IN: Hospital Lacked Standing to File Refund Claim

Recently, the Indiana Department of State Revenue denied a hospital’s sales and use tax refund claim. The hospital used a “third party manager” company for performing “certain administrative duties,” which appeared in this case to include making purchases of exempt equipment. The hospital filed a refund claim on the basis that as a nonprofit hospital, the purchases at issue were exempt from sales and use tax. The Department denied the refund, noting that the problem with the protest was one of standing—the hospital was requesting the refund at issue in the protest, but the invoice stated that the equipment was sold to the third-party management company. Although there was correspondence between the Department, the hospital, and the third-party management company indicating that the equipment was paid for with the hospital’s funds, this did not overcome the standing issue. Specifically, a POA letter asserted that the hospital “ipaid for the property with its own funds,” but the invoice showed the third-party management company as the purchaser. Further, the third- party management company stated that in many cases, it will pay the invoice from its own bank account. Based on these facts, the Department concluded that the hospital did not have standing to file a refund claim. Please contact Dave Perry at 513-763-2402 with questions on this determination.