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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. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  2. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

  3. Pass Legislation to require guilty defendants to pay for the costs of lab work, etc as part of court costs...

  4. The fee increase would be livable except for the 11% increase in spending at the Disciplinary Commission. The Commission should be focused on true public harm rather than going on witch hunts against lawyers who dare to criticize judges.

  5. Marijuana is safer than alcohol. AT the time the 1937 Marijuana Tax Act was enacted all major pharmaceutical companies in the US sold marijuana products. 11 Presidents of the US have smoked marijuana. Smoking it does not increase the likelihood that you will get lung cancer. There are numerous reports of canabis oil killing many kinds of incurable cancer. (See Rick Simpson's Oil on the internet or facebook).

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