STATEMENT OF FACTS
Taxpayer is an Indiana limited liability company (LLC), which
sells tangible personal property to customers inside and outside of Indiana.
The Indiana Department of Revenue ("Department") conducted a
sales/use tax audit for tax years 2007, 2008, and 2009. Taxpayer and the
Department agreed to utilize statistical sampling to determine the total amount
of Taxpayer's additional sales tax due for those years. The statistical
sampling projection resulted in no (zero) additional sales tax liability for
2007, but approximately $6,300 additional sales tax due for 2008 and 2009.
DISCUSSION
...Taxpayer protested the Department's assessments, stating, in relevant part, that "99.5 [percent] of our business is internet based, [and] we have less than [0.5 percent] walk in traffic." Taxpayer further asserted that it only had two accounts with third-party vendors to process its internet sales: namely, a Paypal account and an AMG Processor account ("Online Accounts"). In addition to copies of its ST-103 forms for tax periods April 2011, May 2011, and August 2011, Taxpayer offered its own recalculation based on its April 2008, September 2008, March 2009, and July 2009 records from its Online Accounts. Taxpayer stated that the copies of its ST-103 forms for tax year 2011 showed that its "taxable sales in Indiana fluctuate from month to month." Taxpayer also stated that the "screen shots" of the Online Accounts for the transactions that occurred during April 2008, September 2008, March 2009, and July 2009 (the "Screen Shots Transactions") showed that it only had limited sales in Indiana for 2008 and 2009. Taxpayer further asserted that its own recalculation based on its records of Screen Shots Transactions resulted in a lower amount of taxable sales. Taxpayer thus argued that the projection result, which the Department's audit used to impose the assessment, was incorrect.
Taxpayer's reliance is misplaced. Upon reviewing Taxpayer's
documentation, first, Taxpayer's 2011 returns were beyond the scope of this
protest, because Taxpayer disputed the Department's assessments for tax years 2008
and 2009, not 2011. Additionally, Taxpayer's Screen Shots Transactions were
sales records outside of the audit sample population. Taxpayer selected its
records of April 2008, September 2008, March 2009, and July 2009, but the audit
utilized Taxpayer's records of May 2008, August 2008, September 2009, and
October 2009 per agreement with Taxpayer. Using a different set of sales
records certainly could produce a very different result than the one reached by
the audit. However, it did not demonstrate that the audit's projection result
was incorrect.
...There was no tax liability for tax year 2007; additional sales tax liabilities for 2008 and 2009. Neither the Department nor Taxpayer can subsequently argue that the projection result was not correct by using a different set of records just because the initial result was undesirable. An administrative hearing is not the appropriate forum by which to explore statistical variances and methodologies. Both Taxpayer and the Department thus were bound by the projection result pursuant to IC § 6-8.1-3-12(b).
In short, Taxpayer may argue that a different set of sampling
population resulted in a less tax liability but it failed to demonstrate the
clear error on the part of the audit. Both Taxpayer and the Department agreed
to and, therefore, were bound by the projection result pursuant to IC §
6-8.1-3-12(b).
FINDING
Taxpayer's protest is respectfully denied.
http://www.in.gov/legislative/iac/20120229-IR-045120082NRA.xml.pdf
