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Richardson's RV Inc. v. Indiana Department of State Revenue

Tax Court of Indiana

August 1, 2017

RICHARDSON'S RV INC., Petitioner,
v.
INDIANA DEPARTMENT OF STATE REVENUE, Respondent.

          ATTORNEYS FOR PETITIONER: RANDAL J. KALTENMARK ZIAADDIN MOLLABASHY BARNES & THORNBURG LLP

          ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR. ATTORNEY GENERAL OF INDIANA EVAN W. BARTEL JESSICA REAGAN GASTINEAU WINSTON LIN DEPUTY ATTORNEYS GENERAL

          ORDER ON PETITIONER'S MOTION FOR SUMMARY JUDGMENT

          Martha Blood Wentworth, Judge Indiana Tax Court

         Richardson's RV Inc. has appealed the Indiana Department of State Revenue's final determination that it properly assessed additional sales tax liabilities for the 2010, 2011, and 2012 tax years. The matter is currently before the Court on Richardson's' Motion for Summary Judgment, which the Court grants.

          FACTS AND PROCEDURAL HISTORY[1]

         Richardson's is an Indiana corporation that owns and operates a recreational vehicle dealership in Middlebury, Indiana. (See Pet'r Des'g Evid., App. 1 ¶¶ 6, 7, 10.) During the years at issue, Richardson's sold camper trailers, travel trailers, motor homes, fifth wheels, and toy haulers (collectively "RVs") as well as related repair parts and repair services. (See Pet'r Des'g Evid., App. 1 ¶ 10.) Richardson's also maintained a website that allowed out-of-state customers to shop for RVs. (See Resp't Des'g Evid., Ex. R-8 at 39-43.)

         In a typical sales transaction from Richardson's' website, once a price was agreed upon, Richardson's would send a purchase order to the customer to be signed and returned with the deposit. (See Resp't Des'g Evid., Ex. R-8 at 43.) Richardson's would then arrange a time for the customer to come to the dealership to walk through the vehicle. (See Resp't Des'g Evid., Ex. R-8 at 49-50.) If the vehicle met the customer's expectations, the customer completed the paperwork (e.g., financing agreements, warranty, and titling documents) in the dealership office. (See Resp't Des'g Evid., Ex. R-8 at 51-52, 58-60.)

         Richardson's' regular business practice for transferring physical possession of the vehicle to a customer varied based on whether the customer resided in a state with a reciprocal agreement with Indiana.[2] (See Resp't Des'g Evid., Ex. R-8 at 51-64; Pet'r Des'g Evid., App. 1 ¶¶ 44-48.) If a customer resided in a state with a reciprocal agreement with Indiana ("reciprocal customer"), Richardson's transferred physical possession of the vehicle to the customer at its dealership. (See Pet'r Des'g Evid., App. 1 ¶ 45.) When a customer did not reside in a state with a reciprocal agreement with Indiana ("non-reciprocal customer"); however, Richardson's informed them of Indiana's sales tax rate and asked them whether they preferred to pay their home state's sales/use tax or Indiana's sales tax on their purchase. (See Resp't Des'g Evid., Ex. R-8 at 54-58.) If the non-reciprocal customer chose to pay the tax to their home state, Richardson's transferred possession of the vehicle to the customer at a location seven miles away from the dealership in Michigan, a state without a reciprocal agreement with Indiana.[3] (See Pet'r Des'g Evid., App. 1 ¶¶ 44, 46.) (See also Resp't Des'g Evid., Ex. R-8 at 129.)

         At the Michigan transfer location, an employee of Richardson's and the customer both signed a letter stating that Richardson's had physically delivered the vehicle to the customer in Michigan ("Delivery Letter"). (See Pet'r Des'g Evid., App. 1 ¶¶ 54-55; Ex. E-1 through E-155.) (See also Resp't Des'g Evid., Ex. R-8 at 64.) Richardson's did not collect Indiana sales tax from customers who took possession of the RV in Michigan.[4](See Pet'r Des'g Evid., App. 1 ¶ 26, Ex. C.)

         On February 7, 2014, the Department completed the sales tax audit of Richardson's' business for the years at issue and concluded that Richardson's should have collected and remitted Indiana sales tax on 139 sales to non-reciprocal customers.[5] (See Pet'r Des'g Evid., App. 1 ¶¶ 21, 26, 61, Exs. A, C, G.) The Department issued proposed assessments on March 10, 2014, and on March 12, 2014, Richardson's filed its protest, which the Department denied in its LOF dated November 25, 2014. (See Pet'r Des'g Evid., App. 1 ¶ 22, Ex. B; App. 7 ¶¶ 27, 31, 33; App. 8 ¶¶ 27, 31, 33.) Richardson's filed a Request for Rehearing, which the Department denied on February 26, 2015. (See Pet'r Des'g Evid., App. 7 ¶¶ 38-39; App. 8 ¶ 38-39.)

         On April 23, 2015, Richardson's filed its Original Tax Appeal. On September 18, 2015, Richardson's filed its Motion for Summary Judgment, and the hearing on the Motion was held on April 7, 2016. Additional facts will be supplied as necessary.

         STANDARD OF REVIEW

         Summary judgment is proper only when the designated evidence demonstrates that no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). When reviewing a motion for summary judgment, the Court will construe all properly asserted facts and reasonable inferences drawn therefrom in favor of the non-moving party. See Scott Oil Co. v. Indiana Dep't of State Revenue, 584 N.E.2d 1127, 1128-29 (Ind. Tax Ct. 1992).

         LAW

         Indiana imposes a sales tax "on retail transactions made in Indiana." Ind. Code § 6-2.5-2-1(a) (2010). A "'[r]etail transaction' means a transaction of a retail merchant that constitutes selling at retail[.]" Ind. Code § 6-2.5-1-2(a) (2010). A person is a retail merchant "selling at retail when, in the ordinary course of his regularly conducted trade or business, he . . . acquires tangible personal property for the purpose of resale[, ] and [ ] transfers that property to another person for consideration." Ind. Code § 6-2.5-4-1(b) (2010) (amended 2013).

         Indiana courts "refer to the law of sales for assistance in interpreting tax laws that relate to the sale of goods." Monarch Beverage Co., Inc. v. Indiana Dep't of State Revenue, 589 N.E.2d 1209, 1212 (Ind. Tax Ct. 1992) (citations omitted). Indiana's codification of the Uniform Commercial Code (UCC) under Indiana Code § 26-1-2-106(1) defines a "sale" as "the passing of title from the seller to the buyer for a price[.]" Ind. Code § 26-1-2-106(1) (2010).

         Indiana Code § 26-1-2-401 explains when and where title passes in two different circumstances:

(2) Unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a ...

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