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
INDIANA TAX COURT
ALTOM TRANSPORT, INC., )
v. ) Cause No. 49T10-9805-TA-49
INDIANA DEPARTMENT OF )
STATE REVENUE, )
ON APPEAL FROM A FINAL
DETERMINATION OF THE INDIANA DEPARTMENT OF STATE REVENUE
NOT FOR PUBLICATION
April 22, 2002
The Petitioner, Altom Transport, Inc. (Altom), appeals the final determination of the Respondent,
the Indiana Department of State Revenue (Department), denying Altoms claim for refund of
Indianas 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 Altoms protest.
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. Dept 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
(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 lessees 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 lessors or
lessees 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. I. Vehicle 91
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.
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. (Petr 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. (Petr Ex. 2 at 17-18.)
The Department contends, however, that the invoice merely shows . . . that
the truck was delivered to a certain address. (Respt 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.
(Respt Br. at 5.)
While title to the vehicle would have been perhaps the best method of
showing ownership, Altoms 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 Altoms 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
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 Revenues fuel tax
audit of Altom for 1991 and 1992 (Petrs 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.
Altoms second piece of evidence was the Departments Letter of Findings, dated August
21, 1997. This document does not even mention WTC, and is therefore
of little value.
Altoms third piece of evidence consisted of WTCs 1991 Indiana Motor Carrier Fuel
Tax Quarterly Reports (for the first, second, third and fourth quarters). (Ex.
2 to Petr 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.
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).
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
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
WTCs then reporting service, are not records of what
WTC paid to the
Department but what [the reporting service] reported to WTC. (Respt 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