ILNews

Trial court lacks jurisdiction in tax suit

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The Indiana Tax Court is the proper venue for a suit filed by the state to recover an erroneous tax refund, the Indiana Court of Appeals affirmed today.

The Indiana Attorney General, on behalf of the state, filed a suit in Jackson Superior Court to recover a tax refund granted by the Indiana Department of Revenue to Aisin U.S.A. Manufacturing. The state believed the refund was erroneously granted due to a miscalculation of the refund owed to Aisin. Aisin had overpaid one year by more than $150,000; the DOR calculated that Aisin had overpaid by $1.07 million.

After discovering the error, the DOR sent a proposed assessment of how much Aisin actually owed due to the wrong credit amount. Aisin protested, but the DOR never held the requested hearing or issued a letter of findings. It instead cancelled the proposed assessment, but then a year it later tried to again recover the money. The state then filed the complaint in state court.

The trial court granted Aisin's motion to dismiss for lack of subject matter jurisdiction because the Tax Court has exclusive jurisdiction. On appeal in State of Indiana v. Aisin USA Mfg., Inc., No. 36A01-0909-CV-442, the state argued that it wasn't trying to collect a tax but just recover the money mistakenly refunded to Aisin.

But the mistake in which the state based its claim is a mistake in the calculation of a tax refund, wrote Judge Paul Mathias. The underlying core of the state's claims is an income tax issue that comes under the tax statutes.

The state also argued the Tax Court couldn't have jurisdiction because the DOR never entered a letter of findings. But the DOR was statutorily obligated to do so.

"We do not think that the DOR may unilaterally cancel a proposed tax assessment, fail to hold a hearing, and fail to issue a letter of findings in an attempt to deprive the Tax Court of jurisdiction, only to then attempt to litigate the issue in a trial court of general jurisdiction," wrote the judge.

The Tax Court has exclusive jurisdiction once the letter is issued. To hold otherwise would allow the DOR to avoid jurisdiction of the Tax Court by refusing to issue a letter of findings.

The state claimed that if it's not allowed to proceed in the trial court, it will be without recourse because the statute of limitations has expired.

"As Americans, and as Hoosiers, we take great pride in being a society of laws rather than of men," wrote Judge Mathias, noting that the Tax Court has held a taxpayer can't seek a refund for a tax period outside the statute of limitations. "We believe the same reasoning applies to the State when it seeks to recover an allegedly improper tax refund outside the relevant limitations period. To have any real meaning, statutes need to apply equally to the State as well as to its citizens."

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  1. OK, now do something about this preverted anacronism

  2. William Hartley prosecutor of Wabash county constantly violates people rights. Withholds statement's, is bias towards certain people. His actions have ruined lives and families. In this county you question him or go out of town for a lawyer,he finds a way to make things worse for you. Unfair,biased and crooked.

  3. why is the State trying to play GOD? Automatic sealing of a record is immoral. People should have the right to decide how to handle a record. the state is playing GOD. I have searched for decades, then you want me to pay someone a huge price to contact my son. THIS is extortion and gestapo control. OPEN THE RECORDS NOW. OPEN THE RECORDS NOW. OPEN THE RECORDS NOW.

  4. I haven't made some of the best choices in the last two years I have been to marion county jail 1 and two on three different occasions each time of release dates I've spent 48 to 72 hours after date of release losing a job being denied my freedom after ordered please help

  5. Out here in Kansas, where I now work as a government attorney, we are nearing the end of a process that could have relevance in this matter: "Senate Bill 45 would allow any adult otherwise able to possess a handgun under state and federal laws to carry that gun concealed as a matter of course without a permit. This move, commonly called constitutional carry, would elevate the state to the same club that Vermont, Arizona, Alaska and Wyoming have joined in the past generation." More reading here: http://www.guns.com/2015/03/18/kansas-house-panel-goes-all-in-on-constitutional-carry-measure/ Time to man up, Hoosiers. (And I do not mean that in a sexist way.)

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