ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA DEPARTMENT OF STATE REVENUE.
ATTORNEY FOR PETITIONER: ROBERT A. ROMACK, DUNBAR & ROMACK, Franklin, IN.
ATTORNEYS FOR RESPONDENT: GREGORY F. ZOELLER, ATTORNEY GENERAL OF INDIANA, MICHELE C. ROBERTS, DEPUTY ATTORNEY GENERAL, Indianapolis, IN.
This case asks whether Tannins of Indianapolis, LLC is entitled to the purchase for resale exemption on its 2009, 2010, and 2011 purchases of programmable cards that operate its wine sample dispensing equipment. The Court finds that Tannins' purchases of the cards are not exempt.
FACTS AND PROCEDURAL HISTORY
Tannins (d/b/a Tastings) owns and operates a wine bar in downtown Indianapolis that sells a selection of foods and desserts in addition to selling wine by the glass, by the bottle, and in two-ounce samples. (Resp't Des'g Evid. Supp. Resp't Br.
(" Resp't Evid." ), Ex. 2 at 3; Trial Tr. at 7.) Tannins owns " Italian [E]nomatic technology," specialized equipment with 104 stations that dispense samples of any wine in the bar. (Trial Tr. at 7.) This dispensing equipment can be operated only by inserting a programmed card (" tasting card" ). (Trial Tr. at 7-9.)
A customer who wants to purchase wine samples tells Tannins the dollar amount to load onto a tasting card. (Trial Tr. at 7-8.) Using a " computer head," Tannins loads money in the amount desired by the customer onto the tasting card and programs it to operate Tannins' dispensing equipment. (Trial Tr. at 8, 13.) Tannins then charges the customer the amount loaded onto the card plus 9% tax. (Trial Tr. at 8.)
A customer obtains a wine sample by inserting the tasting card into Tannins' dispensing equipment, which debits the cost of the wine sample from the amount on the tasting card and dispenses the two-ounce sample. (Jt. Stip. Facts ¶ 7.) Customers with money left on their tasting card can receive a refund by giving Tannins the card to put into its card reader and determine the dollar amount remaining on the card. (Trial Tr. at 14-15.) Tannins then refunds that amount including tax. (Trial Tr. at 15.)
On October 9, 2012, the Department completed an audit of Tannins for 2009, 2010, and 2011. (Resp't Evid., Ex. 2 at 1.) On November 13, 2012, the Department issued proposed assessments of use tax for each of the years plus interest. (Resp't Evid., Ex. 3.)
Tannins filed a written protest with the Department, claiming its purchases of the tasting cards were exempt from taxation. (Pet'r Des'g Evid. (" Pet'r Evid." ), Ex. 8.) After conducting a hearing, the Department issued the Letter of Findings on February 26, 2013, upholding the proposed assessments. (Pet'r Evid., Ex. 6.)
Tannins filed this original tax appeal on March 22, 2013. The Court held a trial and heard oral argument on January 10, 2014. Additional ...