Ohio Tax
Workshop N
Kentucky & Indiana
Business Tax Update …
What’s Going On and
How to Benefit from It
Tuesday, January 28, 2014
3:00 p.m. to 4:00 p.m.
Biographical Information
Kevin Zins, Partner, Grant Thornton
4000 Smith Road, Suite 500 Cincinnati, OH 45209
[email protected]
513.345.4528
Fax 513.241.6125
His experience covers both industrial and consumer products businesses. Outside of public accounting,
Mr. Zins’ experience includes approximately four years in the accounting and tax department of Cintas
Corporation, a corporate identity uniform manufacturer, distributor and industrial laundry service company
with operations in about 40 states. Mr. Zins has a broad base of federal tax, state tax and project
management experience.
Industry experience
Conducts multi-state tax return reviews for income, franchise, sales/use and payroll taxes; identifies state
tax credit opportunities; develops, designs and implements strategic tax planning services for large and
mid-size, multi-state corporations; participates in due diligence reviews relating to restructuring
transactions (including acquisitions, divestitures and mergers) and conducts nexus reviews and
negotiates voluntary disclosure agreements to minimize liabilities and exposures; negotiates for audit
defense, including representing clients for income, sales and use, and property tax challenges
Professional qualifications and memberships

American Institute of Certified Public Accountants

Ohio, Kentucky and Indiana Societies of Certified Public Accountants

Ohio and Kentucky Societies of Certified Public Accountants Tax Committee Member (2005 current)

Ohio and Kentucky Chamber of Commerce Tax Committee Member (2005 – current)
Education

Bachelor of Business Administration – Accounting - Bowling Green State University
Mark Loyd, Partner & Chair, Tax & Finance Group, Bingham Greenebaum Doll LLP
3500 National City Tower, 101 South Fifth Street, Louisville, Kentucky 40202
[email protected]
502-587-3552
Fax: 502-540-2245
Mark A. Loyd, ESQ., is a partner and Chair of the Tax and Finance Group of Bingham Greenebaum Doll
LLP, a regional business law firm with offices in Kentucky, Indiana and Ohio. His areas of practice
concentration are state, local and federal taxation, tax litigation, tax controversy resolution and tax
planning for multistate and multinational companies. He is licensed to practice law in Kentucky, Indiana,
Ohio and Tennessee.
Prior to joining BGD, Mark managed the state and local tax function for Brown & Williamson Tobacco
Corporation, a multi-state, multi-billion dollar corporation and U.S. subsidiary of British American
Tobacco. Mark is also a Certified Public Accountant, having begun his career with Coopers & Lybrand,
now PricewaterhouseCoopers.
Mark is the Co-Chair of the ABA/IPT Advanced Property Tax Seminar, Co-Chair of IPT’s Basic Income
Tax School, and Chair of the Editorial Board of The Kentucky CPA Journal, among other
endeavors. Mark also serves as the Chair of the Board of Directors of Park Community Credit Union, a
$600 million dollar financial institution. He is a past Chair of the Tax Section of the Kentucky Bar
Association, a past Chair of the Tax Section of the Louisville Bar Association, and a past Chair of the
Kentucky Society of Certified Public Accountants’ Taxation Committee and is also a former member of the
KyCPA’s Board of Directors and former Chair of its Educational Foundation. He has written extensively
on tax matters in publications such as The Tax Lawyer, the Journal of State Taxation, The Kentucky CPA
Journal, and State Tax Notes, among others. He has been a speaker and panelist on various tax matters
at conferences, forums and for groups such as IPT, ABA, the Federation of Tax Administrators and
others.
Mark received his J.D. degree, magna cum laude, from the University of Louisville’s Louis D. Brandeis
School of Law, where he was Class Salutatorian. He also has an M.B.A., with distinction, from the
University of Louisville and is a graduate of Bellarmine University where he received his B.A. in
Accounting, summa cum laude.
Kentucky & Indiana Business Tax Update: What’s Going On and How to Benefit From It
23rd Annual Ohio Tax Conference, Columbus, Ohio
Workshop N
January 28, 2014
Mark A. Loyd
Chair, Tax & Finance Practice Group
[email protected]
Kevin M. Zins
Partner and Practice Leader, State and Local Tax
[email protected]
January 29, 2013
Presenters
KEVIN M. ZINS, CPA
Partner and Practice Leader, State and Local Tax
Grant Thornton LLP 4000 Smith Road, Suite 500
Cincinnati, OH 45209‐1967
(513) 345‐4528 – Phone
(513) 241‐6125 – Fax
[email protected] – E‐mail
www.grantthornton.com – Web www.grantthornton.com
Mark A. Loyd, Esq.
Partner and Chair, Tax & Finance Practice Group
Bingham Greenebaum Doll LLP 101 South Fifth Street, 3500 National City Tower
Louisville, KY 40202
(502) 587‐3552 – Phone
(502) 540‐2245 – Fax
[email protected] – E‐Mail
www.bgdlegal.com ‐ Web
www.bgdlegal.com
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Kentucky Update
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Kentucky Administrative Developments
Limited Liability Entity Tax Assessments
LLET (Limited Liability Entity Tax) Assessments
•
Kentucky Department of Revenue Conducting Desk Audits
• KDOR Disallows Use of Gross Profits Method, i.e., All Cost of Goods Sold
• KDOR Disallows Certain COGS Deductions, Allowing Only Deductions for Materials and Direct Labor
• Sending Assessments Without Prior Contact
•
Businesses Should • Avoid Reporting Expenses as “Other” or “Miscellaneous”
• Protest Any Inaccurate or Erroneous Assessment Page 4
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Kentucky Tax Amnesty
Kentucky Tax Amnesty Program
Amnesty Background
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Conducted by KDOR from 10/1/12 – 11/30/12
•
Taxable periods 12/1/01 – 10/1/11
•
Available for all Kentucky taxes except certain ad valorem taxes
on real property, personal property, motor vehicles and motor
boats, and penalties for cigarette tax violations
•
Waived all penalties (civil and criminal) & ½ interest
•
Add’l interest, penalties & “cost‐of‐collection” fees
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Kentucky Tax Amnesty
Post‐Amnesty Issues . . . .
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Disallowed Amnesty
•
“Cost‐of‐Collection Fees” . . . Penalties!
•
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25% of taxes which are assessed and collected after the amnesty
period for taxable periods ending or transactions occurring prior
to October 1, 2011 – at time of assessment!
•
50% for taxpayer who failed to file a return for tax period for
which amnesty was available
•
25% of taxes which are or become due and owing for any
reporting period, regardless of when due
Additional 2% interest rate
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Kentucky Tax Case Developments
Income Tax – Recycling Credit
• Dep’t of Revenue v. Bavarian Trucking Co., Inc.
No. 2011‐CA‐002198 (Ky. App May 24, 2013), rev’g, Civil Action No.
10‐CI‐3173 (Boone Cir. Ct., Div. I, Nov. 14, 2011), aff’g, File No. K09‐
R‐16, Order No. K‐21008 (KBTA Dec. 9, 2010)
•
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Holding: Equipment used in collecting methane gas generated by
landfill waste which is later burned to generate electricity is not
eligible for the recycling or composting equipment credit
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Kentucky Tax Case Developments
Income Tax – Ethanol Tax Credit
• Dep’t of Revenue v. Commonwealth Agri‐Energy, LLC,
2011‐CA‐000512‐MR (Ky. App. Nov. 16, 2012) (not to be
published), motion for discretionary review denied, No. 2012‐SC‐
822‐D (Ky. Sept. 18, 2013)
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Holding: Ethanol tax credit application was timely filed, even
though the application was filed after the deadline required by
statute, because the Department had not issued the reporting
form and made it official until after the filing deadline had
passed
•
Takeaway: This case is more about the application process than
the underlying credit.
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Kentucky Tax Case Developments
Transactional Tax (Sales and Use Tax and UGRLT)
• Ohio Valley Aluminum Co. v. Dep’t of Revenue
No. 2013‐CA‐000507 (Ct. App. Mar. 15, 2013), on appeal from Civil Action No.
12‐CI‐368 (Shelby Cir. Ct., Jun. 12, 2012), aff’g, File Nos. K10‐R‐35 & K10‐R‐36,
Order No. K‐22086 (KBTA May 22, 2012)
•
Holding: Parent company (toller of aluminum billets) could not exclude the cost
of raw materials from its “cost of production” for purposes of an exemption
from sales and use tax and UGRLT paid on the cost of energy pursuant to KRS
139.480(3) and KRS 160.613(1) when the owner and purchaser of the raw
materials to be processed by parent is its wholly‐owned subsidiary
Raw Material
Ohio Valley
Toller
MFR
Finished Goods
OVACO
(Owner of Aluminum)
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Kentucky Tax Case Developments
Transactional Tax (Sales and Use Tax)
• Progress Metal Reclamation Co. v. Dep’t of Revenue
Civil Action Nos. 12‐CI‐637 & 12‐CI‐805 (Franklin Cir. Ct. Sept.
23, 2013), aff’g, Order No. K‐22015, File No. K11‐R‐03 (KBTA
Apr. 18, 2012)
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Holding: Liquid oxygen used by taxpayer in cutting torch was
exempt from sales and use tax as an industrial supply. A
hammer pin (used by taxpayer to hold hammer in place on
rotor which turns to break up metal) was not an industrial
tool pursuant to KRS 139.470(11), and thus, not exempt
from sales and use tax.
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Takeaway: Case example of commonly disputed exemption.
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Kentucky Tax Case Developments
Transactional Tax (Sales and Use Tax)
• Ace Clinique of Medicine, LLC v. Dep’t of Revenue
File No. K11‐R‐15, Order No. K‐24090 (KBTA Sept. 24, 2013)
•
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Holding: The KBTA held that taxpayer’s aircraft was subject to
Kentucky use tax when it purchased the aircraft from an out‐of‐state
company. Taxpayer argued that the company from which it
purchased the aircraft was not a retailer under KRS 139.330, and even
if it was, the purchase was exempt as an occasional sale.
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Kentucky Tax Case Developments
Property Tax
• Dep’t of Revenue v. Cox Interior, Inc.
400 S.W.3d 240 (Ky. June 20, 2013)
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Holding: A taxpayer is entitled to a refund of its payment of
a tangible personal property tax assessed despite not
protesting the assessment prior to paying the taxes.
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Takeaway: Example of a case where the taxpayer had to fight all the way to the Kentucky Supreme Court to get to the right answer. www.grantthornton.com
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Kentucky Tax Case Developments
Miscellaneous Tax (Property – Public Service Co. Tax)
• Dayton Power & Light Co. v. Dep’t of Revenue
405 S.W.3d 527 (Ky. App., Nov. 2, 2012), discretionary review
denied, (Ky. Aug. 21, 2013)
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Holding: The Department was correct in taxing a public service
company’s (“PSC”) franchise as separate from the PSC, resulting
in a higher tax rate for the franchise and subjecting it to local
taxation.
•
Takeaway: The Department had previously computed the PSC
tax by allocating the franchise value to each asset thus
exempting the portion of the franchise related to that asset.
This is effectively an across the board tax increase on all PSCs.
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Kentucky Tax Case Developments
Property Tax
• Pinkerton Tobacco Co. v. Dep’t of Revenue
File No. K11‐R‐20, Order No. K‐23033 (KBTA Mar. 27, 2013), on
appeal, No. 13‐CI‐00480 (Franklin Cir. Ct.)
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•
Holding: Taxpayer was exempt from ad valorem taxation after it
reasonably demonstrated that its tobacco products will be shipped to
an out‐of‐state destination within six months of manufacture.
•
Takeaway: Examine your inventory classification on your property tax
return.
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Kentucky Tax Case Developments
Property Tax
• Dep’t of Revenue v. Petrotek, LLC, et. al.
No. 2013‐CA‐001152 (Ky. App.), on appeal from Civil Action No. 12‐CI‐49
(Franklin Cir. Ct. June 4, 2013), aff’g, Order No. K‐21660, File Nos. K09‐R‐34,
K09‐R‐35, K09‐R‐36, K09‐R‐37, K09‐R‐38, K09‐R‐39, K09‐R‐40, and K09‐R‐341
(KBTA, Dec. 15, 2011)
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Holding: In determining the 2009 property tax valuations of four oil wells,
the Department was incorrect in using 2008 values in the standard formula
[total value of oil produced x % interest x revenue factor x allowance credit].
The Department should have instead used the actual production records for
calendar year 2009 which showed a significant decline in production from
2008.
•
Takeaway: This is a valuation case.
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Kentucky Tax Case Developments
Real Property Tax
• College Heights Corporation v. Kentucky Board of Tax Appeals
2011‐CA‐000546‐MR (Ky. App. Feb. 22, 2013) (Not to be Published), rev’g,
Civil Action No. 10‐CI‐00285 (Knox Cir. Ct. Feb. 28, 2011)
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Holding: The valuation method used by the Property Valuation Board’s
hearing officer lacked substantial evidence when the method was outside
the guidelines of the Uniform Standards of Professional Appraisal Practice
and relied on comparable property, despite the fact that no comparable
properties were used in the valuation.
•
Takeaway: USPAP matters.
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Kentucky Tax Legislation
Income Taxes
• HB 440
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Management Fees: Requires the same disclosure and burden of
proof standards to deduct management fees paid to a related entity, a
foreign corporation, or a member of an affiliated group that are
required for intangible expenses and interest expenses.
•
Effective for tax years beginning on or after January 1, 2013.
•
KDOR released Schedule RPC for tax years beginning on or after
January 1, 2012.
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Kentucky Tax Legislation
Sales and Use Tax
• HB 440
•
Use Tax Notification: Requires out‐of‐state retailers selling products
for consumption or use inside Kentucky to notify its customers of
each purchaser’s obligation to report and pay Kentucky use tax
•
Vendor’s Compensation Reduced:
Retailers will receive a
reimbursement on 1.75% of the first $1,000 of sales tax collected and
1.5% of tax collected over $1,000
•
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However, will lower the current cap on the reimbursement of
$1,500 per month to $50 per month
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Kentucky Tax Legislation
Other Taxes
• HB 440 – Tax Collection Tools
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Installment Agreements: Allows KDOR to pursue statutory
remedies against taxpayers who do not comply with the terms of
an installment payment agreement
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License Revocation: A delinquent taxpayer may have his or her
driver’s license, attorney license, motor vehicle registration, or
other occupational or professional license suspended or revoked by
KDOR, and may be denied the ability to register his or her motor
vehicle, if such taxpayer owes tax to Kentucky
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Kentucky Tax Legislation
Tobacco Taxes
• HB 361 – Changes to OTP Taxes & New Licensing
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Effective August 1, 2013, changes rates of excise tax on distributors selling
tobacco products in Kentucky.
•
Requires retailers in Kentucky to purchase tobacco products for resale to
consumers only from distributors that are licensed in Kentucky, or from a
distributor who is granted a distributor’s license for the privilege of purchasing
untaxed tobacco products and remitting the tax directly to the state
•
Allows Kentucky licensed distributors to sell untaxed tobacco products to
another licensed distributor without payment of excise tax, so long as the
purchasing licensed distributor pays such tax
•
Declares as contraband any untaxed tobacco products held, owned, or
possessed by any unauthorized party, and provides for the seizure and
forfeiture of any such contraband
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Kentucky Tax Legislation – To Be Proposed?
54 “Tax Reform” Proposals of Blue Ribbon Tax Reform Commission
Report Sets Out 54 “Tax Reform” Proposals for Consideration
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Individual Income Tax
•
Corporation Income Tax
•
Sales & Excise Taxes
•
Property Taxes
•
Severance Taxes
•
Other Taxes
•
Tax Administration
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Kentucky Tax Legislation – To Be Proposed?
Blue Ribbon Tax Reform Commission “Tax Reform” Highlights
Individual Income Tax
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Reduce Tax Rates – Top Rate Reduced 0.2% to 5.8%
•
Cap of $17,500 on Itemized Deductions
•
Amend $41,110 Pension Income Exclusion To $30,000, with $ For $
phase out for total income over $30,000
•
Update IRC Reference Date from 12/31/06 to 12/31/12
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Provide 529 College Savings Plan Tax Deduction
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Kentucky Tax Legislation – To Be Proposed?
Blue Ribbon Tax Reform Commission “Tax Reform” Highlights
Corporate Income Tax
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Reduce Tax Rates – Top Rate Reduced 0.2% to 5.8%
•
Add Back Deduction for Management Fees
•
Adopt Single Sales Factor (now 3‐Factor with 2x Sales)
•
Adopt Destination Sourcing for Services
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Reduce LLET Exemption from $3 Million to $1 Million with $ for $ phase
out
•
Decouple from U.S. Production Activities Deduction
•
Establish Angel Investor Credit for Small Businesses
•
Expand R&D Credit to Human Capital with Cap and Requiring Approval
(e.g., by KEDFA)
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Kentucky Tax Legislation – To Be Proposed?
Blue Ribbon Tax Reform Commission “Tax Reform” Highlights
Sales and Excise Tax
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Apply Sales and Transient Room Taxes to Entire Hotel Price
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Expand Sales Tax to Select Household Services (e.g., home and automotive services)
with a Clear Nexus to Kentucky
•
Exempt Direct Mail Charges
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Exempt Certain Equine‐Related Agricultural Purchases
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Increase Collection of Out‐of‐State and Internet Sales
•
Impose 1% Gross Receipts Tax on Residential and Business Utilities for Additional
School Funding
•
Increase Cigarette Tax Rate 40₵ to $1/pack & OTP Tax
•
Reinstate Cigarette Rolling Paper Tax
•
•
Repeal 5₵ per case Distilled Spirits Tax
Amend Constitution to Allow General Local Sales Tax
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Kentucky Tax Legislation – To Be Proposed?
Blue Ribbon Tax Reform Commission “Tax Reform” Highlights
Property Taxes
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Create Income Tax Credit for Bourbon Industry to Offset Property Tax on Stored
Bourbon Barrels
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Exempt Inventory from State Property Tax
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Inventory Taxed at 5₵/$100
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Raw Materials Taxed at State Rate Only
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Inventory Held for Shipment Out‐of‐State Exempt
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Freeze State Property Tax Rate at 12₵/$100
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Clarify PSCs Subject to PSC Tax (e.g., all companies generating or marketing
power)
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Require Reporting of Rental Space for Watercraft and Airplanes
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Convert Negligible State‐Only Rates to Exemptions
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Ongoing Income Tax Challenges
• Mandatory Nexus Consolidated Returns
• requires direct ownership
• when is inclusion determined
• Remember Member Disclosure / Add‐Back Rules
• Net Operating Loss Carry Forwards
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Ongoing Sales Tax Challenges
• Limitations on Manufacturing Exemption
• Kentucky versus Other States
• Anything that starts with a "R"…Repair, rebuild, replace
• Industrial tools and supplies…to be exempt it has to touch the product and "effectuate a change
• Occasional sale exemption narrowly defined and applied
• Property Classification
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Indiana Update
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Indiana Legislative Developments
Income Tax
• Indiana conformity to the IRC updated as of January 1, 2013
• Legislation eliminated a number of previously required state income tax addbacks
• Reduction in personal income tax rate:
• Rate for 2015 and 2016 is reduced to 3.3% from current 3.4%
• Rate after 2016 is reduced to 3.23%
• Private school scholarship tax credits available is increased to $7.5 million from $5 million
• Several other credits repealed, expanded or amended
• Provides the method for apportioning income of race team members involved in motorsports racing
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Indiana Legislative Developments
Inheritance Tax
• The Inheritance Tax expires effective January 1, 2013 rather than January 1, 2022 when it was originally due to expire.
• The Generation‐Skipping Transfer Tax is repealed effective January 1, 2013
Sales and Use Tax
• Use tax amnesty program for race horses
• Applies to unpaid tax for claiming transactions prior to 6/1/12
• Amnesty period is July 1 through December 31, 2013
• Interest, penalties, collections costs or other costs are abated
• Research and development property exemption
• Exemption for aviation fuel; now subject to excise tax
• Exemption for parts used in aircraft repairs and maintenance 30
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Indiana Legislative Developments
Financial Institutions Tax
• Rate after December 31, 2013 is reduced from 8.5% to 8.0%
• Rate is reduced .5% for each year until January 1, 2017, when the rate will be 6.5%
Miscellaneous Tax
• An admission fee is imposed for tickets purchased for a race day at a qualified motorsports facility
• 2% on admissions charge less than $100
• 3% on admissions charge of at least $100 but less than $150
• 6% on admissions charge of at least $150
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Indiana Administrative Developments
Sourcing of Service Revenue
• Department of Revenue defines "cost of performance" related to taxpayer selling audience profile information ‐ See LOF 02‐20120316
• Department of Revenue defines "cost of performance" related to information service provider ‐ See LOF 02‐20130238
Claims of Distortion of Income
• Department of Revenue requires the use of a "stacking" method to apportion income on a consolidated return See LOF 02‐20120134
• Sale of subsidiary was business income, interest expense deduction disallowed – See LOF 02‐20120140
• Forced Combination – Taxpayer required to file on a combined unitary basis – See LOF 02‐20120008
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Indiana Tax Court Cases
Income Tax
•
Caterpillar v. Indiana State Dep’t of Revenue
No. 49T10‐0812‐TA‐70 (Ind. Tax Ct. Mar. 28, 2013)
•
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Holding: Foreign service dividends received by Caterpillar, Inc. from its
foreign subsidiaries were deductible in calculating Caterpillar’s Indiana
net operating losses, including those available for carryover as a
deduction from taxable income in future years.
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Indiana Tax Court Cases
Income Tax
•
Vodafone Americas Inc. v. Dep’t of State Revenue
Cause No. 49T10‐1002‐TA‐7, (Ind. Tax Ct. June 18, 2013)
•
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Holding: Income received by a partner of a general partnership that was
doing business in Indiana was income derived from sources within
Indiana for purposes of computing the adjusted gross income tax.
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Indiana Tax Court Cases
Income Tax
•
United Parcel Service, Inc. v. Indiana Dep’t of State Revenue
Cause No. 49T10‐0704‐TA‐24 (Ind. Tax Ct. Sept. 16, 2013)
•
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Holding: UPS’s affiliated foreign reinsurance companies must be
physically present in Indiana to satisfy the statutory requirement of
“doing business” for purposes of Indiana’s gross premium privileges tax.
Such a requirement was not unconstitutional.
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Indiana Tax Court Cases
Income Tax
•
Gibson v. Indiana Dep’t of State Revenue
No. 49T10‐1204‐TA‐20 (Ind. Tax Ct. Nov. 1, 2012)
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Holding: A taxpayer’s refund request was properly denied because the
taxpayer filed the return 11 days late.
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Indiana Tax Court Cases
Income Tax
•
Indiana Dep’t of State Revenue v. Miller Brewing Co.
No. 49S10‐1203‐TA‐136, 975 N.E.2d 800 (Ind. July 26, 2012) motion for
rehearing denied (Ind. Nov. 5, 2012), rev’g, No. 49T10‐0607‐TA‐69 (Ind.
Tax Ct. Aug. 18, 2011)
•
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Holding: Sales by a beverage manufacturer that were delivered by
common carriers to Indiana customers were allocable to Indiana for
purposes of calculating the manufacturer’s gross income.
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Indiana Tax Court Cases
Income Tax
•
Indiana Dep’t of State Revenue v. Rent‐A‐Center East, Inc.
No. 49S10‐1112‐TA‐683, 963 N.E.2d 463 (Ind. Mar. 9, 2012), rev’g, No.
49T10‐0612‐TA‐106, 952 N.E. 2d 387 (Ind. Tax. Ct. May 27, 2011).
•
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Holding: A taxpayer’s challenge to the issue of whether taxpayer was
required to report its Indiana adjusted gross income tax on a combined
return should survive summary judgment, as the Department’s notice of
a proposed assessment was prima facie evidence that the combined
report was necessary to reflect the taxpayer’s adjusted gross income.
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Indiana Tax Court Cases
Income Tax
•
AE Outfitters Retail Co. Indiana Dep’t of State Revenue
No. 49T10‐1012‐TA‐66, 957 N.E.2d 221 (Ind. Tax Ct. Oct. 25, 2011)
•
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Holding: Department must apply all the methodologies in the Indiana
Code before it may require a taxpayer to report its Indiana adjusted
gross income using a combined income tax return.
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Indiana Tax Court Cases
Transactional Taxes
• Wendt LLP v. Indiana Dep’t of State Revenue
No. 02T10‐0701‐TA‐2 (Ind. Tax Ct. Oct. 30, 2012)
• Holding: Certain purchases of tangible personal property by a licensed common carrier were not entitled to the transportation exemption from sales tax, as the carrier’s services were not a series of separate services but were instead provided as continuous, integrated process of transporting its customers’ oversized equipment on the highways.
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Indiana Tax Court Cases
Transactional Taxes
• Indiana Dep’t of State Revenue v. AOL, Inc.
No. 49S10‐1108‐TA‐514, 963 N.E.2d 498 (Ind. Mar. 16, 2012), motion for rehearing denied (Ind. June 28, 2012), rev’g, No. 49T10‐0903‐TA‐7, 940 N.E.2d 870 (Ind. Tax Ct. Dec. 29, 2010)
• Holding: AOL, an online service provider, was liable for use tax on promotional mailers sent to prospective customers in Indiana because the promotional materials were purchased by AOL in retail transactions.
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Indiana Tax Court Cases
Property Tax
• Virginia Garwood v. Indiana Dep’t of State Revenue
No. 82T10‐1208‐TA‐46, (Ind. Tax Ct. Oct 31, 2013)
• Holding: The Indiana Tax Court denied the Department of Revenue’s motion to dismiss and held that it has subject matter jurisdiction over a taxpayer’s refund claim for sales tax, interest, and penalties assessed on the sales of seized property.
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Indiana Tax Court Cases
Property Tax
• Indiana MHC, LLC v. Scott County Assessor
No. 39T10‐10009‐TA‐52, 2013 Ind. Tax LEXIS 10 (Ind. Tax Ct. May 3, 2013)
• Holding: Indiana Tax Court held that taxpayer had not comported with standard methods for using the income capitalization method and should have included data from similar properties in challenging the property value assessment.
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Indiana Tax Court Cases
Property Tax
• Kooshtard Property VIII, LLC v. Shelby County Assessor
No. 49T10‐1011‐TA‐58, 2013 Ind. Tax LEXIS 8 (Ind. Tax Ct. Apr. 29, 2013)
• Holding: Taxpayer did not establish a prima facie case that the Department’s use of a 100% positive influence factor test (reflects actual value of the property in question) was erroneous. Taxpayer presented no evidence to support its claim.
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Indiana Tax Court Cases
Property Tax
• Shelbyville MHPI, LLC v. Thurston
No. 49T10‐1003‐TA‐14 (Ind. Tax Ct. Nov. 5, 2012)
• Holding: Board did not abuse its discretion when it considered “sky‐rocketing” sales prices from 2004 real property market as evidence of the correct property valuation of taxpayer’s property.
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Indiana Tax Court Cases
Property Tax
• Millennium Real Estate Investment, LLC v. Assessor, Benton County
Indiana, No. 49T10‐1008‐TA‐42, (Ind. Tax Ct. Nov. 5, 2012), petition for review denied (Ind. Sup. Ct. June 20, 2013)
• Holding: Court held that Indiana Board of Tax Review’s determination was supported by substantial and reliable evidence, even though the Board had failed to discount taxpayer’s June 2008 sales when these numbers showed that taxpayer’s parcels were recently sold for well below their collective assessed values.
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Indiana Tax Court Cases
Property Tax
• Marion County Auditor v. Sawmill Creek, LLC.
No.49S02‐1106‐CV‐364, 964 N.E.2d 213 (Ind. Mar. 21, 2012), rev’g, No. 49A02‐0912‐CV‐1192, 938 N.E.2d 778 (Ind. Ct. App. Dec. 3, 2010)
• Holding: County auditor’s attempts to notify the property owner of the tax sale, although unsuccessful, were sufficient to meet the Due Process Clause of the Fourteenth Amendment of the US Constitution.
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Indiana Tax Court Cases
Property Tax
• Tipton County Health Care Foundation, Inc. f/k/a Tipton County Memorial Hospital Foundation v. Tipton County Assessor
No. 49T10‐1101‐TA‐6, 961 N.E.2d 1048 (Ind. Tax Ct. Feb. 16, 2012), petition for rehearing denied (Ind. Tax. Ct. April 13, 2012)
• Holding: A health care foundation failed to raise a prima facie case that its assisted living facility was entitled to a charitable purpose property tax exemption because the foundation did not meet its burden of proving that its lease arrangement with a for‐profit corporation was driven by a charitable purpose.
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Indiana Tax Court Cases
Open Records
• Orbitz, LLC v. Indiana Dep’t of State Revenue
No. 49T10‐0903‐TA‐2013 Ind. Tax LEXIS 25 (Ind. Tax Ct. Oct. 16, 2013)
• Holding: The court held that contracts between online travel company Orbitz and various hotels are trade secrets under the Indiana Access to Public Records Act and ordered them to be sealed thus protecting them from access by Orbitz’s competitors.
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Ongoing Challenges
• Filing Group determinations
• Sales sourcing
• Others?
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Questions…
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