Taxpayer is an out-of-state
business, which sells and installs acoustic panels for customers in Indiana and
outside of Indiana. Taxpayer bills its customers on a lump sum basis. Taxpayer
did not file any Indiana sales/use tax returns.
In 2011, the Indiana Department of
Revenue ("Department") conducted a sales/use tax audit of Taxpayer.
The Department determined that the three-year statute of limitations does not
apply to Taxpayer's purchases because Taxpayer is a non-filer of sales tax. The
Department requested that Taxpayer provide its records for 2001 through 2010
tax years, but Taxpayer only provided the Department limited records for 2008,
2009, and 2010 tax years. Pursuant to the audit, the Department determined
that, for tax year 2008, Taxpayer failed to pay sales tax or self-assess use
tax on the materials it purchased and used to perform its installation at an
Indiana customer's location. The audit then utilized the 2008 result to project
Taxpayer's tax liabilities for 2001 through 2007 based on the best information
available at the time of the audit. As a result, the Department assessed
Taxpayer additional use tax and interest for tax years 2001 through 2008.
…
The Department's audit determined
that Taxpayer charged its customers on a lump sum basis; however, the
Department found that, for tax year 2008, Taxpayer failed to pay sales/use tax
on materials which it used in performing the installations in Indiana. Taxpayer
claimed that it was not responsible for paying sales/use tax because the
customer claimed that it was exempt from sales/use tax. Thus, Taxpayer believes
that the Department's assessments were overstated.
...
In this instance, the Department's
audit noted that Taxpayer charged its customer pursuant to a lump sum contract
but did not pay sales tax or self-assess use tax on the materials it used to
perform the lump sum contract. Taxpayer did not present any exemption
certificate to the Department at the time of the audit. Thus, the audit properly
assessed use tax.
At the hearing, Taxpayer asserted
that it was not responsible for sales/use tax because its customer was exempt.
Subsequently, Taxpayer submitted additional documentation including copies of
the contract, invoices, and the customer's exemption certificate to support its
protest. Upon reviewing Taxpayer's documentation, the Department agrees that
Taxpayer has provided sufficient documentation to demonstrate that the
following purchases for tax year 2008 were exempt.
|
Date
|
Reference
|
Amount
|
|
07/22/2008
|
2124460RI
|
$23,122.00
|
|
07/28/2008
|
2129563RI
|
$
4,736.37
|
|
08/15/2008
|
2147518RI
|
$12,265.52
|
Thus, the Department will
recalculate Taxpayer's 2008 tax liability in a supplemental audit.
Additionally, since the audit utilized the 2008 result to project Taxpayer's
tax liabilities for tax year 2001 through 2007, the Department will also
recalculate Taxpayer's 2001-2007 tax liabilities accordingly.
Taxpayer is reminded that sales/use
tax becomes due at the time of purchase. If its customer claims an exemption,
the exemption certificate should be obtained at the time the transaction occurs
otherwise the burden of proving the transaction was exempt falls on Taxpayer
and ultimately becomes measurably more difficult.
