Source: http://www.in.gov/legislative/iac/20131030-IR-045130475NRA.xml.html
Timestamp: 2017-05-27 13:53:41
Document Index: 448917827

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

04-20130348.LOF
Letter of Findings: 04-20130348
I. Industrial Processor – Gross Retail Tax.
Authority: IC § 6-2.5-5 et seq.; IC § 6-2.5-2-1; IC § 6-2.5-3-2; IC § 6-2.5-3-2(a); IC § 6-2.5-4-2(c); IC § 6-2.5-5-3; IC § 6-2.5-5-3(b); IC § 6-2.5-3-4; IC § 6-2.5-4-2; Indiana Dep't of State Revenue v. Rent-A-Center East, Inc., 963 N.E.2d 463 (Ind. 2012); Lafayette Square Amoco, Inc. v. Indiana Dep't of State Revenue, 867 N.E.2d 289 (Ind. Tax Ct. 2007); Rotation Products Corp. v. Indiana Dep't of State Revenue, 690 N.E.2d 795 (Ind. Tax Ct. 1998); Mechanics Laundry & Supply, Inc., v. Indiana Dept. of State Revenue, 650 N.E.2d 1223 (Ind. Tax Ct. 1995); Indiana Dept. of State Rev. v. Kimball Int'l Inc., 520 N.E.2d 454 (Ind. Ct. App. 1988); Indiana Dep't of State Revenue, Sales Tax Division v. RCA Corp., 310 N.E.2d 96 (Ind. Ct. App. 1974); 45 IAC 2.2-5-8(b).
Taxpayer argues that the tools and equipment used to refurbish used stadium seating are exempt from tax.
II. Gaylord Bins and Forklift – Gross Retail Tax.
Authority: IC § 6-2.5-5-3(b); IC § 6-8.1-5-1(c); Indiana Dept. of State Rev. v. Kimball Int'l Inc., 520 N.E.2d 454 (Ind. Ct. App. 1988); 45 IAC 2.2-5-8(b).
Taxpayer maintains it was not required to pay sales/use tax on the purchase of Gaylord Bins and a forklift on the ground that the bins and forklift are directly used in the refurbishment of used stadium seating.
III. Plywood Bracing – Gross Retail Tax.
Authority: IC § 6-2.5-5-6; IC § 6-8.1-5-1(c); 45 IAC 2.2-5-14; 45 IAC 2.2-5-14(a).
Taxpayer states that it was not required to pay sales/use tax when it purchased plywood used to reinforce stadium seat legs because the plywood is incorporated into the refurbished stadium seating.
IV. Negligence Penalty – Gross Retail Tax.
Taxpayer argues that the Department of Revenue should exercise its authority to abate the ten-percent "negligence" penalty.
The Department of Revenue ("Department") conducted an audit review of Taxpayer's business records and tax returns. The audit resulted in the assessment of additional sales/use tax. Taxpayer disagreed with a portion of the assessment and submitted a protest to that effect. An administrative hearing was conducted during which Taxpayer's representatives explained the basis for the protest. This Letter of Findings results.
Pursuant to IC § 6-2.5-2-1, a sales tax, known as the state gross retail tax, is imposed on retail transactions made in Indiana unless a valid exemption is applicable. Retail transactions involve the transfer of tangible personal property. IC § 6-2.5-3-2(a). A complementary excise tax, known as the use tax, is imposed on the storage, use, or consumption of tangible personal property in Indiana if the property was acquired in a retail transaction. IC § 6-2.5-3-2.
An exemption from use tax is granted for transactions where the sales tax was paid at the time of purchase pursuant to IC § 6-2.5-3-4. There are additional exemptions from sales and use tax. IC § 6-2.5-5 et seq. Specifically, IC § 6-2.5-5-3 provides an exemption for machinery, tools, and equipment directly used in the purchaser's direct production of tangible personal property. That exemption extends to "industrial processors." An "industrial processor" is defined under IC § 6-2.5-4-2(c) as one who: (1) acquires tangible personal property owned by another person; (2) provides industrial processing or servicing, including enameling or plating, on the property; and (3) transfers the property back to the owner to be sold by that owner either in the same form or as part of other tangible personal property produced by that owner in his business of manufacturing, assembling, constructing, refining, or processing.
Taxpayer cites to IC § 6-2.5-5-3(b) as authority for its argument that the equipment and tools used to refurbish the used stadium seating – ownership of which is retained by the original stadium – is exempt.
In applying any tax exemption such as IC § 6-2.5-5-3(b), the general rule is that "tax exemptions are strictly construed in favor of taxation and against the exemption." Indiana Dept. of State Rev. v. Kimball Int'l Inc., 520 N.E.2d 454, 456 (Ind. Ct. App. 1988). A statute which provides a tax exemption however is strictly construed against the taxpayer. Indiana Dep't of State Revenue, Sales Tax Division v. RCA Corp., 310 N.E.2d 96, 97 (Ind. Ct. App. 1974). "[W]here such an exemption is claimed, the party claiming the same must show a case, by sufficient evidence, which is clearly within the exact letter of the law." Id. at 101.
As authority, Taxpayer cites to IC § 6-2.5-5-3(b) which states:
In addition, Taxpayer cites to 45 IAC 2.2-5-8 which states in part:
The state gross retail tax does not apply to purchases of manufacturing machinery, tools, and equipment to be directly used by the purchaser in the production process provided that such machinery, tools, and equipment are directly used in the production process; i.e., they have an immediate effect on the article being produced. Property has an immediate effect on the article being produced if it is an essential and integral part of an integrated process which produces tangible personal property. 45 IAC 2.2-5-8(b).
As noted in Part I. above, Taxpayer has the responsibility of establishing that the original assessment was wrong, IC § 6-8.1-5-1(c), and the exemption which Taxpayer seeks to attain is "strictly construed in favor of taxation and against the exemption." Kimball Int'l Inc., 520 N.E.2d at 456.
The Department's audit found that purchase of the plywood was subject to sales/use tax. Taxpayer disagrees stating the plywood is incorporated into the refurbished seats. Taxpayer cites to IC § 6-2.5-5-6 which states:
Taxpayer also cited to 45 IAC 2.2-5-14 which states in part:
The state gross retail tax shall not apply to sales of any tangible personal property which is to be incorporated by the purchaser as a material or an integral part into tangible personal property produced for sale by such purchaser in the business of manufacturing, assembling, refining or processing. 45 IAC 2.2-5-14(a).
Taxpayer is not entitled to an exemption for the purchase of the Gaylord boxes and forklift. In all other respects, Taxpayer's protest is sustained.
Composed: May 27,2017 9:53:40AM EDT