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Thursday, December 30, 2010

Ind. Decisions - Two filed yesterday by Tax Court

Somehow, unlike the other two courts, the filed Tax Court decisions never show up online until the next day. Maybe that will be looked into in the new year.

Two NFP Tax Court opinions were filed Dec. 29th:

In AOL, LLC v. Ind. Dept. of State Revenue (NFP), a 10-page opinion, Judge Fisher writes:

AOL, LLC (AOL) appeals the Indiana Department of State Revenue’s (Department) final determinations denying its two claims for refund of use tax paid from January 1, 2003 through November 30, 2006 and May 1, 2006 through June 30, 2007 (the tax periods at issue). The matter, currently before the Court on the parties’ cross-motions for summary judgment, presents one issue: whether the Department’s denials of AOL’s claims were improper. * * *

As this Court has previously explained, two conditions must be met in order for AOL to incur a use tax liability: 1) AOL must have acquired tangible personal property (i.e., the ROM Packages and CM Packages) in retail transactions; and 2) AOL must have then used, stored, or consumed that tangible personal property in Indiana. See Morton Bldgs., 819 N.E.2d at 918. While AOL indisputably used the ROM Packages and CM Materials in Indiana, it did not acquire them in retail transactions or retail unitary transactions. Rather, in engaging the assembly houses to assemble, print, and ultimately mail the ROM Packages to its prospective members, AOL purchased a service, and not tangible personal property. See API I, No. 49T10-0305-TA-26, slip op. at 7-13. Likewise, in engaging the letter shops to print and then mail the CM Materials to its current customers, AOL again purchased a service, not tangible personal property. See id. AOL owned all of the raw materials used to produce the ROM Packages and the CM Materials; consequently, the assembly houses and letter shops had nothing to sell to AOL other than their services. Id. (footnote added). See also API II, 916 N.E.2d at 754-57. Accordingly, the Department’s denials of AOL’s two claims were improper.

CONCLUSION. AOL owes no Indiana use tax on its in-state use of the ROM Packages and the CM Materials: in purchasing assembly, printing, and mailing services, AOL did not acquire tangible personal property; accordingly, while AOL used its ROM Packages and CM Materials in Indiana, it did not acquire them in either retail transactions or retail unitary transactions. Therefore, the Department’s final determinations, denying AOL’s two claims for refund are REVERSED. The Department is ordered to refund to AOL the use taxes it paid during the tax periods at issue. The parties shall bear their own costs.

In United Parcel Service Inc. v. Indiana Dept. of State Revenue (NFP) , a 6-page opinion, Judge Fisher writes:
United Parcel Service, Inc. (UPS) challenges the final determination of the Indiana Department of State Revenue (Department) that: a) denied UPS's claim for refund of corporate income taxes paid for the year ending December 31, 2000; and b) assessed UPS with an additional corporate income tax liability for the year ending December 31, 2001 (the years at issue). The matter is currently before the Court on the parties' cross-motions for summary judgment. The parties present one issue for the Court's consideration: whether, during the years at issue, UPS properly excluded from its Indiana corporate income tax returns the income of two of its affiliates because they were “subject to” the gross premium privilege tax (premiums tax) under Indiana Code § 27-1-18-2. * * *

Statutes relating to the same general subject matter are in pari materia and will be construed together so as to produce a harmonious result. Ind. Dep’t of State Revenue, Inheritance Tax Div. v. Estate of Pickerill, 855 N.E.2d 1082, 1085 (Ind. Tax Ct. 2006) (citation omitted). Indiana Code § 6-3-2-2.8(4), in conjunction with Indiana Code § 27-1-18-2, clearly demonstrate that UPINSCO and UPS Re were “subject to” the premiums tax under Indiana Code § 27-1-18-2. The Court therefore GRANTS UPS's motion for summary judgment and DENIES the Department's motion for summary judgment. The Department's denial of UPS's claim for refund of corporate income tax for 2000 and its assessment of additional corporate income tax against UPS for 2001 are REVERSED. The parties shall bear their own costs.

Posted by Marcia Oddi on December 30, 2010 12:36 PM
Posted to Ind. Tax Ct. Decisions