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Brandenburg Indus. Serv. Co. v. Indiana Dep't of State Revenue

Tax Court of Indiana

January 30, 2015

BRANDENBURG INDUSTRIAL SERVICE COMPANY, an Illinois corporation, Petitioner,
v.
INDIANA DEPARTMENT OF STATE REVENUE, Respondent

ATTORNEYS FOR PETITIONER: ANDAL J. KALTENMARK, ZIAADDIN MOLLABASHY, BARNES & THORNBURG, LLP, Indianapolis, IN; MARK S. BERNSTEIN, MATTHEW F. SINGER, BARACK FERRAZZANO KIRSCHBAUM & NAGELBERG, LLP, Chicago, IL.

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

Page 148

OPINION

Martha Blood Wentworth, Judge.

Page 149

Brandenburg Industrial Service Company has moved to compel the Indiana Department of State Revenue to disclose both its potential non-expert witnesses and two-pages of handwritten notes prepared by one of its employees. While the Court will not compel the Department to disclose its potential non-expert witnesses, it orders the Department to produce the two-pages of handwritten notes.

FACTS AND PROCEDURAL HISTORY

Brandenburg, an Illinois corporation, processes and sells ferrous and non-ferrous scrap metals that it acquires through its environmental remediation and structure demolition work. (See Pet'r First Am. Pet. Refund Sales & Use Tax (" Pet'r First. Am. Pet." ) ¶ ¶ 5, 8, 10.) Brandenburg uses a variety of equipment and consumable items to process the metals, which it periodically modifies and stores in a facility in Gary, Indiana. (See Pet'r First Am. Pet. ¶ ¶ 12-13.) During the 2006 and 2007 tax years, Brandenburg remitted approximately $150,000 in sales/use tax to the Department on its equipment and consumable items purchases. (See Pet'r First Am. Pet. ¶ ¶ 2-3, 14-16.)

On December 30, 2009, Brandenburg filed a refund claim, asserting that some of its 2006 purchases were actually exempt from sales/use tax under either Indiana Code § 6-2.5-3-2(e) (the Temporary Storage Exemption) or Indiana Code § 6-2.5-5-3(b) (the Equipment Exemption). (See Pet'r First. Am. Pet.¶ 25, Ex. H.) On December 28, 2010, Brandenburg filed a second and third refund claim with the Department. In the second refund claim, Brandenburg asserted that some of its 2007 purchases were exempt from sales/use tax under the Temporary Storage or Equipment Exemptions. (See Pet'r First Am. Pet.¶ 17, Ex. A.) In the third refund

Page 150

claim, Brandenburg asserted that Indiana Code § 6-2.5-5-5.1(b) (the Consumption Exemption) exempted additional purchases made in 2007 from sales/use tax. (See Pet'r First Am. Pet.¶ 26, Ex. I.) On December 30, 2010, Brandenburg filed a fourth refund claim in which it asserted that more of its 2007 purchases were also entitled to the Consumption Exemption. (See Pet'r First Am. Pet.¶ 18, Ex. B.)

Despite the fact that Brandenburg's first and second refund claims sought relief for similar purchases based on the same theories, the Department approved the first and issued a refund, but denied the second. (See Pet'r First Am. Pet. ¶ ¶ 19, 27, Exs. C, J.) Similarly, the Department approved Brandenburg's third refund claim and issued the refund, but denied its fourth refund claim. (See Pet'r First Am. Pet. ¶ ¶ 20, 28, Exs. D, K.)

Brandenburg protested the Department's denials of its second and fourth refund claims. (See Pet'r First Am. Pet. ¶ ¶ 21-22, Exs. E-F.) On March 27, 2012, after holding a hearing, the Department denied Brandenburg's protests. (See Pet'r First Am. Pet. ¶ ¶ 23-24, Ex. G.) On June 22, 2012, Brandenburg appealed to this Court by filing a Petition For Refund Of Sales and Use Taxes. (See Pet'r Pet. Refund Sales & Use Taxes.)

About two months later, on August 23, 2012, the Department sent Brandenburg a letter explaining that it had granted Brandenburg's first and third refund claims in error, but if Brandenburg would remit within ten days the amount of the erroneously issued refunds, it could avoid paying penalties and interest. (See Pet'r First Am. Pet., Ex. L.) On August 27, 2012, the Department issued notices of proposed assessment to Brandenburg for the sales/use tax erroneously refunded, including interest and penalties. (See Pet'r First Am. Pet., Exs. M-O.) Brandenburg protested the proposed assessments, and the Department denied Brandenburg's protest on October 22, 2012. (See Pet'r First Am. Pet., Exs. P, Q.) Brandenburg subsequently filed a motion with the Court seeking leave to amend its Petition to incorporate its claims concerning the first and third refund claims, which the Court granted.

On November 13, 2012, Brandenburg, consistent with the terms provided in the parties' Joint Case Management Plan, served the Department with its First Set of Interrogatories and First Request for Production of Documents. (See Pet'r Mem. Supp. Mot. Compel Interrog. Resp. (" Pet'r Interrog. Br." ) at 1; Pet'r Mem. Supp. Mot. Compel Produc. Non-Privileged Doc. (" Pet'r Produc. Br." ), Ex. I at 12.) The Department's responses to Brandenburg's Interrogatory Number 16 and Request For Production Number 3 are the subjects of Brandenburg's motions to compel.

Interrogatory Number 16

In Interrogatory Number 16, Brandenburg asked the Department to

Identify each Person whom you expect to call as a non-expert witness in this matter, and for each person identified, state (1) the subject matter on which he or she is expected to testify and (2) the substance of the facts on which he or she is expected to testify.

( Pet'r Interrog. Br., Ex. G at 2.) The Department, while reserving the right to supplement its response, answered Interrogatory Number 16 as follows:

a. As yet unidentified representative(s) of the Indiana Department ...

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