ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
Steven W. Handlon KAREN M. FREEMAN-WILSON
HANDLON & HANDLON ATTORNEY GENERAL OF INDIANA
Portage, IN Indianapolis, IN
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
MEYER WASTE SYSTEMS, INC., )
an Indiana corporation d/b/a )
Able Disposal, )
v. ) Cause No. 45T10-9609-TA-124
INDIANA DEPARTMENT OF )
STATE REVENUE, )
ON APPEAL FROM A FINAL DETERMINATION
OF THE INDIANA DEPARTMENT OF REVENUE
December 7, 2000
Meyer Waste Systems, Inc. d/b/a Able Disposal (Meyer Waste) appeals the final determination
by the Indiana Department of State Revenue (Department of Revenue) assessing it use
tax for the calendar years 1990, 1991, and 1992 (tax years in question).
In this original tax appeal Meyer Waste presents the following issue for
this Courts review: whether, pursuant to Ind. Code Ann. Section 6-2.5-5-27 (West 2000),
Meyer Waste is exempt from the use tax on its trucks and other
items associated with its garbage hauling business.
FACTS AND PROCEDURAL HISTORY
The undisputed facts follow. During the tax years in question, Meyer Waste
was primarily in the business of transporting garbage. However, Meyer Waste also
did some recycling business. Meyer Waste possessed a motor carrier permit issued
by the Interstate Commerce Commission. Meyer Waste transported garbage generated by individual
homeowners and tenants, commercial businesses, and governmental entities. Meyer Waste loaded the
garbage onto its trucks, generally while the trucks were on public roadways, and
drove the garbage to landfills via public roadways. In its business, Meyer
Waste used and consumed tangible personal property that included garbage trucks, garbage loading
and unloading equipment, replacement parts for trucks and loading equipment, and tools and
machinery for repair and maintenance of said items.
Following an audit in 1995, the Department of Revenue issued a proposed assessment
for 1990, 1991, and 1992 wherein it assessed the use tax, penalties and
interest that totaled $290,665.48. Thereafter, Meyer Waste protested the assessment and the
Department of Revenue conducted a hearing thereon. In 1996, the Department of
Revenue issued a letter of findings wherein it abated the penalties but affirmed
the proposed assessments. In its findings the Department of Revenue determined that
Meyer Waste did not provide public transportation pursuant to Ind. Code Section 6-2.5-5-27
because it was carrying its own property. Therefore, the Department of Revenue
concluded that Meyer did not qualify for the public transportation exemption to the
use tax. Subsequently, the Department of Revenue issued its demand notices wherein
it sought payment of the assessed use tax including interest. Thereafter, Meyer
Waste paid the $287,171.92 that was demanded.
On September 27, 1996, Meyer Waste filed its original tax appeal in this
See footnote At the same time, Meyer Waste filed a claim for refund
with the Department of Revenue. The Department of Revenue has not
acted on Meyer Wastes refund. Additional facts will be provided as necessary.
ANALYSIS AND OPINION
Standard of Review
The Court reviews appeals from final determinations of the Department of Revenue de
novo and is thus not bound by the evidence or the issues raised
at the administrative level.
National Serv-All, Inc. v. Indiana Dept of State
Revenue, 644 N.E.2d 954, 955 (Ind. Tax Ct. 1994); Ind. Code Ann. §
6-8.1-5-1(h). When an appeal involves a claim for exemption, the taxpayer bears
the burden to show it falls within the terms of the exemption.
Id. If the exemption is ambiguous, the court is required to resolve
the ambiguity in favor of the Department of Revenue. Id.
Meyer Waste argues that it is entitled to the public transportation exemption from
the use tax for the years in question. First, Meyer Waste asserts
that it is not the owner of the garbage that it hauls.
Second, even assuming arguendo that Meyer Waste is the owner, it argues that
ownership does not preclude it from receiving the exemption. Third, Meyer Waste
contends that if the exemption does not apply to it, then the exemption
statute is unconstitutional. The Department of Revenue argues that Meyer Waste does
not qualify for the exemption based upon prior precedent in this Court and
that the inapplicability of the exemption to Meyer Waste is not violative of
either the Indiana or United States constitutions.
The statute at issue provides an exemption to the following tax:
(a) An excise tax, known as the use tax, is imposed on the
storage, use, or consumption of tangible personal property in Indiana if the property
was acquired in a retail transaction, regardless of the location of that transaction
or of the retail merchant making that transaction.
Ind. Code Ann. § 6-2.5-3-2(a) (West 2000). The following statute exempts taxpayers
from the use tax in certain circumstances:
(a) The storage, use, and consumption of tangible personal property in Indiana is
exempt from the use tax if:
* * *
(2) the property was acquired in a transaction that is wholly or partially
exempt from the state gross retail tax under any part of IC 6-2.5-5,
except IC 6-2.5-5-24(b), and the property is being used, stored, or consumed for
the purpose for which it was exempted.
Ind. Code Ann. § 6-2.5-3-4(a)(2)(West 2000). The specific exemption at issue, the
public transportation exemption, provides as follows:
Transactions involving tangible personal property and services are exempt from the state gross
retail tax, if the person acquiring the property or service directly uses or
consumes it in providing public transportation for persons or property.
Ind. Code Ann. § 6-2.5-5-27 (West 2000)(emphasis added).
This Court has decided three previous cases that have analyzed the application of
Ind. Code Section 6-2.5-5-27 to garbage haulers. These cases are Indiana Waste
Systems of Indiana, Inc. v. Indiana Department of State Revenue, 633 N.E.2d 359
(Ind. Tax Ct. 1994) (Indiana Waste I), Indiana Waste Systems of Indiana, Inc.
v. Indiana Department of State Revenue, 644 N.E.2d 960 (Ind. Tax Ct. 1994)
(Indiana Waste II), and National Serv-All, Inc. v. Indiana Department of State Revenue,
644 N.E.2d 954 (Ind. Tax Ct. 1994). In Indiana Waste I, this
Court held that garbage constituted property within the meaning of Ind. Code Section
6-2.5-5-27. Indiana Waste I, 633 N.E.2d at 368; see also National Serv-All,
644 N.E.2d at 956. In all three cases, this Court also held
that in order to qualify for the exemption the hauler must not be
the owner of the garbage.
Indiana Waste I, 633 N.E.2d at 367;
Indiana Waste II, 644 N.E.2d at 961; National Serv-All, Inc., 644 N.E.2d at
956. Moreover, the carrier must be predominantly engaged in transporting property of
another to be entitled to the exemption. Indiana Waste II, 644 N.E.2d
With respect to ownership, this Court has held that [a]t the point the
garbage is abandoned, the generators of the garbage lose their ownership rights.
Indiana Waste I, 633 N.E.2d at 367; see also National Serv-All, 644 N.E.2d
at 956-57. The Indiana Court of Appeals has held that a garbage
generator abandons its garbage when it places garbage on the curb or curtilage
to be picked up by the garbage hauler unless it takes affirmative steps
to retain ownership or control. Long v. Dilling Mech. Contractors, Inc., 705
N.E.2d 1022, 1026 (Ind. Ct. App. 1999), rehg denied, trans. denied. Absent
an agreement between a garbage generator and a garbage hauler reserving ownership in
the generator, the ownership of the garbage passes when the hauler removes the
garbage from the generator. Indiana Waste II, 644 N.E.2d at 961; see
also National Serv-All, 644 N.E.2d at 956.
A. Ownership of the Garbage
This Court must first look to whether Meyer Waste owns the garbage that
it hauls to determine whether it is entitled to the public transportation exemption.
Meyer Waste argues that it does not own the waste that it
transports. More specifically, Meyer Waste argues that the generators do not abandon
the garbage because the generators demonstrate indicia of ownership (possession and control) by
their ability to retrieve their garbage and designate where Meyer will make the
final disposition of the garbage, that abandonment of garbage is violative of certain
federal and state environmental laws so the generators could not intend to abandon
the garbage, that Meyer Waste has no intent to own the garbage, and
that Meyer Waste is merely a bailee of the garbage. The Department
of Revenue argues that once Meyer takes possession of the garbage, it assumes
ownership because Meyer has a better claim to the garbage than anyone else.
There is no question that the title to the garbage changes after the
generator discards the garbage; the question has been to whom and when does
the title pass. National Serv-All, 644 N.E.2d at 958. After a
very thorough review of the different approaches taken by other jurisdictions regarding this
ownership issue, this Court held that absent an agreement otherwise, the ownership of
garbage passes from the generator to the hauler when the hauler removes the
garbage from the generator. National Serv-All, 644 N.E.2d at 958-59; Indiana Waste
II, 644 N.E.2d at 961. The chief incidents of ownership include: possession,
the rights of use and enjoyment, and right of disposal of the property.
National Serv-All, 644 N.E.2d at 957; Indiana Waste I, 633 N.E.2d at
367. When the generator relinquishes all the incidents of ownership, the hauler
acquires them. National Serv-All, 644 N.E.2d at 959. While possession is
not tantamount to ownership, it does raise a rebuttable presumption of ownership.
Indiana Waste I, 633 N.E.2d at 367; National Serv-All, 644 N.E.2d at 957.
Meyer Waste seems to argue that despite the fact that it has not
provided this Court with any written agreements by its customers that they would
maintain ownership of the property after it was picked up by Meyer Waste,
there is other evidence that its customers agreed to maintain ownership of the
garbage until Meyer Waste unloaded it at a final disposal facility.
1. Indicia of Ownership
The Court first addresses Meyer Wastes argument that its customers do not abandon
their garbage when they place it at the curb because the generators demonstrate
indicia of ownership (possession and control) when, on occasion, one may ask to
retrieve its garbage. Meyer Waste contends that the customer exercises its control
and possession when the customer has disposed of the garbage and then decides
that it wants the garbage back. One example Meyer Waste provides is
where a woman threw her husbands bowling trophies in the garbage. After
the garbage was collected, the woman changed her mind and wanted the trophies
back. Meyer Waste located and retrieved the trophies, but they were no
longer in the same form. Another example that Meyer Waste presents is
where employees of a K-mart store thought that they discarded cash receipts.
Meyer Waste allowed the store employees to search for the receipts at the
transfer station. Meyer Waste asserts that the customers requests and Meyer Wastes
responses show control and possession by the customer and an intention not to
abandon the garbage. Thus, Meyer Waste claims that the generator retains ownership
over the garbage. Meyer Waste claims that such customers behave as though
they have a right to retrieve their property. (Petr Post-trial Br. at
While Meyer Wastes willingness and ability to retrieve garbage that generators decide they
no longer wish to discard may constitute good customer service, it does not
demonstrate that the generators maintain possession and control for purposes of ownership.
In fact, Meyer Waste admitted at trial that we are in the service
business and try to keep all of our customers happy. (Trial Tr.
at 34.) Once the generator placed the garbage on the curb, it
had no right to demand its return absent an agreement otherwise. See
Indiana Waste I, 633 N.E.2d at 367. There is no evidence of
any such agreement here.
Meyer Waste also argues that its customers have a right to and sometimes
do instruct Meyer Waste as to the location they desire for the disposal
of their garbage. (Petr Post-trial Br. at 27.) The only evidence
that Meyer Waste provides this Court with to support its argument is its
own testimony. Meyer Waste does not provide this Court with any corroborative
evidence such as provisions in its written contracts with its customers that the
customers have a right to designate where they want their garbage to go.
Meyer Waste also does not provide the testimony of any of its
customers or others that retention of the right to designate where their garbage
would go was part of any agreement between Meyer Waste and its customers.
Meyer Wastes self-serving assertion without more is not probative evidence of control
by the generators.
Cf. Dobbins v. State, 721 N.E.2d 867, 875 (Ind.
1999) (stating that [i]t is within the province of the trier of fact
to determine facts from evidence presented to it and then to judge the
credibility of those facts); Milburn v. Milburn, 694 N.E.2d 738, 740 (Ind. Ct.
App. 1998) (holding that [i]n reaching its decision, the trial court must review
self-serving and uncorroborated testimony by the claimant "with caution and scrutiny."), trans. denied.
Moreover, the evidence shows that Meyer Waste controls the majority of its
customers final disposal locations, as it contacts and makes the arrangements with landfills
to dispose of the garbage that it hauls and handles the disposal fees.
Meyer Waste testified that not many of its customers make specific requests
indicating where they want their trash to go for its final disposition, but
Meyer Waste will take it to a special location if a request is
made and will charge the customer accordingly. Even assuming arguendo that these
few customers retained the ownership, the majority of Meyer Wastes customers do not
request a special location for disposal and thus those customers do not retain
ownership. In order to qualify for the exemption the hauler must be
predominately engaged in transporting the property of another. See Indiana Waste II,
644 N.E.2d at 961. If only some of Meyer Wastes customers retained
ownership, Meyer Waste would not be predominately transporting the property of another.
See Indiana Waste II, 644 N.E.2d at 962 (holding that a garbage hauler
was not entitled to the exemption because only 17.7 percent of its annual
revenue came from hauling the garbage of another).
Abandonment and the Environmental Laws
Meyer Waste next argues that if a generator abandons its garbage at the
curb for pick up by the garbage hauler, it is violating numerous laws
imposing liability for the improper or illegal abandonment or disposal of non-hazardous waste.
Therefore, it contends that a generator cannot intend to abandon the garbage
when it sets it on the curb for pick up. Among other
statutes, Meyer Waste cites Ind. Code Ann Section 13-30-2-1(4)-(6) (West 1998) to support
its argument. That statute provides in relevant part:
A person may not do any of the following:
* * * *
(4) Deposit or cause or allow the deposit of any contaminants or solid
waste upon the land, except through the use of sanitary landfills, incineration, composting,
garbage grinding, or another method acceptable to the solid waste management board.
(5) Dump or cause or allow the open dumping of garbage or of
any other solid waste in violation of rules adopted by the solid waste
(6) Dispose of solid waste in, upon, or within the limits of or
adjacent to a public highway, state park, state nature preserve, or recreation area
or in or immediately adjacent to a lake or stream, except:
(A) in proper containers provided for sanitary storage of the solid waste;
(B) as a part of a sanitary landfill operation or other land disposal
method approved by the department.
I.C. § 13-30-2-1(4)-(6) (emphasis added). Meyer Waste has not provided nor has
the Court found any authority to support Meyer Wastes proposition that its customers
placement of (abandonment of) non-hazardous garbage at the curb for pick up constitutes
a violation of acceptable methods or rules prescribed by the solid waste management
board. Moreover, Meyer Waste has not shown how an individual or business
putting its garbage out for pick up by a garbage hauler is disposing
of garbage in an unlawful manner within the limits of a public highway,
state park, state nature preserve, recreation or in or near a lake or
Intent to Own
Meyer Waste also quotes a statute that prohibits the illegal dumping of waste
onto anothers land. See Ind. Code Ann. § 13-30-3-13(d) (West 1998).
That statute is inapplicable to this case because there are no allegations here
that generators are placing their garbage out for pick up on the land
of another. This case only raises the issue of the abandonment of
garbage for pick up by a garbage hauler from ones own land.
Finally, Meyer Waste quotes a statute that defines a nuisance, but does not
state how its customers placement of garbage out for pick up constitutes a
nuisance. See Ind. Code Ann. § 34-19-1-1 (West 2000). In addition,
Meyer Waste does not cite any authority to support its assertion that placement
of garbage in the proper containers for pick up by a garbage hauler
constitutes a nuisance.
See footnote Consequently, Meyer Wastes argument that if a garbage generator
abandons its garbage when it sets it out for pick up, it commits
a criminal offense and therefore the generator could not have intended to abandon
it, is without merit.See footnote
Meyer Waste next argues that even if the garbage generators abandon their
garbage at the curb it cannot be presumed that the title passes to
Meyer Waste. Instead, Meyer Waste asserts that if the generators abandon their
garbage at the curb, the title passes to the State or to the
owner of the landfill. As such, Meyer Waste challenges this Courts existing
precedent in National Serv-All, 644 N.E.2d at 959 and Indiana Waste II, 644
N.E.2d at 961. As this Court stated in Indiana Waste II, absent
an agreement between the generator of the garbage and the garbage hauler reserving
ownership in the generator, the ownership of the garbage passes to the hauler
when the hauler removes it from the generator. Indiana Waste II, 644
N.E.2d at 961. Meyer Waste contends that it did not intend to
take ownership and therefore it cannot be deemed to have accepted ownership.
The only evidence that Meyer Waste presents of its lack of intent is
testimony by its CEO that it did not intend to become the owner
because there was no business purpose to be served by doing so and
because ownership would mean that it would incur additional environmental liability. (Petr
Post-trial Br. at 28.) Meyer Wastes CEO also testified that it intended
only to provide transportation services and not to obtain ownership, which was demonstrated
by its assistance to customers when they wanted their garbage returned. As
noted supra, this is not evidence of an agreement between Meyer and its
customers that the customers retain ownership of the garbage once it is removed
from the customers/generators premises. See Indiana Waste II, 644 N.E.2d at 961.
Therefore, this Court concludes based upon past precedent, that when Meyer Waste
picked up the garbage from the curb, it became the owner of the
Meyer Waste next argues that it is entitled to the public transportation exemption
because it is the bailee of the generators garbage. A bailment is
defined as an express or implied agreement between a bailor and bailee.
Norris Auto. Serv. v. Melton, 526 N.E.2d 1023, 1025 (Ind. Tax Ct. 1988).
A bailment is created where bailed property is delivered into the bailee's
exclusive possession, and the bailee accepts the property. Id. Because this
Court concluded above that Meyer Waste is the owner of the property, it
cannot be the bailee. Therefore, this contention by Meyer Waste does not
further its position.
Meyer Waste has not shown that its customers agreed to retain ownership.
Moreover, none of Meyer Wastes arguments demonstrate that anyone other than Meyer Waste
owns the garbage that it picks up from its customers, the generators.
Therefore, this Court holds that based upon established precedent, Meyer Waste owns the
garbage that it hauls.
B. Public Transportation
Meyer Waste argues that even if it owns the garbage, it is entitled
to the public transportation exemption from the use tax. More specifically, Meyer
Waste argues that the requirement stated in the regulations that the transportation be
for consideration does not preclude a transporter who hauls its own garbage from
receiving the exemption.
This Court has previously noted that the public transportation aspect of Ind. Code
Section 6-2.5-5-27 requires that the transporter perform its function for consideration. National
Serv-All, 644 N.E.2d at 956; Indiana Waste II, 644 N.E.2d at 961.
This requirement is set forth in the regulation that defines public transportation as
[p]ublic transportation shall mean and include the movement, transportation, or carrying of persons
and/or property for consideration by a common carrier, contract carrier, household goods carrier,
carriers of exempt commodities, and other specialized carriers performing public transportation service for
compensation by highway . . . which carriers operate under authority issued by,
or are specifically exempt by statute from economic regulation of, the public service
commission of Indiana, the Interstate Commerce Commission, . . . the U.S. Department
of Transportation . . .; however, the fact that a company possesses a
permit or authority issued by the P.S.C.I., I.C.C. etc., does not of itself
mean that such a company is engaged in public transportation unless it is
in fact engaged in the transportation of persons or property for consideration as
Ind. Admin. Code tit. 45, r 2.2-5-61(b) (1996) (emphasis added). In three
prior cases this Court has held that for consideration means that someone other
than the transporter must own the property being transported. National Serv-All, 644
N.E.2d at 956; Indiana Waste II, 644 N.E.2d at 961; Indiana Waste I,
633 N.E.2d at 367. If the carrier is not predominantly engaged in
transporting the property of another, it is not entitled to the exemption.
Indiana Waste II, 644 N.E.2d at 961; National Serv-All, 644 N.E.2d at 956.
Nonetheless, Meyer Waste challenges the existing precedent by arguing that neither the
phrase for consideration nor the phrase for compensation in the regulation requires that
it transport the property of another. Meyer Waste argues that if the
language in the regulation stated that the transportation must be for hire instead
of for consideration, then the transporter would be required to transport the property
of another. To support its argument, Meyer Waste cites to cases from
other jurisdictions that distinguish between for hire and for compensation.
See footnote (Petr
Post-trial Br. at 41.) While it may be true that in some
other jurisdictions one who transports its own goods and adds a transportation charge
is deemed to have transported the goods for compensation or for consideration, that
is not the law in the state of Indiana.
Meyer Waste asserts that in both
Indiana Waste I and National Serv-All this
Court erroneously read State Department of Revenue v. Calcar Quarries, Inc. as standing
for the rule that in order to be eligible for the public transportation
exemption, the hauler must transport the property of another.
See footnote (Petr Post-trial Br.
State Department of Revenue v. Calcar Quarries, Inc., 182 Ind. App.
84, 394 N.E.2d 939 (1979); Indiana Waste I, 633 N.E.2d at 367;
Serv-All, 644 N.E.2d at 956. Meyer Waste contends that Calcar did not
address the question of who owned the stone that was being transported on
Calcars trucks. Moreover, Meyer Waste contends that the Indiana Court of Appeals
implicitly held in Calcar that ownership of the property one is hauling is
irrelevant for the purpose of determining whether the transportation is for consideration.
(Petr Post-trial Br. at 43.) Calcar, 182 Ind. App. 84-88, 394 N.E.2d
In Calcar, crushed stone was sold at the Calcar Quarry Plant either to
be delivered by trucks owned by others, or to be delivered by the
Calcar trucks. Calcar, 394 N.E.2d at 941 (emphasis added). Calcars hauling
of property to its own job sites amounted to no more than 10
percent of its crushed stone sales. Id. In Calcar, the Court
of Appeals did consider the issue of who owned the stone that was
being transported. The States argument in Calcar was that Calcar was not
engaged in public transportation but instead was engaged primarily in the service of
hauling its own product. Id. Restated, this argument is that in
order to be engaged in public transportation one must haul the product of
another. In Calcar, the Court of Appeals held that Calcar transported property
for consideration and satisfied the definition of public transportation. Id.
When the facts of Calcar are analyzed, it can be reasonably interpreted as
holding that to be engaged in public transportation one must haul the property
of another. The facts clearly state that the stone was sold at
Calcars Plant, not at the purchasers chosen delivery location. As such, the
purchaser became the owner at the time of sale and could pay Calcar
to haul its stone or arrange for another hauler to transport it.
This interpretation is furthered by the fact that Calcar sold its products F.O.B.
Id. Meyer Waste incorrectly states that in Calcar F.O.B.
meant that the seller of goods bears the expense and risk of loss
for the delivery of goods to a buyer i.e., that the seller
retains titled [sic] during delivery. (Petr Post-trial Br. at 44, n.13.) (emphasis
added). In Calcar the Court of Appeals noted that when the term
is F.O.B. the place of shipment, the seller must at that place ship
the goods in the manner provided in this article [chapter] (section [26-1-]2-504) and
bear the expense and risk of putting them into the possession of the
carrier. Calcar, 394 N.E.2d at 941 n.2. In such a situation,
title to the goods passes from the seller to the buyer at the
point of shipment. See Weil v. Stone, 33 Ind. App. 112, 115,
118, 69 N.E. 698, 699, 700 (1904) (holding where contract provided for sale
of goods F.O.B. Fort Wayne, Indiana, the title to the goods passed to
the buyer at shipment from Fort Wayne); Cf. Gross Income Tax Division v.
Shane Mfg. Co., 191 N.E.2d 310, 311, 312 (Ind. 1963) (stating that where
all shipments were F.O.B. the sellers plant at Evansville, Indiana title was transferred
to the buyer at the sellers plant in Evansville when seller delivered goods
to the buyers trucks). Consequently, it appears that the title to the
stone passed once the stone was given to the carrier for shipment.
See id. Because Calcar ran its delivery business separate from its quarry,
asphalt, and ready mix operation it appears that it acted separately as a
See footnote Therefore, it is evident that when Calcar hauled the stone to
the customers it was hauling the property of another because title had already
passed to the customer.
Even assuming arguendo that Calcar was carrying its own property, the only reasonable
Ind. Admin. Code tit. 45, r 2.2-5-61(b) (1996) is that for
consideration and for compensation mean that the transportation must be of anothers property.
Otherwise a purchaser would be paying to have someone elses property hauled.
It is rare that in the ordinary course of business the purchaser
would pay for the seller to haul the sellers own property. However,
this is not to say that there are not occasions where pursuant to
a contract, a party might pay for the shipping before the title actually
passes to it.
This Court reaffirms its holdings in Indiana Waste I, Indiana Waste II, and
National Serv-All that in order to qualify for the transportation exemption to the
use tax, one must haul the property of another. Consequently, Meyer Wastes
argument that it qualified for the exemption despite the fact that it hauls
garbage that it owns cannot prevail.
Meyer Waste next asserts that the past applications of the public transportation exemption
in Calcar, Indiana Waste I & II, and National Serv-All are unconstitutional because
they have created arbitrary classifications among transporters or carriers providing public transportation of
property for consideration or compensation paid by another.
See footnote (Petr Post-trial Br. at
47.) Meyer Waste contends that these classifications are violative of the guarantees
of equal protection under the 14
th amendment, section one of the United States
th amendment provides in relevant part:
All persons born or naturalized in the United States, and subject to the
jurisdiction thereof, are citizens of the United States and of the State wherein
they reside. No State shall make or enforce any law which shall
abridge the privileges or immunities of citizens of the United States; nor shall
any State deprive any person of life, liberty, or property, without due process
of law; nor deny to any person within its jurisdiction the equal protection
U.S. Const. Amend. XIV, § 1 (emphasis added). Generally, if neither a
suspect class nor fundamental right is involved, to pass equal protection muster a
statute must meet a rational basis test. Area Interstate Trucking, Inc. v.
Indiana Dept of Revenue, 605 N.E.2d 272, 275 (Ind. Tax Ct. 1992), cert.
denied, 510 U.S. 864, 114 S. Ct. 183 (1993); Indiana High Sch. Athletic
Ass'n, Inc. v. Carlberg, 694 N.E.2d 222, 236 (Ind. 1997), rehg denied.
This test merely requires "that the law be rationally related to a legitimate
governmental purpose. Indiana High Sch. Athletic Ass'n, Inc., 694 N.E.2d at 236
(internal quotations omitted). When discussing the States power to levy taxes, our
Court of Appeals has previously noted that
[T]here is a point beyond which the State cannot go without violating the
Equal Protection Clause. The State must proceed upon a rational basis and
may not resort to a classification that is palpably arbitrary. The rule
often has been stated to be that the classification must rest upon some
ground of difference having a fair and substantial relation to the object of
Championship Wrestling, Inc. v. State Boxing Comm'n, 477 N.E.2d 302, 305, (Ind. Ct.
App. 1985), rehg denied, trans. denied (quotation marks omitted)(quoting Allied Stores of Ohio,
Inc. v. Bowers, 358 U.S. 522, 527, 79 S. Ct. 437, 441, (1959)).
There is a strong presumption that statutes are constitutional and the burden
is on the challenger to clearly demonstrate the statute's invalidity with all doubts
being resolved in favor of the statute. Area Interstate Trucking, 605 N.E.2d
at 276. The United States Supreme Court has stated that a classification,
though discriminatory, is not arbitrary nor violative of the Equal Protection Clause of
the Fourteenth Amendment if any state of facts reasonably can be conceived that
would sustain it. Allied Stores, 358 U.S. at 528, 79 S. Ct.
The 14th Amendment does not impose any specific limitation upon the power of
Indiana to classify persons and things for tax purposes other than to prohibit
arbitrary classifications. Indiana Aeronautics Commn v. Ambassadair, Inc., 267 Ind. 137, 142,
368 N.E.2d 1340, 1343 (1977), cert. denied, 436 U.S. 905, 98 S. Ct.
2235 (1978). It is only in the context of a particular statute
that classification and the criteria which define them can be judged against the
equal protection clauses. Id. at 143; 368 N.E.2d at 1344. A
court is required to make an independent determination of whether any reasonably conceivable
purpose exists which would support the constitutionality of the classification employed. Id.
at 144; 368 N.E.2d at 1344. While the State is not at
liberty to resort to a tax classification which is palpably arbitrary, any classification
is valid provided it rests upon some ground of difference having a fair
and substantial relation to the object of the legislation so that all persons
similarly circumstanced are treated alike. Area Interstate Trucking, Inc., 605 N.E.2d at
27(citing Miles v. Dep't of Treasury, 209 Ind. 172, 188, 199 N.E. 372,
380, (1935), appeal dismissed, 298 U.S. 640, 56 S. Ct. 750 (1936);
Lutz v. Arnold, 208 Ind. 480, 499, 193 N.E. 840, 847 (1935)).
In addition, [s]ufficient differences in the method of doing business may be
justification for separate classification and differential tax treatment. Id. (citing State Bd.
of Tax Comm'rs v. Jackson, 283 U.S. 527, 537-43, 51 S. Ct. 540,
543-45 (1931), rehg denied; Miles, 209 Ind. at 190, 199 N.E. at 380).
A court cannot assume that state legislative enactments were adopted arbitrarily or
without good reason to further some legitimate policy of the state. Allied
Stores, 358 U.S. at 528, 79 S. Ct. at 442. A court
cannot know with certainty and it is not important that a court know
the special reasons, motives or policies of the legislature because a state legislature
need not explicitly declare its purpose. Id. Assuming arguendo that the
Courts interpretation of Ind. Code Section 6-2.5-5-27 creates a classification because owners of
their own property do not receive the exemption while those that haul the
property of others receive the exemption, this Court addresses Meyer Wastes claims below.
1. Rational Basis
Meyer Waste argues that there is no rational basis for interpreting the public
transportation exemption to apply only to those who transport the property of others.
It is obvious from the plain language of the public transportation exemption
that its purpose was to provide an exemption to the use tax for
those who provide public transportation. As Meyer Waste points out, the purpose
of the statute may be to reduce the cost to the carrier of
providing transportation services to the public so that the carrier would pass on
the savings to the public by charging it lower prices for transporting property.
(Petr Post-trial Br. at 51.) This is a legitimate governmental purpose.
See Indiana High School Athletic Ass'n, Inc., 694 N.E.2d at 236.
A reading of the statute that the exemption is available only to those
carriers that haul property of another has a substantial relation to its purpose
of providing a tax break to those who provide public transportation. See
discussion supra, part B. Otherwise the benefit would not be just to
the public, but rather the benefit would also go to the carriers when
they transported their own property for their own purposes.
See footnote There is no
indication in the statute that it is to be applied to carriers who
haul their own property, which would be a form of private transportation.
If one is hauling its own property it is reasonable to assume that
it is for its own purposes, in which case, the public would not
be benefited by the exemption. Therefore, this Court cannot say that the
classification created by this Courts interpretation of the statute as exempting only those
who haul the property of another was not founded upon a reasonable distinction
in state policy that has a fair and substantial relation to the object
of the exemption or that no set of facts can be conceived to
sustain our interpretation.
See Allied Stores, 358 U.S. at 529, 79 S.
Ct. at 442; Championship Wrestling, 477 N.E.2d at 305. Thus, there is
a rational basis for this Courts application of the public transportation exemption.
This Court next addresses Meyer Wastes contentions that this Courts interpretation of the
statue as creating a classification that only those that transport the property of
others receive the exemption is arbitrary. See Championship Wrestling, 477 N.E.2d at
305. First, Meyer Waste argues that it is arbitrary to allow a
furniture mover to receive the exemption but deny that same exemption to a
garbage hauler because both use public roads and highways, pay road taxes, pay
truck license fees, pay personal property taxes on equipment, are subject to the
Department of Transportation regulations, and drivers for both are required to have a
commercial license. However, Meyer Waste does not present this Court with any
cases or other evidence that similarly situated furniture haulers have been or would
be treated different from similarly situated garbage haulers. The bottom line is
that any hauler would be denied the exemption if it was transporting its
own property. The cases have consistently held that all haulers who own
the property that they haul are not entitled to the exemption. See
Indiana Waste I, 633 N.E.2d at 367; Indiana Waste II, 644 N.E.2d at
961; National Serv-All, 644 N.E.2d at 956. Therefore, this argument is without
Meyer Waste next claims that the classification is arbitrary because it is based
upon the ownership rights in the property being transported. It claims that
this classification is arbitrary because a carrier can claim the Public Transportation Exemption
if the customer who compensates the carrier for transportation owns the property during
or immediately after it is transported, but not if the customer owns the
property immediately before it is transported. Id. (original emphasis). Meyer Waste
bases its contention regarding these allegedly arbitrary classifications upon its assertion that the
holdings in Indiana Waste and National Serv-All are different from the holding in
Calcar. More specifically, Meyer Waste asserts that in Calcar the transporter was
entitled to the exemption regardless of whether the customer owned the property while
it is [sic] being transported on the carriers truck, so long as the
customer paid consideration for transporting the property to the customers place of business.
(Petr Post-trial Br. at 48.) In other words, Meyer Waste is
arguing that the arbitrariness exists because Calcar holds that it does not matter
whether the hauler owns the property it transports while Indiana Waste and National
Serv-All hold that a hauler is only entitled to the exemption if it
does not own the property that it transports. As noted supra, Calcar
stands for the proposition that to qualify for the exemption the hauler must
transport the property of another. See supra. Therefore, this Court concludes
that Meyer Wastes argument is without merit.
Finally, Meyer Waste claims that the classification of carriers by those that own
the property that they carry and those that carry the property of another
is arbitrary in violation of equal protection because the classification is based solely
on the nature of property being transported. More specifically, Meyer Waste argues
that garbage haulers are treated differently than are other types of transporters, assuming
arguendo that garbage is unique because it has lost its value to customers
(is considered abandoned) and ownership passes to the haulers upon pick up.
Meyer Waste asserts that if it hauled any type of property other than
garbage this Court would not be engaging in an analysis of whether or
not the customer had abandoned the property, and whether or not ownership had
(somehow) passed to [Meyer Waste]. (Petr Post-trial Br. at 54.) As
such, it seems that Meyer Waste is arguing that it is being treated
arbitrarily only because it hauls garbage.
Meyer Waste argues that garbage is property within the meaning of Ind. Code
Section 6-2.5-5-27 and that there is no reasonably conceivable purpose for distinguishing among
various types of property when determining eligibility for the exemption. Again, Meyer
Waste supports this argument with its assertion that in Calcar the Court of
Appeals held that it did not matter whether the carrier owned the stone
and that the only relevant inquiry was whether the transportation was being done
for compensation. (Petr Post-trial Br. at 55.) Meyer Waste argues that
the only difference between it and Calcar is that Meyer Waste hauls garbage.
However, as the Court held supra, there is another difference between Calcar
and Meyer Waste. That difference is that Calcar did not own the
property that it was delivering and Meyer Waste did own the property (which
happened to be garbage) that it was transporting.
The use tax is not being imposed upon Meyer Waste because it hauls
garbage; it is being taxed because it owns the garbage that it hauls.
Any hauler that owns its own property would not be eligible for
See footnote Furthermore, garbage haulers and all other haulers that predominantly haul
the property of another and meet the other requirements of the public transportation
statute would be eligible for the exemption. Consequently, there is no arbitrariness
in how the Courts have applied the public transportation exemption and there can
be no violation of equal protection under the Federal Constitution because all companies
who haul their own property are treated equally.
This Court finds that
Ind. Code Section 6-2.5-5-27 has a legitimate government purpose
and this Courts interpretation of the classifications created by it rest upon differences
that have a fair and substantial relation to the purpose of the statute.
See Indiana High Sch. Athletic Assn, 694 N.E.2d at 236. Championship
Wrestling, 477 N.E.2d at 305. Meyer Waste has not demonstrated that the
classifications are palpably arbitrary. See id. Therefore, Meyer Waste has not
met its burden of demonstrating that Ind. Code Section 6-2.5-5-27 is unconstitutional.
See Area Interstate Trucking, 605 N.E.2d at 276. Thus, Meyer Wastes constitutional
challenge claim cannot succeed. See id.
Meyer Waste has not demonstrated that it is predominately engaged in transporting the
property of another. See Indiana Waste II, 644 N.E.2d at 961; National
Serv-All, 644 N.E.2d at 956; Indiana Waste I, 633 N.E.2d at 367.
Consequently, Meyer Waste has not met its burden of proving that it fell
within the terms of the public transportation exemption and therefore the Court AFFIRMS
the Department of Revenues final determination. See National Serv-All, 644 N.E.2d at
955. Moreover, this Court concludes that Meyer Waste has not demonstrated that
this Courts application of the public transportation exemption is arbitrary and therefore unconstitutional.
The parties have stipulated that certain property is not included in
this appeal because it would not qualify for the exemption. The property
includes: in 1990, $5,846 of property, resulting in a use tax assessment
of $293; in 1991, $27,358 of property, resulting in a use tax assessment
of $1,368; and in 1992, $8,766 of property resulting in a use tax
assessment of $438. (Stipulation of the Parties at 4.)
Footnote: The regulations provide the following example:
A company possesses a contract carrier permit to transport stone for a limestone
company. It also purchases stone and sells it to its own customers.
During the period it is transporting its own stone, it is not
engaged in public transportation and tangible personal property and equipment used and consumed
in such activities are subject to tax.
Ind. Admin. Code tit. 45, r 2.2-5-61(m) Example (1) (1992).
The Court recognizes that there are some cases where the uncorroborated
testimony of a witness may constitute sufficient evidence.
See Heaton v. State,
483 N.E.2d 58, 59 (Ind. 1985) (holding that [t]he uncorroborated testimony of a
rape victim is sufficient to support a conviction); Downey v. State, 726 N.E.2d
794, 796 (Ind. Ct. App. 2000) (stating that [t]he uncorroborated testimony of a
child victim is sufficient to support a conviction of child molesting), rehg denied,
Meyer Waste cites to
Railroad Commission v. Waste Management of Texas,
880 S.W.2d 835 (Tex. App. 1994) to support its proposition that garbage generators
cannot abandon their garbage. Its reliance on that case is misplaced.
Following a brief discussion of the abandonment of asbestos-containing solid waste, the Court
of Appeals of Texas stated: [w]e do not decide [whether a generator could
abandon asbestos-containing solid waste], however, because in the present case the parties stipulated.
Id. at 843-44.
This Court notes that there may be situations where abandonment or
mishandling of garbage may be in violation of certain laws.
See Starzenski v.
Elkhart, 659 N.E.2d 1132, 1140-41 (Ind. Ct. App. 1996) (stating that where large
amount of trash and debris that was located in partys yard and house
for approximately two-years, city properly entered the property to remove it as it
constituted a nuisance), trans. denied, cert. denied, 519 U.S. 1028, 117 S. Ct.
582 (1996); State v. Money, 651 N.E.2d 344, 346 (Ind. Ct. App. 1995)
(holding that garbage constituted solid waste and that information charging defendant with burning
garbage in the back yard of his residence was sufficient to constitute the
offense of illegal open burning under Ind. Code Ann. section 13-7-4-1), trans. denied.
However, Meyer Waste has not demonstrated how its customers violate any of
these laws by placing their trash out for pick up.
None of the cases cited by Meyer Waste are cases involving
Footnote: The Court notes that it also held that the carrier must
not own the property being transported in order to qualify for the exemption
Indiana Waste II, 644 N.E.2d at 961.
All three garbage hauling cases issued by this Court cite both
Calcar and Ind. Admin. Code tit. 45, r. 2.2-5-61. See Indiana Waste
I, 633 N.E.2d at 367; Indiana Waste II, 644 N.E.2d at 961; National
Serv-All, 644 N.E.2d at 956.
We assume based upon footnote number two in Calcar that the
Court of Appeals interpreted F.O.B. Calcars plant to mean that Calcars plant was
the place of shipment.
Calcar, 394 N.E.2d at 941 n.2.
The money received for Calcars hauling operations was kept separate from
its quarry, asphalt and ready mix operations and separate accounting also done for
the hauling operations.
Calcar, 394 N.E.2d at 941. The stone was
charged separate from any hauling charge that was added if the stone was
to be delivered by Calcars trucks. Id.
Meyer Waste posits that the ownership classifications in
Calcar, Indiana Waste
I & II, and National Serv-All violate the guaranty of a uniform and
equal rate of property assessment and taxation under Article 10, Section 1 of
the Indiana Constitution. Article 10, Section 1 provides in relevant part:
[t]he General Assembly shall provide, by law, for a uniform and equal rate
of property assessment and taxation and shall prescribe regulations to secure a just
valuation for taxation of all property, both real and personal.
(emphasis added). Our Supreme Court has held that Article 10, Section 1
of our Constitution applies only to property taxes, not to excise taxes. Lutz
v. Arnold, 193 N.E. 840, 846, 208 Ind. 480, 496, 503 (Ind. 1935);
See also 1935 Op. Atty. Gen. at 29. The use tax at
issue is an excise tax and not a property tax. See I.C.
§ 6-2.5-3-2(a); Tri-States Double Cola Bottling Co. v. Department of State Revenue, 706
N.E.2d 282, 283 (Ind. Tax Ct. 1999) (stating that Indiana imposes as excise
tax (use tax) on the use, storage or consumption of tangible personal property
in Indiana). Consequently, Article 10, Section 1 is not applicable to Meyer
Meyer Waste also asserts that the ownership classifications in
Waste I & II, and National Serv-All violate Article I, Section 23 of
the Indiana Constitution (the Privileges and Immunities Clause) and seems to meld this
argument into the framework of its Federal equal protection claim. The Privileges
and Immunities Clause of the Indiana Constitution provides:
The General Assembly shall not grant to any citizen, or class of citizens,
privileges or immunities, which, upon the same terms, cannot equally belong to all
Ind. Const. art. I, § 23. For many years, our Supreme
Court analyzed claims made under the Privileges and Immunities Clause using the same
methodology as that applied in federal equal protection analysis. Indiana High Sch.
Athletic Ass'n, Inc. v. Carlberg, 694 N.E.2d 222, 239 (Ind. 1997).
However, in Collins v. Day, our Supreme Court held that the analytical framework
required to resolve Privileges and Immunities Clause claims did not include "applying varying
degrees of scrutiny for different protected interests," an integral element of federal equal
protection analysis. Collins v. Day, 644 N.E.2d 72, 80 (Ind. 1994).
Instead, the same level of scrutiny is applied to analyze the constitutional propriety
of "any and all" grants of unequal privileges or immunities. Id.
The two-part test for determining a statute's validity under Article 1, Section 23
that our Supreme Court announced in Collins is as follows:
First, the disparate treatment accorded by the legislation must be reasonably related to
inherent characteristics which distinguish the unequally treated classes. Second, the preferential treatment
must be uniformly applicable and equally available to all persons similarly situated.
Finally, in determining whether a statute complies with or violates Section 23, courts
must exercise substantial deference to legislative discretion.
Id. Meyer Waste merely makes a bare assertion that Article 1, Section
23 has been violated without developing any independent argument with respect thereto.
This Court will not make Meyer Wastes argument for it. Cf. North
Park Cinemas, Inc. v. State Bd. of Tax Commrs, 689 N.E.2d 765, 769
(Ind. Tax Ct. 1997) (holding that a hearing officer did not have an
affirmative duty to make a case on behalf of a party, rather a
party is responsible for presenting evidence and an argument in support of its
position). Consequently, the Court will only address Meyer Wastes claim that the
14th Amendment to the United States Constitution has been violated.
supra, it is rare that under ordinary circumstances members
of the public would pay a carrier to transport property owned by that
carrier. See supra part B. It would seem more logical that a
carrier would be responsible for the costs of transporting its own property.
Therefore, there is also no arbitrariness among garbage haulers. As
with any other hauler, if a garbage hauler transports the property of another
and meets the statute in all other respects, it is entitled to the
public transportation exemption.