Taxpayer is an out-of-state corporation with operations in Indiana. As the result of an audit, the Indiana Department of Revenue ("Department") determined that Taxpayer had claimed research and development ("R & D") credits without documentation supporting the claimed amounts of credits on its Indiana adjusted gross income tax ("AGIT") returns for the 2004, 2005, and 2006 tax years. The Department therefore removed those credits from its calculations of Taxpayer's AGIT for those years, which resulted in additional AGIT due for those years. The Department therefore issued proposed assessments for AGIT and interest.
...
Taxpayer protests the reduction of research and development credits which it claimed on its 2004, 2005, and 2006 Indiana AGIT returns, along with the resulting proposed assessments for additional AGIT for those years. Taxpayer states that the R & D credits were properly claimed. Taxpayer did not have documentation upon which it based its calculations of the credit it claimed. The Department denied Taxpayer's R & D credits in their entirety based on the determination that Taxpayer was unable to substantiate any of the numbers Taxpayer used to calculate the credits. The Department notes that the burden of proving a proposed assessment wrong rests with the person against whom the proposed assessment is made, as provided by IC § 6-8.1-5-1(c).
For income tax purposes, Indiana follows the federal tax scheme with certain modifications. IC § 6-3-2-1(b); IC § 6-3-1-3.5(b). Indiana also provides certain tax credits which a taxpayer may claim to reduce its taxable income. One of the tax credits is the "Indiana qualified research expense tax credit" under IC § 6-3.1-4-...
...
...
The Department denied the credits which Taxpayer claimed, basing its determination on the grounds that Taxpayer did not have any documentation to substantiate the numbers which Taxpayer used in its credit calculations. During the hearing, Taxpayer explained that they did not have any additional documentation ready to provide in support of their claimed credits. Additional time was allowed for the submission of any supporting documentation. Ultimately, no additional supporting documentation was received by the Department on this issue. Therefore, Taxpayer has not met the burden of proving the proposed assessments wrong, as required by IC § 6-8.1-5-1(c).
