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Justices vacate review of voided tax warrants in 'puppy mill' case

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The Indiana Supreme Court on Tuesday vacated an order granting review in a case that concluded tax agencies and the Indiana attorney general’s office overstepped their authority by issuing jeopardy tax warrants to seize animals from an alleged puppy mill in Harrison County.

Justices unanimously vacated a transfer order from the Indiana Tax Court in Indiana Department of State Revenue v. Virginia Garwood, et al., No. 82S10-1203-TA-171. Justices previously granted transfer and heard oral arguments earlier this month, but Chief Justice Brent Dickson wrote that “review was improvidently granted” in ordering the appeal as final.

The appeal brought by Indiana Attorney General Greg Zoeller sought to overturn a tax court ruling against the Department of Revenue in August by Tax Judge Martha Wentworth in Virginia and Kristin Garwood v. Indiana Department of Revenue, No.82T10-0906-TA-29.

The attorney general's public information officer Bryan Corbin said the state has other avenues it can pursue to collect unpaid taxes, and noted the Virginia and Kristin Garwood pleaded guilty in May 2010 to Class D felony charges of failing to pay sales.

“Tax evasion and fraud are against the law and will subject the offender to potential civil and criminal penalties by the Department of Revenue, the Attorney General’s Office, and the local prosecutor’s office,” Corbin said in a statement. “The State will not tolerate businesses that gain an unfair economic advantage over their competitors by willfully failing to pay their taxes. The Court’s decision not to hear the case does not mean that the Garwoods are relieved of their tax burden to the State. We respect the decision of the Court.”

Corbin said the order set no precedent and applied only the to Garwood case.

The attorney for the Garwoods had not returned a message left by IL deadline.

The justices let stand Wentworth’s ruling against what the attorney general had dubbed the “Al Capone” approach to take down what it described as illegal puppy mill operations.

The case goes back to June 2009, when a mother and daughter were charged after a raid on their dairy farm that involved police, representatives of the attorney general’s office, department of revenue and about 60 animal rescue workers.

The state had gone to the Garwoods’ residence to serve the jeopardy tax assessments and demanded the family pay about $142,368 immediately or their personal property would be seized. When they couldn’t pay, 244 dogs and puppies were seized. The animals, some of which tested positive for disease, were sold by the state to the Humane Society for a total $300.

The tax court granted summary judgment in the Garwoods’ favor and voided the Garwoods’ jeopardy assessments. Wentworth ruled that lawmakers narrowly defined the circumstances in which jeopardy tax warrants may be issued.

Wentworth wrote that one of four circumstances must exist to execute jeopardy tax warrants: that a person intends to quickly leave the state, remove property from the state, conceal property in the state, or do any other act that would jeopardize the collection of taxes. She ruled there was no evidence that those circumstances existed.

The Garwoods eventually pleaded guilty to failing to pay 2007 to 2009 sales tax for the puppy-breeding and selling operation in Mauckport.

The state alleged the Garwoods were concealing the puppies to avoid being taxed, citing Virginia Garwood’s refusal to allow Harrison County Animal Control on her property at one point after a consumer complained she was hiding the operation.

But Wentworth disagreed, finding it was not reasonable to infer that Virginia Garwood’s intent was to conceal property to avoid paying taxes because one would not normally expect an animal control officer to be involved with tax collection matters. Wentworth also dismissed the state’s arguments that the Garwoods’ purchase of breeding animals in bulk was speculative as far as a way for them to conceal the individual sales of the dog operation.

While the Garwoods may not have been properly reporting and paying taxes, the evidence doesn’t prove they were intending not to pay or trying to thwart collection in any way, the judge determined.

Citing an Indiana Supreme Court ruling from 2002 about jeopardy assessments, Wentworth noted that those tax tools should be issued as part of the state’s “power of the purse” and not its “power of the sword” in punishing crimes.



 

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  1. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

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