ILNews

Justices divided on whether case should be before Tax Court

Back to TopCommentsE-mailPrintBookmark and Share

The Indiana Supreme Court split Thursday on whether the attorney general’s attempt to recover an erroneously issued “tax refund” to a company should proceed in state court or in the Indiana Tax Court.

Because of clerical errors, the Indiana Department of Revenue issued a refund check to Aisin Manufacturing for its 2001 taxes in the amount of $1,146,062 in September 2003. The Department of Revenue discovered the error in October 2005 when Aisin filed an amended return for the 2001 tax year. Aisin had paid the proper amount of taxes for that year. The Department of Revenue was unable to recover the money erroneously sent to Aisin, so the matter was referred to the attorney general.

The state, on behalf of taxpayers, filed the complaint against Aisin for unjust enrichment, theft, and constructive trust in Jackson Superior Court. The trial court granted Aisin’s motion to dismiss for lack of jurisdiction, believing the matter was the exclusive jurisdiction of the Tax Court. The Indiana Court of Appeals affirmed, finding whatever mistakes were made were “quintessentially tax matters.”

In State ex rel. Gregory F. Zoeller v. Aisin USA Manufacturing, Inc., No. 36S01-1009-CV-469, Justices Frank Sullivan, Steven David, and Chief Justice Randall T. Shepard disagreed, and found the state’s claims could proceed in Jackson Superior Court.

The majority opinion determined that the matter doesn’t “arise under” Indiana tax law as interpreted in State v. Sproles, 672 N.E.2d 1353 (Ind. 1996). They rejected the trial court’s conclusion that this case involves the collection of a tax because the dispute involved a tax payer and tax collector because if every case involving the Department of Revenue was intended to fall within the Tax Court’s exclusive jurisdiction, then the General Assembly could have said so, wrote Justice Sullivan.

This is essentially an accounting case and “to hold that this ‘refund,’ issued solely because of accounting or clerical errors, represents part of a tax would not serve the legislative purpose of ensuring the uniform interpretation and application of the tax laws because the tax laws are not implicated,” wrote the justice.

The majority held that a refund issued because of an accounting error and that has nothing to do with the interpretation or application of substantive tax law doesn’t revive the original tax liability, where such liability has already been discharged by the taxpayer’s full payment. Because such a refund is issued to a taxpayer owing no tax, the state has a claim for restitution.

“… although Indiana tax statutes provide the exclusive remedy for a taxpayer to recover an overpayment of taxes, we perceive no limitation imposed by the tax law on the State’s common-law claim for restitution in this case,” wrote Justice Sullivan.

The majority reversed the trial court and remanded for proceedings on the merits of the state’s claims.

Justice Robert Rucker dissented in a separate opinion in which Justice Brent Dickson joined. Justice Rucker wrote that it’s reasonable to conclude the state, believing it could not obtain relief in the Tax Court because of a statute of limitation, attempted an end-run and filed the action in Superior Court.

“Given the lengths to which the majority was required to analyze Aisin’s various tax filings and the resultant repercussions, I agree this is a tax case and would affirm the judgment of the trial court,” he wrote.

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. Can I get this form on line,if not where can I obtain one. I am eligible.

  2. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  3. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  4. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

  5. Could be his email did something especially heinous, really over the top like questioning Ind S.Ct. officials or accusing JLAP of being the political correctness police.

ADVERTISEMENT