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ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
CATHERINE A. NESTRICK JEFFREY A. MODISETT
TERRY G. FARMER ATTORNEY GENERAL OF INDIANA
BAMBERGER, FOREMAN, OSWALD & HAHN
Evansville, IN LISA TIBEREND-SLAWSON
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
CNB BANCSHARES, INC., )
v. )Cause No. 82T10-9608-TA-00094
DEPARTMENT OF STATE REVENUE )
ON APPEAL FROM A FINAL DETERMINATION OF
THE DEPARTMENT OF STATE REVENUE
March 5, 1999
CNB Bancshares, Inc. (CNB) appeals a final determination of the Department of
State Revenue (Department) denying it a tax credit for
interest received on qualified
loans, see Ind. Code Ann. §§ 6-3.1-7-1 to -6 (West 1989 & Supp. 1998), made to
businesses located within a statutorily designated enterprise zone. See Ind. Code Ann.
§§ 4-4-6.1-1 to -8 (West 1991 & Supp. 1998).
The relevant facts are undisputed. CNB, a holding company located in
Evansville, Indiana, owns several banks. CNB, through its subsidiaries, loaned money
to several businesses and individuals located in the Evansville Enterprise Zone (EZ).
CNB claimed a loan interest credit (credit) for loans it made to businesses located in
the EZ on its 1992 Financial Institutions TaxSee footnote
(FIT) return. In calculating its FIT liability
for the 1992 tax year, CNB applied a loan interest credit (credit) for interest received
from loans it made to businesses located in the EZ.
See Ind. Code Ann. §§ 6-3.1-7-1
On December 18, 1992, the EZ Board,
see Ind. Code Ann. § 4-4-6.1-1 (West
Supp. 1998), recommended to the Department that CNB be disqualified from receiving
any credits against its FIT liability. The EZ Board reasoned that CNB had failed to
register as an EZ business and had failed to reinvest the
amount of money its FIT
liability was reduced by the credit in the EZ.
See Ind. Code Ann. § 4-4-6.1-2 (West
1991) (amended 1995, 1996 & 1998). The Department
, acting on this recommendation,
issued a Notice of Proposed Assessment to CNB on January 12, 1996 disallowing the
credit taken by CNB on its 1992 FIT return.
See Ind. Code Ann. §
On March 8, 1996, CNB paid the proposed assessment and subsequently, on
June 6, 1996, CNB filed a claim for refund for the entire amount it paid pursuant to the
See Ind. Code Ann. §
6-8.1-9-1 (West Supp. 1998); see also
City Securities Corp. v. Department of State Revenue, 704 N.E.2d 1122, 1125-26 (Ind.
Tax Ct. 1998). On July 1, 1996 the Department issued an order denying CNB's claim
for refund. CNB filed this original tax appeal on August 5, 1996. On February 3, 1997,
CNB filed a motion for summary judgment. This Court heard oral argument on that
motion on April 4, 1997. ANALYSIS AND OPINION
Standard of Review
This court reviews final determinations of the Department de novo and is bound
neither by the evidence nor the issues raised at the administrative level. See Ind.
Code Ann. § 6-8.1-9-1(d) (West Supp. 1998); ANR Pipeline Co. v. Department of State
Revenue, 672 N.E.2d 91, 93 (Ind. Tax Ct. 1996). Summary judgment is appropriate
only when no genuine issue of material fact exists. Ind. T. R. 56(C); Roehl Transp., Inc.
v. Department of State Revenue, 653 N.E.2d 539, 541 (Ind. Tax Ct. 1995).
The Department claims that CNB is a zone business.
Zone businesses are
required to pay an annual registration fee and to reinvest in the EZ any credits they
receive. See Ind. Code Ann. § 4-4-6.1-2(a)(4). Therefore, the Department contends
that CNB's failure to do either of these things disqualifies it from being a zone business
and therefore from receiving the credit.See footnote
CNB argues that any
taxpayer that receives
interest on a qualified loanSee footnote
is entitled to the credit whether that taxpayer is a zone
business or not. See Ind. Code Ann. § 6-3.1-7-2 (West 1989).
When faced with a question of statutory interpretation, this Court looks first to
the plain language of the statute. Where the language is unambiguous, this Court has
no power to construe the statute for the purpose of limiting or extending its operation.
Cooper Indus., Inc. v. Department of State Revenue, 673 N.E.2d 1209, 1212 (Ind. Tax
Ct. 1996) (internal quotation marks omitted); see also Department of Pub. Welfare v.
Couch, 605 N.E.2d 165, 167 (Ind. 1992). Courts should give words their common and
ordinary meaning without overemphasizing a strict literal or selective reading of
individual words. See Sangralea Boys Fund, Inc. v. State Bd. of Tax Comm'rs, 686
N.E.2d 954, 956 (Ind. Tax Ct. 1997) (citing Spaulding v. International Bakers Servs.,
Inc. 550 N.E.2d 307, 309 (Ind. 1990)), review denied.
The statutes at issue in the present case are clear and unambiguous. The plain
language of the sections at issue reveals that a taxpayer is not required to comply with
the requirements of section
) in order to be eligible for the credit. A
taxpayer need only receive interest from a qualified loan. There is no requirement that
the entity loaning the money be a zone business or even located in an EZ. In the
present case, CNB made loans to businesses located within the EZ and received
interest. This is sufficient to trigger entitlement to the credit under section 6-3.1-7-2
without CNB performing any further administrative tasks.
To find as the Department urges would ignore the plain language of sections 4-
4-6.1-2 and 4-4-6.1-1.1. The application of these two statutory provisions is specifically
limited to chapter 4-4-6.1. See Joyce Sportswear Co. v. State Bd. of Tax Comm'rs, 684
N.E.2d 1189, 1192 (Ind. Tax Ct. 1997), appeal dismissed. Therefore, these provisions
have no bearing on CNB's entitlement to the credit granted by section 6-3.1-7-2.
Moreover, the Department's contention that CNB accesses at least one (1) tax credit
available under [chapter 4-4-6.1], and is therefore a zone business subject to the
control of the EZ board (and subject to the registration and reinvestment requirement),
cannot be supported by any reasonable interpretation of the applicable law. The credit
that CNB accesses is provided by section 6-3.1-7-2 and not by chapter 4-4-6.1.
Thus, CNB is not a zone business based on the definition provided by section 4-4-6.1-
1.1 and is therefore not subject to registration and reinvestment requirements.See footnote
this Court to hold otherwise Court would be impermissibly adding restrictions to section
6-3.1-7-2 that the legislature chose not to include. See Hyatt Corp. v. Department of
State Revenue, 695 N.E.2d 1051, 1056 (Ind. Tax Ct. 1998), review denied.
Based on the foregoing, this Court GRANTS summary judgment in favor of CNB.
Footnote: 1See Ind. Code Ann. §§ 6-5.5-2-1 to -8 (West Supp. 1998).
Footnote: 2Prior to 1994, there was no explicit statutory definition of the term, zone
business. In 1994, the legislature defined a zone business as any entity that accesses
at least one (1) tax credit . . . under this chapter [i.e., chapter 4-4-6.1 of the Indiana
Code]. See Ind. Code Ann. § 4-4-6.1-1.1 (West Supp. 1998). Although this definition
was adopted after the tax year at issue, the parties do not dispute its applicability to the
case at bar.
Footnote: 3The EZ board has the power to disqualify a zone business from eligibility for all
incentives available to zone businesses, if the zone business does not pay the
registration fee and utilize its incentives for the benefit of its property or employees
located in the EZ. See Ind. Code Ann. § 4-4-6.1-2(a)(4).
Footnote: 4A qualified loan is defined as a loan made to an entity that uses the loan
proceeds for . . . a purpose that is directly related to a business located in an enterprise
zone. See Ind. Code Ann. § 6-3.1-7-1 (West Supp. 1998).
Footnote: 5It may be helpful to examine briefly why there is different treatment of zone
businesses and those who lend to zone businesses. The goal of providing the credit is
to encourage the infusion of money and products into certain areas that lack these
resources. Were lenders required to pay a registration fee and reinvest the credit in
the EZ, there would be no incentive to loan money to a zone business because the
benefit of the credit would be nullified. On the other hand, requiring zone businesses
to reinvest any credits that they receive does not nullify the benefit of the credits
because the zone businesses would retain the benefit of any reinvestment the zone
businesses choose to make.
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