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Medco Health Solutions, Inc. v. Indiana Department of State Revenue

Tax Court of Indiana

May 7, 2014

MEDCO HEALTH SOLUTIONS, INC., Petitioner,
v.
INDIANA DEPARTMENT OF STATE REVENUE, Respondent

ATTORNEYS FOR PETITIONER: FRANCINA A. DLOUHY, FAEGRE BAKER DANIELS LLP, Indianapolis, IN; R. GREGORY ROBERTS, MORRISON & FOERSTER LLP, New York, New York.

ATTORNEYS FOR RESPONDENT: GREGORY F. ZOELLER, INDIANA ATTORNEY GENERAL, JOHN P. LOWREY, DEPUTY ATTORNEY GENERAL, Indianapolis, IN.

OPINION

ORDER ON RESPONDENT'S PARTIAL MOTION TO DISMISS

Martha Blood Wentworth, Judge.

Medco Health Solutions, Inc. has appealed the Indiana Department of State Revenue's final determination that assessed it

Page 264

with an additional Indiana adjusted gross income tax liability for the tax years ending August 19, 2003, December 27, 2003, December 25, 2004, and December 31, 2005 (the period at issue). The matter is currently before the Court on the Department's Partial Motion to Dismiss Or For Summary Judgment (Motion).[1] The Court grants the Department's Motion.

FACTS AND PROCEDURAL HISTORY

Medco is a Delaware corporation with its headquarters and principal place of business in Franklin Lakes, New Jersey. Medco provides pharmacy benefit management services through national networks of retail pharmacies and its own mail-order pharmacies.

In 2007, the Department audited Medco. During the course of the audit, the Department determined that Medco had not sourced its income properly on its tax returns. Accordingly, the Department recalculated Medco's Indiana sales factor, which resulted in Medco owing additional Indiana adjusted gross income tax for the period at issue. On June 8, 2009, the Department issued Proposed Assessments to Medco relating to that liability.

Medco timely protested the Proposed Assessments. The Department held a hearing on Medco's protest on March 30, 2010. On March 7, 2011, the Department issued a Letter of Findings denying Medco's protest.

On May 5, 2011, Medco initiated an original tax appeal. On June 17, 2011, the Department filed its Motion. The Court conducted a hearing on the Department's Motion on September 30, 2011. Additional facts will be supplied as necessary.

STANDARD OF REVIEW

A motion to dismiss under Trial Rule 12(B)(6) tests the legal sufficiency of a petition, not the facts supporting it. See Wireless Advocates, LLC v. Indiana Dep't of State Revenue,973 N.E.2d 111, 112 (Ind. Tax Ct. 2012). When considering a 12(B)(6) motion to dismiss, this Court will look only to the petition and may not resort to any other evidence in the record.[2]See Town of Plainfield v. Town of Avon, 757 N.E.2d 705, 710 (Ind.Ct.App. 2001), trans. denied. Moreover, the Court will evaluate the petition in a light most favorable to the non-moving party, with every reasonable inference drawn in its favor. Wireless Advocates, 973 N.E.2d at 112. Thus, granting a motion to dismiss under Trial Rule 12(B)(6) ...


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