The Indiana Department of Revenue ("Department") determined that Taxpayer had not paid sales tax on a horse that he acquired in a transaction that occurred in Indiana. Given that Taxpayer had not paid sales tax, the Department issued a proposed assessment for use tax (and interest).
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Claiming races are a method of determining the price of a horse, with the successful claimant taking title to the horse "at the time the horse leaves the starting gate and is declared an official starter." Taxpayer was the claimant of a horse that was raced in a claiming race. The Department assessed tax based upon the claiming amount paid by Taxpayer for the horse.
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Taxpayer raises two alternative contentions. First, Taxpayer argues that other states in which he participates in claiming races only tax horse purchases upon the original purchase and/or any increase in purchase price, or do not tax horse claiming transactions at all. Taxpayer did not provide the relevant statutes, regulations, or other guidance from the other states reflecting the asserted tax treatment. However, Indiana's statutes currently provide that sales and use tax is imposed on the full purchase price of the horse.
Second, Taxpayer notes that he was subject to use tax on the purchase of the same horse on four separate occasions. This contention appears to be along the same lines as Taxpayer's argument regarding tax treatment in other states. However, at this time, Indiana law can result in the same horse being claimed multiple times and being subject to Indiana sales and use tax each time.
In conclusion, Taxpayer purchased a race horse at a claiming race; Taxpayer failed to pay sales tax at the time of purchase. Taxpayer has not established that the horse was purchased for an exempt purpose. Thus use tax was properly assessed by the Department. Taxpayer has not met the burden imposed by IC § 6-8.1-5-1(c).
