Judge rules for revenue department on man’s claim for sanctions

September 18, 2014

A man who argued that the Indiana Department of State Revenue should be sanctioned for allegedly producing his ex-wife’s transmittal envelope for her tax return and passing it off as his own lost his case before the Indiana Tax Court Thursday.

Nick Popovich filed a motion for default judgment, costs and attorney fees as sanctions for the Department of State Revenue’s purported spoliation of evidence and discovery abuses. Popovich’s request is based on the 2003 transmittal envelope produced by the revenue department after it audited him and determined he owed additional income taxes. In January 2005, Popovich sent in his income tax return for 2003, which was sent through regular U.S. mail. His ex-wife, that same month, mailed her 2003 income tax return through certified mail.

At first the hearing officer on the case said Popovich would be informed when the transmittal envelope was retrieved from storage. After initiating his tax appeal, Popovich again sought the envelope; the department provided a copy bearing a certified mailing number. This led Popovich to believe the department produced his ex-wife’s envelope. He repeatedly requested his envelope but never told the department he suspected this was his ex-wife’s envelope.

More than two years after filing his appeal, he filed his motion for Trial Rule 37 Sanctions, alleging the department had purposefully destroyed, mutilated or lost his 2003 transmittal envelope and obstructed discovery.  

“As the Court has noted previously, the discovery process in this case has been acrimonious,” Judge Martha Wentworth wrote in Nick Popovich v. Indiana Department of State Revenue, 49T10-1010-TA-53.

 “Indeed, the parties have used the discovery process not as a mechanism to unearth all relevant facts and evidence, but rather as an opportunity for gamesmanship, which engendered secrecy, incivility, and distrust. While the Court does not condone this behavior, it cannot infer from the facts before it that the Department intentionally or even negligently destroyed, mutilated, or altered Popovich’s 2003 transmittal envelope. Nor can the Court infer from the facts that the Department conspired to supplant Popovich’s 2003 transmittal envelope with his ex-wife’s transmittal envelope. Accordingly, Popovich has not shown that the Department’s discovery misdeeds warrant the entry of a default judgment and an award of all litigation expenses, including attorney’s fees.”

Wentworth found the department had no statutory duty to preserve the transmittal envelope for a period of six years. Although the term “tax return” is not defined in statute, based on the plain meaning of the term, it does not include the envelope. She also rejected Popovich’s claim that the department had a self-imposed duty to preserve his envelope.

Wentworth said she will schedule a Trial Rule 37(A)(4) hearing on the propriety of expenses given the court’s previous resolution of two other matters in this case.


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