Taxpayer is an Indiana construction company that specializes
in building barns for farming operations. The Indiana Department of Revenue
("Department") conducted a sales and use tax audit of Taxpayer for
the years 2009 and 2010. Pursuant to the audit, Taxpayer was assessed
additional use tax and interest.
...
The Department's audit found that Taxpayer had made
purchases which were subject to sales tax where Taxpayer had failed to pay the
sales tax and where Taxpayer had also failed to self-assess and remit use tax.
Therefore, the audit assessed the use tax. Specifically, the Department found
that Taxpayer purchased a waterer, heater, and plugs (on the same invoice)
without paying sales tax on its purchase of the items or collecting and
remitting sales tax on its subsequent sale of the these items. Taxpayer
protests the assessment on the basis that it was including these items in the
construction of a barn for one if its customers, a dairy farm, that purportedly
qualifies for exemption under IC § 6-2.5-5-2, the "agricultural machinery,
tools, and equipment" exemption.
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 purchase of the contested items was exempt.
