department of Health at the time they were received in Indiana, since Taxpayer was the unlicensed person receiving the gasoline when it entered the state of Indiana, as discussed in Issue I. Similarly, pursuant to IC § 16-44-2-18.5(d), Taxpayer owed oil inspection fees on special fuel to the Indiana State Department of Health at the time they were received in Indiana, since Taxpayer was the unlicensed person receiving the gasoline when it entered the state of Indiana, as discussed in Issue II.
Taxpayer has not demonstrated that Taxpayer does not owe the Indiana oil inspection fees that have been assessed. Therefore, Taxpayer failed to meet its burden of proof to establish that the findings of the audit were incorrect.
