Taxpayer is an out-of-state business which sells boats, boat
trailers, and boat supplies. The Indiana Department of Revenue
("Department") conducted an audit review of Taxpayer's business
records. The audit found that Taxpayer owed sales and use tax.
...
Taxpayer failed to collect Indiana sales tax when it sold
boats and trailers to Indiana customers. These customers had presented Taxpayer
with an exemption certificate from Taxpayer's own home state. The result was
that the Indiana customers paid Taxpayer neither Indiana sales tax nor the
out-of-state location's sales tax.
Although Taxpayer is located outside Indiana, the audit
found that Taxpayer had delivered boats and trailers to its Indiana customers
and that Taxpayer was liable for the uncollected tax.
Pursuant to IC § 6-2.5-2-1, a sales tax, known as state
gross retail tax, is imposed on retail transactions made in Indiana unless a
valid exemption is applicable. Retail transactions involve the transfer of
tangible personal property. IC § 6-2.5-3-2(a). A complementary excise tax,
known as the use tax, is imposed on the storage, use, or consumption of
tangible personal property in Indiana if the property was acquired in a retail
transaction. IC § 6-2.5-3-2.
45 IAC
2.2-2-2 states that the retail merchant must collect the tax in its role as
an agent for the state. When the retail merchant fails to collect the tax, IC §
6-2.5-9-3 provides that the retail merchant is liable for the payment of the
tax. See also IC § 6-2.5-6-7.
As a threshold issue, it is the Taxpayer's responsibility to
establish that the existing tax assessment is incorrect. As stated in IC §
6-8.1-5-1(c), "The notice of proposed assessment is prima facie evidence
that the department's claim for the unpaid tax is valid. The burden of proving
that the proposed assessment is wrong rests with the person against whom the
proposed assessment is made." Lafayette Square Amoco, Inc. v. Indiana
Dep't of State Revenue, 867 N.E.2d 289, 292 (Ind. Tax Ct. 2007); Indiana Dep't
of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463, 466 (Ind. 2012).
Under Indiana law, Taxpayer erred when it failed to collect
sales tax when it delivered boats, trailers, and other merchandise to Indiana
customers because the Indiana customers took possession of the items in
Indiana. As set out in IC § 6-2.5-4-1(e), "[A] transfer is considered to
have occurred after delivery of the property to the purchaser." See also
IC § 6-2.5-13-1 (defining "receive" and "receipt" as
"taking possession of tangible personal property.") Taxpayer
delivered boats, trailers, and equipment to Indiana customers; the underlying
transactions were subject to this state's sales tax.
