ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
PAUL S. WARD JEFFREY A. MODISETT
Attorney at Law Attorney General of Indiana
VINCENT S. MIRKOV
Deputy Attorney General
ROBERT J. SELL, ) ) Petitioner, ) ) v. ) No. 49T10-9706-TA-00161 ) DEPARTMENT OF STATE REVENUE, ) ) Respondent. ) __________________________________________________________________________________________________________________________________________
NOT FOR PUBLICATION
corporation operated a restaurant in LaGrange, Indiana. The restaurant's manager
failed to remit certain sales and employment withholding taxes to the Department for
the 1989, 1990, and 1991 tax years. Sell discovered this problem, and on October 30,
1991, Sell contacted the Department by mail offering to pay the tax liability alone, which
totaled (independent of any interest and penalties) approximately $6784.96. Over the
next several months, Sell made payments on this liability.
On December 9, 1991, the Department sent a letter to Sell's representative (an accounting firm) rejecting Sell's offer. In this letter, the Department stated its position that it would not waive Sell's liability for the interest and penalties associated with the failure to remit the sales and employment withholding taxes.See footnote 1 In February and March 1992, apparently unbeknownst to Sell, the Department issued a number of demand notices. All but two of these demand notices were incorrectly addressed to Bob Sell, The Rose, 725 Wiggens Ferry Drive D, St. Louis MO 63141-6572. It is unclear where the two remaining demand notices were sent. The copies of those two demand notices have the address 105 N. Detroit, LaGrange, IN 46761 handwritten under the name Bob Sell. After issuing the demand notices, in April 1992, the Department issued tax warrants as part of its collection efforts.
Later in 1992, Sell's representative contacted the Department again. The Department reiterated its position that it would not waive the penalties and interest. However, the Department did not advise Sell's representative that it had issued
demand notices or tax warrants in this correspondence. Sell apparently was not
advised of this development.
In 1994, Sell finally became aware of the Department's contention that he still had a tax liability. Additional correspondence between Sell's representative and the Department ensued. On February 19, 1997, the Department collected $5313.68 from Sell pursuant to the tax warrants filed five years previously in LaGrange County. On March 13, 1997, Sell filed a claim for refund for this amount alleging that the tax warrants had been filed improperly. On April 18, 1997, the Department denied Sell's refund claim. This original tax appeal ensued. Both parties have moved for summary judgment.See footnote 2
The plain language of this provision requires the Department to issue a demand notice before it issues a tax warrant. Without a valid demand notice, there can be no valid tax warrant. With no valid tax warrant, there can be no assessment of collection costs and fees associated with the issuance of tax warrants. In this case, the Department concedes that all but two of the demand notices were mailed to the incorrect address (i.e. the St. Louis address). These demand notices are therefore invalid. Consequently, any tax warrants issued concerning a tax liability reflected in those demand notices are invalid. Therefore, any associated collection costs and fees are invalid.
The two remaining demand notices present greater difficulty. Copies of these demand notices contain the correct address (i.e., the 105 N. Detroit address). However, this address is handwritten, and the rest of the demand notice is obviously
computer generated. In addition, Sell tenders an affidavit in which he states that he
never received the demand notices, and that he left a forwarding order with the United
States Post Office so that any correspondence sent to the 105 N. Detroit address would
have reached him.See footnote
On these facts, the Court finds that there is no evidence that the demand notices were properly mailed. The Department has not designated any evidence from which this Court as fact-finder could reasonably conclude that the demand notice was properly mailed. The fact that the proper address was handwritten on a computer generated form hardly establishes proper mailing. Therefore, the Court concludes that the demand notices were invalid. Consequently, the tax warrants were invalid, thereby making the associated collection costs and fees invalid as well.
Sell further complains that the Department should be required to refund the $5,313.68 that Sell involuntarily paid because those funds were collected pursuant to an invalid tax warrant. The Court disagrees. If Sell has an outstanding tax liability, the Department is entitled to apply the funds it collected to that tax liability. The Court is aware that there may be situations where the Department's collection efforts are so egregious as to shock the conscience, thus requiring the return of funds unlawfully collected, despite the presence of an unpaid tax liability. This case is not one of them.
summary judgment. This Court sua sponte REMANDS this cause to the Department for
a recalculation of Sell's total tax liability (including interest and penalties) without the
collection costs and fees associated with the issuance of the tax warrants. The
Department is further ORDERED to apply Sell's payment (both voluntary and
involuntary) to that tax liability and to refund any overpayment (with associated interest
provided by statute). Because this Court REMANDS this case, Sell's motion for
summary judgment is DENIED. The Court retains jurisdiction over this cause and
ORDERS the parties to file status reports with the Court thirty-one days from this
ORDER indicating whether there are any further issues for the Court's determination.
Thereafter, the Court will enter final judgment.
IT IS SO ORDERED.
Thomas G. Fisher, Judge
Indiana Tax Court
Paul S. Ward
Attorney at Law
4321 East 82nd Street, Suite C.
Indianapolis, Indiana 46250
Jeffrey A. Modisett
Attorney General of Indiana
By: Vincent S. Mirkov
Deputy Attorney General
Indiana Government Center South, Fifth Floor
402 West Washington Street
Indianapolis, Indiana 46204-2770
Converted from WP6.1 by the Access Indiana Information Network