Source: http://www.in.gov/legislative/iac/20120829-IR-045120477NRA.xml.html
Timestamp: 2016-05-27 18:27:57
Document Index: 566447738

Matched Legal Cases: ['§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6']

04-20110560.LOF
Letter of Findings: 04-20110560
Authority: IC § 6-2.5-1-1; IC § 6-2.5-1-2; IC § 6-2.5-2-1; IC § 6-2.5-3-2; IC § 6-2.5-3-4; IC § 6-8.1-5-1; 45 IAC 2.2-1-1.
Taxpayer protests the imposition of use tax on its purchase of furniture.
Authority: IC § 6-2.5-4-9; IC § 6-8.1-5-1; 45 IAC 2.2-3-8; 45 IAC 2.2-3-9.
Taxpayer protests the imposition of use tax on its purchases of materials used in its construction projects.
III. Sales and Use Tax–"Labor Charges."
Taxpayer argues that the Department has imposed use tax on "labor charges."
Taxpayer protests the imposition of use tax on furniture. During the audit, Taxpayer was unable to provide documentation for some of its purchases. The auditor was, therefore, unable to verify that the transactions were not subject to Indiana use tax.
Accordingly, Indiana imposes a sales tax on retail transactions and a complementary use tax on tangible personal property that is stored, used, or consumed in the state. IC § 6-2.5-1-1 et seq. An exemption from the use tax is granted for transactions where the gross retail tax ("sales tax") was paid at the time of purchase pursuant to IC § 6-2.5-3-4. Since Taxpayer did not pay sales tax at the time of purchase, the Department found that the purchases were subject to use tax.
During the hearing Taxpayer presented an invoice to Taxpayer from a vendor, a related entity ("related entity vendor"), and a copy of the related entity vendor's credit card statement showing payments made to various vendors. While Taxpayer did not provide evidence that the related entity paid sales tax at the time of purchase, a vendor's incorrect payment of sales tax would not relieve Taxpayer of its obligation to pay the Department the assessed use tax.
Taxpayer's protest to the imposition of use tax on furniture is respectfully denied.
II. Sales and Use Tax–Imposition.
Taxpayer protests the assessment of use tax on certain of the construction materials consumed in lump sum contracts that were performed for "Section 482 housing projects."
(1) is to be added to a structure or facility by the purchaser; and(2) after its addition to the structure or facility, would become a part of the real estate on which the structure or facility is located.
(b) A contractor who purchases construction material exempt from the state gross retail tax or otherwise acquires construction material "tax-free" is accountable to the Department of Revenue for the state gross retail tax when he disposes of such property.
Taxpayer states that it hired subcontractors to perform construction work on a lump sum basis for certain "Section 482 housing" projects. Taxpayer maintains that it does not provide exempt certificates to its subcontractors and that its subcontractors sign purchase orders for "lump sum" construction contracts where all sales and use taxes are to be paid by the subcontractors. Additionally, Taxpayer argues that certain of the invoices are exempt because the charges are for "services," such as spreading gravel, and do not represent the transfer of tangible personal property.
During the protest process, Taxpayer submitted additional documentation–including invoices, purchase order contracts with certain subcontractors, and two letters from subcontractors to demonstrate the nature of the transactions. Based upon the document presented, Taxpayer has provided sufficient evidence to establish that the following transactions are not subject to use tax:
Douglas Plumbing, audit report p.4, $41,000 transaction, $27,060 taxed;
S & L Builders, LLC, audit report p.4, $95,169 transaction, $62,811 taxed;
S & L Builders, LLC, audit report p.5, $34,532 transaction, $22,791 taxed;
Additionally, based upon the document presented, Taxpayer has provided sufficient evidence to establish that part of the Hoosier Concrete Pumping, Inc. $5,150 payment (audit report p. 4, check no. 161) was not subject to use tax. Taxpayer provided four invoices and 3 purchase order contracts to demonstrate the nature of this payment. One of these invoices demonstrates that the transaction (invoice no. 8576) was a transaction where the contractor operated under "time and materials contract." For this transaction, the $365 paid for the concrete materials is subject to use tax. Therefore, Taxpayer's protest is sustained in part in the amount of $4,785 and is denied in part in the amount of $365.
However, Taxpayer's protest to the imposition of use tax on the other transactions is denied. For example, some of the transactions protested were not taxed in the audit. Some of the transactions were taxed as transactions where the contractor operated under "time and materials contracts," only the materials portions were subject to tax, and Taxpayer has failed to present evidence that demonstrated otherwise. Since Taxpayer failed to provide documentation that supported its assertions about the transactions in question, Taxpayer has failed to meet its burden to show that the assessment was incorrect under IC § 6-8.1-5-1. Therefore, the Department finds no reason to disagree with the audit's conclusion that these materials in the remaining protested transactions are subject to use tax.
Taxpayer's protest as to the $41,000 Douglas Plumbing transaction–on p. 4 of the audit report in which $27,060 was subjected to tax–is sustained. Taxpayer's protest as to the $95,169 S & L Builders, LLC transaction–on p. 4 of the audit report in which $62,811 was subject to tax–is sustained. Taxpayer's protest as to the $34,532 S & L Builders, LLC transaction–on p. 5 of the audit report in which $22,791 was subject to tax–is sustained. Taxpayer's protest as to the $5,150 Hoosier Concrete Pumping, Inc. payment–on p. 4 of the audit report–is sustained in part in amount of $4,785 and is denied in part in the amount of $365. However, Taxpayer's protest is denied for the other transactions in question.
Taxpayer's protest to the imposition of use tax on "labor charges" in the amount of $21,837.00 is sustained.
Taxpayer's protest as to the $41,000 Douglas Plumbing transaction–on p. 4 of the audit report in which $27,060 was subjected to tax–is sustained, as discussed in Issue II. Taxpayer's protest as to the $95,169 S & L Builders, LLC transaction–on p. 4 of the audit report in which $62,811 was subject to tax–is sustained, as discussed in Issue II. Taxpayer's protest as to the $34,532 S & L Builders, LLC transaction–on p. 5 of the audit report in which $22,791 was subject to tax–is sustained, as discussed in Issue II. Taxpayer's protest as to the $5,150 Hoosier Concrete Pumping, Inc. payment–on p. 4 of the audit report–is sustained in part in amount of $4,785 and is denied in part in the amount of $365, as discussed in Issue II. Taxpayer's protest to the imposition of use tax on "labor charges" in the amount of $21,837.00–on p. 4 of the audit report, referenced as check no. 179–is sustained, as discussed in Issue III. In all other respects, Taxpayer's protest is denied.
DIN: 20120829-IR-045120477NRA
Composed: May 27,2016 2:27:57PM EDT