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Tax judge denies state's motion to dismiss

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The Indiana Tax Court has denied the state’s motion to dismiss a mother and daughter’s challenge to the jeopardy tax assessments made against them after the state found they didn’t pay taxes on their sales of puppies.

The Indiana Attorney General’s Office and the Department of State Revenue investigated Virginia and Kristin Garwood’s business activities involving selling puppies and found that they weren’t remitting sales and income tax due on the sales. The department served the Garwoods with 16 jeopardy tax assessments demanding immediate payment. They didn’t pay and the dogs were seized and sold.

The department filed a verified petition for proceedings supplemental in Harrison Circuit Court; the Garwoods timely protested their assessments to the department shortly thereafter. The department wrote a letter to the Garwoods telling them that the relief they want was best available in Harrison Circuit Court. The Garwoods then asked the Tax Court for a judicial review of the final determination by the department and to enjoin the collection of the pending tax.

The department filed a motion to dismiss under Indiana Trial Rule 12(B), arguing lack of subject matter jurisdiction, lack of personal jurisdiction, improper venue, failure to state a claim upon relief can be granted, and that the same action was pending in another court.

In Virginia Garwood, et al. v. Indiana Dept. of State Revenue No. 82T10-0906-TA-29, the Tax Court denied all of the department’s 12(B) motions, finding its arguments that Indiana Dept. of Revenue v. Deaton (Deaton II), 755 N.E.2d 568 (Ind. 2001) controls and that there is no appealable final determination in this case to be misplaced. Deaton II is distinguishable from the instant case and it simply suggests that the jeopardy tax warrants at issue in this case have not attained the status of “judgments,” wrote Judge Thomas Fisher.

Also, the judge rejected the departments’ argument that the Garwoods’ failure to file a claim for a refund with the department precludes their challenge before the Tax Court. The department claimed that a taxpayer must first pay the taxes assessed, request a refund, and then if they don’t like the outcome, seek judicial review.

Indiana Code Section 6-8.1-5-3 is silent as to the manner by which a taxpayer may challenge the validity of a jeopardy assessment, but the Indiana Supreme Court has held that taxpayers may challenge jeopardy assessments through the administrative procedures provided under I.C. Section 6-8.1-5-1, he wrote. In addition, the department’s own regulation allows taxpayers to protest a jeopardy assessment within 20 days after the assessment is made.

“Consequently, through its argument, the Department attempts to eliminate one administrative path to the Tax Court when there are actually at least two,” wrote the judge. “This Court, however, will not sanction such actions.”

The department assessed the Garwoods with liability for income and sales taxes under I.C. Section 6-8.1-1-1. They timely protested those assessments in conformity with Indiana Code and the department sent a letter, without holding a hearing, telling the Garwoods the relief they seek was in the Harrison Circuit Court.

“Therefore, for purposes of this case, the Department’s letter constituted a final determination. The Garwoods’ action is an original tax appeal; therefore, the Court denies the Department’s 12(B)(1) motion to dismiss,” he wrote.

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  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.

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