ATTORNEYS FOR PETITIONER
PAUL D. CULLEN, SR.
JOSEPH A. BLACK
THE CULLEN LAW FIRM, PLLC
PATRICIA POLIS McCRORY
MARK W. PFEIFFER
HARRISON & MOBERLY
ATTORNEYS FOR THE RESPONDENT
ATTORNEY GENERAL OF INDIANA
DAVID A. ARTHUR
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
MAX E. ANDERSON, d.b.a. )
COMPANY, Successor in Merger with
v. ) Cause No. 49T10-0002-TA-13
INDIANA DEPARTMENT OF )
STATE REVENUE, )
ON APPEAL FROM A FINAL DETERMINATION OF
THE INDIANA DEPARTMENT OF STATE REVENUE
October 30, 2001
Max E. Anderson, d.b.a. M.X. Express (M.X. Express), appeals the November, 10, 1999
order of the Indiana Department of State Revenue (Department) denying M.X. Expresss claim
for refund of Indianas Motor Carrier Fuel Tax (MCFT) for 1997, 1998, and
the first two quarters of 1999. This matter is before the Court
on M.X. Expresss Motion for Class Certification and its Motion for Partial
Summary Judgment, in which M.X. Express raises the following issues:
Whether the Court should certify a class for which M.X. Express would be
the representative; and
Whether the assessment and collection of the MCFT for fuel consumed on the
Indiana Toll Road (Toll Road) violates the Commerce Clause.
For the reasons stated below, the Court DENIES M.X. Expresss Motion for Class
Certification and DENIES its Motion for Partial Summary Judgment. The Court GRANTS summary
judgment to the Department.
FACTS AND PROCEDURAL HISTORY
The facts of the case are undisputed. M.X. Express is an Indiana-based
See footnote that was engaged in business within and without Indiana during the
period at issue. Beginning January 1997 and ending June 30, 1999, M.X.
Express paid the MCFT to the Department pursuant to the International Fuel Tax
Agreement (IFTA), which allows carriers to file a consolidated motor fuel use tax
return in a base state. The base state collects all fuel use
taxes that a carrier owes and distributes the revenue to the other states
in which the carrier operates.
See Owner-Operator Indep. Drivers Assn v. Dept
of Revenue, 725 N.E.2d 891, 892 (Ind. Ct. App. 2000), trans. denied.
The base state of M.X. Express is Indiana.
The MCFT, imposed at a rate of $0.27 per gallon, is calculated pursuant
to Indiana Code § 6-6-4.1-4(b), which 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(b). Indianas Toll Road is considered a highway for the
purpose of calculating the MCFT. Area Interstate Trucking, Inc. v. Indiana Dept
of Revenue, 605 N.E.2d 272, 275 (Ind. Tax Ct. 1992), cert. denied; Area
Interstate Trucking, Inc. v. Indiana Dept of Revenue, 574 N.E.2d 311, 314 (Ind.
Ct. App. 1991), trans. denied. The Toll Road, however, receives no MCFT
revenue. Area Interstate Trucking, 605 N.E.2d at 275 n.3. On November
1, 1999, M.X. Express submitted a claim to the Department for an MCFT
refund of $1,538.39 paid on the fuel M.X. Express consumed on the Toll
Road. In its refund request, M.X. Express opined that the collection of
the MCFT for fuel consumed on the Toll Road violated the Commerce Clause,
[t]he Department of Revenues collection of the Motor Carrier Fuel Tax on account
of miles driven by commercial vehicles on the Toll Road is not fairly
related to any services provided by the State of Indiana in connection with
interstate travel over the Toll Road in that: (a) the State of
Indiana itself provides no services in connection with the operation of the Toll
Road; and (b) such services provided to commercial vehicles by the [Toll Road]
Authority are fully paid through the collection of tolls and other revenues no
part of which comes from the State of Indiana.
(Attach. to Petr Class Action Original Tax Appeal for Declaratory and Injunctive Relief
and Damages.) M.X. Express did not, and does not, challenge the constitutionality
of the assessment and collection of the MCFT for the fuel it consumes
on any Indiana highways other than the Toll Road. (Petr Mem. in
Supp. of Mot. for Partial Summ. J. at 2 n.1.)
ANALYSIS AND OPINION
On November 10, 1999, the Department denied M.X. Expresss refund request. M.X.
Express commenced an original tax appeal on February 2, 2000, requesting that this
Court certify a class of carriers for which M.X. Express would be the
representative. On September 14, 2000, M.X. Express filed a Motion for Partial Summary
Judgment on the issue of whether the MCFT violates the Commerce Clause.
This Court heard oral arguments on December 4, 2000. Additional facts will
be supplied when necessary.
Standard of Review
This Court reviews findings of the Department de novo and is therefore bound
by neither the evidence nor the issues raised at the administrative level.
Ind.Code § 6-8.1-9-1(d); Jack Gray Transport, Inc. v. Dept of State Revenue, 744
N.E.2d 1071, 1074 (Ind. Tax Ct. 2001), rehg granted in part. Summary
judgment is appropriate only when there are no genuine issues of material fact
and the moving party is entitled to judgment as a matter of law.
Ind. Trial Rule 56(C). When any party has moved for summary
judgment, the Court may grant summary judgment for any other party upon the
issues raised by the motion although no motion for summary judgment has been
filed by such party. Ind. Trial Rule 56(B); Encyclopaedia Britannica, Inc. v.
State Bd. of Tax Commrs, 663 N.E.2d 1230, 1232 (Ind. Tax Ct. 1996).
M.X. Express asks this Court to certify a class for which M.X. Express
would be the representative. Under Indiana Trial Rule 23(A), the following criteria
must be met for a class to be certified: (1) the potential
class members must be so numerous that joinder of all members is impracticable;
(2) questions of law or fact must be common to the class; (3)
the claims or defenses of the representative party must be typical of the
claims or defenses of the class; and (4) the representative party must be
able to fairly and adequately protect the interests of the class. Jack
Gray, 744 N.E.2d at 1074.
In the instant case, the Court questions whether M.X. Express has sufficiently shown
that it will fairly and adequately protect the interests of the class.
The adequacy of representation is a question of fact to be resolved by
this Court, see Hefty v. All Other Members of the Certified Settlement Class,
680 N.E.2d 843, 851 (Ind. 1997), and the named representative has the burden
of proof to show that it will fairly and adequately represent the putative
class. Dunn v. Jenkins, 377 N.E.2d 868, 871 (Ind. 1978). The
Court does not doubt the skill and ability of M.X. Expresss counsel to
litigate this class action. The Court is concerned, however, that counsel has
not laid a sufficient foundation of fact showing M.X. Expresss willingness and ability
to serve as the named representative.
See footnote Because M.X. Express has not satisfied
its burden of proof with regard to this particular matter, the Court DENIES
its request for class certification at this time.
M.X. Express asserts that the imposition of the MCFT on fuel it consumes
on the Toll Road violates the Commerce Clause of the U.S. Constitution, which
grants Congress the power [to] regulate Commerce . . . among the several
States. . . . U.S. Const. Art. I, § 8 cl. 3.
Although the clause is silent as to how much economic regulatory power
a state retains, it has been applied to prevent states from discriminating against
out-of-state economic interests or from benefiting in-state interests.
General Motors Corp. v.
Indianapolis Power & Light Co., 654 N.E.2d 752, 764 (Ind. Ct. App. 1995)
(citing Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 273 (1984)). The
U.S. Supreme Court has rejected the view, however, that interstate commerce is immune
from state taxation. Complete Auto Transit, Inc. v. Brady, 430 U.S. 274,
288 (1977), rehg denied. Consequently, a state tax will withstand a Commerce
Clause challenge if it (1) is applied to an activity with a substantial
nexus with the taxing state, (2) is fairly apportioned, (3) does not discriminate
against interstate commerce, and (4) is fairly related to the services provided by
the State. Roehl Transport, Inc. v. Indiana Dept of State Revenue, 653
N.E.2d 539, 545 (Ind. Tax Ct. 1995) (citing Complete Auto, 430 U.S. at
In this case, M.X. Express specifically argues that the MCFT assessed and collected
for fuel consumed on the Toll Road violates the Commerce Clause because the
tax is not fairly related to the services provided by the State.
The fourth prong of
Complete Auto requires that the MCFT only be fairly
related to the multitude of services provided to the citizens by the State.
Hoosier Energy Rural Elec. Coop., Inc. v. Indiana Dept of State Revenue,
572 N.E.2d 481, 485 (Ind. 1991), cert. denied; see also Complete Auto, 430
U.S. at 287; Commonwealth Edison, 453 U.S. at 625. This requirement, however,
does not call for a rigorous quantification of the services provided. As
the U.S. Supreme Court has said:
The fair relation prong of Complete Auto requires no detailed accounting of the
services provided to the taxpayer on account of the activity being taxed, nor,
indeed, is a State limited to offsetting the public costs created by the
taxed activity. If the event is taxable, the proceeds from the tax
may ordinarily be used for purposes unrelated to the taxable event. Interstate commerce
may thus be made to pay its fair share of state expenses and
contribute to the cost of providing all governmental services, including those services from
which it arguably receives no direct benefit.
Oklahoma Tax Commr v. Jefferson Lines, Inc., 514 U.S. 175, 199200 (1995) (emphasis
in original) (citations omitted, internal punctuation omitted), rehg denied. Accordingly, this Court
need only determine whether the taxpayer has a substantial nexus with Indiana, and
whether the measure of the tax . . . [is] reasonably related to
the extent of the contact, since it is the activities or presence of
the taxpayer in the State that may properly be made to bear a
just share of the state tax burden. Commonwealth Edison, 453 U.S. at
62526 (emphasis in original) (internal punctuation omitted). The parties do not dispute
the fact that M.X. Express has a substantial nexus with Indiana,
See footnote leaving for
resolution whether the measure of the MCFT is reasonably related to M.X. Expresss
contact with Indiana. CONCLUSION
When a tax is assessed proportionally to a taxpayers activities or presence in
a State, the taxpayer is shouldering its fair share of supporting the States
provision of police and fire protection, the benefit of a trained work force,
and the advantages of civilized society.
Commonwealth Edison, 453 U.S. at 627
(internal quotation marks omitted); see also State of Wisconsin v. J.C. Penny Co.,
311 U.S. 435, 446 (1940) (upholding the taxing power of a state where
the measure and incidence of an earnings tax on foreign corporations were tied
to the earning opportunities afforded by the state), rehg denied. For the purpose
of the MCFT, Indiana taxes M.X. Express on fuel it consumes on Indiana
highways as measured by the miles it drives on Indiana highways. I.C.
§ 6-6-4.1-4(a). Thus, the measure of the MCFT is in proper proportion
to the extent of M.X. Expresss activity on Indiana highways and, therefore, to
its consequent enjoyment of the opportunities and protections which the State has afforded
in connection with those activities. Commonwealth Edison, 453 U.S. at 626 (internal
quotation marks omitted); see also Area Interstate Trucking, 605 N.E.2d at 278
By assessing the MCFT for the fuel that M.X. Express consumes on Indiana
highways, the State is merely requiring M.X. Express to assume its fair share
of the State tax burden. Commonwealth Edison, 453 U.S. at 627, 629;
Complete Auto, 430 U.S. at 279. The State is well within
its rightsand well within the Commerce Clauseto do so. Accordingly, the Court
holds that the MCFT does not violate the Commerce Clause under the fourth
prong of the Complete Auto test.
For the forgoing reasons, the Court DENIES M.X. Expresss request for class certification
and DENIES its motion for partial motion for summary judgment. The Court
GRANTS summary judgment to the Department.
Footnote: A carrier is defined as a person who operates or causes to
be operated a commercial motor vehicle on any highway in Indiana.
Counsel for M.X. Express opines that [b]y bringing and diligently prosecuting this
case to date, the named class representative has more than demonstrated [its] ability
and willingness to pursue the interests of the Class through qualified counsel.
(Petr Mem. in Supp. of Mot. for Class Certification at 33.) No
case law is cited for this proposition, and the Court is not persuaded
by conclusory statements.
See, e.g., Miller Structures, Inc. v. Indiana State Bd.
of Tax Commrs, 748 N.E.2d 943, 954 (Ind. Tax Ct. 2001). If
the parties so move, the Court will set a hearing on the issue
of M.X. Expresss adequacy as the named representative.
M.X. Express argument is premised on an assumption that the MCFT is
not a tax but a user fee charged for using Indiana highways.
Because U.S. Supreme Court dictum suggests that a fee charged for specific quantifiable
services cannot survive a Commerce Clause challenge if it is manifestly disproportionate to
the services rendered,
Commonwealth Edison Company v. Montana, 453 U.S. 611, 621 n.12
(1981), rehg denied, M.X. Express reasons that the fourth prong of Complete Auto
should be narrowed by Commonwealth Edison.
A tax is compulsory and entitles the taxpayer to receive nothing in return,
other than the rights of government which are enjoyed by all citizens alike.
Ennis v. State Highway Commission, 108 N.E.2d 687, 693 (Ind. 1952).
A user fee, on the other hand, is an optional, specific charge for
the use of publicly-owned or publicly-provided facilities or services that afford a particular
benefit to the payer. City of Gary v. Indiana Bell Tel., 732
N.E.2d 149, 156 (Ind. 2000) (citation omitted, internal punctuation omitted), rehg denied.
Payment of the MCFT is compulsory, Ind.Code §§ 6-6-4.1-4(a) (imposing the MCFT on
fuel consumption); 6-6-4.1-4.5(a) (providing that the MCFT shall be paid), and M.X. Express
obviously enjoys the same benefit as do all citizens alikethe use of Indiana
highwayswhich means that the benefit is not particular to M.X. Express. See
National Cable Television Assn v. United States, 415 U.S. 336, 34041 (1974) (holding
that a fee payer enjoys benefits not shared by other members of society).
Clearly, then, the MCFT is a tax. See Roehl Transport, 653
N.E.2d at 546. Cf. Owner-Operator Independent Drivers Assn v. Bower, 2001 WL 1111231
(Ill. Ct. App. 2001) (holding that the Illinois motor fuel use tax
is a tax and not a user fee). Accordingly, the Court is
not persuaded by M.X. Expresss user fee arguments.
M.X. Express also tries to use this Courts discussion of the policy for
the MCFT in Area Interstate Trucking, 605 N.E.2d at 277, to show that
the MCFT is a user fee. The issue whether the MCFT is
a user fee was not reached in that case. Thus, M.X. Express
mistakenly relies on Area Interstate Trucking and its progeny.
M.X. Express has a physical presence in Indiana, and Indiana is M.X
Expresss base state for the collection of the MCFT under the IFTA.
Footnote: It should be noted that [i]n the absence of a violation of
. . . substantial nexus, fair apportionment, and nondiscrimination[,] courts are not equipped
to determine the appropriate portion of a states tax burden that ought to
be borne by any segment of the states industry.
Jerome R. Hellerstein
& Walter Hellerstein, I State Taxation,
¶ 4.17[e] (3d ed. 2001).