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. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  2. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  3. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  4. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

  5. I totally agree with John Smith.

ADVERTISEMENT