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Taxpayer protests the assessment of sales tax on various transactions for which it claims customers offered vehicles for trade-in. The issue is whether Taxpayer received vehicles as part of like-kind exchanges and, if so, the value of the like-kind vehicles.
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Taxpayer has provided a breakdown of vehicles claimed to have been acquired pursuant to a like kind exchange. Taxpayer's breakdown does not establish that the property acquired in a like-kind exchange or the value of the property. Nevertheless, Taxpayer has provided sufficient information to justify further review and–if appropriate–adjustment by the Department's Audit Division. Taxpayer is sustained subject to audit review; however, Taxpayer must provide any invoices and other documentation substantiating the claimed like-kind exchanges within thirty (30) days after issuance of this Letter of Findings.
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Taxpayer protests the assessment of sales tax on various sales for which it claims it erroneously counted twice. According to Taxpayer, a sale of a repossessed vehicle was effectively counted twice.
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Taxpayer's provided information includes a breakdown of the vehicles that were subject to "Buy Backs." Taxpayer's information does not establish that the vehicles were counted twice when they should have only been counted once. Nevertheless, Taxpayer has provided sufficient information to justify further review and–if appropriate–adjustment by the Department's Audit Division. Taxpayer is sustained subject to audit review; however, Taxpayer must provide any invoices and other documentation substantiating the claimed double-counted vehicles within thirty (30) days of notification by the Department's Audit Division.
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Taxpayer's provided information includes a breakdown of the vehicles that were subject to "Buy Backs." Taxpayer's information does not establish that the vehicles were counted twice when they should have only been counted once. Nevertheless, Taxpayer has provided sufficient information to justify further review and–if appropriate–adjustment by the Department's Audit Division. Taxpayer is sustained subject to audit review; however, Taxpayer must provide any invoices and other documentation substantiating the claimed double-counted vehicles within thirty (30) days of notification by the Department's Audit Division.
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Taxpayer protests the amount of sales tax assessed. In particular, Taxpayer protests that the amount of sales listed included sales tax. In other words, assuming a vehicle was sold for $100 with $7 sales tax, Taxpayer asserts that the Department's audit determined that the taxable sale was $107 as opposed to $100.
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Upon review of Taxpayer's documentation for 2010 and 2011, the Department used only the gross sales price in determining total sales. The gross sales price was listed on a different line than the Indiana sales tax on the transaction, and the two were not aggregated in determining the listed sales subject to sales tax. Thus, Taxpayer has not provided sufficient information to conclude that its contention was correct.
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Taxpayer protests the taxation of various sales. In particular, Taxpayer claims that it sold vehicles to third parties who were eligible for the sale-for-resale exemption found under IC § 6-2.5-5-8. The issue is whether Taxpayer has substantiated its claim for exemption.
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In this particular case, Taxpayer provided exemption certificates. However, Taxpayer listed itself as the "purchaser" and the actual purchaser as the "seller." Thus, the exemption certificates were not properly completed by the actual purchaser. Taxpayer's protest is denied with regard to these sales.
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Taxpayer protests the disallowance of claimed bad debt deductions. In particular, the Department's audit stated that Taxpayer's claimed deduction was improperly deducted on its monthly sales tax return. Instead, the Department asserted that the claimed deduction should have been taken via refund claims.
IC § 6-2.5-6-9(a) provides that a bad debt is to be "deduct[ed] from the retail merchant's gross retail income from retail transactions made during a particular reporting period." The provision necessarily requires that the refund be allowed on the sales tax return covering the period for which the bad debt is determined to be worthless (or partially worthless). Thus, Taxpayer's bad debt deductions are not necessarily disallowable because the deductions were claimed on Taxpayer's sales tax returns. However, the exact amount of deduction is still subject to audit review. Further, if Taxpayer has subsequently filed refund claims for the periods in question, Taxpayer's protest is denied to the extent any refunds have been permitted.
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Taxpayer argues that it is entitled to abatement of the penalty for incurring a deficiency as the result of negligence.
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Taxpayer argues that the largest portion of the deficiency was the result of the bad debt reporting issue discussed previously. However, Taxpayer was sustained on that issue. With regard to the remaining issues in the assessment, Taxpayer did not detect otherwise apparent discrepancies between its actual and reported sales and further did not collect exemption certificates despite clear statutory requirements. Thus, Taxpayer has not provided sufficient legal or factual grounds to justify penalty waiver.
