Taxpayer is an out-of-state corporation with operations in Indiana. As the result of a records cross-check with the Federal Aviation Administration ("FAA"), the Indiana Department of Revenue ("Department") learned that Taxpayer had purchased an aircraft but had not paid sales tax to Indiana. The Department reviewed its records and found that Taxpayer had not paid Indiana sales tax on the purchase of the aircraft. The Department therefore issued a proposed assessment for use tax.
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Taxpayer protests the imposition of Indiana use tax. The Department based its proposed assessments on the information received from the FAA which stated that the Taxpayer was the registered owner of the aircraft. That report also stated that Taxpayer's address was in Indiana. The Department therefore determined that the aircraft was in Indiana but had not had sales tax paid on the purchase. The Department notes that the burden of proving a proposed assessment wrong rests with the person against whom the proposed assessment is made, as provided by IC § 6-8.1-5-1(c).
Taxpayer states that the previous owner of the aircraft had flown from his home base in Arizona and into California. Along the way, the engine failed and the aircraft crash-landed. It was towed to an airport in California where it has been ever since. Taxpayer states that it purchased the aircraft in 2012 with the intention of either making it airworthy again or, if repairs are not feasible, selling the parts. In any event, the aircraft has never been in Indiana.
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As a result of the protest process, Taxpayer was able to provide documentation in support of its position that the aircraft has not left California since its crash. Since the aircraft never entered Indiana, Taxpayer never used the aircraft here. Therefore, Indiana use tax is not due. Taxpayer has met the burden of proving the proposed assessment wrong, as required under IC § 6-8.1-5-1(c).
