Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Smith v. Indiana Department of State Revenue

Tax Court of Indiana

April 10, 2019

TONY W. SMITH and SHIRLENA SMITH, Petitioners,
v.
INDIANA DEPARTMENT OF STATE REVENUE, Respondent.

          ATTORNEY FOR PETITIONERS: JAMES K. GILDAY GILDAY & ASSOCIATES, P.C. INDIANAPOLIS, IN

          ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR. ATTORNEY GENERAL OF INDIANA WINSTON LIN DEPUTY ATTORNEY GENERAL INDIANAPOLIS, IN

          ORDER ON PETITIONERS' MOTION FOR PARTIAL SUMMARY JUDGMENT

          Martha Blood Wentworth, Judge.

         Tony W. Smith and Shirlena Smith have appealed, among other things, the Indiana Department of State Revenue's assessments of Indiana adjusted gross income tax (AGIT) for 2005 through 2007 and 2009 through 2014. The matter, currently before the Court on the Smiths' Motion for Partial Summary Judgment ("Motion"), presents the following issue of first impression: whether the Department's modifications to the Smiths' AGIT liabilities for 2005 through 2007 (the "years at issue") were limited to the modifications made by the Internal Revenue Service (the "IRS") to resolve the federal audit for those years.[1] Upon review, the Court finds that the Department's modifications were limited to the final modifications made by the IRS to resolve the federal audit for those years.[2]

         FACTS AND PROCEDURAL HISTORY

         The following facts are not in dispute. The Smiths timely filed their federal income tax returns for 2005 through 2007, reporting that they were professional gamblers with income and deductions associated with that trade. (See Pet'rs' Resp. Opp'n Resp't Mot. Partial Summ. J. ("Pet'rs' Resp. Br.") at 4 (citing First Jt. Stip. Facts ("Stip.") ¶¶ 3-5), Confd'l Ex. A ¶ 5, Confd'l Exs. A-1 to A-3.) The Smiths also filed Indiana nonresident income tax returns for those years. (Pet'rs' Resp. Br. at 4 (citing Stip. ¶¶ 3-5), Confd'l Ex. A ¶ 6, Confd'l Exs. A-4 to A-6.)

         The IRS subsequently audited the Smiths' federal income tax returns for the years at issue, examining their status as professional gamblers. (See Resp't Mem. Supp. Mot. Partial Summ. J. ("Resp't Br."), Ex. C at 50; Pet'rs' Resp. Br., Confd'l Ex. B ¶ 7, Confd'l Ex. B-2.) The IRS reported its audit findings to the Smiths by issuing a Revenue Agent Report ("RAR") for 2005 and 2006 on November 19, 2008, and an RAR for 2007 on September 15, 2009. (See Resp't Br., Ex. C at 50, Confd'l Ex. D ¶ 3, Confd'l Ex. D-1 at 1359.) The Smiths' RARs were accompanied by a "30-Day Letter" that provided the time and manner for the Smiths to indicate to the IRS whether they agreed or disagreed with the adjustments. (See Resp't Br. at 6 (citing https://taxclinic.law.gsu.edu/files/2013/IRS_30_day_letter-1.pdf ("Sample 30-Day Letter")), Ex. C at 58.) The Smiths disagreed with the adjustments on the RARs and initiated an appeal with the IRS. (See Resp't Br., Ex. C at 50-51, 58.)

         On January 21, 2011, the IRS executed the Smiths' Form 870-AD "Offer to Waive Restrictions on Assessment and Collection of Tax Deficiency and to Accept Overassessment," which settled the matter. (See Resp't Br., Ex. C at 51, 54; Pet'rs' Resp. Br., Confd'l Ex. A ¶¶ 11(b), 12(b), Confd'l Ex. A-10.) The settlement reflected adjustments to the Smiths' federal tax liabilities for 2005 through 2007 that were contained on separate tax forms that accompanied the Form 870-AD. (See Pet'rs' Resp. Br., Confd'l Ex. A ¶ 12(c)-(d), Confd'l Exs. A-11 to A-12.)

         Several years later, while investigating the Smiths' Indiana AGIT liability for a different tax period, the Department learned of the Smiths' federal audit for the years at issue. (See Resp't Br., Confd'l Ex. D ¶ 3, Confd'l Ex. D-1 at 1359.) The Department expanded its audit to include the years at issue and ultimately adjusted the Smiths' Indiana AGIT liabilities for 2005 through 2007 based on the federal adjustments in the RARs. (See Resp't Br., Confd'l Ex. D ¶ 3, Confd'l Ex. D-1.) On August 8, 2016, the Department issued Proposed Assessments against the Smiths for the years at issue. (Resp't Br., Confd'l Ex. A at 168-73.)

         The Smiths, believing that the Department's adjustments should have reflected their Form 870-AD adjustments rather than the adjustments in their RARs, amended their Indiana income tax returns for the years at issue on September 12, 2016. (See Pet'rs' Des'g Evid. Supp. Resp. Opp'n Resp't Mot. Partial Summ. J. ("Pet'rs' Des'g Evid.") ¶ 4, Stip. ¶¶ 3-4; Pet'rs' Resp. Br., Confd'l Ex. A ¶ 19, Confd'l Ex. B ¶ 15.) On October 7, 2016, the Smiths protested the Department's Proposed Assessments, and on November 29, 2017, the Department issued a Letter of Findings denying their protest. (Pet'rs' Des'g Evid. ¶ 4, Stip. ¶¶ 18, 22.)

         On January 8, 2018, the Smiths incorporated their claims regarding the years at issue in a pending original tax appeal.[3] On January 11, 2019, the Smiths moved for partial summary judgment. On February 20, 2019, the Court held a hearing on the Smiths' Motion. Additional facts will be supplied as necessary.

         STANDARD OF REVIEW

         Summary judgment is proper only when the designated evidence demonstrates that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). A genuine issue of material fact exists when facts concerning an issue that would dispose of the case are disputed or when undisputed facts support conflicting inferences as to the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.