Taxpayer operates a hotel located in Indiana providing overnight accommodations, meeting rooms, and parking to its customers. Taxpayer was audited by the Indiana Department of Revenue ("Department"). As a result of that audit, the Department ... assessed Taxpayer additional sales tax on certain hotel accommodations rented to individuals for which Taxpayer did not collect sales tax. Specifically, the Department found that Taxpayer did not collect sales tax on rooms rented to guests that claimed an exemption from sales tax based upon the guest's status as a member of a not-for-profit organization.
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Indiana imposes sales tax on the rental of hotel accommodations in Indiana, and the retail merchant has a duty to collect the sales tax on these transactions. In addition to this state-level sales tax, Marion County also imposes an "innkeepers' tax" on hotel accommodations.
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Indiana imposes sales tax on the rental of hotel accommodations in Indiana, and the retail merchant has a duty to collect the sales tax on these transactions. In addition to this state-level sales tax, Marion County also imposes an "innkeepers' tax" on hotel accommodations.
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Taxpayer argues that it is relieved of its duty to collect sales tax on the rental of rooms to these not-for profits because it relied upon exemption certificates that the guests provided.
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Taxpayer's assertion assumes that it accepted valid exemption certificates for the transactions at issue. However, as will be seen below, the exemption certificates were not valid.
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In summary, Taxpayer, as a retail merchant entered into Indiana retail transactions for hotel accommodations without collecting sales tax. Since Taxpayer collected exemption certificates that were not proper, the Department made an assessment of sales tax against Taxpayer. Based upon the statutes and regulations provided above, Taxpayer's transactions were properly subjected to sales tax. Therefore, Taxpayer's protest to the imposition of sales tax is respectfully denied.
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The Department found that Taxpayer had made purchases of tangible personal property that it used in its business operations without paying sales tax at the time of the transaction or remitting use tax to the Department. Thus, the Department assessed use tax on the purchases. Taxpayer protested the assessments stating that the "purchases were done through our 'franchise qualified vendors'... [where] payments were made according to the invoices without [Taxpayer] checking that the supplier didn't add sales tax to the invoices." Taxpayer maintains that its failure to pay the sales or use tax was not intentional, but a result of it relying on the "franchise qualified vendors" invoices.
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Taxpayer made retail purchases of tangible personal property without paying sales tax or remitting use tax to the Department. Taxpayer used this property in Indiana. Taxpayer invites the Department to abate the use tax that is due because Taxpayer did not intentionally fail to pay the use tax to the Department. Taxpayer does not cite to any statute, regulation, or case law that supports its position. Therefore, the Department declines Taxpayer's invitation and is unable to depart from its initial conclusion that Taxpayer's purchases were correctly subject to Indiana use tax.
