Taxpayer is an Indiana business in the medical industry. As
the result of an audit, the Indiana Department of Revenue
("Department") determined that Taxpayer had not paid sales tax or
remitted use tax on certain purchases during the tax years during the audit
years of 2009 and 2010. The Department therefore issued proposed assessments
for use tax and interest on those purchases which it determined were subject to
sales and use taxes for those years.
...
Taxpayer protests the imposition of use tax on certain purchases
which the Department determined were subject to sales and use taxes for the tax
years 2009 and 2010. The Department based its determination on the grounds that
there was no documentation available to substantiate that the purchased items
had either had sales or use tax paid, or that the items had been used in an
exempt manner, or that the items had been resold. As delineated in Taxpayer's
September 13, 2012, post-hearing letter, Taxpayer protests that some of the
items included as taxable in the Department's calculations were actually not
taxable. 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).
...
The first category of items under protest concerns purchases
which Taxpayer made from a specific vendor ("Vendor"). Vendor
supplied items used in Taxpayer's medical business. Taxpayer states that Vendor
charged sales tax on items Vendor considered to be taxable and did not charge
sales tax on items Vendor considered to be non-taxable. Taxpayer provided
invoices supporting its position.
...
Taxpayer argues that Vendor determined taxable and
non-taxable items and charged sales tax accordingly. The Department notes that
the audit listed specific items which the Department considered taxable but
upon which sales tax had not been charged and imposed use tax on those items.
The items listed in the audit report are medical supplies consumed in
professional use and, as provided by 45 IAC
2.2-5-36, are subject to sales or use tax. Taxpayer has not met the burden
of proving the proposed assessments wrong, as provided by IC § 6-8.1-5-1(c).
The next category of items under protest consists of charges
on an "Advanta" credit card. Taxpayer states that the majority of
purchases paid for with this card were from Vendor discussed above and from
local merchants. Taxpayer argues that Vendor or the local merchants would have
charged sales tax at the time of purchase of any tangible personal property. As
discussed above, Vendor did not charge sales tax on all taxable sales and use
tax was properly imposed on additional purchases from Vendor. Regarding the
purchases from local merchants, Taxpayer was unable to provide any
documentation establishing that sales tax was paid at the time of purchase.
Taxpayer has not met the burden of proving the proposed assessments wrong, as
provided by IC § 6-8.1-5-1(c).
The next category of items under protest consists of
payments to 3M Unitek. Taxpayer states that primarily the only costs associated
with sales tax would be shipping costs. A review of the invoices provided in
the course of the protest process and of the audit report shows that the
invoices do not match the amounts listed in the audit report. Also, the one invoice
that lists a charged amount for tangible personal property only lists sales tax
charged on the delivery charge. The tangible personal property in question on
this invoice is for medical supplies consumed in professional use which, as
provided by 45 IAC
2.2-5-36, are subject to sales or use tax. In this case, the documentation
supplied does not prove that the proposed assessments are wrong, as required by
IC § 6-8.1-5-1(c).
The next item under protest is an invoice from Avaya upon
which the Department determined that sales tax had not been paid at the time of
purchase. As part of the protest process, Taxpayer provided sufficient
documentation to show that the amount it paid its vendor in this case was the
same as the amount it paid its vendor every month and that each monthly payment
included separately stated sales tax. Therefore, Taxpayer has met the burden
imposed by IC § 6-8.1-5-1(c) of proving the proposed assessment of use tax on
this particular monthly payment incorrect.
The next category of items under protest consists of items
purchased with cash but for which Taxpayer had no receipts or invoices to show
that sales tax was paid at the time of purchase. Taxpayer states that sales tax
must have been paid on these purchases and that use tax should therefore not be
paid. Again, the Department notes that the burden of proving a proposed
assessment wrong rests with the person against whom the proposed assessment is
made, and in this case Taxpayer has not met the burden imposed by IC §
6-8.1-5-1(c).
The next category of items under protest consists of a First
National credit card used primarily to purchase items from Vendor discussed
above. As discussed above, the Department's adjustments regarding purchases
from Vendor are correct. However, Taxpayer argues that these amounts should be
considered as already counted once in the Department's taxable calculations. A
review of the documentation submitted in the protest process does not establish
that the amounts paid to First National correspond to purchases from Vendor.
Taxpayer has not met the burden imposed by IC § 6-8.1-5-1(c).
The next category of items under protest consists of
payments made to a locksmith service. Taxpayer states that no tangible personal
property was purchased, therefore no sales or use tax is due. Taxpayer was
unable to provide invoices or other form of documentation to establish that
only services were provided in these transactions. Therefore, Taxpayer has not
met the burden of proving the proposed assessments wrong, as required by IC §
6-8.1-5-1(c).
In conclusion, Taxpayer has not met the burden of proving
the proposed assessments wrong for most of the items under protest. Taxpayer is
sustained regarding the Avaya invoice. Taxpayer's protest is denied in all
other regards.
