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Justices: Tax Court erred in prima facie showing requirement

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The Indiana Supreme Court has found that the Indiana Tax Court erred in requiring the state revenue department to produce more evidence of a proposed assessment of additional tax liability for a corporation. The justices reversed and remanded Indiana Department of State Revenue v. Rent-A-Center East, Inc., No. 49S10-1112-TA-683.

The Tax Court in May denied the revenue department’s motion for summary judgment and granted one in favor of Rent-A-Center East. The department failed to designate any facts to show it complied with Indiana Code 6-3-2-2(p), so it had not made a prima facie case that it is entitled to judgment as a matter of law regarding whether the department should consider alternatives to assessing tax based on a combined return.

But the justices determined the Tax Court incorrectly applied the combined scheme of state statute and trial rule requirements to the case.

Judge Martha Wentworth construed the tax statutes to require the revenue department to make its Trial Rule 56(C) prima facie showing by designating facts material to RAC East’s separate return from 2003 on income sources and the use of combined income tax return being reasonable and equitable. Then, the court denied the department’s motion after finding it didn’t comply with Indiana Code 6-3-2-2(p).

“We conclude that Section 6-3-2-2(p) and Trial Rule 56 must function together in a different way,” Chief Justice Randall Shepard wrote.

The justices found that the department may make a proposed assessment only if it reasonably believes that a person has not reported the proper amount of tax due, and it makes its assessment on the basis of the best information available. The General Assembly has provided that the notice of proposed assessment is prima facie evidence that the department’s claim for the unpaid tax is valid, Shepard wrote, so the burden of proving that the proposed assessment is wrong rests with the person against whom the proposed assessment is made.

“Nothing in the text of Section 6-3-2-2(p) indicates that the General Assembly intended it to trump the presumption of validity given to the proposed assessment, nor do we think it proper for a taxpayer resisting such an assessment simply to cite subsection (p) as a means of vitiating the Department’s prima facie showing.” Shepard wrote. “Rather, Section 6-3-2-2(p) reflects the Legislature’s codification of a rule of decision with respect to when a combined income tax return may permissibly be required. It serves as the evidentiary bar that must be evaluated at the end of the summary judgment analysis (or trial process), not a threshold over which the Department must pass at the beginning.”

The case is remanded to Wentworth to consider summary judgment motions on their merits in light of all the designated evidence the parties may tender.

 

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  1. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  2. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  3. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

  4. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  5. This article proved very enlightening. Right ahead of sitting the LSAT for the first time, I felt a sense of relief that a score of 141 was admitted to an Indiana Law School and did well under unique circumstances. While my GPA is currently 3.91 I fear standardized testing and hope that I too will get a good enough grade for acceptance here at home. Thanks so much for this informative post.

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