ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
STEVE CARTER FRANCINA A. DLOUHY
Attorney General of Indiana JAMES H. HAM, III
Baker & Daniels
NANDITA G. SHEPHERD Indianapolis, IN
Deputy Attorney General of Indiana
Office of the Attorney General ATTORNEY FOR AMICUS CURIAE
MARK J. COLUCCI
BRIAN P. POPP Kroger Gardis & Regas, LLP
Laszlo & Popp, LLP Indianapolis, IN
CHARLES C. MEEKER
Parker, Poe, Adams, & Bernstein, LLP
STATE BOARD OF TAX COMMISSIONERS, )ET AL. )
Applying standard principles of statutory construction and administrative law, we hold that the
Tax Court does not have subject matter jurisdiction to enjoin an audit being
pursued by the assessors contractor. We therefore reverse.
In early February 2001, the Lake County Assessors office (Assessor) called Ispat and
requested that it contact TMA employee Tom Tucker. Counsel for Ispat called
Tucker, who stated he had a copy of Ispats 2000 personal property return
and wanted to schedule an audit. Several days after their phone conversation,
Tucker sent Ispats counsel a list of requested audit items.
Ispats counsel then wrote the Assessor questioning whether the Assessor possessed authority to disclose confidential information to TMA and its representative Tucker. The Assessors later reply recognized that auditors like TMA were not referenced in the confidentiality statute, but said the Assessor and TMA would treat all of Ispats information in a confidential manner. See footnote
Ispat continued to object. The Assessor sought and obtained guidance from
the State Board of Tax Commissioners (State Board) See footnote on the ability to
contract with third parties and to disclose confidential information to them. A
senior administrative law judge with the State Board opined that local government officials
were allowed to contract with third parties to conduct their official duties and
could disclose confidential information to those third parties in relation to the contracted
job. The Assessor then contacted Ispat and again demanded to schedule an
audit with TMA.
Ispat filed a petition with the State Board requesting that it interpret the
property tax laws under Ind. Code § 6-1.1-35-1 (1998)See footnote and instruct the Assessor
that (1) his office could not conduct an audit of Ispats 2000 personal
property return because the statute of limitations to change the assessment had expired;
(2) the confidentiality statue precluded the Assessor from disclosing Ispats confidential information to
TMA or TMAs employees; and (3) he may not delegate his official duties
regarding business personal property taxes to contractors such as TMA.
Inc. v. State Bd. of Tax Commrs, 757 N.E.2d 1078, 1081-82 (Ind. Tax
Ct. 2001). Ispat and Lake County each filed a brief with the
The Board thereafter issued its Decision of the State Board of Tax Commissioners.
It declared that the Assessor could hire contractors to assist with
audits. It reasoned that the practical reality [is] that local assessing officials
lack sufficient expertise among their paid, full-time staff to perform some auditing and
similar tasks pertaining to personal property assessment. (Petr Injunction Ex.1 at 9-10.)
Ispat filed a tax appeal in the Tax Court. It sought to
enjoin the Assessor from disclosing Ispats confidential information to TMA and from delegating
his personal property authority to TMA. Conversely, the State Board moved to
dismiss the case for lack of subject matter jurisdiction. The Tax Court
concluded it had subject matter jurisdiction to hear the appeal because Ispats appeal
arises under Indiana tax law, the State Board reached a final determination, and
Ispat met the requirements for the issuance of a permanent injunction. Ispat,
757 N.E.2d at 1083, 1086. Lake County, the Assessor and the Board sought
review here, which we granted pursuant to Ind. Appellate Rule 63(A).
The matter arrives here, without any disputed facts, as a pure question of
law. We review these
On the other hand, the legislature has been quite explicit in providing
that [I]f a taxpayer fails to comply with any statutory requirement for the
initiation of an original tax appeal, the Tax Court does not have jurisdiction
to hear the appeal. I.C. § 33-3-5-11(a),
See State Bd. of Tax Commrs
v. Mixmill Mfg. Co., 702 N.E.2d 701, 702 (Ind. 1998).
Generally, two jurisdictional requirements must exist for the Tax Court enabling statute to
apply. First, the case must arise under the tax laws of
Indiana. Ind. Code § 33-3-5-2(a) (1996). Second, the case must be an
initial appeal of a final determination made by the appropriate agency, the State
Board in this case.
This Court has interpreted the arising under jurisdictional language in a broad manner.
Sproles, 672 N.E.2d at 1357. In the present case, the parties
do not dispute that the case arises under the Indiana tax laws, as
the nucleus of the case is based on tax law. While the
first jurisdictional requirement is met, a dispute over tax law does not alone
grant jurisdiction. The central issue in this case is whether the State
Board issued a final determination.
The Tax Court used a very liberal interpretation, concluding that the Board issued
a final determination because no other administrative proceeding occurred, the decision was signed
by three of the Boards commissioners, and the decision determined the rights of
and imposed obligations on the parties.
Ispat, 757 N.E.2d at 1083-84.
It said that a final determination is an order that determines the rights
of or imposes obligations on the parties as a consummation of the administrative
process. Ispat, 757 N.E.2d at 1083.
Ispat contends that the Boards decision was a final determination as opposed to,
say, an advisory opinion, because the dispute involved a real situation instead of
a hypothetical one. (Petr Ispat Inland Br. at 10-13.) The
State Board is regularly engaged in providing guidance to local officials at varying
levels of formality from oral advice to published manuals. While an advisory opinion
may often be generated by less than hypothetical situations, we have not found
specific language that states an advisory opinion may only address hypothetical situations.
Nor have we found any language that automatically transforms an advisory opinion into
a final determination.
On the other hand, Ispat argues that there are alternative methods to reach
a final determination and the Tax Court has used nontraditional paths to reach
a final determination in the past.
While there have been said instances,
we see no need to apply a nontraditional standard in the present case,
as the facts do not support a need for deviation. In effect,
Ispat argues that the Indiana Code should provide for interlocutory appeals. It
is not the law at the moment. A final determination requires the
completion of a two-part test, and Ispat has not satisfied the requirements.
This is not to say that the taxpayer was without an alternative means to obtain a final determination. Theoretically, Ispat had the option of refusing the demand for an audit, in which case the machinery of the tax system would produce appealable final determinations. See footnote
The legislatures declaration that the Tax Court may not hear an appeal if
the taxpayer fails to comply with any statutory requirement for the initiation of
an original tax appeal, Ind. Code § 33-3-5-11(a), expresses a standard tenet of
administrative law. Under Indiana law, if a party is required by
the Administrative Orders and Procedures Act to exhaust its administrative remedies before an
agency prior to obtaining judicial review of the agency decision, courts are completely
ousted of subject matter jurisdiction to hear the case at all.
Lakes Joint Venture v. Avon Utilities, Inc., 648 N.E.2d 641, 644 (Ind. 1995).
A party is not entitled to judicial relief for an alleged or
threatened injury until the prescribed administrative remedy has been exhausted. Id. (citing
Wilson v. Board of Indiana Employment Sec. Div., 270 Ind. 302, 305, 385
N.E.2d 438, 441 (Ind. 1979)).
In Sproles, 672 N.E.2d at 1358, we observed that the exhaustion doctrine serves multiple objectives:
Premature litigation may be avoided, an adequate record for judicial review may be compiled, and agencies retain the opportunity and autonomy to correct their own errors. Even if the ground of complaint is the unconstitutionality of the statute, which may be beyond the agencys power to resolve, exhaustion may still be required because administrative action may resolve the case on other grounds without confronting broader legal issues.
In a few exceptional instances, however, a party may gain judicial review without satisfying the prerequisite. The leap is sometimes justified where pursuit of administrative remedies would be futile, where strict compliance would cause irreparable harm, and where the applicable statute is alleged to be void on its face. Bellamy v. Gillis, 722 N.E.2d 905 (Ind. Ct. App. 2000). We are not persuaded that any of these exceptions apply here.
DICKSON, SULLIVAN, BOEHM, and RUCKER, JJ., concur.