Taxpayer is a company that manufactures trailers. The Indiana Department of Revenue ("Department") conducted a sales and use tax audit for the tax years 2010 and 2011. As a result of the audit, the Department issued proposed assessments for sales/use tax and interest.
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Taxpayer's protest involves three issues–advertising, scissor lift, and scales. Each item will be dealt with below.
Advertising
Taxpayer's protest letter states the following:
These were advertising brochures that were purchased for two trailer shows–the [] show in [another state] and the [] show in [another state]. In both cases, the literature was taken directly to the sales show and distributed. The auditor specifically told us that these were exempt, but then left them in the audit report.
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Taxpayer, after the hearing, provided the Department with a copy of one invoice, which shows that the catalogs and booklets were purchased from a company in another state and shipped to another state. Taxpayer has established that that specific invoice should not have been assessed Indiana use tax, since the invoice shows that the items were not in Indiana. Also, Taxpayer made food purchases while in another state, using a credit card. To the extent that the copies of the receipts provided by Taxpayer were assessed use tax in the Audit, Taxpayer is sustained.
Scissor Lift
The protest letter states in part:
The scissor lift is used in the production process to hang sidewall and roof metal on the outsides of the larger stacker trailers. Large ladders were used previously (and were sales tax exempt), but an increase in frequency of larger trailers and for safety, they purchased and began using a scissor lift. They [ sic] auditor agreed that that should be exempt (or at least pro-rated), but then left the full amount of the lift on the summary.
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Taxpayer provided photographs of the scissor lift. From the photographs, it appears that the scissor lift has the same function as a ladder, and thus is not directly used in the direct production process–that is, the scissor lift does not have an immediate effect on the article being produced (i.e., trailers). Furthermore, 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). Taxpayer has not met its burden of proof; Taxpayer's protest of the scissor lift is denied.
Scales
Lastly, Taxpayer argues in pertinent part that the scales should be exempt too:
The scales are used in the production process to weigh the units before they can be completed. A unit is not complete and can't be considered complete in production until it is weighed. It is the final step in the production process and is 100 [percent] necessary to complete the trailer and do the required paperwork. [Taxpayer] cannot sell nor do anything to a trailer that does not have a VIN tag or title and those documents cannot be generated until the weight of the unit is determined.
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The weighing of the trailers and the attendant paperwork for titling are post-production. The trailer has already been "altered... to its completed form...." Taxpayer's protest on this issue is denied.
