News and Insights

Indiana Department of Revenue Rules Against Three Taxpayers by Narrowly Interpreting Revenue Statutes

Tax Development Feb 27, 2017

In three Letters of Findings (LOF) issued on February 22, 2017, the Indiana Department of Revenue (“Department”) denied taxpayers’ requests to deviate from Indiana tax provisions. In LOF No. 02-20150384, the taxpayer protested the Department’s assessment of additional tax by requiring the inclusion of interest for intercompany loans; throw-back sales; and the disallowance of a net operating loss (NOL) to its adjusted gross income tax. For all three items, the Department found that the taxpayer lacked evidence to support its position.

In LOF No. 02-20150326, the Department found that prior to the election to file a consolidated Indiana return, the taxpayer was required to report intercompany gains between its members. Finally in LOF No. 02-20160014, the taxpayer was denied its request to use an alternative apportionment formula, reflecting its property and payroll, as it did not present evidence that the alternative method would more accurately reflect its income in Indiana.

The results in all three rulings are unsurprising. Without substantial evidence to support their position, a taxpayer will not be able to depart from the statutory filing methodology, in determining its tax under the Indiana adjusted gross income tax.


Mary Bernard