Excerpts of Revenue's Determination follow:
Taxpayers (also referred to as "Husband" and/or "Wife") are individuals with a current Florida address. Taxpayers own a house in Indiana. Taxpayers also possess tangible personal property, including automobiles, in Indiana, and their automobiles are properly titled and registered at the Indiana Bureau of Motor Vehicles ("Indiana BMV"). Additionally, Husband incorporated an Indiana company in 1999 and has been the president of the company since. The company was eventually acquired by a multinational company and became a subsidiary of that multinational company. Husband continues to work for the company as the president of that subsidiary located in Indiana.
In late 2008, Taxpayers purchased another house in Florida. Subsequently, Taxpayers applied for the Florida homestead exemption for the Florida house and obtained Florida drivers' licenses. Beginning in 2010, Taxpayers ceased filing their Indiana income tax returns. Pursuant to an audit, the Indiana Department of Revenue ("Department") determined that Taxpayers were Indiana residents, that Taxpayers failed to file their Indiana income tax return for tax year 2010, and that their 2010 Indiana income tax was due.
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The Department determined that Taxpayers were Indiana residents, that they failed to file their 2010 Indiana income tax return, and that their Indiana income tax for 2010 is due. Taxpayers, to the contrary, claimed that they are not required to file their 2010 Indiana income tax return and they do not owe any Indiana income tax because they are not Indiana residents.
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Taxpayers in this case claimed that they were not required to file Indiana income tax for 2010 tax year and were not responsible for 2010 Indiana income tax because they became Florida residents in late 2008. To support their protest, Taxpayers provided copies of Taxpayers' Florida drivers' licenses as well as excerpts of their previous federal and state returns showing a Florida address. Taxpayers also submitted a letter, dated May 5, 2010, from the county Auditor's Office where Taxpayers' Indiana residence is located, acknowledging that Taxpayers wanted to file their homestead credit in Florida, as well as an e-mail correspondence regarding their May 5, 2010 request. Taxpayers further provided a copy of a letter, dated February 22, 2013, from the same Indiana county Auditor's Office, stating that the county Auditor's Office corrected and adjusted Taxpayers' "2009 pay 2010" and "2010 pay 2011" property tax bills, which resulted in additional property taxes on Taxpayers' Indiana property for both 2009 and 2010 tax years. Taxpayers promptly paid the additional property tax the same day, February 22, 2013. Taxpayers thus maintained that they were not liable for the 2010 Indiana income tax because they did not receive the "homestead exemption" benefit on their Indiana property for 2010.
Taxpayers in this case claimed that they were not required to file Indiana income tax for 2010 tax year and were not responsible for 2010 Indiana income tax because they became Florida residents in late 2008. To support their protest, Taxpayers provided copies of Taxpayers' Florida drivers' licenses as well as excerpts of their previous federal and state returns showing a Florida address. Taxpayers also submitted a letter, dated May 5, 2010, from the county Auditor's Office where Taxpayers' Indiana residence is located, acknowledging that Taxpayers wanted to file their homestead credit in Florida, as well as an e-mail correspondence regarding their May 5, 2010 request. Taxpayers further provided a copy of a letter, dated February 22, 2013, from the same Indiana county Auditor's Office, stating that the county Auditor's Office corrected and adjusted Taxpayers' "2009 pay 2010" and "2010 pay 2011" property tax bills, which resulted in additional property taxes on Taxpayers' Indiana property for both 2009 and 2010 tax years. Taxpayers promptly paid the additional property tax the same day, February 22, 2013. Taxpayers thus maintained that they were not liable for the 2010 Indiana income tax because they did not receive the "homestead exemption" benefit on their Indiana property for 2010.
Upon reviewing Taxpayers' documentation, however, Taxpayers' reliance on their physical activities in Florida and the removal of the "homestead exemption" on their Indiana property is misplaced. Specifically, whether Taxpayers claimed the "homestead exemption" on their Indiana property is only one of several factors outlined in 45 IAC 3.1-1-22 when determining whether Taxpayers were domiciled in Indiana or Florida, as Taxpayers claimed, in 2010. Similar to Mr. Larson who purchased and homesteaded properties in Nevada, Taxpayers here purchased a house in Florida, properly insured, and applied for their "homestead exemption" benefit in Florida. However, the homestead exemption on Taxpayers' Indiana residence remained for the 2010 tax year. Not until February 2013, after the Department issued the proposed assessment against Taxpayers for the unpaid 2010 Indiana income tax, did Taxpayers make the additional payment of property tax to the Indiana county Auditor's Officer for the "2009 pay 2010" and "2010 pay 2011" tax years.
Similar to Mr. Larson who received a valid Nevada driver's license and joined in a club in Nevada, Taxpayers here obtained Florida drivers' licenses and joined a club in Florida. Like Mr. Larson, Taxpayers also retained more vehicles in Indiana than in Florida. Taxpayers stated that they registered two (2) vehicles in Florida in 2010 when the Department's records showed that, in 2010, the Indiana BMV issued a total of four (4) license plate numbers to Taxpayers–three (3) license plate numbers were issued to Husband and one (1) license plate number was issued to both Husband and Wife. In July 2010, Husband further purchased another vehicle from an Indiana dealership where Husband offered Taxpayers' Indiana residence, as the "Address of Purchaser," in the Indiana dealership's document at the time of his purchase.
Similar to Mr. Walton's business activities in Michigan and Mr. Larson's business activities in Minnesota, in this instance, Husband continued to work as the president of the same company located in Indiana for the tax year at issue. Husband claimed that, for 2010, he worked from his Florida residence. But, in the company's filings with the state of Indiana, Husband's residence remained at the same Indiana location. The nature of Husband's employment required Husband to maintain his contacts in Indiana, to carry an Indiana phone number, and to return to Indiana to perform certain necessary tasks. Thus, Husband still maintained his professional connection in Indiana.
Additionally, similar to Mr. Bayh who maintained family ties in Indiana, Mr. Walton who maintained family ties in Michigan, and Mr. Larson who maintained his personal connection in Minnesota, Taxpayers also maintained their personal connection in Indiana. Taxpayers here continue to own their Indiana home and various tangible personal property, including automobiles. As mentioned above, Taxpayers maintained and continued using their Indiana residence to receive mail delivery (including utility bills and property tax bills) and to conduct their banking or similar financial activities. For example, Husband used their Indiana residence as the address of purchaser to purchase a vehicle at an Indiana dealership in July 2010. Wife made a payment by personal check dated 2011, listing Taxpayers' Indiana residence as the address. That check payment further demonstrated that Taxpayers' Indiana bank account remained open and regularly utilized by Taxpayers in 2010. Taxpayers argued that, during 2010, they spent their time in Florida, but the records also revealed that Taxpayers were in Indiana. Thus, although Taxpayers claimed that they moved to Florida, they had not established their "intention to abandon the old domicile."
As discussed above, "resident" includes any individual who was domiciled in this state during the taxable year. IC § 6-3-1-12(a). "A change of domicile requires an actual moving with an intent to go to a given place and remain there. It must be an intention coupled with acts evidencing that intention to make the new domicile a home in fact.... [T]here must be the intention to abandon the old domicile; the intention to acquire a new one; and residence in the new place in order to accomplish a change of domicile." Bayh, 521 N.E.2d at 1317-18.
There is no dispute that Taxpayers obtained Florida driver's licenses; joined a club in Florida, as well as purchased properties and applied "homestead exemption" benefit in Florida. However, Taxpayers continued maintaining their professional and personal connections in Indiana during 2010. Pursuant to the above mentioned statutes, regulations, and case law, Taxpayers' domicile is presumed to continue in Indiana. In the absence of the intent to remain in Florida, Taxpayers' physical relocation to Florida does not change their domiciliary status.
In short, given the totality of the circumstances, in the absence of other supporting documentation, Taxpayers were domiciled in Indiana during 2010 and thus were Indiana residents. Taxpayers remain obligated to file their 2010 Indiana income tax return and their 2010 Indiana income tax is due.
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In this case, the Department takes no position as to whether the underpayment penalty should be calculated based on what Taxpayers reported on their original return or whether the penalty should ever be calculated based upon the amount for which Taxpayers are ultimately found liable. However, the Department's records showed that, previously, Taxpayers had substantial income and made some estimated payments; but, for tax year 2010, Taxpayers did not make any estimated payments. Additionally, Taxpayers did not provide documentation to demonstrate that their failure to pay tax was not due to negligence. Taxpayers continued to have a tax professional prepare and file their income tax returns. The tax professional is the agent for Taxpayers; Taxpayers, as the principal, are responsible for the result.
Given the totality of the circumstances, in the absence of other supporting documentation, an underpayment penalty is properly imposed IC § 6-3-4-4.1(b) because Taxpayers failed to make any estimated payments as statutorily required for tax year 2010.
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Taxpayers did not provide sufficient documentation to demonstrate that their failure to pay tax was not due to negligence.
