ATTORNEY FOR PETITIONER:    ATTORNEYS FOR RESPONDENT:
JOSEPH MURDOCK    STEVE CARTER    
SMITH & MURDOCK     ATTORNEY GENERAL OF INDIANA
Indianapolis, IN    Indianapolis, IN

     LINDA I. VILLEGAS
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN

_____________________________________________________________________

    IN THE INDIANA TAX COURT _____________________________________________________________________ 

ALTOM TRANSPORT, INC.,                                                    )
                                                                               )
    Petitioner,                                                                )
                                                                               )
    v.                                                                         )   Cause No. 49T10-9805-TA-49
                                                                               )                
INDIANA DEPARTMENT OF                                                          )                
STATE REVENUE,                                                                 )
    )
    Respondent.            )    
_____________________________________________________________________

ON APPEAL FROM A FINAL
DETERMINATION OF THE INDIANA DEPARTMENT OF STATE REVENUE


NOT FOR PUBLICATION
April 22, 2002

FISHER, J.     

    The Petitioner, Altom Transport, Inc. (Altom), appeals the final determination of the Respondent, the Indiana Department of State Revenue (Department), denying Altom’s claim for refund of Indiana’s Motor Carrier Fuel Tax and Surcharge Tax (collectively, the MCFT) paid for the years 1991, 1992, and 1993. The sole issue in this case is whether Altom owes MCFT on the consumption of fuel by motor vehicles it owned but leased to another company during 1991 and 1992.
FACTS AND PROCEDURAL HISTORY

    Altom is an Illinois corporation engaged in the business of hauling liquid petroleum products. Warehouse & Terminal Cartage (WTC) is an Illinois corporation engaged in the business of hauling dry freight. Altom and WTC are sister corporations (i.e., they are owned by the same investor). Altom and WTC also operate out of the same facility in Chicago, Illinois.
    In early 1995, the Department completed an audit of Altom in which it found various MCFT deficiencies for the 1991, 1992, and 1993 tax years. As it pertains to this case, the Department determined that Altom failed to pay MCFT on fuel consumed by six of its trucks (vehicles 58, 64, 79, 80, 81, and 91) during 1991 and the first half of 1992. As a result, the Department issued an overall proposed MCFT assessment of approximately $27,000, plus interest and penalties.
    On March 16, 1995, Altom protested the proposed assessment on the basis that it did not own vehicle 91 and that the other five vehicles were leased to, and were in the control of, WTC. After holding an administrative hearing, the Department, in a Letter of Findings dated August 21, 1997, partially denied Altom’s protest. See footnote
    Altom subsequently paid the taxes and filed a claim for refund with the Department. The Department denied the claim, and Altom initiated this original tax appeal on May 12, 1998. The Court conducted trial on the matter on March 29, 1999. Additional facts will be supplied as necessary.
STANDARD OF REVIEW

    In appeals of claims for refund from the Department, “[t]he tax court shall hear the appeal de novo.” Ind. Code § 6-8.1-9-1(d). Consequently, the Court is bound by neither the evidence nor the issues presented at the administrative level. Salin Bancshares v. Ind. Dep’t of State Revenue, 744 N.E.2d 588, 591 (Ind. Tax Ct. 2000).
DISCUSSION AND ANALYSIS


    Indiana imposes a motor carrier fuel tax “on the consumption of motor fuel by a carrier in its operations on highways in Indiana.” Ind. Code § 6-6-4.1-4(a); Ind. Code § 6-6-4.1-4.5(a). The MCFT is imposed at a rate of $0.27 a gallon is calculated pursuant to a formula that provides:
The amount of motor fuel consumed by a carrier in its operations on highways in Indiana is the total amount of motor fuel consumed in its entire operations within and without Indiana, multiplied by a fraction. The numerator of the fraction is the total number of miles traveled on highways in Indiana, and the denominator of the fraction is the total number of miles traveled within and without Indiana.

Ind. Code § 6-6-4.1-4(a) and (b); Ind. Code § 6-6-4.1-4.5(a) and (b).
    This Court has decided numerous cases over the years involving the imposition of the MCFT. While those cases have run the gamut in terms of issues, they have all involved the question of whether or not the MCFT was due. This case, however, is different. Indeed, the parties are not debating whether or not the tax is due. Rather, the parties’ debate centers around who is liable for the tax.
    The MCFT, imposed on the consumption of fuel by a “carrier,” is paid by that “carrier.” Ind. Code § 6-6-4.1-4(a),(b),(c); Ind. Code § 6-6-4.1-4.5(a),(b),(c). A “carrier” is defined as “a person who operates or causes to be operated a commercial motor vehicle on any highway in Indiana.” Ind. Code § 6-6-4.1-1(a). With respect to leased motor vehicles, Indiana Code § 6-6-4.1-3 provides:
(a) Except as otherwise provided in this section, every commercial motor vehicle leased to a carrier is subject to this chapter to the same extent and in the same manner as commercial motor vehicles owned by the carrier.

(b) Except as provided in subsection (f), the department may consider a lessor of commercial motor vehicles to be a carrier with respect to the operation of the vehicles it leases to others if the lessor:

(1) supplies or pays for the motor fuel consumed by the vehicles; or

(2) makes rental or other charges calculated to include the cost of the motor fuel consumed by the vehicles.

(c) The department shall provide, by rules adopted under IC 4-22-2, for the presentation by a lessor to other carriers and to the public of evidence and identification of carrier status determined under this section.

(d) Any commercial motor vehicles leased from a lessor who is considered a carrier under subsection (b) may be excluded from the lessee’s reports and liabilities under this chapter.

(e) This section governs the primary liability under this chapter of lessors and lessees of commercial motor vehicles. If a lessor or lessee who is primarily liable fails, in whole or in part, to discharge the lessor’s or lessee’s liability, the lessor or lessee and the other lessor or lessee who is a party to the lease transaction are responsible for compliance with this chapter and are jointly and severally liable for payment of the tax. However, the aggregate taxes collected by the department may not exceed the amount of the tax that would have resulted from the operation of the leased vehicle by the owner, plus any applicable costs and penalties.

(f) This subsection does not apply if the motor vehicle is leased to the same person under two (2) or more consecutive leases. If a motor vehicle is leased for less than thirty (30) days, the holder of an annual permit issued under section 12 of this chapter for the motor vehicle is liable for the motor carrier fuel tax.

Ind. Code § 6-6-4.1-3.
    Under the statute, the general rule is that the lessee of a motor vehicle is liable for the MCFT. Ind. Code § 6-6-4.1-3(a). One exception to the general rule occurs when the lessor purchases the fuel consumed by the vehicle. Ind. Code § 6-6-4.1-3(b). In those instances, the Department may consider the lessor as liable for the MCFT. Id. In any event, the statute unambiguously provides that both the lessee and the lessor are jointly and severally liable for the MCFT. Ind. Code § 6-6-4.1-3(e). In other words, if the party primarily liable for the tax does not pay, the Department may pursue payment from the other party to the lease. Id.

I. Vehicle 91

Altom contends that because vehicle 91 is owned by WTC, WTC owes the MCFT on the fuel consumed by that vehicle. To show that WTC owned the vehicle, Altom entered into evidence an invoice from the Summerfield Trucking Company, indicating that a 1990 Peterbilt tractor (vehicle 91) was “sold to” WTC. (Pet’r Ex. 2 at 16.) Attached to the invoice was the financing agreement listing WTC as the “Buyer,” as well as a refinancing agreement listing WTC as the “Borrower.” (Pet’r Ex. 2 at 17-18.)
    The Department contends, however, that the “invoice merely shows . . . that the truck was delivered to a certain address.” (Resp’t Br. at 5.) Furthermore, “[s]ince Altom and WTC share the same address[,] the invoice is of little significance. Ownership would be properly evidenced by a title.” (Resp’t Br. at 5.)
    While title to the vehicle would have been perhaps the best method of showing ownership, Altom’s evidence is sufficient to show that WTC owned vehicle 91. Furthermore, both parties had ample time to conduct discovery, and no where does the record before the Court indicate that the Department asked for, but was refused, the title to vehicle 91. Accordingly, because WTC owns vehicle 91, the Department is instructed to remove vehicle 91 from Altom’s fleet list for purposes of calculating its MCFT liability.
Vehicles 58, 64, 79, 80, and 81

    Altom alleges that during 1991 and a part of 1992, it leased vehicles 58, 64, 79, 80, and 81 to WTC and, as a result, WTC is liable for the MCFT under Indiana Code § 6-6-4.1-3(a). Altom admits, however, that the leases are not written, but rather “oral understandings.” The Department responds that because there is no written lease, there is no lease, and because there is no lease, Altom as owner is liable for the MCFT.
    The relevant question here is not whether a lease exists between Altom and WTC. Indeed, if no lease exists, then Altom is liable as owner. If a lease does exist, Altom may still be liable, under Indiana Code § 6-6-4.1-3(e), if WTC did not pay. Thus, the pertinent question is whether WTC paid the MCFT liability.
    During trial, this Court instructed Altom to provide evidence that WTC indeed paid the MCFT liability for the tax years at issue. (Trial Tr. at 68-69, 74.) In turn, Altom submitted three pieces of evidence. The first document disclosed the results of the Illinois Department of Revenue’s fuel tax audit of Altom for 1991 and 1992 (Pet’rs Ex. 4). The document does little more than reveal the fact that Altom paid motor carrier fuel tax to the State of Illinois. The document does not disclose the miles traveled and the fuel consumed by each vehicle in the fleet. Consequently, it is impossible to tell whether Altom, let alone WTC, paid MCFT on the five leased vehicles.
    Altom’s second piece of evidence was the Department’s Letter of Findings, dated August 21, 1997. This document does not even mention WTC, and is therefore of little value.
    Altom’s third piece of evidence consisted of WTC’s 1991 Indiana Motor Carrier Fuel Tax Quarterly Reports (for the first, second, third and fourth quarters). (Ex. 2 to Pet’r Br.) Attached to the report for the first quarter of 1991 is a “summary” for each of the five vehicles: it shows how many miles were traveled in Indiana, how much fuel was consumed in Indiana, and it shows how much MCFT was owed to Indiana. This is sufficient to show that WTC paid the MCFT on all five vehicles for the first quarter of 1991. See footnote
    Altom, however, provided no summaries for the second, third, and fourth quarter 1991 reports. In addition, it submitted no evidence whatsoever with respect to the 1992 tax year. Because there is no indication that WTC paid the MCFT on the fuel consumed by the five leased vehicles for the last three quarters of 1991, and for 1992, the Department may seek payment of the MCFT liability from Altom, pursuant to the joint and several liability clause of Indiana Code § 6-6-4.1-3(e).
CONCLUSION

    For the foregoing reasons, the Court finds that Altom is not responsible for the MCFT liability relating to vehicle 91 and is entitled to a refund. Likewise, Altom is not responsible for the MCFT on the five leased vehicles for the first quarter of 1991 and is entitled to a refund. Altom is responsible, however, for the MCFT liabilities relating to the five leased vehicles for the last three quarters of 1991, as well as 1992. This case is REMANDED to the Department for action consistent with this opinion.

Footnote: For reasons not relevant to this decision, however, the Department did waive a portion of the interest and penalties assessed against Altom.
Footnote: The Department alleges that these “summaries,” which were prepared by WTC’s then reporting service, “are not records of what WTC paid to the Department but what [the reporting service] reported to WTC.” (Resp’t Br. at 10 (emphasis in original).) This is purely conjecture by the Department. The Department had the ability to cross reference the first quarter report and the summaries.