Indiana protest sustained as taxpayer was not state resident
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Friday, May 10, 2019

Indiana protest sustained as taxpayer was not state resident

By Payroll and Entitlements Editorial Staff

A taxpayer was not required to pay Indiana personal income withholding tax on income for which his Florida employer had withheld tax because the taxpayer met his burden of establishing that he was not an Indiana resident during 2017. The taxpayer argued that the Department of Revenue erred when it determined that he was required to pay 2017 Indiana income tax. In this matter, the taxpayer employed by a Florida company was assigned by his employer to Baghdad, Iraq for the last five years. Previously, the taxpayer’s company had assigned him to Indiana for seven months and since then the company continued to use Indiana as the taxpayer's mailing list. However, when in the United States the taxpayer was living in Arizona until November of 2017 when he purchased a home in Colorado. The taxpayer provided a copy of his 2017 federal form 2555 "Foreign Earned Income" statement that lists the Florida employer and gives the taxpayer's "foreign address" as an Iraq military base. The taxpayer’s company also issued 2017 W-2s listing the taxpayer’s current Colorado address. Additionally, there was no evidence that the taxpayer owned or rented an Indiana home, possessed an Indiana driver's license, ever voted in Indiana, ever worked in Indiana for an Indiana employer, ever prepared a will in Indiana, or ever maintained an Indiana bank account. Further, there was no indication that the taxpayer's seven month Indiana stay represented the taxpayer's intent to establish domicile in Indiana. Accordingly, the taxpayer’s protest was sustained. (Letter of Findings No. 01-20182481, Indiana Department of Revenue, January 24, 2019, released April 2019.)

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