ATTORNEYS FOR PETITIONERS: ATTORNEYS FOR RESPONDENT:
DAVID F. McNAMAR KAREN M. FREEMAN-WILSON
JOHN H. SHARPE
ATTORNEY GENERAL OF
INDIANA McNAMAR, FEARNOW & McSHARAR, P.C.
Indianapolis, Indiana JEFFREY S. McQUARY
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
DAVID C. BRUNS, M.D. and
ELLEN M. BRUNS, )
v. )Cause No. 49T10-9712-TA-00206
DEPARTMENT OF STATE REVENUE,
ON APPEAL FROM A FINAL DETERMINATION OF
THE DEPARTMENT OF STATE REVENUE
March 24, 2000
The petitioners, Dr. David C. Bruns & Ellen M. Bruns, appeal a final
determination of the Department of State Revenue (Department) assessing Dr. Bruns (Bruns) for
motor vehicle excise tax (MVET).
The parties raise one issue for the
Courts consideration: whether Bruns is liable for payment of the MVET assessed against
him by the Department.
FACTS and PROCEDURAL HISTORY
Bruns is a physician employed by the Indiana Department of Family and Social
Services (FSSA) in its Indianapolis office. Bruns maintains a permanent residence in
Gifford, Illinois. His drivers license and license plates are issued in Illinois;
he votes in Illinois, and he pays income taxes as an Illinois resident.
As a result of his employment, Bruns drives to Indianapolis on Monday
mornings to begin his work week. During the work week, on some
days, if he chooses not to drive back to Illinois, Bruns stays overnight
in a rooming house located in Plainfield, Indiana. Bruns room contains a
bed, a small television set, a clock radio, sundries, and clothing to be
worn during the work week. On Friday nights, Bruns drives back to
his domicile in Illinois.
On June 3, 1997, Bruns received a letter from the Department indicating that
the Department considered him to be a current Indiana resident and that the
Departments information indicated that he had been an Indiana resident since 1992.
Therefore, the Department determined that Bruns should have registered his automobile in Indiana
beginning in 1992 and should have paid the MVET from that date.
See Ind. Code Ann. § 6-6-5-2 (West Supp. 1999). Bruns filed a
written letter of protest on June 5, 1997, explaining that he was in
fact a resident of the State of Illinois. On that same day,
the Department issued a letter to Bruns indicating that it had voided its
1992 assessment and had reduced his 1993 liability to $579.67. See Ind.
Code Ann. § 6-8.1-5-1(a) (West Supp. 1999). However, the Department did not
alter its 1994-1997 assessments, which resulted in a total tax assessment for the
years 1993 through 1997 of $2,485.69.
On July 22, 1997, Bruns filed a written protest with the Department regarding
its proposed assessment. On July 25, 1997, the Department issued a Letter
of Findings (LOF) upholding its proposed assessment. On August 25, 1997, Bruns
requested a rehearing from the Department.
See Ind. Code Ann. § 6-8.1-5-1(f)
(West Supp. 1999). The Department denied Bruns request for a rehearing
and on December 23, 1997, Bruns filed this original tax appeal. On
August 19, 1998, Bruns filed a motion for summary judgment. On October
20, 1998, the Court heard oral argument on this motion. Deeming that
resolution of the issues raised on summary judgment were not appropriate, the Court
denied Bruns motion for summary judgment. See Bruns v. Department of Revenue,
No. 49T10-9712-TA-00206 (Ind. Tax Ct. Feb.2, 1999) (unpublished memorandum decision denying Bruns Motion
for Summary Judgment) (Bruns I). On August 30, 1999, the parties presented
themselves to this Court for trial on the issue regarding the MVET.
Oral argument was held on January 24, 1999. Additional facts will
be supplied where necessary.
ANALYSIS AND OPINION
Standard of Review
This Court reviews final determinations of the Department de novo and
is bound neither by the evidence presented nor the issues raised at the
administrative level. See Ind. Code Ann. § 6-8.1-5-1(h) (West Supp. 1999); Hurst
v. Department of State Revenue, 721 N.E.2d 370, 372 (Ind. Tax Ct. 1999).
I. Liability under the MVET statute
Living in Indiana
Bruns contends that, because he is a resident of the state of Illinois,
he should not be liable under the MVET statute. Excise taxes are
levies on an activity or event.
See Hall v. Department of Revenue,
720 N.E.2d 1287, 1289 (Ind. Tax Ct. 1999) (citing Jerome R. Hellerstein &
Walter Hellerstein, State and Local Taxation 30 (1988)). An excise tax includes
taxes sometimes designated by statute or referred to as privilege taxes. See
id. (quoting Thomas Cooley, The Law of Taxation § 45 (4th ed. 1924)).
Indiana imposes an annual license excise tax on vehicles required to be
registered in Indiana under the motor vehicle laws of the state. See
Ind. Code Ann §§ 6-6-5-2, -6 (West Supp. 1999). The
statute requires that a person, [w]ithin sixty (60) days of becoming an Indiana
resident, register any motor vehicle owned by the person that will be
operated on Indiana roads. See Ind. Code Ann. § 9-18-2-1 (West Supp.
1999) (amended 1996 &1999, 1999 amendments effective Jan.1, 2000). Another statute in
part defines an Indiana resident as: a person who . . . has
been living in Indiana for at least one hundred eighty-three (183) days during
a calendar year and who has a legal residence in another state.
at § 9-13-2-78(1) (West 1992).
The Department asserts that Bruns was present in Indiana for over two hundred
(200) days a year for three of the last four years in question.
(Respt Br. at 5.) The Department contends that Bruns was a
resident of Indiana for purposes of section 9-13-2-78(1). Further, the Department places
great emphasis on the phrase living in Indiana. To expand on its
contention that Bruns was a resident during the tax years in question, the
Department argues that living in Indiana
does not mean being domiciled in Indiana.
(Respt Br. at 3-4.) Rather, the Department argues, living in Indiana
means occupying a home or dwelling in Indiana.
(Respt Br. at 4.)
With that said, it is important to note that the phrase living
in Indiana is not defined by statute or by any Department regulation.
In Croop v. Walton, 199 Ind. 262, 157 N.E. 275 (1927), the Indiana
Supreme Court dealt with facts similar to those in the case at bar.
Croop was not based on an excise tax but rather on taxes
on certain intangible property consisting principally of corporate stock in a Michigan furniture
manufacturing company. See Croop, 157 N.E. at 275. In that case,
a taxpayer who was domiciled in Sturgis, Michigan for a number of years
purchased a house in Elkhart, Indiana.
The taxpayers use of this house was to provide assistance to his daughter,
who was in the midst of a divorce, until she became settled elsewhere.
However, the daughter died unexpectedly, which caused the taxpayers wife to suffer
severe mental and physical trauma. As a result, after visiting several mental
institutions and other medical facilities, the taxpayer continued to stay at the Elkhart
house on account of the mental and physical condition of his wife, and
continued to occupy it until such time as she could safely return to
Sturgis to live. Croop, 157 N.E. at 276.
The Indiana Supreme Court observed that Croop did not live in Elkhart with
the intention of giving up his domicile in Sturgis or come to Elkhart
with the intention of acquiring a new domicile. See id. Although
the Courts analysis in Croop focused mainly on the issue of domicile,
the Indiana Supreme Court also offered guidance in the area of residency.
For example, the Court determined that when a person has residences in different
states, that person is taxable at the original domicile, unless opening of the
second home involved abandonment of the original domicile. See id. at 277.
Affirming the lower courts determination that the taxpayer was not domiciled in
Indiana, the Court noted that the taxpayer had left his original place of
residence temporarily with the intention of returning to Michigan. See id at 278.
According to the Indiana Supreme Court in another case, the question of
residency is a contextual determination to be made by a court upon a
consideration of the individual facts of any case. In the Matter
of Evrard, 263 Ind. 435, 440, 333 N.E.2d 765, 768 (1975) (emphasis added)
(establishing clarification of laws regarding voting and residency).
Moreover, in determining a taxpayers residency, the fact that a person has more
than one residence or place of abode in which he has a substantial
investment, social commitment, and interest, and which is useful for any number of
purposes, is only one relevant fact among many other things to be considered
by a court. See id. In determining residence or domicile, conduct
such as the abandonment of a prior residence and contemporary statements of intention
to establish a new principal residence are also to be considered. See
id. (citing Brittenham v. Robinson, 18 Ind. App. 502, 48 N.E 616 (1897)).
The Departments assertion that one can maintain a residence in two states
is correct. (Oral Argument Tr. at 11.) However, in order to
impose certain taxes on someone who is domiciled in one state but also
is alleged to have a residence in another state, a closer analysis regarding
that persons behavior or conduct combined with the taxpayers purpose is also required.
See Evrard, 333 N.E.2d at 768. With that said, the Court,
at this time, declines the parties invitation to define the term living in
Indiana. The Court can now dispose of the issue of MVET liability
by looking to the evidence presented by the parties.
B) The Evidence Presented
Bruns argues that he cannot be in Indiana for at least 183 days
unless he is present in Indiana for 4,392 hours.
See footnote The Department argues
that being present in Indiana for any part of the day equals one
day. Bruns offered detailed evidence that he was not present in Indiana
for at least 183 days during the tax years in question. In
support of his argument, Bruns submits that during the 1993 tax year, he
was in Indiana for 70.232 days; for the 1994 tax year he was
in Indiana for 182.626 days; for the 1995 tax year he was in
Indiana for 176.624 days; for the 1996 tax year he was in Indiana
for 179.626 days, and for the 1997 tax year he was in Indiana
173.830 days. (Petr Ex. 6.) Thus, according to Bruns evidence (after conversion
from days to hours), for the 1993 tax year Bruns was present in
Indiana for 1,685.6 hours; for the 1994 tax year Bruns was present in
Indiana for 4,383 hours; for the 1995 tax year Bruns total time spent
in Indiana equaled 4,239 hours, and for the 1996 and 1997 tax years,
Bruns was present in the state for 4,311 and 4,171.92 hours respectively.
The Department, in addition to its claim that Bruns occupation of the rooming
house amounted to living in Indiana, offered parking garage records for the tax
years of 1995, 1996 and 1997. (Respt Ex. 6.) This evidence
differs from Bruns evidence in that it shows that his vehicle was parked
in the state employee parking garage for 212 days in 1995; 216 days
in 1996; and 213 days in 1997. However, the Court rejects this
argument because it would mean that any nonresident full-time employee of the state
who parks his or her car in a state-owned parking garage will be
present in Indiana for at least 183 days and would become a resident.
Bruns is correct in his assertion that to be in Indiana for a
day, a person must be present in the state for at least twenty-four
hours. Thus, the Departments argument is rendered useless because a day equals twenty-four
hours; nothing less equals a day. Based on that concept and the
fact that Bruns has submitted uncontroverted evidence that, although his car was in
the garage for a period greater than 183 days, he in fact was
not present in Indiana for at least 183 days or for a period
greater than 4,392 hours. Therefore, even if Bruns occupation of the Plainfield
rooming house amounted to living in Indiana, the evidence before this Court is
that Bruns was not present in Indiana for at least 183 days.
Finally, the Court, absent any statute allowing dual registration of one car in
two states, will not require Bruns to come into violation of his home
states laws by registering his car in Indiana.
See 625 Ill. Comp. Stat.
5/3-401(a) (West 1999)(stating that it shall be unlawful for any owner of a
vehicle to allow that vehicle to be driven without being registered). Instead
of falling under the purview of the MVET statute, Bruns would fall under
the purview of Ind. Code Ann. § 9-18-2-2 (West 1989), which allows a
nonresident to operate a vehicle on Indiana roads without registering the vehicle or
paying the MVET if the vehicle is properly registered in the jurisdiction in
which the nonresident is a resident.
The record clearly indicates that Bruns is a resident of the State of
Illinois and only works as an employee of the State of Indiana.
Based on section 9-18-2-2, the legislature did not intend to force multiple
taxation on people whose vehicles are properly registered in other states. There
is no evidence in the record that would indicate that Bruns vehicle is
not properly registered in Illinois. This Court in its denial of Bruns
motion for summary judgment stated that the intent of the definition of resident
in section 9-13-2-78(1) is to prevent people who actually live in Indiana from
avoiding taxation here by registering their vehicles in nearby states. Bruns
I at 7 (emphasis supplied in original.).
Based on the foregoing, this Court REVERSES the Departments finding that Bruns is
liable for the MVET assessment in the amount stated above.
Mr. and Mrs. Bruns initiated this action against both the Department of
State Revenue and the State Board of Tax Commissioners (State Board). Because
the motor vehicle excise tax is a listed tax,
see Ind. Code Ann.
§§ 6-6-5-2(b) & 6-8.1-1-1 (West Supp. 1999), the State Board of Tax Commissioners
is not responsible for administration of the tax and is dismissed from the
cause. See Ind. T.R. 21.
For ease of analysis and discussion, the Court will treat this case
as if Dr. Bruns is the only petitioner. In light of todays
opinion, the Court does not need to deal with the issue of the
tax as it affects Mrs. Bruns as co-owner of the vehicle.
The issues raised in Bruns' motion for summary judgment were as follows: whether
Ind. Code Ann. § 9-13-2-78(1) (West 1992) is unconstitutionally vague; and, whether Bruns
is a resident of Indiana. This Court denied Bruns motion for summary
judgment based on a possible conflict in the facts. See Bruns I,
supra at 10. However, because of todays decision, the Court will not consider
any issues based on constitutionality.
For a more in-depth analysis of excise taxes, see generally
Posner, Economic Analysis of Law 455-58 (3d ed. 1986).
Under Indiana law, a person may have only one legal domicile.
Domicile is defined as the place where a person has a permanent home
to which he has, when absent, an intention of returning.
Election Bd. v. Bayh, 521 N.E.2d 1313, 1317 (Ind. 1988). However, a
person may have more than one legal residence. See Croop, 157 N.E. at
277. Thus, a person may legally reside in more than one state
while being legally domiciled in only one state. See id.; see also
Blacks Law Dictionary 337 (abr. 6th ed. 1991).
During oral argument, respondent stated that Bruns, because of his occupation of the
Plainfield rooming house, maintained a residence for some twenty years. (Oral Arg. Tr.
at 11). However, in this case, whether Bruns maintained the Plainfield rooming
house 365 days per year is not germane to the disposition of the
issue of liability under the MVET statute. What is germane is whether
the facts of this case show that Bruns occupied the Plainfield rooming house
for at least 183 days per year pursuant to the MVET statute.
Under the MVET statute, a person can maintain a residence in Indiana for
365 days; however, to be liable under the MVET, it must be shown
that the taxpayer lived in Indiana for at least 183 days per year.
Footnote: 183 days multiplied by twenty-four hours equals 4,392 hours.