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Justices reverse Tax Court in UPS case

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The Indiana Supreme Court found that two reinsurance companies of the United Parcel Service are foreign companies that don’t do business within Indiana, so they aren’t exempt from Indiana adjusted gross income tax.

In Indiana Department of Revenue v. United Parcel Service, Inc., 49S10-1107-TA-417, UPS argued its two affiliated reinsurance companies – UPINSCO, formed under the laws of the U.S. Virgin Islands and UPS Re, formed under the laws of Bermuda – are subject to Indiana’s gross premium privilege tax statute, so they would be exempt from adjusted gross income tax here.

In Indiana, insurance companies are required to pay tax on earned premiums in lieu of state corporate income tax. The premium tax works like an excise tax allowing a foreign insurer to do business in Indiana, wrote Justice Robert Rucker.

UPS contracted with several companies to provide workers’ compensation insurance and liability insurance for damage to its packages, but UPINSCO and UPS Re ultimately insured UPS’s risks.

UPS sought to exclude in 2000 and 2001 from its federal taxable income the income of its affiliates UPINSCO and UPS Re. The Indiana Department of State Revenue disallowed the exclusion and claimed UPS underpaid taxes in 2001. The Indiana Tax Court granted summary judgment for UPS and denied the department’s motion. The Tax Court reasoned that because UPS was “subject to” the premium tax under Indiana Code 6-3-2-2.8(4), it was exempt from the adjusted gross income tax.

The justices concluded that the affiliates were not doing business in Indiana. The record shows – and the parties don’t dispute – that the reinsurance transactions took place between foreign companies as neither the primary insurers nor the affiliates are organized under the laws of Indiana, Rucker wrote.

“… even assuming UPINSCO and UPS Re reinsured Indiana risks, there is no evidence in the record before us that the reinsurance transactions took place in the State of Indiana,” he wrote. “Because this is a necessary condition in order to be ‘subject to’ the premium tax, UPS failed in its burden of establishing that it is entitled to summary judgment as a matter of law. Because we are definitely and firmly convinced the Tax Court’s determination to the contrary is in error, we reverse the grant of summary judgment in favor of UPS and remand this cause for further proceedings.”

 

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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