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High court rules on issue preclusion in tax case

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In an opinion handed down March 6, the Indiana Supreme Court had to decide whether a previous ruling barred the Indiana Department of Revenue from raising new contentions in support of a different method of allocation of income to the state.

In Miller Brewer Co. v. Indiana Department of Revenue, No. 49S00-0711-TA-553, Miller Brewing Co. argued that because of a previous ruling, Miller Brewing Co. v. Ind. Dept. of State Revenue (Miller I), 831 N.E.2d 859 (Ind. Tax Ct. 2005), the Department of Revenue is bound by that ruling under the doctrine of issue preclusion.

Miller I deals with the company's 1994, 1995, and 1996 Indiana tax returns and ruled Miller was entitled to a refund of the taxes it paid for sales in which the customer picked up its product outside of Indiana or pickup by a carrier because these sales weren't allocable to Indiana.

In the instant case, the same issue is being challenged - whether sales to Indiana customers are allocated to Indiana if the customer arranged for a common carrier to pick up the product at a facility in another state - but for the tax years of 1997-1999. The department denied Miller's request for a refund of those types of sales claiming the state's sales factor was based on a "destination rule" which allowed the state to treat sales of products picked up by common carriers for delivery to Indiana as sales derived from this state. Miller appealed to the Indiana Tax Court claiming that issue preclusions barred the department from denying a refund for those sales. The case is on appeal to the high court solely on the question of issue preclusion.

The Supreme Court has yet to determine whether or to what extent issue preclusion applies in tax cases. The Tax Court had held that issue preclusion is generally not applicable in tax cases, but the high court didn't address the issue in a review of the decision. The Supreme Court held that the department's new arguments in support of its "destination rule" aren't precluded by Miller I.

Even though the issue presented by Miller's claim for a refund for the years of 1997-1999 was identical to the issue in Miller I, appeals from final determinations of the Department of State Revenue are to be heard de novo by the Tax Court, wrote Chief Justice Randall T. Shepard. The Tax Court wasn't bound by the evidence or the issues raised at the administrative level and not barred from considering this new issue, he wrote.

Miller claims this is a new argument, not a new fact, and can't reopen the issue of law already determined between two parties, but the Supreme Court thought that in tax cases, the principle should be relaxed.

"If failure to raise an omitted argument can forever preclude the Department from re-litigating a legal issue, the state is in effect barred by the omission of its agents who generally do not bind the government by a mistake of law," he wrote. "We have also noted the concerns for equity in taxation and for potential competitive effects that perpetuating a legal rule for one taxpayer can produce."

For the purposes of this appeal, the Supreme Court found sufficient that the relevant equities of the interpretations of the statute and regulation weren't presented in Miller I.

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  1. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  2. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  3. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  4. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

  5. Seventh Circuit Court Judge Diane Wood has stated in “The Rule of Law in Times of Stress” (2003), “that neither laws nor the procedures used to create or implement them should be secret; and . . . the laws must not be arbitrary.” According to the American Bar Association, Wood’s quote drives home this point: The rule of law also requires that people can expect predictable results from the legal system; this is what Judge Wood implies when she says that “the laws must not be arbitrary.” Predictable results mean that people who act in the same way can expect the law to treat them in the same way. If similar actions do not produce similar legal outcomes, people cannot use the law to guide their actions, and a “rule of law” does not exist.

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