SALT Report 3506 – An Indiana corporation who had been previously audited, was issued an assesment for use tax and interest due for purchases on which sales tax had not been paid and use tax had not been remitted for the periods of 2010, 2011, and 2012. The taxpayer argued that the assessments contradict treatment received in their prior audits.
As a general rule, all purchases of tangible personal property are subject to sales and/or use tax. Exemptions from use tax are granted when sales tax is paid at the time of purchase and under qualifying circumstances, additional exemptions from sale and/or use tax exist. The taxpayer made purchases without paying sales tax and therefore was assessed use tax. The taxpayer argued that certain items in question were allowed an exemption in previous audits and should be allowed again. Ultimately the Department determined that although the taxpayer does not qualify for the exemption, because the taxpayer claimed an exemption for the items for several years with the department’s approval the exemptions should be granted for the tax periods in question. All periods after the taxpayer was put on notice of the auditor’s assessments would not be permitted the exemption, however the business was sold in November of 2012, leaving no future periods open to assessment.
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