Taxpayer is an Indiana company, which provides customers/guests furnished accommodation. In 2011, the Indiana Department of Revenue ("Department") conducted a sales/use tax audit of Taxpayer's records. Pursuant to the audit, the Department determined that Taxpayer failed to pay sales tax or self-assess use tax on tangible personal property it purchased and used in the course of its business activities, including items listed in Taxpayer's depreciation schedule. The audit also determined that Taxpayer did not properly collect sales tax on its rentals of the furnished accommodation, namely hotel rooms. As a result, the Department assessed additional sales tax, use tax, and interest.
...
The Department's audit determined that Taxpayer failed to collect sales tax on the rentals of hotel rooms where its customers/guests either (1) stayed less than thirty days, or (2) in the aggregate stayed more than thirty days but were billed and paid weekly or bi-weekly. Taxpayer, to the contrary, claimed that it was not responsible for collecting the sales tax on some of those guests because they stayed more than 30 days.
...
The Department's Sales Tax Information Bulletin 41 (December 2002), 26 Ind. Reg. 928 ("Information Bulletin 41"), and the subsequently revised Information Bulletin 41 (September 2010), 20100929 Ind. Reg. 045100600NRA, which addresses issues concerning "Sales Tax Application to Furnishing of Accommodations," further illustrates, in relevant part, that:
III. Exemption of Tax
An accommodation that is rented for thirty (30) days or more is not subject to the sales tax. The customer is required to pay the tax for the first thirty (30) days if the customer is billed on less than a monthly basis.
EXAMPLE:
A business rents accommodations for its employees and signs a lease for four months, payable monthly, the first thirty (30) days would not be subject to tax. Same situation as above; however, the business pays the rental on a weekly basis. The business is required to pay sales tax on the first thirty (30) days of rental.
If an entity rents the rooms for employees, the entity is renting the rooms and not the person who stays in the room. The contract would not have to be for a specific room as long as the continuous stay portion of the contract remains in effect. (Emphasis added).
In this instance, Taxpayer claimed that it was not responsible for the sales tax because its customers/guests stayed more than 30 days. Taxpayer also submitted copies of the hotel invoices to support its protest.
Taxpayer's documentation demonstrated that six (6) guests stayed more than 30 days. Thus, the Department agrees that Taxpayer is not responsible for the sales tax on the following transactions listed in the Audit Summary, Page 13, pursuant to the above mentioned statute, regulation, and Sales Tax Information Bulletin 41.
Guest Name
|
Rate per Night
|
Additional Taxable Sales
|
Josh M.
|
$30
|
$300
|
Hunter I.
|
$30
|
$360
|
Randy W.
|
$30
|
$510
|
Mike L.
|
$30
|
$330
|
Mark B.
|
$30
|
$390
|
William P.
|
$35
|
$945
|
In short, Taxpayer's documentation demonstrated that it was not responsible for the sales tax of the above mentioned six guests. Taxpayer, however, remains responsible for the sales tax on the remainder of its guests' stays listed in the Audit Summary. The Department will recalculate Taxpayer's tax liability in a supplemental audit.
...
The Department's audit assessed Taxpayer use tax on certain purchases, including "Decorative Throws," "Modem," "Speaker phone," "Carpeting," "Van," "Phone System," "TV's," and "Landscaping." Taxpayer claimed that the Department's audit erroneously assessed use tax on those purchases.
...
In this instance, Taxpayer believed that the Department's audit erroneously assessed use tax on its purchases because its former employee failed to provide copies of the invoices to the auditor during the audit. Thus, Taxpayer believed that once it provided the copies of the invoices, it would not be responsible for the use tax.
Taxpayer is mistaken. First, Taxpayer's documentation demonstrates that no sales tax was paid on its purchases of "Decorative Throws," "Modem," "Speaker phone," "Carpeting," "Van," and "Phone System." As mentioned above, a taxpayer is liable for use tax when the taxpayer purchases tangible personal property and uses/stores/consumes the property in Indiana without paying sales tax. In this instance, Taxpayer did not pay sales tax at the time of the purchases and it used these items in Indiana. Since sales tax was not paid at the time of the purchases, use tax is due. Thus, the Department properly imposed use tax on those items.
Taxpayer also submitted copies of purchase receipts from various retail stores, such as Lowe's, Home Depot, Sam's Club, and Walmart, to support its protest of the audit's assessment on "Landscaping" and "TV's." Taxpayer's documentation, however, failed to support its assertion that it paid the sales tax on "Landscaping" and "TV's" which were listed in its depreciation schedule. For example, Taxpayer's depreciation schedule stated that "Landscaping" was purchased on June 1, 2009, for $3,000. Taxpayer's receipts demonstrated that it paid sales tax on various purchases, including "extension cords," "char. grill," "roofing," "fileset," and "soap dish," at various retail stores on different dates other than June 1, 2009. Similarly, Taxpayer's receipts showed that it purchased various televisions on different dates other than May 1, 2009 and also failed to support its purchase of the $4,000 "TV's" listed in its depreciation schedule. Thus, given the totality of the circumstances, in the absence of other supporting documentation, the Department is not able to agree that Taxpayer has met its burden demonstrating that the Department's assessment is not correct.
In short, Taxpayer's protest is respectfully denied.
