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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. I will continue to pray that God keeps giving you the strength and courage to keep fighting for what is right and just so you are aware, you are an inspiration to those that are feeling weak and helpless as they are trying to figure out why evil keeps winning. God Bless.....

  2. Some are above the law in Indiana. Some lined up with Lodges have controlled power in the state since the 1920s when the Klan ruled Indiana. Consider the comments at this post and note the international h.q. in Indianapolis. http://www.theindianalawyer.com/human-trafficking-rising-in-indiana/PARAMS/article/42468. Brave journalists need to take this child torturing, above the law and antimarriage cult on just like The Globe courageously took on Cardinal Law. Are there any brave Hoosier journalists?

  3. I am nearing 66 years old..... I have no interest in contacting anyone. All I need to have is a nationality....a REAL Birthday...... the place U was born...... my soul will never be at peace. I have lived my life without identity.... if anyone can help me please contact me.

  4. This is the dissent discussed in the comment below. See comments on that story for an amazing discussion of likely judicial corruption of some kind, the rejection of the rule of law at the very least. http://www.theindianalawyer.com/justices-deny-transfer-to-child-custody-case/PARAMS/article/42774#comment

  5. That means much to me, thank you. My own communion, to which I came in my 30's from a protestant evangelical background, refuses to so affirm me, the Bishop's courtiers all saying, when it matters, that they defer to the state, and trust that the state would not be wrong as to me. (LIttle did I know that is the most common modernist catholic position on the state -- at least when the state acts consistent with the philosophy of the democrat party). I asked my RCC pastor to stand with me before the Examiners after they demanded that I disavow God's law on the record .... he refused, saying the Bishop would not allow it. I filed all of my file in the open in federal court so the Bishop's men could see what had been done ... they refused to look. (But the 7th Cir and federal judge Theresa Springmann gave me the honor of admission after so reading, even though ISC had denied me, rendering me a very rare bird). Such affirmation from a fellow believer as you have done here has been rare for me, and that dearth of solidarity, and the economic pain visited upon my wife and five children, have been the hardest part of the struggle. They did indeed banish me, for life, and so, in substance did the the Diocese, which treated me like a pariah, but thanks to this ezine ... and this is simply amazing to me .... because of this ezine I am not silenced. This ezine allowing us to speak to the corruption that the former chief "justice" left behind, yet embedded in his systems when he retired ... the openness to discuss that corruption (like that revealed in the recent whistleblowing dissent by courageous Justice David and fresh breath of air Chief Justice Rush,) is a great example of the First Amendment at work. I will not be silenced as long as this tree falling in the wood can be heard. The Hoosier Judiciary has deep seated problems, generational corruption, ideological corruption. Many cases demonstrate this. It must be spotlighted. The corrupted system has no hold on me now, none. I have survived their best shots. It is now my time to not be silent. To the Glory of God, and for the good of man's law. (It almost always works that way as to the true law, as I explained the bar examiners -- who refused to follow even their own statutory law and violated core organic law when banishing me for life -- actually revealing themselves to be lawless.)

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