Tax Court allows motor carriers’ refund case to proceed

Three motor carriers can proceed with their claims for a tax refund from the state, the Indiana Tax Court has ruled.

The Tax Court’s Wednesday opinion involves three small business motor carriers — B.L. Reever Transport, Sandman Services and Lost River Trucking. During the 2016 and 2017 tax years, the motor carriers remitted quarterly payments to the Indiana Department of State Revenue for the motor carrier fuel tax.

In late 2018, the motor carriers filed three separate claims for refunds on the portion of the MCFT that was remitted with respect to their consumption of fuel on an Indiana toll road during the 2016 and 2017 tax years. The toll road was privately leased in 2006 and thus not “publicly maintained,” making tax assessment for fuel consumed on the toll road improper, they argued. Sandman Services sought a refund of $22.93 for 2016, Lost River Trucking sought $3.04 for 2016 and B.L. Reever sought $8.02 for 2017.

The Department of Revenue, however, said it was “unable to process” the refund claims, so the motor carriers field protests and a single appeal with the Tax Court. The parties later agreed to dismiss the appeal in 2019, and in 2020 the department denied the protests.

Then in May 2020, the motor carriers initiated another appeal, claiming the toll road was not a “highway” for purposes of the MCFT, making them eligible for the refunds plus interest. For its part, the Revenue Department moved to dismiss the appeal under Indiana Trial Rule 12(B), but Judge Martha Blood Wentworth denied that motion Wednesday.

The department argued in its motion that the case should be dismissed for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. Specifically as to the jurisdiction claim, the department argued the motor carriers did not obtain a final determination on the specific issue in their appeal.

But “the Department issued a final determination denying a refund claim on the same basis as the Motor Carriers’ Notice of Claim raises in this appeal,” Wentworth wrote Wednesday. “Even if the Motor Carriers’ claims were different, however, it is well established that this Court hears appeals from a final order denying refund (i.e., a final determination) by the Department de novo, and is not bound by the evidence or legal arguments made to the Department at the administrative level. … Consequently, the Court finds no defect in its subject matter jurisdiction and will not dismiss the Motor Carriers’ small tax case for a lack of subject matter jurisdiction.”

The department’s failure-to-state-a-claim argument was based on three premises: the holding in Roehl Transport, Inc. v. Indiana Department of State Revenue; the holdings in the two cases of Area Interstate Trucking, Inc. v. Indiana Department of State Revenue and in Area Interstate Trucking, Inc. v. Indiana Department of State Revenue; and the doctrine of legislative acquiescence. Wentworth denied the motion to dismiss on all grounds.

According to the DOR, Roehl was fatal to the motor carriers’ refund claim because it “clearly establishes that all fuel consumed by a carrier while traveling anywhere in the state – whether on the Toll Road or elsewhere – is subject to [the] MCFT … .” Wentworth, however, said the department misconstrued Roehl, which she said dealt with an “entirely different” issue than the one raised in the instant case.

As to the Area Interstate Trucking cases, Wentworth found “unavailing” the DOR’s argument that those cases “held that the Toll Road was a highway for purposes of the MCFT.”

“… (T)he issue in this case is whether the Toll Road is a ‘publicly maintained’ highway, consistent with the requirements of Indiana Code § 6-6-4.1-1(h), even though it was leased to a private company in 2006,” Wentworth wrote. “The Area Interstate Trucking cases, which were decided in 1991 and 1992, predate the 2006 lease of the Toll Road and address wholly distinct issues … .”

Finally, the department argued that because the General Assembly has not changed the applicable law since the 2006 lease of the toll road, the Legislature acquiesced to the interpretations of the Area Interstate Trucking cases and the department’s own 1984 regulation. Wentworth disagreed on this final point.

“As already explained, the Area Interstate Trucking cases do not support a dismissal of this appeal,” she wrote. “Moreover, the Motor Carriers’ appeal challenges the validity of the Department’s regulation, claiming that the facts in this case will show that the regulation is no longer valid because it ignores a limitation set forth in the statute, i.e., that the toll road be publicly maintained. Therefore, the Court is not persuaded that the legislature’s silence indicates that it acquiesced to giving no effect to the ‘publicly maintained’ requirement of Indiana Code § 6-6-4.1-1(h) in response to the 2006 lease of the Toll Road.

“To put it differently, the Department’s claim that the legislature has expressed its opinion through silence can just as easily be seen as the legislature’s failure to express an opinion at all,” Wentworth concluded. “Accordingly, the Court will not dismiss the Motor Carriers’ small tax case for failure to state a claim upon which relief can be granted on this basis either.”

The case is B.L. Reever Transport, Inc., Charles Paar, d/b/a Sandman Services, and Leland Wilkins, d/b/a Lost River Trucking v. Indiana Department of State Revenue, 20T-TA-9.

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