ILNews

Tax judge shoots down 'Al Capone' approach

Back to TopCommentsE-mailPrintBookmark and Share

In a blow to the Indiana attorney general’s office, the state’s tax judge has shot down a legal theory that used jeopardy tax assessments to go after a purported puppy mill in Harrison County.

The ruling came late Friday in the case of Virginia and Kristin Garwood v. Indiana Department of Revenue, No.82T10-0906-TA-29. Tax Judge Martha Wentworth ruled against what the AG has dubbed the “Al Capone” approach to take down what it described as illegal puppy mill operations.

This case goes back to June 2009, when a mother and daughter from Harrison County were charged following a raid on their dairy farm. The state went 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, police and animal rescue workers seized 244 dogs and puppies that were confined in squalid enclosures. The seized animals, some of testing positive for disease, were sold by the state to the Humane Society for a total $300.

The Garwoods eventually pleaded guilty to a felony charge of failing to pay 2007 to 2009 sales tax for the puppy-breeding and selling operation in Mauckport, Ind.

Indiana law didn’t offer the state a way to go after the Garwoods or similar tax delinquents, and the AG used the criminal tax evasion tool that had taken down 1930s crime boss Al Capone for not paying taxes on his operations. That method meant utilizing the Department of Revenue and its ability to issue jeopardy tax assessments, if at least one of four statutory circumstances were present.

The state has used this method multiple times in recent years, and the 16 warrants against the Garwoods was the second time that approach had been used. The Garwoods challenged the jeopardy tax assessments and filed an original tax appeal in the summer of 2009, arguing that they were deprived of their constitutional due process rights, thereby voiding the jeopardy assessments. The state disputed those claims, saying they were justified to use the assessments.

Judge Wentworth ruled against the state, finding that it hadn’t proved it had enough justification to issue the jeopardy assessments in this situation.

The state alleged the Garwoods were concealing property (the puppies) to avoid being taxed. The state argued that Virginia Garwood’s refusal to allow the Harrison County Animal Control onto her property at one point following a consumer complaint showed she was hiding the operation.

But Judge Wentworth disagreed, finding it was not reasonable to infer that 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. She 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.

“The Court holds that the Department did not show the presence of the statutorily prescribed exigent circumstances that the Garwoods intended to quickly leave the state, remove their property from the state, conceal their property in the state, or do another act that would jeopardize the collection of taxes,” she wrote.

Citing an Indiana Supreme Court ruling from 2002 about jeopardy assessments, Judge 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.

“Jeopardy assessments are a powerful collection tool that, when properly used, further the important state interest of collecting state tax revenue needed to pay for critical government services and conducting the business of the state,” Judge Wentworth wrote. “The designated evidence shows that the Garwoods did not remit the proper amount of tax due to the state on their sales, a fact the Garwoods have repeatedly acknowledged. Nonetheless, the Department overstepped its authority in this case by issuing jeopardy assessments without having shown exigent circumstances required by Indiana Code 6-8.1-5-3 and 45 IAC 15-5-8.”

The case is remanded to the state revenue department with instructions to void the Garwoods’ jeopardy assessments. The state now has the option of asking the Indiana Supreme Court to consider the case.
 

ADVERTISEMENT

  • Correction
    Also, you refer to squalid conditions. The conditions at the farm were NOT squalid. The dogs had safe outdoor kennels, shade, igloo style shelters, water, food, bedding, there were pallets of food for the dogs and a refrigerator with immunizations to use on puppies. Please consider the actual facts of the case, not the media hype.
  • Correction
    You say in your article that the State did not have "a way to go after the Garwoods or other tax delinquents." That is not true. The State could have pursued this case like any other tax assessment case, sending an assessment, allowing for a hearing if there was an objection, etc. The jeopardy assessment procedure is certainly not the only way to pursue someone who has not paid their taxes.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. I'm going to court the beginning of Oct. 2015 to establish visitation and request my daughters visits while she is in jail. I raised my grandchild for the first two and half years. She was born out of wedlock and the father and his adopted mother wantwd her aborted, they went as far as sueing my daughter for abortion money back 5mo. After my grandchild was born. Now because of depression and drug abuse my daughter lost custody 2 and a half years ago. Everyting went wrong in court when i went for custody my lawyer was thrown out and a replacment could only stay 45 min. The judge would not allow a postponement. So the father won. Now he is aleinating me and my daughter. No matter the amount of time spent getting help for my daughter and her doing better he runs her in the ground to the point of suicide because he wants her to be in a relationship with him. It is a sick game of using my grandchild as a pawn to make my daughter suffer for not wanting to be with him. I became the intervener in the case when my daughter first got into trouble. Because of this they gave me her visitation. Im hoping to get it again there is questions of abuse on his part and I want to make sure my grandchild is doing alright. I really dont understand how the parents have rights to walk in and do whatever they want when the refuse to stand up and raise the child at first . Why should it take two and a half years to decide you want to raise your child.The father used me so he could finish college get a job and stop paying support by getting custody. Support he was paying my daughter that I never saw.

  2. Pence said when he ordered the investigation that Indiana residents should be troubled by the allegations after the video went viral. Planned Parenthood has asked the government s top health scientists at the National Institutes of Health to convene a panel of independent experts to study the issues surrounding the little-known branch of medicine.

  3. State Farm is sad and filled with woe Edward Rust is no longer CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go All American Girl starred Margaret Cho The Miami Heat coach is nicknamed Spo I hate to paddle but don’t like to row Edward Rust is no longer CEO The Board said it was time for him to go The word souffler is French for blow I love the rain but dislike the snow Ten tosses for a nickel or a penny a throw State Farm is sad and filled with woe Edward Rust is no longer CEO Bambi’s mom was a fawn who became a doe You can’t line up if you don’t get in a row My car isn’t running, “Give me a tow” He had knowledge but wasn’t in the know The Board said it was time for him to go Plant a seed and water it to make it grow Phases of the tide are ebb and flow If you head isn’t hairy you don’t have a fro You can buff your bald head to make it glow State Farm is sad and filled with woe Edward Rust is no longer CEO I like Mike Tyson more than Riddick Bowe A mug of coffee is a cup of joe Call me brother, don’t call me bro When I sing scat I sound like Al Jarreau State Farm is sad and filled with woe The Board said it was time for him to go A former Tigers pitcher was Lerrin LaGrow Ursula Andress was a Bond girl in Dr. No Brian Benben is married to Madeline Stowe Betsy Ross couldn’t knit but she sure could sew He had knowledge but wasn’t in the know Edward Rust is no longer CEO Grand Funk toured with David Allan Coe I said to Shoeless Joe, “Say it ain’t so” Brandon Lee died during the filming of The Crow In 1992 I didn’t vote for Ross Perot State Farm is sad and filled with woe The Board said it was time for him to go A hare is fast and a tortoise is slow The overhead compartment is for luggage to stow Beware from above but look out below I’m gaining momentum, I’ve got big mo He had knowledge but wasn’t in the know Edward Rust is no longer CEO I’ve travelled far but have miles to go My insurance company thinks I’m their ho I’m not their friend but I am their foe Robin Hood had arrows, a quiver and a bow State Farm has a lame duck CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go State Farm is sad and filled with woe

  4. The ADA acts as a tax upon all for the benefit of a few. And, most importantly, the many have no individual say in whether they pay the tax. Those with handicaps suffered in military service should get a pass, but those who are handicapped by accident or birth do NOT deserve that pass. The drivel about "equal access" is spurious because the handicapped HAVE equal access, they just can't effectively use it. That is their problem, not society's. The burden to remediate should be that of those who seek the benefit of some social, constructional, or dimensional change, NOT society generally. Everybody wants to socialize the costs and concentrate the benefits of government intrusion so that they benefit and largely avoid the costs. This simply maintains the constant push to the slop trough, and explains, in part, why the nation is 20 trillion dollars in the hole.

  5. Hey 2 psychs is never enough, since it is statistically unlikely that three will ever agree on anything! New study admits this pseudo science is about as scientifically valid as astrology ... done by via fortune cookie ....John Ioannidis, professor of health research and policy at Stanford University, said the study was impressive and that its results had been eagerly awaited by the scientific community. “Sadly, the picture it paints - a 64% failure rate even among papers published in the best journals in the field - is not very nice about the current status of psychological science in general, and for fields like social psychology it is just devastating,” he said. http://www.theguardian.com/science/2015/aug/27/study-delivers-bleak-verdict-on-validity-of-psychology-experiment-results

ADVERTISEMENT