Taxpayer is a business with operations in several states. As the result of an audit, the Indiana Department of Revenue ("Department") determined that Taxpayer had not paid sales tax on some tangible personal property ("TPP") at the time of purchase during the tax years 2009, 2010, and 2011. The Department therefore issued proposed assessments for use tax and interest for those years.
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Taxpayer protests the imposition of use tax on some of its purchases of TPP during the audit years of 2009, 2010, and 2011. The Department determined that, on certain purchases of TPP, Taxpayer's Kentucky-based vendor had charged Kentucky sales tax at six percent, while Indiana's sales and use taxes were seven percent. The Department gave Taxpayer credit for the six percent Kentucky sales tax already paid and imposed Indiana use tax on the one percent difference from Indiana's seven percent rate. Taxpayer protested that it had already paid sales tax.
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Therefore, if a person properly paid sales tax to another state, under IC 6-2.5-3-5 , the Department will give a credit in the amount of the other state's sales tax against the amount of Indiana use tax due. In this case, the Department did just that. Therefore, while Taxpayer is correct that it paid sales tax at the time of purchase, that sales tax was Kentucky's six percent tax. Indiana's seven percent use tax was reduced by the six percent Kentucky sales tax, resulting in a one percent Indiana use tax imposition on those purchases. The Department correctly applied IC 6-2.5-3-5 . Taxpayer has not met the burden of proving the proposed assessments wrong, as required by IC 6-8.1-5-1 (c).
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