Senate Enrolled Act No. 243 (signed by Governor March 5, 2026)
Revises the definition of the Internal Revenue Code (IRC) to conform to four provisions (three IRC sections) of the One Big Beautiful Bill Act (HR 1) that have an effective date of July 4, 2025. The conformity date to the remainder of the IRC is amended in Section 6 of Senate Enrolled Act 243.
Amends the definition of “adjusted gross income” in the following ways to comport with changes made in HR 1 (the One Big Beautiful Bill Act):
- For the addback of an amount equal to the amount excluded from federal gross income under IRC Section 108(f)(5), it pertains to taxable years ending after December 31, 2020, and before January 1, 2026.
- For the modification for amounts related to specified research or experimental procedures, “procedures” has been changed to “expenditures.”
- Create a new modification to add or subtract an amount equal to the modifications required for qualified production property under IC 6-3-2-30.
- For the addback for a claimed federal deduction under IRC Section 250(a)(1)(B), it is attributable now to net CFC tested income instead of global intangible low taxed income.
Amends the definition of “specified research or experimental expenditures” for purposes of the deduction for such to have different meanings based on the tax year as follows:
- The prior definition of specified research or experimental expenditures (as defined in IRC Section 174(b) as in effect December 31, 2024) that the taxpayer is required to charge to capital account under IRC Section 174(a)(2) applies to taxable years beginning before January 1, 2025.
- For taxable years beginning after December 31, 2024, it means foreign research or experimental expenditures (as defined in IRC Section 174(b)) and domestic research or experimental expenditures (as defined in IRC Section 174A(b)).
Creates a modification for “qualified production property,” which has the meaning provided in IRC Section 168(n)(2).
Stipulates that except as otherwise provided in IC 6-3-2-30, if a taxpayer makes an election to claim the special depreciation allowance under IRC Section 168(n) with regard to qualified production property used by the taxpayer and placed in service during the current taxable year or a previous taxable year, the taxpayer shall add or subtract the amount required to make the taxpayer’s adjusted gross income (as defined in IC 6-3-1-3.5 or IC 6-5.5-1-2) equal to the amount of adjusted gross income determined as if an election had not been made under IRC Section 168(n).
Provides that a taxpayer will be considered to have made an election to not claim the special depreciation allowances under IRC Section 168 for purposes of computing adjusted gross income under IC 6-3 or IC 6-5.5 if the taxpayer:
- makes an election under IRC Section 168(n) to claim the special depreciation allowance under that section; and
- the taxpayer is considered to have elected to not claim other special depreciation allowances under IRC Section 168 as a result of that election.
Clarifies that for purposes of IC 6-2.5-9-3 pertaining to personal liability of holder of taxes in trust, a marketplace facilitator is not liable under both IC 6-2.5-9-3 and now IC 6-8.1-8-18 (added in Section 77 of Senate Enrolled Act 243) for failure to collect and remit gross retail and use taxes.
Extends the deadline that taxpayers and DOR have to respond to revenue agent report changes to one year beginning January 1, 2026, instead of 180 days as it was previously.
Creates a new article outlining the authority of administrative agencies to regulate digital assets.
- Defines a “digital asset” to mean: virtual currency; cryptocurrency (as defined in IC 2-3.5-2-2.8); payment stablecoin (as defined in 12 U.S.C. 5901(22)); fungible tokens and nonfungible tokens; and other assets that exist only in electronic form and confer economic, proprietary, or access rights or powers.
- Prohibits public agencies other than the department of financial institutions from adopting or enforcing a rule or other regulation that would have the effect of prohibiting, restricting, or impairing the ability of a person to use or accept digital assets as a method of payment for legal goods and services.
House Enrolled Act No. 1210 (signed by Governor March 12, 2026)
Requires that, in order to use the specific transaction award certificate issued by the Indiana
economic development corporation, a qualified data center user must submit to the county treasurer or city fiscal officer, whichever enters into the agreement with the data center, an amount equal to not more than 1% of the state gross retail and use taxes not paid on the data center’s total amount of electricity billed each calendar quarter continuing through the duration of the specific transaction award certificate.
II. Select Administrative and Case Updates
A. Sales and Use Tax
Revenue Ruling #2026-04-RST (June 26, 2026) (Sales Tax) – Cloud-Based Educational and Trading Simulation Services
An out-of-state company provides a cloud-based educational platform that teaches trading skills through simulated environments. Customers access the platform through a web browser and may optionally use a downloadable application developed by an unrelated third party. The simulated trading is fictitious, and Taxpayer’s offering included educational content, analytical tools, and access to the simulation. The optional application is provided as freeware and is not required to access the web-based service.
The Department concluded that customers obtain remote access rather than permanent ownership or possession of software. The optional third-party freeware did not convert the offering into downloadable software, and Taxpayer’s product was educational and trading-simulation services performed using software rather than a transfer of tangible personal property. Because the offering was not tangible personal property or a specified digital product under IC 6-2.5-4-16.4, the access software was not subject to Indiana sales tax.
Memorandum of Decision: 04-20253054 (June 4, 2026) (Sales Tax) – Direct Mail Sourcing
An out-of-state business conducting direct mail operations with an Indiana-based printer sought a refund of sales tax paid on Indiana transactions. Its customers supplied product samples, and Taxpayer used the Indiana printer to package and distribute those samples with printed materials to prospective customers in targeted demographics nationwide. The Department initially denied the refund in reliance on Sales Tax Information Bulletin 54. In protest, Taxpayer documented its business model and provided transaction-level information identifying where the direct mail was delivered.
Under IC 6-2.5-13-3, an out-of-state purchaser without a direct-mail permit or exemption certificate may establish the jurisdictions to which the mail is delivered, allowing the transactions to be sourced accordingly. Taxpayer established which transactions were sourced to Indiana and which were sourced to other states. The Department therefore sustained the protest and ordered a refund of the overpaid Indiana sales tax.
Revenue Ruling #2026-01-RST (May 26, 2026) (Sales Tax) – Direct Mail Producer; Nontaxable Data Services
The Department addressed the sales tax treatment of an Indiana-based Taxpayer that is a direct mail producer and printer. Direct mail is considered the sale of tangible personal property. See IC 6-2.5-4-1. Taxpayer must collect Indiana sales tax on direct mail sales unless it receives a direct pay permit, direct-mail form, exemption certificate, or other valid information showing the jurisdictions to which the mail will be delivered. When valid sourcing documentation is provided, the sale is sourced to the delivery jurisdictions; without it, then the transaction will be determined by the location from which the direct mail is shipped under IC 6-2.5-13-3 and Sales Tax Information Bulletin 54.
The Department ruled that charges for imaging and digital services, production, finishing and bindery services, shipping, and administrative credit card usage fees were subject to sales tax as services performed relative to the tangible property prior to transfer, regardless of whether these charges are separately stated on an invoice. However, other data services, when separately invoiced, appear to be services performed with regard to the data provided by the customer and not with respect to the direct material being produced. The Department ruled that sales tax should not be collected on these stand-alone services such as mail/digital tracking, data address verification and data sanitation.
Drawing from IC 6-2.5-1-5(a)(3) and Sales Tax Information Bulletin #92, the Department ruled that shipping charges incurred on behalf of the seller of tangible personal property are included in gross retail income and are subject to sales tax, except for postal charges, which are not.
[Taxpayer] v. Indiana Dep’t of State Revenue, No. 24T-TA-00004 (Ind. Tax Ct. Mar. 31, 2026) – Sales and Use Tax Exemption for Telecommunications Equipment (Cell Phones)
In this case of first impression, the Court addressed whether cell phones qualify as exempt “radio or microwave transmitting or receiving equipment” under IC 6-2.5-5-13. Taxpayer purchased cell phones from manufacturers such as Apple and Samsung for resale to subscribers but used a portion of those phones to fulfill contractual obligations—specifically, to provide free phones to customers who entered into cellular service contracts with Taxpayer, and to replace existing customer phones pursuant to phone insurance policies. Taxpayer paid over $5 million in use tax on those phones for the 2018–2019 tax years and sought a refund under the telecommunications equipment exemption.
The Department denied the refund, arguing that the exemption was limited to central network infrastructure that remains under the provider’s control and serves all customers. The Court disagreed, holding that the plain and ordinary meaning of “radio or microwave transmitting or receiving equipment” encompasses cell phones, which transmit and receive radio waves as an essential function. The Court examined telecommunications industry definitions of the words and phrases used in the statute and found that the statute includes both centralized network equipment and decentralized, customer-sided equipment, such as “station equipment” or “station apparatus.” The Court further held that the statutory phrase “including, without limitation” preceding the list of enumerated equipment types is a term of illustration or enlargement and not of limitation, which supports a broader reading of the exemption.
The Court also rejected the Department’s argument that Taxpayer was not “the person acquiring the property” for purposes of the exemption. The Court found that the relevant acquisition is Taxpayer’s purchase of phones from its suppliers, not the customer’s receipt of a phone under the service agreement. Partial summary judgment was granted in favor of Taxpayer on the exemption question; the specific refund amount was reserved for further proceedings.
Revenue Ruling #2026-02-RST (Mar. 16, 2026) (Sales/Use Tax) – Marketplace Facilitator Status; Auction Software
A technology company providing auction software asked whether it was a marketplace facilitator. Its platform allows customers to conduct traditional, online, and hybrid auctions while retaining control over bidding, pricing, payment methods, customer eligibility, and fulfillment. Taxpayer does not: participate in bidding, take title to any items, buy or list products for sale, finalize sales, engage in payment processing/collection, or act as an agent, broker, or intermediary. It does not collect, hold, or distribute funds related to auctions on its platform. It earns revenue from subscriptions, referral fees, banner ads, custom websites, and support services.
A marketplace facilitator under IC 6-2.5-1-21.9 is a person who (1) owns, operates, or otherwise controls a marketplace, and (2) facilitates a retail transaction pursuant to IC 6-2.5-4-18. The Department determined that Taxpayer does not facilitate retail transactions. Although the software enables customers to configure payment settings within the platform, this software feature is not connected to the ecommerce portal, allowing them to define accepted payment methods. A marketplace facilitator facilitates a retail transaction by collecting the sales price or purchase price of the seller’s products. Taxpayer does not collect funds or process payments on its platform.
Because Taxpayer does not meet both elements of the statutory definition of marketplace facilitator, it is not required to collect and remit sales tax on auction transactions conducted through its technology solutions.
Memorandum of Decision: 04-20251266; 04-20251267 (Mar. 12, 2026) (Sales/Use Tax) – Research and Development Exemption
A healthcare business filed sales and use tax refund claims for 2020 through 2024, asserting that property used in research and development was exempt under IC 6-2.5-5-40. The Department conducted plant tours and reviewed invoices and Taxpayer’s descriptions of how the items were used in laboratory extraction and research activities. The Department sustained the exemption for items shown to be essential and integral to the research and development, including items used to extract biological materials (oxygen cylinder rentals, transfusion filters, collagenase packs, and cellbind chambers), lid containers to keep instruments sterile in clean rooms, and freezer racks or custom racks used to maintain sample integrity.
The Department denied the exemption for corrugated boxes and box liners because their use was not specifically explained. It denied the exemption for masks with ear loops, mop heads, dry ice, and Cryocubes (used for packaging and shipping) as nonlaboratory items outside the scope of IC 6-2.5-5-40(b). The protest was thus sustained in part and denied in part.
Memorandum of Decision: 04-20241728 (Nov. 14, 2025) (Sales/Use Tax) – Manufacturing Exemption; Lump Sum Contracts
A manufacturing company with several Indiana locations underwent an audit for 2018 through 2020 to update its Sales and Use Tax Compliance Agreement. Taxpayer challenged the treatment of items claimed to be directly used in manufacturing under IC 6-2.5-5-3 and argued that certain construction contracts were lump-sum contracts rather than time-and-materials arrangements. It supported the protest with contract language, invoices, and descriptions of its production process.
Taxpayer’s manufacturing process involved the production of large steel products, beginning with mining raw materials in other states, processing them for consistency in size and content, and transporting them to Indiana for storage in an ore yard. The raw materials were then melted into liquid form by a blast furnace; the molten steel was transferred to other machinery to be formed into solid steel slabs, which were then processed through a hot strip mill and several finishing stations until they became steel sheets and coils completed to customer specifications.
Taxpayer used overhead cranes fixed along the manufacturing line, with each crane performing a specific function related to moving in-process materials—such as large amounts of ore, molten steel in ladles, and heavy steel slabs and coils—from one manufacturing stage to another.
The Department agreed that the overhead cranes were directly used in production and that replacement parts for exempt machinery qualified for exemption under the double-direct test and 45 IAC 2.2-5-8. It also concluded from the contract language that the contested arrangements were lump-sum contracts, even though some supporting documentation contained a “breakdown” of time and materials associated with a job. Thus, the contractor—not the owner—bears the sales or use tax on materials.
The Department denied interest on the resulting audit refund under IC 6-8.1-9-2 and General Tax Information Bulletin 101 because the refund arose from audit adjustments rather than a separately filed refund claim. The protest was sustained on the exemption and contract issues but denied as to interest.
Revenue Ruling #2025-04-RST (Sept. 25, 2025) (Sales/Use Tax) – Packaging Materials and Manufacturing Equipment Exemption
The Department issued this ruling in response to a request from a fulfillment subsidiary of a large logistics provider (the “Company”) that operates distribution centers in Indiana. The Company provided pick, pack, and ship services; retail display packaging; consumer packaging; and reverse logistics and repackaging services on behalf of its customers. Two issues were presented: (1) whether non-returnable packaging materials—including bags, boxes, bubble wrap, and similar items—qualified for the packaging materials exemption under IC 6-2.5-5-9(d); and (2) whether the Company’s packaging equipment qualified as exempt manufacturing machinery, tools or equipment under IC 6-2.5-5-3(b).
The Department concluded that the Company does not qualify as an “industrial processor” because its fulfillment operations do not transform its customers’ products into new, marketable goods. Citing Faris Mailing, Inc. v. Indiana Dep’t of State Revenue, 512 N.E.2d 480 (Ind. Tax Ct. 1987) and North Central Industries, Inc. v. Indiana Dep’t of State Revenue, 790 N.E.2d 198 (Ind. Tax Ct. 2003), the Department emphasized that packaging products for shipment, retail display, or return does not constitute “production” or “manufacture” within the meaning of the exemption statutes. Because the Company’s activities were logistical rather than transformative in nature, neither the packaging materials nor the packaging equipment qualified for the claimed exemptions. Both remain subject to Indiana sales and use tax.
Letter of Findings: 04-20251093 (June 2, 2025) (Use Tax) – Statistical Sampling Accuracy; Penalty Waiver
The Department audited a corporation doing business in Indiana for use tax compliance during the 2021–2022 tax years. Following its review, the Department issued a proposed assessment of additional use tax based on a statistical sampling methodology. The Taxpayer timely protested the assessment and submitted supplemental documentation to challenge specific items identified in the audit sample.
Taxpayer demonstrated that several software purchases—including Foundation, Smartsheet, Dodge Construction, Dropbox, and Microsoft Outlook cloud access—constituted non-taxable software-as-a-service (“SaaS”) transactions because the software was accessed remotely via the internet without any transfer of possession or control, as outlined in Sales Tax Information Bulletin 8. Taxpayer further established that twenty-one transactions within the sample had already been subjected to sales or use tax, one item was a non-retail governmental fee rather than a taxable purchase, and one construction-material purchase was made on behalf of an exempt school district customer. As a result, the Department found that it would adjust the error percentage in the audit and recalculate Taxpayer’s use tax owed accordingly.
Regarding the 10% negligence penalty imposed under IC 6-8.1-10-2.1, Taxpayer demonstrated reasonable cause for abatement: the error rate in the original sample was very small relative to total transactions; the penalty was the first assessed against the Taxpayer; and Taxpayer had engaged an accounting firm following the audit to improve its use tax compliance procedures. The Department found that Taxpayer exercised ordinary business care and prudence and waived the negligence penalty pursuant to 45 IAC 15-11-2.
Order Denying Refund: 04-20210049 (Apr. 30, 2025) (Sales/Use Tax) – Public Transportation Exemption; Natural Gas Utility
An Indiana utility corporation regulated by FERC and the Indiana Utility Regulatory Commission sought a refund of use tax paid on tangible personal property used to maintain intrastate natural gas pipelines during 2015 through 2017. Taxpayer claimed the public transportation exemption under IC 6-2.5-5-27. The Department initially analyzed the claim using the transportation-company factor test in Sales Tax Information Bulletin 12, but it subsequently acknowledged that approach was inapplicable to Taxpayer, and reconsidered the claim under the statutory and regulatory requirements for public transportation.
Under 45 IAC 2.2-5-61, public transportation requires the movement of property for consideration by a common carrier, contract carrier, or another qualifying carrier. The Department observed that Taxpayer’s provision of natural gas could be considered a service, or the gas could be considered as “property.” Because the statute was ambiguous, it was strictly construed against Taxpayer under Indiana Dep’t of State Revenue v. Indianapolis Pub. Transp. Corp., 550 N.E.2d 1277 (Ind. 1990). The protest was denied.
B. Property Tax
Hardways, LLC v. Lawrence County Assessor, Pet. No. 47-004-23-1-4-00370-25 (Ind. Bd. Tax Rev. June 22, 2026), on appeal at Indiana Tax Court No. 26T-TA-00012 – Self-Storage Facility Valuation
Hardways appealed the 2023 assessment of its 135-unit self-storage facility in Bedford, Indiana, which increased from the 2022 assessment of $520,900 to $657,800. Because the assessment increased by more than 5%, the burden of proof shifted to the Assessor under IC 6-1.1-15-20. The Assessor presented a USPAP-compliant appraisal prepared by an MAI, who developed all three standard approaches to value—cost, sales comparison, and income capitalization—and concluded to a value of $800,000 as the lowest of the three approaches, consistent with the requirements of IC 6-1.1-4-46(d), which mandates that self-storage facilities be valued at the lowest of the three approaches.
The Board found the MAI appraisal credible and well-supported by market data. Hardways argued that the assessment should be based on the Department of Local Government Finance (“DLGF”) guidelines, and that the Assessor failed to document various departures from the prior-year assessment. The Board held that IC 6-1.1-4-46(d) does not mandate the use of DLGF guidelines and that market-based evidence—as opposed to a formalistic application of mass appraisal regulations—is required when a party challenges an assessment on appeal. The Board changed the assessment to $800,000.
IBEW Local 305 v. Allen County Assessor, No. 25T-TA-00003 (Ind. Tax Ct. Mar. 13, 2026) – Educational Use Exemption
The taxpayer owned property used and occupied by the Fort Wayne Electrical Joint Apprenticeship and Training Committee Trust Fund (“JATC”). The taxpayer sought a property tax exemption, arguing under IC 6-1.1-10-36.3 that the property is predominantly used and occupied for educational purposes by a not-for-profit school for electrical apprenticeship training, which included both classroom instruction and on-the-job training. The Indiana Board of Tax Review denied the exemption, holding that the term “school” is limited to institutions that are accredited or regulated by the Indiana Department of Education.
The Court reversed, holding that the ordinary and usual meaning of “school” is broad and encompasses various educational institutions serving students of all ages. Nothing in the statutory text limits the term to institutions based on the age of the pupil or the regulatory framework under which the institution operates. The Court noted that the Legislature’s use of the unmodified term “school” without any qualifying language indicates an intent for a broad meaning. The case was remanded to the Board for application of the plain, ordinary and usual meaning of “school.”
Ambassador Campus Properties LLC, n/k/a The Summit FW LLC v. Allen County Assessor, Pet. Nos. 02-74-22-2-8-00542-23, et al. (Ind. Bd. Tax Rev. Feb. 17, 2026) – Charitable Exemption
Ambassador Campus Properties, part of a for-profit philanthropic investment firm, sought a charitable purposes property tax exemption under IC 6-1.1-10-16 for a former college campus in Fort Wayne that it had converted to office space. The property was leased to a mix of for-profit and nonprofit tenants.
The Board denied the exemption for the 2022 and 2024 assessment dates. First, the Board found that Ambassador failed to prove the property was “owned” for charitable purposes. Ambassador was structured as a for-profit LLC, rents charged to tenants were at or above market rates, and the lease agreements contained no enforceable charitable-use requirements. Second, the Board found that exempt uses did not predominate over non-exempt uses on the property. Third, and critically, because ownership, occupancy, and use of the property were not unified—Ambassador owned the property, but multiple separate tenants occupied and used various portions—each occupying entity needed to independently establish its own exempt purpose under IC 6-1.1-10-16. Ambassador failed to demonstrate that any individual tenant’s use satisfied the charitable-purpose standard. The exemption was denied in full.
Donovan v. Clark County Assessor, No. 25T-TA-00002 (Ind. Tax Ct. Dec. 22, 2025) – Purchase Price as Valuation Evidence
The Donovans purchased their 11th-floor condominium in a waterfront community in Jeffersonville, Indiana on August 24, 2022, for $810,000. Believing their January 1, 2023 assessment of $700,000 was too high in comparison to their neighbors, they appealed. The Indiana Board of Tax Review increased the assessment to $810,000 based on the subject property’s purchase price. On appeal, the Court affirmed the $810,000 assessment.
The Court recognized that, under IC 6-1.1-31-6(c), market value-in-use does not mean “fair market value.” However, fair market value and market value-in-use can converge when the pre- and post-sale uses of a property are the same, as the evidence showed in this case. The Donovans argued that their assessment was higher than other condominium unit sales in the same building, but the Court found this evidence unpersuasive because no adjustments were made for differences such as floor level, number of bedrooms and bathrooms, or condition. The Donovans’ uniformity claim was similarly rejected due to the absence of a ratio study or coefficient of dispersion analysis.
Mercantile Operations, Inc. v. Vanderburgh County Assessor, Pet. Nos. 82-027-20-1-4-00431-23, et al. (Ind. Bd. Tax Rev. Nov. 24, 2025), on appeal at Indiana Tax Court No. 26T-TA-00004 – Department Store Valuation
Mercantile appealed the 2020–2022 assessments of its anchor department store in Evansville, Indiana, which was assessed at approximately $6.4 million to $6.8 million across the appeal years. Both parties presented competing USPAP-compliant appraisals using the three recognized approaches to value.
The Board rejected the income approach submitted by Mercantile’s appraiser, noting that he estimated market rent to be below the range of evidence presented in his appraisal, and he failed to consider percentage rent beyond a level of base rent. The Board rejected his sales-comparison approach for using sales from 2005, 2006 and 2011, and also for using sales involving participants that did not contemplate a department store use following the sale. The Board also rejected the Assessor’s appraiser’s income-capitalization approach and cost approach because a key component of each approach utilized retail sales amounts that were more than double the retail sales at comparable Indiana anchor department stores. However, the Board found that the Assessor’s appraiser’s sales-comparison approach used credible and compelling sales comparables. The Board adopted that sales-comparison value but adjusted it downward by $1 million to account for the condition of the property’s roof, based on repair cost estimates from the Assessor’s appraiser to address leaking roof. The final assessments were set at $6,880,000 (2020), $6,700,000 (2021), and $6,520,000 (2022).
Madison County Assessor v. Kohl’s Indiana, LP, No. 24T-TA-00009 (Ind. Tax Ct. Nov. 17, 2025) – Burden of Proof; Sufficiency of Evidence
Previously, the Court remanded this case to the Indiana Board of Tax Review in Madison County Assessor v. Kohl’s Indiana, LP, No. 24T-TA-00009 (Ind. Tax Ct. Dec. 06, 2024). On remand, the Board found extensive flaws in the appraisals submitted by both parties. Nevertheless, the Board determined that each appraisal made a prima facie case because each appraisal was prepared by a qualified appraiser using generally accepted appraisal principles in conformance with the Uniform Standards of Professional Appraisal Practice (“USPAP”). The Board then proceeded to weigh the appraisals, determining Taxpayer’s appraisal was more convincing because its flaws were “somewhat less egregious” than the flaws in the competing appraisal. The Board reduced the 2019–2021 assessments from approximately $4.5 million to approximately $2.36 million. The Assessor appealed to Court a second time.
Again, the Court reversed, holding that the Board had improperly applied a per-se rule that any USPAP-compliant expert appraisal was sufficient to satisfy the party’s burden of proof, regardless of the appraisal’s content. The Court held that the Board must independently determine whether an appraisal, standing alone and without reference to any competing appraisal, more likely than not reflects the property’s true tax value under the preponderance-of-the-evidence standard. The Court noted that the Board found extensive flaws with the Taxpayer’s appraisal, which casts doubt on whether the Taxpayer had met its burden of proof in the absence of the Board’s improper per-se rule. The case was remanded for the Board to conduct further proceedings under the correct legal standard.
P.S.–following the second remand and a determination by the Board, this case has been appealed a third time with the Indiana Tax Court, pending at 26T-TA-00010.
Kohl’s Indiana, LP v. St. Joseph County Assessor, Pet. Nos. 71-002-18-1-4-00216-23, et al. (Ind. Bd. Tax Rev. Sept. 22, 2025) – Big Box Retail Valuation
Kohl’s appealed the 2018–2022 assessments of its 87,310-square-foot retail store in South Bend, Indiana. Both parties presented competing expert appraisals using the recognized approaches to value. The Board found Kohl’s appraiser more persuasive than the Assessor’s appraiser. Kohl’s appraiser demonstrated a deeper investigation of comparable sales and leases, including conducting site visits and interviews with real estate brokers involved in the transactions. The Board credited Khol’s appraiser’s sales-comparison approach and income-capitalization approach as reliable indicators of the property’s market value-in-use.
The Assessor attacked Khol’s appraiser’s use of three deed-restricted comparable sales in the sales-comparison approach, with restrictions limiting future retail use. The Board did not impose a bright-line rule against the use of such comparables. The Board was not overly troubled by two of those comparables having less onerous restrictions, noting that Khol’s appraiser confirmed that the restrictions were negotiated after the purchase prices were established. The Board determined, however, that a sale with a 25-year restriction on department and discount store use should not have been used, and Khol’s appraiser’s adjustment to account for the restriction did not remedy the error.
By contrast, the Board found the Assessor’s appraisal less credible, noting that her paired sales analysis included leased fee sales for which she did not know the lease terms, as well as one sale that was part of a portfolio transaction with an allocated sale price. The comparable properties she selected were too disparate in size from the subject, and she lacked objective support for many of her adjustments.
The Board reduced the assessments to $2,970,000 for 2018, increasing gradually to $3,290,000 for 2022.
[Taxpayer] v. Madison County Assessor, Pet. Nos. 48-039-18-1-3-01014-19, et al. (Ind. Bd. Tax Rev. Aug. 18, 2025), on appeal at Indiana Tax Court No. 26T-TA-00020 – Industrial Manufacturing Facility Valuation
Taxpayer appealed the 2018–2023 assessments of its industrial manufacturing facility in Anderson, Indiana, where assessments ranged from approximately $48.6 million to $54.2 million. The Board found Taxpayer’s appraiser less reliable due to several methodological deficiencies: unsupported external obsolescence estimates employing a “case study” method with too many unverified variables; a land valuation in the cost approach that simply used the land value from the subject’s property record card; unsupported significant adjustments to leased comparables without analyzing how the lease rates compared to market rent; and the omission of supporting data from the appraiser’s work file.
The Assessor’s appraiser presented three complete approaches to value and provided better-supported conclusions with good quantity and quality of data. Although he did not specialize in the appraisal of industrial properties like Taxpayer’s appraiser, Assessor’s appraiser’s familiarity with the Indiana market and Indiana’s market value-in-use standard, as well as his MAI designation, were more than sufficient for him to address the subject property. The Board adopted the Assessor’s appraiser’s reconciled values, ranging from $48 million to $57 million over the years at issue.
C. Income Tax
Memorandum of Decision: 02-20232240 (Oct. 24, 2025) (Corporate Income Tax) – Net Operating Losses of Disregarded Entity
An out-of-state company formed in 2016 filed an amended Indiana corporate income tax return for the year ending September 30, 2019, claiming approximately $13.5 million of Indiana net operating losses (NOLs) inherited from a disregarded entity, asserting that the disregarded entity was the transferor corporation in a qualifying F Reorganization with Taxpayer pursuant to I.R.C. §§ 368 and 381. The Department initially denied the refund, concluding that Taxpayer had already carried over and used the NOLs during tax years 2017 and 2018. Taxpayer stated that the disregarded entity was audited by the IRS and they timely amended the relevant Indiana tax returns, including the disregarded entity’s, to report the federal modification before the applicable statutory due dates.
The Department agreed that Taxpayer was designated to be the disregarded entity’s successor and thus inherited its legacy tax attributes, including its NOLs. However, the Department could not verify the NOL amount because Taxpayer did not provide the Tax Matters Agreement or the federal Revenue Agent’s Report. In addition, under Indiana Dep’t of State Revenue v. Caterpillar, Inc., 15 N.E.3d 579 (Ind. 2014) and IC 6-3-2-2.6, foreign source dividend deductions must be excluded from Indiana NOL calculations; Taxpayer had incorrectly included those deductions. The Department adjusted the allowable NOLs accordingly and partially sustained the protest.
Letters of Findings: 04-20242334, et al. (June 10, 2025) (Indiana Income Tax) – Research Expense Credits
An LLC taxed as an S corporation and its individual members protested the Department’s denial of research expense credits (“RECs”) for the 2021–2022 tax years. The LLC’s business is finishing pre-molded parts produced by the LLC’s only customer—a manufacturer (“Manufacturer”), with the work primarily involving the removal of unwanted pieces from molded parts. Taxpayers claimed that several jobs that Manufacturer hired LLC to do required LLC to conduct research, specifically to improve its process for removing the unwanted pieces. The Department evaluated the LLC’s activities against the four-part test for qualified research under IRC § 41(d)(1).
The Department found that the LLC’s activities were categorically excluded by IRC § 41(d)(4)(B) as the “adaptation of [an] existing business component to a particular customer’s requirement or need.” The Department further found that the LLC provided insufficient documentation demonstrating either technological uncertainty or a process of experimentation. Process change requests submitted by the LLC showed that the solutions were specified within the request itself, with no evidence of hypothesis testing or evaluation of alternative approaches. The Department acknowledged that one project involving sensor placement raised questions about uncertainty but concluded that this was “uncertainty about construction”—whether a known solution could be implemented—rather than “uncertainty about the concept” of whether a workable solution existed, as required by Little Sandy Coal Co. v. Commissioner of Internal Revenue, 62 F.4th 287 (7th Cir. 2023). Although the LLC generally met the “technological in nature” and “business component” tests for most projects, it failed on the Section 174 uncertainty and process-of-experimentation requirements. The Department upheld the denial of all qualified research expenses, resulting in zero RECs.
D. Special Fuel Tax
[Taxpayer] v. Indiana Dep’t of State Revenue, No. 24T-TA-00018 (Ind. Tax Ct. April 22, 2026) – Special Fuel Tax; Nonhighway Purposes Exemption
Taxpayer filed refund claims totaling approximately $200,000 for special fuel tax paid in 2018–2019 on fuel consumed while its delivery vehicles traversed private roads, including parking lots and private drives. The Department denied the claims, contending that the main purpose of the fuel in Taxpayer vehicles was to propel the vehicles on public highways to reach their destinations.
The parties submitted a joint stipulation of facts and cross-motions for summary judgment. The Court noted that the special fuel tax under IC 6-6-2.5-28(a) applies to fuel used “for propelling motor vehicles,” but IC 6-6-2.5-30(a)(8) exempts fuel “used for nonhighway purposes.” The Court held that the plain meaning of “nonhighway purposes” includes fuel consumed on private roads, as these are not public highways. The Court rejected the Department’s attempt to import additional conditions into the statutory exemption, holding that the exemption is based solely on the purpose for which the fuel is used—specifically, whether the fuel propels a vehicle on a public highway or private road—and not on whether the business purpose of the user involves incidental travel on private roads, whether the vehicle is registered for highway use, or whether the fuel is dyed to mark it as exempt. Partial summary judgment was granted in favor of Taxpayer on the exemption question; the extent of the refund was reserved for further proceedings.
E. Financial Institutions Tax
Final Order Denying Refund: 18-20241059; 18-20251388 (Sept. 15, 2025) (Financial Institutions Tax) – Merchant Discount Revenue Sourcing
A group of financial institutions, including a parent and subsidiaries, amended its 2019 and 2020 FIT returns to revise the apportionment methodology for merchant discount revenue and sought a refund. Taxpayers argued that merchant discount fees were billed to merchants’ headquarters and therefore should be sourced to where the merchant corporations are located. The Department disagreed, focusing on the statutory language governing interest income, merchant discount, and other receipts from financial institution credit card receivables and cardholder fees.
Under IC 6-5.5-4-8, those receipts must be attributed to the state to which the card charges and fees are regularly billed using the cardholder billing addresses, not merchant headquarters. The Department reasoned that separating merchant discount from the other receipts in the same provision would produce “irrational and disharmonizing results,” contrary to West v. Office of Indiana Sec’y of State, 54 N.E.3d 349 (Ind. 2016), and would disregard the statutory use of “and.” The protest was denied.
F. Tobacco Tax
Revenue Ruling #2026-01-OTP (July 1, 2026) (Tobacco Tax) – Non-Tobacco Smokeable Products
A company distributing smokeable products in Florida sought guidance on whether its products would be subject to Indiana cigarette or other tobacco products taxes if sold or distributed in Indiana. The products were manufactured from 100% domestically grown biomass and contained neither tobacco nor nicotine. The Department examined the statutory definitions of cigarettes, tobacco products, and alternative nicotine products under IC 6-7-1-1, IC 6-7-2-7, and IC 6-7-2-0.2.
The Department concluded that each relevant statutory definition requires tobacco or nicotine as an element of the product. Because Taxpayer’s products contained neither, they were not cigarettes, tobacco products, or alternative nicotine products subject to tax under IC 6-7. The ruling therefore held that the products were not subject to Indiana cigarette tax or other tobacco products tax, subject to the stated facts remaining accurate.
G. Administrative/Procedural
Webb v. Sullivan County Assessor, No. 25T-TA-00029 (Ind. Tax Ct. July 16, 2026) – Motion to Supplement Record; Use of Generative AI in Briefing
The Webbs, appearing pro se, moved to supplement the administrative record with a transcript from a Sullivan County small claims court hearing involving a related tax sale dispute. The Court denied the motion under IC 33-26-6-5(b), which permits supplementation of the administrative record only in limited circumstances.
The Court found that the proffered evidence did not relate to the validity of the Indiana Board of Tax Review’s determination, the lawfulness of its procedures, the improper constitution of the Board, or grounds for disqualifying a Board member. Further, the Court found that the evidence could have been discovered and presented with due diligence during the administrative proceedings before the Board.
The Court also commented on the Webbs’ apparent use of generative AI that cited to legitimate court rules which “plainly do not stand for any of the propositions that the Webbs advance.” The Court admonished the Webbs without further penalty, and emphasized the duty of litigants to verify the accuracy and authenticity of legal authorities, and to confirm that they support the proposition advanced, before submitting them to the Court.
Letter of Findings: 03-20253160 (Jan. 20, 2026) (Withholding Tax) – Penalty Abatement; Reliance on Payroll Provider
An Indiana financial services company failed to remit monthly withholding tax for 15 months from August 2023 through October 2024. The Department issued 15 Notices of Proposed Assessment for the unpaid tax and approximately $11,500 in penalties. Taxpayer had relied on a third-party payroll provider for more than 20 years. After the provider lost access to Taxpayer’s INTIME account portal to the Department, it stopped filing monthly returns even though employee paychecks continued to show withholding deductions. Department notices were returned as undeliverable because Taxpayer had updated its mailing address on returns but not its legal address directly with the Department. Taxpayer paid the base tax promptly after discovering the problem in 2024.
The Department concluded that Taxpayer’s conduct did not constitute willful neglect under IC 6-8.1-10-2.1(d). Given the long-standing reliance on the payroll provider, the continued withholding from employee paychecks, Taxpayer’s corrective action, and Taxpayer’s history of compliance, the Department found reasonable cause under 45 IAC 15-11-2 and waived all penalties.
Donovan v. Clark County Assessor, No. 25T-TA-00002 (Ind. Tax Ct. Dec. 22, 2025) –Use of Generative AI in Briefing
The Donovans, appearing pro se, acknowledged using AI to aid in drafting their brief. The Court identified numerous hallucinations such as a fictitious case and fictitious quotations from legitimate cases. The Court admonished the Donovans without further penalty, and emphasized the duty of litigants to verify the accuracy and authenticity of legal authorities.
Final Order Denying Refund: 47-20242444 (July 18, 2025) (Motor Carrier Fuel Tax) – Procedure to Claim Proportional Use Credit Refund
An out-of-state motor carrier in the utility construction industry electronically submitted a Proportional Use Credit (“PUC”) refund claim for the fourth quarter of 2023 on January 29, 2024. The Department denied the claim because Taxpayer failed to submit the corresponding IFTA quarterly tax return by the January 31, 2024 deadline.
Taxpayer protested, arguing that it was unaware that the Department had not received its IFTA documentation when it checked on the status of its PUC refund claim after approximately 3 months, and Taxpayer claimed it subsequently emailed the IFTA return to the Department following Taxpayer’s status check. Taxpayer noted that all of its prior PUC refund claims and IFTA returns had been submitted by U.S. mail, and this was Taxpayer’s first instance of submitting the PUC refund claim online.
The Department held that IC 6-6-4.1-4.8(b) requires that a PUC claim be filed “with the quarterly return” on the prescribed form and by the applicable deadline. Because Taxpayer submitted the PUC refund claim without the accompanying quarterly return, the claim was incomplete as a matter of law. The Department noted that PUC refunds are subject to an annual cap of $3.5 million under IC 6-6-4.1-4.8(d), and that strict adherence to filing requirements is vital for the Department’s calculation and disbursement of refunds within that statutory cap. The protest was denied.
Memorandum of Decision: 02-20211027 (July 11, 2025) (Corporate Income Tax) – Statute of Limitations for Refund
An out-of-state corporation filed a GA-110L form on May 20, 2020 to claim refunds of two payments: $33,636.72 paid on May 31, 2017, and $115,000 paid on April 30, 2014. The Department instructed Taxpayer to file the claims on the correct form, and Taxpayer accordingly filed amended corporate income tax returns on June 8, 2020 and requested a refund on the amended returns. The Department denied both refund claims as untimely.
The Department examined the timeliness of each claim separately. A refund claim must be filed within 3 years of the latter of the due date of the return or the date of payment. With respect to the $33,636.72 payment, the Department found the claim timely under IC 6-8.1-9-1(a) because it was filed within three years of the date of payment. With respect to the $115,000 payment made on April 30, 2014, the general three-year limitation would have expired before the May 2020 filing. However, the Department determined that the limitation period began to run later because Taxpayer had signed a Form 870 on November 21, 2018, concluding a federal adjustment to Taxpayer’s federal tax returns. Under IC 6-3-4-6(c)(4) and (e), a taxpayer has 180 days from the date of a federal modification to file a corresponding amended Indiana return. The new due date for Taxpayer’s amended return—May 20, 2019—correspondingly extended the 3-year period for claiming a refund. Because Taxpayer filed its refund request within 3 years of the amended return due date following a federal adjustment, the Department found the $115,000 claim also timely. The protest was sustained on the timeliness question; the Department was directed to review the merits of the refund claims.
“The Department reminds Taxpayer that it must request corporate income tax refunds by filing an initial or amended corporate income tax return and not in any other way…. [T]he Department cautions Taxpayer that future refund requests made improperly may be denied.”
Memorandum of Decision: 04-20251622; 04-20251623 (June 6, 2025) (Sales Tax) – Refund Procedure; Statute of Limitations
An out-of-state corporation filed amended Indiana sales tax returns on October 3, 2023, for the September and October 2020 reporting periods. Within those returns, the Taxpayer requested a refund of sales tax that it had inadvertently collected from an exempt customer. The Department denied the refund claims as untimely. The Taxpayer protested.
Citing 45 IAC 15-9-2, the Department noted that a refund claim must be filed on the form prescribed by the Department, and it must include the amount of the refund to which the person is entitled, the reasons why the person is entitled to the refund, the tax period for which the overpayment is claimed, and the year and date of the overpayment.
The Department examined the applicable limitation period under IC 6-8.1-9-1(a), which generally permits a taxpayer to file a claim for refund within three years after the later of the date the tax was paid or the date the return was due. The original returns for September and October 2020 were due on October 20, 2020, and November 20, 2020, respectively. Because the amended returns were filed on October 3, 2023, both claims fell within the three-year statutory window. The Department further found that Taxpayer had provided a properly completed exemption certificate from the exempt customer and documentation establishing that Taxpayer refunded the improperly collected tax to the customer, as required under IC 6-2.5-6-14.1.
The Taxpayer’s protest was sustained.
The Memorandum of Decision does not discuss whether an amended return constitutes “a form prescribed by the Department” for purposes of a sales tax refund claim. However, “[t]he Department will take this opportunity to remind Taxpayer that the proper way to request a refund for overpayment of sales tax is to file a Claim for Refund form (“GA-110L”) once Taxpayer has determined that it has overpaid sales tax and amended its returns accordingly.”
September 10, 2026
