ILNews

High court rules on issue preclusion in tax case

Back to TopCommentsE-mailPrintBookmark and Share

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.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Unfortunately, the court doesn't understand the difference between ebidta and adjusted ebidta as they clearly got the ruling wrong based on their misunderstanding

  2. A common refrain in the comments on this website comes from people who cannot locate attorneys willing put justice over retainers. At the same time the judiciary threatens to make pro bono work mandatory, seemingly noting the same concern. But what happens to attorneys who have the chumptzah to threatened the legal status quo in Indiana? Ask Gary Welch, ask Paul Ogden, ask me. Speak truth to power, suffer horrendously accordingly. No wonder Hoosier attorneys who want to keep in good graces merely chase the dollars ... the powers that be have no concerns as to those who are ever for sale to the highest bidder ... for those even willing to compromise for $$$ never allow either justice or constitutionality to cause them to stand up to injustice or unconstitutionality. And the bad apples in the Hoosier barrel, like this one, just keep rotting.

  3. I am one of Steele's victims and was taken for $6,000. I want my money back due to him doing nothing for me. I filed for divorce after a 16 year marriage and lost everything. My kids, my home, cars, money, pension. Every attorney I have talked to is not willing to help me. What can I do? I was told i can file a civil suit but you have to have all of Steelers info that I don't have. Of someone can please help me or tell me what info I need would be great.

  4. It would appear that news breaking on Drudge from the Hoosier state (link below) ties back to this Hoosier story from the beginning of the recent police disrespect period .... MCBA president Cassandra Bentley McNair issued the statement on behalf of the association Dec. 1. The association said it was “saddened and disappointed” by the decision not to indict Ferguson police officer Darren Wilson for shooting Michael Brown. “The MCBA does not believe this was a just outcome to this process, and is disheartened that the system we as lawyers are intended to uphold failed the African-American community in such a way,” the association stated. “This situation is not just about the death of Michael Brown, but the thousands of other African-Americans who are disproportionately targeted and killed by police officers.” http://www.thestarpress.com/story/news/local/2016/07/18/hate-cops-sign-prompts-controversy/87242664/

  5. What form or who do I talk to about a d felony which I hear is classified as a 6 now? Who do I talk to. About to get my degree and I need this to go away it's been over 7 years if that helps.

ADVERTISEMENT