ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
STEPHEN H. PAUL STEVE CARTER
DAVID GIVEN ATTORNEY GENERAL OF INDIANA
THADDEUS R. AILES Indianapolis, IN
BAKER & DANIELS
Indianapolis, IN KAREN HSU
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
SIMON AVIATION, INC., )
v. ) Cause No. 49T10-0003-TA-31
INDIANA DEPARTMENT OF )
STATE REVENUE, )
ORDER ON PARTIES CROSS-MOTIONS
FOR SUMMARY JUDGMENT
April 2, 2004
Simon Aviation, Inc. (Simon) appeals the Indiana Department of State Revenues (Department) imposition
of Indiana use tax on aircraft lease payments it made during the years
ending December 31, 1993, December 31, 1994, and April 30, 1995 (the years
at issue). The matter is currently before the Court on the parties
cross-motions for summary judgment. The issue for the Court to decide is
whether those lease payments are subject to Indianas use tax.
FACTS AND PROCEDURAL HISTORY
The material facts as they relate to this case are undisputed. Simon
is an Indiana corporation doing business in Indiana and throughout the country.
In 1985, Simon leased an aircraft from Wells Fargo Leasing Corporation and CIT
Simon took delivery of the aircraft in Canada. Simon flew
the aircraft to various locations within the United States before it entered Indiana
for the first time on November 26, 1986. In March of 1986,
Simon leased a second aircraft from Manufacturers Hanover Commercial Corporation. After taking
delivery of the aircraft in Connecticut, Simon made several flights on the aircraft
to destinations within the United States before it entered the State of Indiana
for the first time on October 11, 1986. While both aircraft were
primarily hangared in Indiana during the years at issue, they were nonetheless used
for interstate travel.
On July 28, 1987, upon Simons inquiry, the Department issued a ruling in
which it stated Simons lease payments were not subject to Indianas use tax
because the aircraft were used primarily in interstate commerce (DRS87-10). The ruling
also stated that [a]ny changes in these facts should be submitted to the
Department for reconsideration of this ruling. (Petr Original Tax Appeal, Attach. 1
In the early 1990s, the Department audited Simon and determined that, for tax
years 1986 through 1989, Simons lease payments were subject to use tax.
Simon contested the proposed assessment, arguing that it had already received a ruling
from the Department that the lease payments were not taxable. In the
alternative, Simon argued that the Department was prohibited, under Indiana Code § 6-8.1-3-3,
from adopting a position that would retroactively increase its tax liability. On
June 2, 1992, the Department issued a letter of findings (1992 LOF), stating:
In the instant case, the audit has established no change in either Indiana
law or the taxpayers situation [that] would warrant invalidating [DRS87-10].
The taxpayers protest is sustained. The Department finds that [DRS87-10] is still
valid and that the assessment is inappropriate. The taxpayers contention that such
a retroactive assessment is prohibited by IC 6-8.1-3-3 is rendered moot by this
finding and need not be addressed. This finding applies solely to the
leases of the two aircraft under protest. If new aircraft are acquired,
new leases obtained, or any of the circumstances in this case change, the
taxpayer must notify the Department and request a new ruling.
(Petr Original Tax Appeal, Attach. 2 at 2-3 (emphasis added).)
On March 31, 1993, Simon consolidated and refinanced its aircraft leases with General
Electric Capital Corporation (GECC). Simon did not notify the Department of these
On August 4, 1994, the Department sent a letter to Simon in which
This letter is to advise you that effective July 1, 1994, the Department
is hereby rescinding . . . DRS87-10.
[DRS87-10] granted [the] exemption under the commerce clause. Exemption under the commerce
clause is not warranted as no evidence is available to indicate that Simon
. . . [is] engaged in public transportation as required by [Indiana Code
The original decision may have been buttressed by the Missouri Supreme Court decision
in King v. L & L Marine Serv., Inc., 647 S.W.2d 524 (Mo.
1983). However, it is important to note that this decision was overturned
by the Missouri Supreme Court in Director of Revenue v. Superior Aircraft Leasing
Co., 734 S.W.2d 504 (Mo. 1987).
[Simons lease payments are taxable under] Indiana Code [§] 6-2.5-3-2[.]
(Petr Original Tax Appeal, Attach. 3 at 1-2.) The letter then stated
any aircraft purchased or leased after this date will be subject to Indiana
. . . use tax. (Petr Original Tax Appeal, Attach. 3 at
On September 28, 1994, the Department issued another letter to Simon clarifying the
substance of the first letter. That letter stated:
As our August 4 letter stated, due to more recent case law, it
is now the position of the Department that irrespective of such interstate movement,
Indiana Code [§] 6-2.5-3-2 subjects [your] aircraft to Indiana . . . use
The specific clarification requested relates to the implementation of the Departments rescission of
DRS87-10 in regard to the subject airplane leases in effect on July 1,
1994. In that regard, the Department will continue to recognize the validity
of DRS87-10 as to those leases in effect between Simon . . .
and [its] respective lessors as of July 1, 1994 and will not treat
the periodic lease payments under those leases as subject to Indiana . .
. use tax due to reliance of [Simon] on DRS87-10. However, in
the event [Simon] should renegotiate either or both lease transactions in the future,
or . . . should purchase or lease additional or replacement aircraft after
July 1, 1994, such new transactions would be subject to Indiana . .
. use tax.
(Petr Original Tax Appeal, Attach. 4 at 1.)
On January 24, 1995, the Department issued yet another letter to Simon.
This letter provided in pertinent part:
This letter is a follow up to the Departments letters of August 4,
1994 and September 28, 1994. In those letters the Department addressed the
rescission of [DRS87-10] and [its] application to the purchase or lease of additional
aircraft occurring after July 1, 1994.
In accordance with Department Regulation 45 IAC 15-3-2, the Department hereby makes the
rescission of DRS87-10 effective July 1, 1992. The reason for this change
is that it recently came to [our] attention that [Simon] was informed [in
the 1992 LOF] . . . that DRS87-10 was no longer valid to
new aircraft acquired or to new leases obtained [thereafter].
In order to put this in its proper perspective, the Department will make
the effective date of the rescission July 1, 1992. The Department will
continue to apply DRS87-10 as to those leases that were in effect prior
to July 1, 1992 and will not treat the periodic lease payments under
those leases as subject to Indiana  use tax due to the reliance
of [Simon] on DRS87-10. However, in the event [Simon] should renegotiate either
or both lease transactions in the future, or if [it] should purchase or
lease additional or replacement aircraft after July 1, 1992, such new transactions would
be subject to Indiana sales/use tax.
(Petr Original Tax Appeal, Attach. 5 at 1.)
In 1996, the Department conducted another audit of Simon. As a result
of this audit, it determined that, for the years at issue, Simon owed
Indiana use tax (and interest thereon) on its lease payments with GECC in
the amount of $147,367.61.
Simon subsequently protested the proposed assessment. In its protest, Simon alleged, inter
alia, that DRS87-10 was still applicable and therefore its lease payments were not
subject to use tax. On November 30, 1999, the Department issued a
letter of findings (1999 LOF) in which it denied Simons protest:
[T]he 1992 LOF  served to explicitly notify [Simon] that while [DRS87-10] could
be relied on for that transaction, it was not applicable beyond the stated
circumstances. The contention that [Simon] could rely on [DRS87-10] after the notification
in the 1992 LOF is without merit.
(Petr Original Tax Appeal, Attach. 6 at 6.)
Simon initiated this original tax appeal on March 6, 2000. Simon subsequently
filed its motion for summary judgment on November 29, 2000. The Department
filed a response brief on February 21, 2001.
The Court conducted a
hearing on April 4, 2001. Additional facts will be supplied as necessary. STANDARD OF REVIEW
This Court reviews final determinations of the Department de novo. Ind. Code
Ann. § 6-8.1-5-1(h) (West 2000). Accordingly, the Court is not bound by
either the evidence or the issues presented at the administrative level. Snyder
v. Indiana Dept of State Revenue, 723 N.E.2d 487, 488 (Ind. Tax Ct.
2000), review denied.
In addition, summary judgment is only appropriate where no genuine issues of material
fact exist and the moving party is entitled to judgment as a matter
of law. Ind. Trial Rule 56(C); Snyder, 723 N.E.2d at 488.
Cross motions for summary judgment do not alter this standard. Williams v.
Indiana Dept of State Revenue, 742 N.E.2d 562, 563 (Ind. Tax Ct. 2001).
DISCUSSION AND ANALYSIS
As this Court has previously explained, Indiana imposes a use tax on goods
purchased outside of the state and brought into the state for use.
See Rhoade v. Indiana Dept of State Revenue, 774 N.E.2d 1044, 1047 (Ind.
Tax Ct. 2002). The imposition of this tax is generally based on
two theories: (1) that Indiana merchants will lose business if taxpayers purchase
goods out-of-state to avoid sales tax liability and (2) that the state will
lose tax revenue if taxpayers purchase goods out-of-state. See id. Consequently, Indianas
use tax is functionally equivalent to its sales tax and is
(a) . . . imposed on the storage, use, or consumption of tangible
personal property in Indiana if the property was acquired in a retail transaction,
regardless of the location of that transaction or of the retail merchant making
(b) The use tax is also imposed on the storage, use, or consumption
of a vehicle, an aircraft, or a watercraft, if the vehicle, aircraft, or
watercraft:1. DRS87-10 and the Departments 1992 LOF
(1) is acquired in a transaction that is an isolated or occasional sale;
(2) is required to be titled, licensed, or registered by this state for
use in Indiana.
Ind. Code Ann. § 6-2.5-3-2(a) and (b) (West 1993).
See footnote While Indiana taxpayers
are generally entitled to a credit against the use tax equal to the
amount of any sales tax or use tax paid to another state, the
credit . . . does not apply to the use tax imposed on
the use, storage, or consumption of vehicles, watercraft, or aircraft that are required
to be titled, registered, or licensed by Indiana.
Ind. Code Ann. §
6-2.5-3-5 (West 1993).
Simon claims that the lease payments it made during the years at issue
are not subject to use tax. To support that claim, Simon has
presented three alternative arguments. (See Summ. J. Tr. at 17.)
First, it argues that the lease payments are not taxable under DRS87-10 and
the Departments 1992 LOF. In the alternative, Simon argues that the 1992
LOF constitutes a retroactive change in the Departments policy, which is prohibited under
Indiana Code § 6-8.1-3-3. Finally, or in any event, Simon argues that
the lease payments are not taxable pursuant to the Commerce Clause of the
United States Constitution.
Simon first asserts that its lease payments are not taxable under DRS87-10 and
the Departments 1992 LOF. More specifically, it explains that: 1) the
1992 LOF stated, undeniably, that DRS87-10 was still valid; 2) the 1992 LOF
d[id] not say that DRS87-10 would be invalid if a new lease agreement
were entered into by Simon; it merely state[d] that the issue would need
to be reconsidered[;] and 3) DRS87-10 was not rescinded until 1994. (Petr
Br. In Supp. of [Its] Mot. for Summ. J. at 7-9.) Thus,
Simon asserts, the Departments conclusion (in the 1999 LOF) that DRS87-10 was no
longer valid is an improper attempt to constru[e] the 1992 LOF to say
something  it doesnt. (Summ. J. Tr. at 21.)
The Department provides advice to taxpayers in many different forms. Rulings are
issued to individual taxpayers based upon specific factual situations. Ind. Admin. Code
tit. 45, r. 15-3-2(d)(1) (1992). Consequently, taxpayer rulings are very limited in
their application: only the taxpayer to whom the ruling was issued is
entitled to rely on it, and, even then, only with respect to the
particular fact situation provided in the taxpayers written application for the ruling.
See id.; 45 IAC 15-3-2(d)(3).
In the case at bar, the Department issued DRS87-10 in 1987, based on
the facts as they existed at that time. Accordingly, DRS87-10 indicated that
[a]ny changes in these facts should be submitted to the Department for reconsideration
of this ruling. (See Petr Original Tax Appeal, Attach. 1 at 3.)
In turn, the Departments 1992 LOF indicated that DRS87-10 was still valid
because the facts had not changed since 1987. The 1992 LOF reminded
Simon, however, that [t]his finding applies solely to the leases of the two
aircraft under protest. If new aircraft are acquired, new leases obtained, or
any of the circumstances in this case change, the taxpayer must notify the
Department and request a new ruling. (Petr Original Tax Appeal, Attach. 2
at 2-3 (emphases added).)
When Simon refinanced its leases in 1993, it did not notify the Department.
(Summ. J. Tr. at 16.) Consequently, as of March 31, 1993,
Simon placed itself outside the scope of the 1992 LOF -- as well
as DRS87-10. Indeed, the 1992 LOF indicated that if any facts in
Simons case changed including the acquisition of new leases -- Simon must
notify the Department. See Huntington County Cmty. School Corp. v. State Bd.
of Tax Commrs, 757 N.E.2d 235, 240 (Ind. Tax Ct. 2001) (stating that
the word must, like the word shall, has a mandatory rather than a
discretionary meaning). By ignoring that directive, both the 1992 LOF and DRS87-10
became inapplicable as of March 31, 1993.
This is not to say, however, that had the Department been given the
opportunity to review Simons new factual circumstances, it would have necessarily determined that
the lease payments were taxable. Nevertheless, it is inconceivable that Simon could
not have anticipated such a result. Cf. id. (stating that a statutes
explicit requirement that each petition must be verified necessarily implied that if the
petition was not verified, it was invalid); Gulf Stream Coach, Inc. v. State
Bd. of Tax Commrs, 519 N.E.2d 238, 242 (Ind. Tax Ct. 1988) (stating
that a taxpayer who otherwise qualifies for an exemption can waive it by
failing to follow proper procedure to obtain the exemption). Accordingly, this Court
cannot say that, during the years at issue, Simons lease payments fell within
the non-taxable parameters of DRS87-10 and the Departments 1992 LOF.
2. Indiana Code § 6-8.1-3-3
Next, Simon states that if DRS87-10 is not applicable to the lease payments
(by way of the 1992 LOF), then the Departments 1992 LOF constitutes a
retroactive change in the Departments interpretation of the law. (Summ. J. Tr.
at 29.) Such a change, Simon contends, is prohibited by Indiana Code
§ 6-8.1-3.3 which, during the years at issue, provided that [n]o change in
the [D]epartments interpretation of a listed tax
may take effect before the date
the change is adopted in a rule . . . if the change
would increase a taxpayers liability[.] Ind. Code Ann. § 6-8.1-3-3(b) (West 1987)
(amended 1996) (footnote added). Simons argument, however, is misplaced.
First, the 1992 LOF did not, as Simon contends, constitute a change in
the law. (See Summ. J. Tr. at 29 (Simons counsels statement that
the 1992 LOF revoking DRS87-10 was a change in the law).) The
1992 LOF merely reiterated the terms of DRS87-10: given the specific factual
circumstances, the lease payments were not taxable; however, a change in those facts
might render DRS87-10 inapplicable. In addition, the 1992 LOF did not contain
any statement, explanation, or analysis that would indicate the Department was changing its
interpretation of the law. (Cf. Petr Original Tax Appeal, Attach. 3 at
1-2 (the Departments August 4, 1994 letter stating that the Department
is hereby rescinding . . . DRS87-10 because [e]xemption under the commerce clause
is not warranted); Petr Original Tax Appeal, Attach. 4 at 1 (the Departments
September 28, 1994 letter stating due to more recent case law, it is
now the position of the Department that irrespective of such interstate movement, Indiana
Code [§] 6-2.5-3-2 subjects [your] aircraft to Indiana . . . use tax).)
Furthermore, as explained supra, Simon was advised three times that if its factual
circumstances changed, DRS87-10 might not apply. Indeed, when Simon first applied for
the ruling in 1987, it was cautioned that such a ruling would be
based on [a] specific factual situation. 45 IAC 15-3-2(d)(1). Second, when
Simon received DRS87-10, it was notified that [a]ny changes in these facts should
be submitted to the Department for reconsideration of this ruling. (See Petr
Original Tax Appeal, Attach. 1 at 3.) Finally, in the Departments 1992
LOF, Simon was again reminded that [t]his finding applies solely to the leases
of the two aircraft under protest. If new aircraft are acquired, new
leases obtained, or any of the circumstances in this case change, the taxpayer
must notify the Department and request a new ruling. (Petr Original Tax
Appeal, Attach. 2 at 3 (emphases added).) Consequently, there was nothing retroactive
about the Departments 1992 LOF. Accordingly, Simons Indiana Code § 6-8.1-3-3 argument
is without merit.
3. Commerce Clause
Finally, Simon argues that the imposition of Indiana use tax against its lease
payments violates the Commerce Clause of the United States Constitution, which provides in
part that Congress shall have the power [to] regulate Commerce . . .
among the several States[.] U.S. Const. Art. I, § 8 cl. 3.
As this Court has previously noted, the Commerce Clause is
designed to create an area of free trade among the states. By
its terms, the Commerce Clause is only an authorization for Congress to regulate
commerce. However, there is a negative or dormant implication of the Commerce
Clause that prohibits taxation by a state in a manner that discriminates against
or unduly burdens interstate commerce.
Hi-Way Dispatch, Inc. v. Indiana Dept of State Revenue, 756 N.E.2d 587, 603
(Ind. Tax Ct. 2001) (internal quotations and citations omitted). a. Fair Apportionment
To determine whether a state tax unconstitutionally discriminates against or burdens interstate commerce,
this Court applies the four-part test set forth in Complete Auto Transit, Inc.
v. Brady, 430 U.S. 274, 279, 97 S.Ct. 1076, 1079, 51 L.Ed.2d 326
(1977), rehg denied. The Complete Auto test provides that a state tax
will survive a Commerce Clause challenge if the tax (1) is imposed on
an activity with a substantial nexus with the taxing state, (2) is fairly
apportioned, (3) does not discriminate against interstate commerce in favor of local commerce,
and (4) is fairly related to services the state provides. Indiana-Ky. Elec.
Corp. v. Indiana Dept of State Revenue, 598 N.E.2d 647, 656 (Ind. Tax
Ct. 1992) (IKEC) (citations omitted). Simon maintains that the Departments imposition of
use tax against its lease payments violates both the second and third prongs
of the Complete Auto test.
The second prong of the Complete Auto test the necessity of apportionment
-- is intended to prevent multiple taxation of interstate commerce. See IKEC,
598 N.E.2d at 656-58. There are two methods by which the risk
of multiple tax burdens upon an interstate commerce transaction can be avoided.
First, multiple taxation may be avoided by providing a tax credit (as an
offset or exemption) for a sales or use tax that has been paid
to another state or jurisdiction. D.H. Holmes Co., Ltd. v. McNamara, 486
U.S. 24, 31, 108 S.Ct. 1619, 1623, 100 L.Ed.2d 21 (1988). Multiple
taxation may also be avoided by imposing a tax in conformity with a
formula that rationally relates the amount of the tax to the fraction of
interstate activity taking place within the taxing state. See IKEC, 598 N.E.2d
Simons argument focuses on two points. First, because Indiana Code § 6-2.5-3-5(b)
denies a credit for sales and use taxes paid in other states, there
is the possibility of multiple taxation. (See Petr Br. In Supp. of
[Its] Mot. for Summ. J. at 13.) Second, the imposition of Indianas
use tax does not rationally relate to the fraction of activity taking place
within Indiana because the Department is attempting to tax its lease payments in
their entirety, despite the fact that the vast majority of the storage, use,
and consumption of the Aircraft occurred outside of Indiana. (Petr Br. In
Supp. of [Its] Mot. for Summ. J. at 14.)
Simon bears the burden of demonstrating that it has either been subject to
multiple taxation, or that it is subject to the risk of multiple taxation.
See Hoosier Energy Rural Elec. Co-op., Inc. v. Indiana Dept of Revenue,
528 N.E.2d 867, 872 (Ind. Tax Ct. 1988) (citing Standard Pressed Steel Co.
v. Washington Dept of Revenue, 419 U.S. 560, 563, 95 S.Ct. 706, 709,
42 L.Ed.2d 719 (1975)), affd, 572 N.E.2d 481 (Ind. 1991), cert. denied, 502
U.S. 924, 112 S.Ct. 337, 116 L.Ed.2d 277 (1991). In this case,
it has done neither.
First, Simon has presented no evidence to indicate that it has paid any
sales or use tax to any other state at the time it initially
leased its aircraft. Simon, therefore, cannot point to an actual cumulative tax
burden. Similarly, it has not shown that it is at any risk
of multiple taxation. Indeed, it has not shown that any other state
would now have the power to tax the same transaction (i.e., the use,
storage, or consumption of the aircraft that are the subject of the leases).
See Hoosier Energy, 528 N.E.2d at 872-73. See also Revenue Cabinet,
Commonwealth of Kentucky v. Ashland Oil, Inc., 888 S.W.2d 701, 704 (Ky. Ct.
App. 1994), cert. denied, 515 U.S. 1103, 115 S.Ct 2248, 132 L.Ed.2d 256
(1995); Great American Airways v. Nevada State Tax Commn, 705 P.2d 654, 657
(Nev. 1985), cert. denied, 479 U.S. 817, 107 S.Ct. 74, 93 L.Ed.2d 31
(1986); Whitcomb v. Commr of Taxes, 479 A.2d 164, 168 (Vt. 1984).
In other words, it has not been shown that any other states are
attempting to extract a functionally equivalent tax from Simon.
See Hoosier Energy,
528 N.E.2d at 873 (footnote added). Thus, this Court need not decide
what effect a foreign jurisdictions uncredited sales or use taxes would have on
[Indianas] taxing scheme. See Great American Airways, 705 P.2d at 657.
Furthermore, Simons claim that Indiana is not apportioning its use tax based upon
the amount of miles flown or hours spent in Indiana (see Petitioners Brief
In Support of [Its] Motion for Summary Judgment at 14-15), fails to recognize
the true function of the use tax. Indeed, use taxes function primarily
to prevent the evasion of the state sales tax. See Jerome R.
Hellerstein & Walter Hellerstein, State Taxation ¶ 16.01 (3d ed. 1998 & 2000).
Indianas use tax is imposed when an object, purchased out-of-state by an Indiana
resident, is stored, used, or consumed within Indiana. A.I.C. § 6-2.5-3-2.
In this case, the use tax is inherently apportioned because there is no
danger of multiple state taxation of the same tax incidences. In other
words, only Indiana has a sufficient nexus with Simon to levy a use
tax upon its out-of-state aircraft acquisition. Cf. Great American Airways, 705 P.2d
b. Discrimination Against Interstate Commerce
Simon also argues that the imposition of Indianas use tax against its lease
payment violates the third prong or discrimination prong of the Complete
Auto test. A state tax impermissibly discriminates against interstate commerce if it provides
a direct commercial advantage to local business. Rhoade, 774 N.E.2d at 1050
(quotation marks and citation omitted). In particular, a state tax impermissibly discriminates
against interstate commerce when the states taxing power effectively increases the tax burden
for out-of-state transactions, thereby coercing taxpayers to conduct intrastate rather than interstate business.
The Court finds that the imposition of Indianas use tax against Simons lease
payments does indeed discriminate against interstate commerce and therefore violates the Commerce Clause.
The Court finds persuasive its recent analysis in the Rhoade case.
As the Court explained in that case, when Mr. Rhoade, and Indiana resident,
purchased an automobile in Florida,
[he] paid 6% Florida sales tax on the purchase price of his vehicle.
Indiana then required him to pay its use tax at the rate
of 5% on the purchase price of his vehicle. In the end,
Rhoade was effectively assessed tax on the purchase price of this vehicle at
the rate of 11%; had he purchased his vehicle in Indiana, he would
have been assessed tax at a rate of only 5%[.] Because Indiana
taxpayers in Rhoades position will pay more tax for a vehicle purchased out-of-state
than the same-priced vehicle purchased in-state, they have a direct financial incentive not
to purchase vehicles out-of-state. In other words, Indianas use tax forecloses tax-neutral
decision making on the part of Indiana taxpayers with respect to out-of-state versus
in-state vehicle purchases. Concomitantly, those who sell vehicles in Indiana have a
direct commercial advantage over those who sell vehicles in other states because of
the strong financial disincentive to purchasing a vehicle out-of-state. It is such
discrimination and foreclosure of tax-neutral decision making that the Commerce Clause prohibits.
Id. (internal citations omitted). CONCLUSION
Because Indianas use tax results in a greater tax burden on aircraft purchased
out-of-state than aircraft purchased in-state, the Court holds that it impermissibly discriminates against
interstate commerce. Consequently, the Court GRANTS summary judgment in favor of Simon
and against the Department.
For the above stated reasons, the Court GRANTS summary judgment in favor of
Simon and against the Department. The Court REMANDS the case to the
Department and ORDERS it to refund to Simon the appropriate amount of use
tax to which it is entitled.
SO ORDERED this 2nd day of April, 2004.
Thomas G. Fisher, Judge
Stephen H. Paul
Thaddeus R. Ailes
BAKER & DANIELS
300 North Meridian Street, Suite 2700
Indianapolis, Indiana 46204
Attorney General of Indiana
By: Karen Hsu
Deputy Attorney General
Indiana Government Center South, Fifth Floor
402 West Washington Street
Indianapolis, IN 46204-2770
With respect to this aircraft, Wells Fargo Leasing Corporation leased the
frame and engines to Simon; CIT Group leased the avionics and other interior
Footnote: Although not captioned as a cross motion for summary judgment, the
Department's response brief requests that summary judgment be entered in its favor.
Pursuant to Indiana Trial Rule 56(B), summary judgment may be granted to the
non-moving party. Therefore, the Court will treat the Department's request as a
cross motion for summary judgment. See
Hunt Corp. v. Indiana Dept of
State Revenue, 709 N.E.2d 766, 767 n. 5 (Ind. Tax Ct. 1999).
In other words, Indianas use tax complements Indianas sales tax to ensure
that non-exempt retail transactions (particularly out-of-state retail transactions) that escape sales tax liability
are nevertheless taxed.
See USAir, Inc. v. Indiana Dept of State Revenue,
623 N.E.2d 466, 46869 (Ind. Tax Ct. 1993).
Indianas use tax is a listed tax pursuant to Indiana Code
Ind. Code Ann. § 6-8.1-1-1 (West Supp. 2003).
Simon merely, and generically, states that
if every other state were
to impose an identical tax, multiple taxation would occur for a taxpayer who
uses or stores its aircraft in another state (in addition to Indiana) and
is required to title, register, or license its aircraft in that state [as
well.] (Petr Br. In Supp. or [Its] Mot. for Summ. J. at
An exemption from or credit for Indianas use tax will depend
on the amount of sales or use tax already paid to another state
by an Indiana taxpayer.
Rhoade v. Indiana Dept of State Revenue, 774
N.E.2d 1044, 1051 n.5 (Ind. Tax Ct. 2002). The payment of another
states sales or use tax, however, will not necessarily exempt an Indiana taxpayer
from the entire amount of Indiana use tax or entitle the taxpayer to
a use tax credit equal to the out-of-state sales or use tax already